Bankruptcy is an option many people are turning to in this dire economy. A new wave of filings are being attributed to the "strategic default" strategy many home owners are employing.
Strategic default refers to a default/foreclosure of a house that homeowners believe will not grow in value for a long time. These homes are often owned by professionals who see their homes as money pits instead of smart investment. For these people, they believe giving up the home and starting fresh is the best strategy for them. A good bankruptcy attorney is essential for such maneuvers. The current buyers market is a great time for professionals to invest in real estate. House Prices have reached a 10 year low and are expected to bottom out soon.
The Law Office of Roman P. Mosqueda is a full service law firm that has been around for over 30 years. If you are interested in learning more about bankruptcy please watch this 2 min youtube video:
Bankruptcy 101 Tutorial Video
Or call our offices for a free consultation: at (213) 252 - 9481
Learn more at: www.MosquedaLaw.com
The Law Offices of Roman P. Mosqueda
"How The Law Can Work For You"
Thursday, June 3, 2010
Thursday, April 8, 2010
Bankrupcy Video
The bankruptcy video just went live and we are already generating interest with it. We will continue the series with videos on most of the major topics of law.
Here is a link to the bankruptcy video:
[ Video ]
Here is a link to the bankruptcy video:
[ Video ]
Thursday, April 1, 2010
PROPOSED HUD RULE PROHIBITS SELLER-FINANCING WITHOUT LICENSE EXCEPT FOR FAMILY OR OWN RESIDENCE
PROPOSED HUD RULE PROHIBITS SELLER-FINANCING WITHOUT LICENSE EXCEPT FOR FAMILY OR OWN RESIDENCE
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
“The Secure and Fair Enforcement Mortgage Licensing Act of 2008 (SAFE Act), as a key component of the Housing and Economic Recovery Act of 2008 (Pub.L.110-289) enacted into law on July 30, 2008, directs all States to adopt licensing and registration systems for loan originators that comply with the minimum standards set by the SAFE Act.
The Department of Housing and Urban Development (HUD) is charged by the SAFE Act with establishing and implementing a system for mortgage loan originators in States that do not meet the minimum requirements of the statute.
So, HUD published its proposed Rule on the minimum standards under the SAFE ACT that States need to comply with in licensing loan originators, procedures and actions, as well as its enforcement authority in the Federal Register, Vol. 74, No. 239,
December 15, 2009.
Moreover, HUD proposes “to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States.”
The HUD proposed Rule, if codified as a Final Rule or regulation, would eliminate the business strategy of acquiring and reselling properties through seller financing without being licensed as a loan originator, unless: (1.) an individual offers or negotiates terms of a residential mortgage loan with or on behalf of a member of his or her immediate family; or (2.) an individual seller provides financing to a buyer pursuant to the sale of the seller’s own residence.
Proposed Rule Prohibiting
Seller Financing Deprives
Owners Of Property Rights
Under The 14TH Amendment:
One of the cherished rights of U.S. citizens is property rights protected by the 14th Amendment of the Constitution from any state action without due process of law, which allows owners to dispose of their properties in any way they see fit.
One of their property rights is to sell their properties through seller financing to assist buyers who cannot qualify for bank loans. The usury provision (Article 15) of the California Constitution prohibits loan-shaking activities, charging in excess of 10 percent per annum, unless exempted by a finance lender’s license.
Requiring owners of residential income properties to be licensed as loan originators in order to sell such properties through seller-financing directly to buyers interferes with property rights of owners.
The proposed Rule seeks to eliminate property rights exercised by property owners through centuries in favor of more regulations and of banks at the expense of home buyers with bad credit.
Proposed Rule Impairs
Obligations Of Existing
Contracts Protected By
The Constitution:
The contract is the law among the parties. A property owner has the right to sell his or her property, including seller-financing to enable a buyer short on cash to consummate the sale.
Seller-financing likewise enables a seller to sell his or her properties faster, and earn income during the duration of the promissory note being financed.
The proposed Rule would impair obligations of existing contracts in cases involving contracts to sell with seller-financing, lease with option to buy with seller-financing, and other similar contracts.
Proposed Rule §3400.13 Requires
Individuals To Be Licensed
By States With Exemptions:
§3400.13(e) of the proposed Rule provides that a State is not required to impose the prohibitions: (a) from “engaging in the business of a loan originator with respect to any dwelling or residential real estate in the State, unless the individual first registers and obtains and maintains a valid loan originators license for the State; and (d) complies with the same requirements in the case of an independent contracts engaging in residential mortgage loan origination, if: “(4) an individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual; and (5) any individual who only offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence.”….(underscoring supplied)
Loopholes To Proposed Rule:
A loophole to the proposed Rule is for the seller, who is amenable to seller financing of a residential income property, to hire the services of a licensed loan originator to offer or negotiate terms of a residential mortgage loan to a prospective buyer.
Another loophole is to retain “a licensed attorney who only negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client,” and who is not “compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent” thereof, pursuant to §3400.13(e)(6) of the proposed Rule.
Conclusion:
The proposed Rule, prohibiting seller-financing without loan originator license except for family or one’s own residence, should not be codified into regulation because it deprives owners of their property rights to indulge in seller-financing, and it impairs obligations of existing contracts.
If it is found to be within the constitutional rule-making power of the Congress delegated to HUD, and not an over-reaching regulation beyond the scope of the SAFE Act, the loopholes of hiring a licensed loan originator or licensed attorney are available to owners willing to do seller-financing.
(The Author, Roman P. Mosqueda, is a licensed real estate broker and licensed attorney in California, practicing real estate law among other areas of law.
For any comments, please e-mail to rpm_law@yahoo.com, or call (213) 252-9481, or visit his website at www.mosquedalaw.com.
This article is not legal advice, but for information only. If the reader has specific issues on seller-financing, he or she should consult with a competent real estate attorney or broker.)
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
“The Secure and Fair Enforcement Mortgage Licensing Act of 2008 (SAFE Act), as a key component of the Housing and Economic Recovery Act of 2008 (Pub.L.110-289) enacted into law on July 30, 2008, directs all States to adopt licensing and registration systems for loan originators that comply with the minimum standards set by the SAFE Act.
The Department of Housing and Urban Development (HUD) is charged by the SAFE Act with establishing and implementing a system for mortgage loan originators in States that do not meet the minimum requirements of the statute.
So, HUD published its proposed Rule on the minimum standards under the SAFE ACT that States need to comply with in licensing loan originators, procedures and actions, as well as its enforcement authority in the Federal Register, Vol. 74, No. 239,
December 15, 2009.
Moreover, HUD proposes “to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States.”
The HUD proposed Rule, if codified as a Final Rule or regulation, would eliminate the business strategy of acquiring and reselling properties through seller financing without being licensed as a loan originator, unless: (1.) an individual offers or negotiates terms of a residential mortgage loan with or on behalf of a member of his or her immediate family; or (2.) an individual seller provides financing to a buyer pursuant to the sale of the seller’s own residence.
Proposed Rule Prohibiting
Seller Financing Deprives
Owners Of Property Rights
Under The 14TH Amendment:
One of the cherished rights of U.S. citizens is property rights protected by the 14th Amendment of the Constitution from any state action without due process of law, which allows owners to dispose of their properties in any way they see fit.
One of their property rights is to sell their properties through seller financing to assist buyers who cannot qualify for bank loans. The usury provision (Article 15) of the California Constitution prohibits loan-shaking activities, charging in excess of 10 percent per annum, unless exempted by a finance lender’s license.
Requiring owners of residential income properties to be licensed as loan originators in order to sell such properties through seller-financing directly to buyers interferes with property rights of owners.
The proposed Rule seeks to eliminate property rights exercised by property owners through centuries in favor of more regulations and of banks at the expense of home buyers with bad credit.
Proposed Rule Impairs
Obligations Of Existing
Contracts Protected By
The Constitution:
The contract is the law among the parties. A property owner has the right to sell his or her property, including seller-financing to enable a buyer short on cash to consummate the sale.
Seller-financing likewise enables a seller to sell his or her properties faster, and earn income during the duration of the promissory note being financed.
The proposed Rule would impair obligations of existing contracts in cases involving contracts to sell with seller-financing, lease with option to buy with seller-financing, and other similar contracts.
Proposed Rule §3400.13 Requires
Individuals To Be Licensed
By States With Exemptions:
§3400.13(e) of the proposed Rule provides that a State is not required to impose the prohibitions: (a) from “engaging in the business of a loan originator with respect to any dwelling or residential real estate in the State, unless the individual first registers and obtains and maintains a valid loan originators license for the State; and (d) complies with the same requirements in the case of an independent contracts engaging in residential mortgage loan origination, if: “(4) an individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual; and (5) any individual who only offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence.”….(underscoring supplied)
Loopholes To Proposed Rule:
A loophole to the proposed Rule is for the seller, who is amenable to seller financing of a residential income property, to hire the services of a licensed loan originator to offer or negotiate terms of a residential mortgage loan to a prospective buyer.
Another loophole is to retain “a licensed attorney who only negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client,” and who is not “compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent” thereof, pursuant to §3400.13(e)(6) of the proposed Rule.
Conclusion:
The proposed Rule, prohibiting seller-financing without loan originator license except for family or one’s own residence, should not be codified into regulation because it deprives owners of their property rights to indulge in seller-financing, and it impairs obligations of existing contracts.
If it is found to be within the constitutional rule-making power of the Congress delegated to HUD, and not an over-reaching regulation beyond the scope of the SAFE Act, the loopholes of hiring a licensed loan originator or licensed attorney are available to owners willing to do seller-financing.
(The Author, Roman P. Mosqueda, is a licensed real estate broker and licensed attorney in California, practicing real estate law among other areas of law.
For any comments, please e-mail to rpm_law@yahoo.com, or call (213) 252-9481, or visit his website at www.mosquedalaw.com.
This article is not legal advice, but for information only. If the reader has specific issues on seller-financing, he or she should consult with a competent real estate attorney or broker.)
LAND TRUST IN CALIFORNIA
LAND TRUST IN CALIFORNIA
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., & S.J.D.
In California, general trust law is found in the Probate Code §§15000-19403. There is no specific land trust statute in California, unlike Illinois land trust law, (765 ILCS 405/410/415/420), Massachusetts business trust (MBT) law (M.G.L.c.182, §2), and Virginia land trust law (Va. Code Sec. 55-17.1).
So, land trusts created in California for California property are based on general trust law in the aforesaid California Probate Code.
But an out-of-state land trust may be formed that would hold title through the trustee of a California property, to take advantage of more beneficial land trust statute and case law of another state. Indeed, the Virginia Supreme Court in Air Power, Inc v. Thompson, 244 Va. 534, 422 S.E. 2nd 786 (1992), has confirmed that Va. Code Sec. 55-17.1 gives the trustee of a land trust both legal and equitable power of the real property, which protects the privacy of the beneficiaries.
Indeed, since California does not have a specific land trust statute, there is no legislative history nor developed case law on land trust in this state, only California general trust law and case law.
But a general trust law may have some advantages over a specific land trust statute with more requirements. Indeed, Illinois land trust statute (75 ILCS 435) requires that holders of power of direction owe fiduciary duties to holders of the beneficial interest in land trust. California trust law does not have a similar requirement.
In any event, the avoidance of probate over a real property in a land trust trumps all difficulties in the creation of a land trust.
I. California Genereal Trust Law:
A. Creation Of Trust:
California Probate § 15000 states that “(t)his division (Division 9 of the Probate Code) shall be known and may be cited as the Trust Law.” And § 15001(a) states that “(e)xcept as otherwise provided by statute: This division applies to all trusts regardless of whether that were created before, on, or after July 1, 1987.”
Among other methods of creating trust, a trust may be created by: “(b) (a) transfer of property by the owner during the owner’s lifetime to another person as trustee,” under § 15200(b) of the California Probate Code. And “a trust is created only if there is trust property,” under § 15202 thereof.
“A trust may be created for any purpose that is not illegal or against public policy,” under § 15203 thereof. A land trust is not for an illegal purpose, nor is it against public policy in California, although it is not widely used in this state.
And “a trust, other than a charitable trust, is created only if there is a beneficiary,” under § 15205 thereof.
B. Trust Of Real Property And Personal Property:
So as not to violate the Statute of Frauds, which requires a written instrument to be enforceable, §15206 states that “a trust is relation to real property is not valid unless evidenced by one of the following methods: (b) By a written instrument conveying the trust properly signed by the settlor, or by the settlor’s agent if authorized in writing to do so.”
And under § 15207 (a) thereof, “(t)he existence and terms of an oral trust of personal property may be established only by clear and convincing evidence.” Under § 1528 thereof, “consideration is not required to create a trust….”
Lastly, “a trust created pursuant to this chapter (1, part 2, Division 9 of the Probate Code) which relates to real property may be recorded in the office of the county recorder in the county where all or a portion of the real property is located,” under § 15210 thereof.
II. Mechanics Of A Land Trust:
A. Advantages And Benefits:
(1.) Privacy:
One of the much heralded advantages of a land trust is that a grant deed-in-trust of a trust property in the name of a different trustee (private or institutional) may be recorded with the County Recorder, but the land trust agreement that states the names of the truster/settlor/investor and the beneficiaries is not recorded.
Thus, the creator/grantor of the land trust: trustor/settlor who invests in real property can keep his/her/its name, as well as the names of the beneficiaries out of the County Recorder’s and County Assessor’s books, and to a certain extent hide the investment from public view.
But a judgment creditor of a trustor/settlor or of a beneficiary can subject the latter to answer written interrogatories on his/her/its assets, or to debtor’s examination under oath in court to determine assets, and not merely rely on County Recorder and Assessor asset searches.
The land trust agreement may also use a name for the land trust different from the name of the trustor/settlor who created the land trust. This is another asset protection benefit.
And if the beneficiary of the land trust is also the same trustor/settlor, the latter may designate his/her living trust or wholly-owned limited liability company as the beneficiary to hopefully avoid gift tax issues.
(2.) Avoidance Of Probate:
Moreover, just like successor trustees may be designated in the land trust agreement, successor beneficiaries may also be selected to avoid disruptions in distribution of trust assets at termination of the trust, outside of probate proceedings.
A land trust may be created as revocable (terms of the land trust agreement may be changed) or irrevocable (cannot be changed), but the latter requires the filing of separate tax returns and is taxed at a higher rate than the trustor/settlor’s individual tax rate, unless considered a simple trust in which all incomes created are taxed to beneficiaries.
For federal income tax implications, if the grantor/trustor is also the beneficiary the Internal Revenue Service (IRS) classifies it as a grantor trust that has tax consequences that flow directly to the trustor’s Form 1040 and state return.
(B.)Disadvantages And Pitfalls:
(1.) Separtate Land Trust Agreement For Each Property:
In order to preserve the privacy of the investment or transaction and the asset protection benefits of the land trust, only one real estate property can be listed as held in the land trust.
Thus, a different land trust agreement is created for each property. This could be cumbersome, although the same trustor/settlor, trustee, and beneficiary can be named in each land trust agreement
(a) Simpler Alternatives:
Simpler alternatives are to purchase investment or rental properties through a limited partnership (LP) or a limited liability company (LLC), or transfer such properties to a more flexible living trust that does not require the filing of separate tax returns, or transfer the ownership interests of an LLC (not title of the property) to a living trust.
An LLC may also create a land trust by conveying title of a property to the trustee, and designate itself (LLC) as the beneficiary for privacy of ownership.
Sometimes less is more; for indeed, creditors can see through and have recourse against avoidance of execution of judgment on properties through asset protection schemes. And transfers of ownerships of properties may result in tax assessments.
(The Author, Roman P. Mosqueda, is a licensed real estate broker who has practiced real estate and probate law for more than 15 years, among other areas of law practice.
This article is meant for information only, and not legal advice. If the reader has specific issues on land trust and probate, he/she should consult with a competent real estate/probate attorney.
Comments and questions may be e-mailed to rpm_law@yahoo.com, or call (213) 252-9481.)
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., & S.J.D.
In California, general trust law is found in the Probate Code §§15000-19403. There is no specific land trust statute in California, unlike Illinois land trust law, (765 ILCS 405/410/415/420), Massachusetts business trust (MBT) law (M.G.L.c.182, §2), and Virginia land trust law (Va. Code Sec. 55-17.1).
So, land trusts created in California for California property are based on general trust law in the aforesaid California Probate Code.
But an out-of-state land trust may be formed that would hold title through the trustee of a California property, to take advantage of more beneficial land trust statute and case law of another state. Indeed, the Virginia Supreme Court in Air Power, Inc v. Thompson, 244 Va. 534, 422 S.E. 2nd 786 (1992), has confirmed that Va. Code Sec. 55-17.1 gives the trustee of a land trust both legal and equitable power of the real property, which protects the privacy of the beneficiaries.
Indeed, since California does not have a specific land trust statute, there is no legislative history nor developed case law on land trust in this state, only California general trust law and case law.
But a general trust law may have some advantages over a specific land trust statute with more requirements. Indeed, Illinois land trust statute (75 ILCS 435) requires that holders of power of direction owe fiduciary duties to holders of the beneficial interest in land trust. California trust law does not have a similar requirement.
In any event, the avoidance of probate over a real property in a land trust trumps all difficulties in the creation of a land trust.
I. California Genereal Trust Law:
A. Creation Of Trust:
California Probate § 15000 states that “(t)his division (Division 9 of the Probate Code) shall be known and may be cited as the Trust Law.” And § 15001(a) states that “(e)xcept as otherwise provided by statute: This division applies to all trusts regardless of whether that were created before, on, or after July 1, 1987.”
Among other methods of creating trust, a trust may be created by: “(b) (a) transfer of property by the owner during the owner’s lifetime to another person as trustee,” under § 15200(b) of the California Probate Code. And “a trust is created only if there is trust property,” under § 15202 thereof.
“A trust may be created for any purpose that is not illegal or against public policy,” under § 15203 thereof. A land trust is not for an illegal purpose, nor is it against public policy in California, although it is not widely used in this state.
And “a trust, other than a charitable trust, is created only if there is a beneficiary,” under § 15205 thereof.
B. Trust Of Real Property And Personal Property:
So as not to violate the Statute of Frauds, which requires a written instrument to be enforceable, §15206 states that “a trust is relation to real property is not valid unless evidenced by one of the following methods: (b) By a written instrument conveying the trust properly signed by the settlor, or by the settlor’s agent if authorized in writing to do so.”
And under § 15207 (a) thereof, “(t)he existence and terms of an oral trust of personal property may be established only by clear and convincing evidence.” Under § 1528 thereof, “consideration is not required to create a trust….”
Lastly, “a trust created pursuant to this chapter (1, part 2, Division 9 of the Probate Code) which relates to real property may be recorded in the office of the county recorder in the county where all or a portion of the real property is located,” under § 15210 thereof.
II. Mechanics Of A Land Trust:
A. Advantages And Benefits:
(1.) Privacy:
One of the much heralded advantages of a land trust is that a grant deed-in-trust of a trust property in the name of a different trustee (private or institutional) may be recorded with the County Recorder, but the land trust agreement that states the names of the truster/settlor/investor and the beneficiaries is not recorded.
Thus, the creator/grantor of the land trust: trustor/settlor who invests in real property can keep his/her/its name, as well as the names of the beneficiaries out of the County Recorder’s and County Assessor’s books, and to a certain extent hide the investment from public view.
But a judgment creditor of a trustor/settlor or of a beneficiary can subject the latter to answer written interrogatories on his/her/its assets, or to debtor’s examination under oath in court to determine assets, and not merely rely on County Recorder and Assessor asset searches.
The land trust agreement may also use a name for the land trust different from the name of the trustor/settlor who created the land trust. This is another asset protection benefit.
And if the beneficiary of the land trust is also the same trustor/settlor, the latter may designate his/her living trust or wholly-owned limited liability company as the beneficiary to hopefully avoid gift tax issues.
(2.) Avoidance Of Probate:
Moreover, just like successor trustees may be designated in the land trust agreement, successor beneficiaries may also be selected to avoid disruptions in distribution of trust assets at termination of the trust, outside of probate proceedings.
A land trust may be created as revocable (terms of the land trust agreement may be changed) or irrevocable (cannot be changed), but the latter requires the filing of separate tax returns and is taxed at a higher rate than the trustor/settlor’s individual tax rate, unless considered a simple trust in which all incomes created are taxed to beneficiaries.
For federal income tax implications, if the grantor/trustor is also the beneficiary the Internal Revenue Service (IRS) classifies it as a grantor trust that has tax consequences that flow directly to the trustor’s Form 1040 and state return.
(B.)Disadvantages And Pitfalls:
(1.) Separtate Land Trust Agreement For Each Property:
In order to preserve the privacy of the investment or transaction and the asset protection benefits of the land trust, only one real estate property can be listed as held in the land trust.
Thus, a different land trust agreement is created for each property. This could be cumbersome, although the same trustor/settlor, trustee, and beneficiary can be named in each land trust agreement
(a) Simpler Alternatives:
Simpler alternatives are to purchase investment or rental properties through a limited partnership (LP) or a limited liability company (LLC), or transfer such properties to a more flexible living trust that does not require the filing of separate tax returns, or transfer the ownership interests of an LLC (not title of the property) to a living trust.
An LLC may also create a land trust by conveying title of a property to the trustee, and designate itself (LLC) as the beneficiary for privacy of ownership.
Sometimes less is more; for indeed, creditors can see through and have recourse against avoidance of execution of judgment on properties through asset protection schemes. And transfers of ownerships of properties may result in tax assessments.
(The Author, Roman P. Mosqueda, is a licensed real estate broker who has practiced real estate and probate law for more than 15 years, among other areas of law practice.
This article is meant for information only, and not legal advice. If the reader has specific issues on land trust and probate, he/she should consult with a competent real estate/probate attorney.
Comments and questions may be e-mailed to rpm_law@yahoo.com, or call (213) 252-9481.)
Family Limited Partnership (FLP) For Estate Planning And Asset Protection: Benefical Or Risky?
Family Limited Partnership (FLP) For Estate Planning And Asset Protection: Benefical Or Risky?
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
If you have assets of $1,000,000 (or even less in certain circumstances) to contribute, and still retain other assets sufficient to support you for the remainder of your life, you may consider forming and operating a family limited partnership (FLP) among members of your family.
Yes, a FLP is only for wealthy persons, who have significant assets and can afford to pay thousands of attorney’s fees to set it up, defray expert’s valuation costs, as well as bankroll operating expenses to properly maintain it.
It can be as simple as husband and wife-donors creating a FLP with $1,000,000 or less worth of assets, whether real estate such as rental property (but not primary residence), cash, securities, business interests, etc.
As general partners in a FLP, the husband and wife may hold ten (10) percent general partnership interest and ninety (90) per cent limited liability interest.
The husband and wife, as general partners retaining general partnership interest, may then transfer limited partnership units, representing the remaining 90% of the partnership interests to their children.
I. Benefits Of A FLP:
A. Control Over Transferred Assets:
The FLP operating agreement governs the administration, management, investment, and distribution of income and assets upon termination. It can also restrict the transfer of partnership units or interests to others.
The general partners-parents would have management and investment control over the partnership assets to the exclusion of limited partners-children.
More importantly, the general partners decide when and how much of partnership income may be distributed to partners. They can also prohibit the transfer of partnership units or interests outside of the family.
The general partners may further form an irrevocable trust to which their general partnership interests would be transferred and administered by an independent trustee, or form an entity as the general partner managed by an independent fiduciary.
B. Discounted Valuation Of Gifts To Children:
Parents are allowed to give tax-free gifts to children or grandchildren valued at $12,000 (or $24,000 of split gift by both parents) each year.
These annual gifts may take the form of limited partnership units in a FLP, thereby taking advantage of the annual $12,000 gift-tax exclusion to lower estate taxes.
In the context of a FLP, the parents can further take advantage of gift and estate tax valuation rules on minority interests, resulting in lack of control, as well as lack of marketability (non-liquidity) to reduce transfer taxes.
A valuation expert may determine a 20 percent discount in value to a partnership unit given as a gift, due to lack of control, as well as another 20 percent discount due to lack or marketability. Such discounts cannot normally be done in a gift of similar value given outright to children.
The estate values of the partnership units belonging to the parents may also be reduced by aforesaid discounts, resulting in reduced estate taxes when they pass way.
C. Income-Tax Benefits:
A FLP, as a partnership, is a pass-through mechanism, whereby partnership deductions and incomes are charged directly to the partners, general and limited, and taxed at their individual tax rates.
Thus, a FLP allows the shifting of the proportionate share of the partnership’s income from the parents’ relatively higher tax rate to the lower income tax rates of the children with limited incomes.
Moreover, a FLP may make income distributions to limited partners-children to assist them in paying income taxes attributed to the FLP.
D. Asset Protection Benefits:
Another benefit of a FLP is asset protection of general and limited partners from their creditors, seeking to execute judgments against the underlying partnership assets. But the lack of business purpose of a FLP may cause the court to pierce its veil, and find it an alter-ego of the general partners.
Indeed, general and limited partners own only general or limited partnership units or interests (personal property) in a FLP. They do not own directly the (real or personal property) of the FLP.
Limited partnership interests may be gifted to minor children through irrevocable children’s trust that would provide additional asset protection from the general partner-donor’s and children’s creditors.
II. RISKS OF A FLP:
A. Court Determination That Assets Transferred To A
FLP Are Includable In Parent’s Gross Estate:
A FLP would not work as discussed above, if a court determines that a FLP is not created, implemented, and operated correctly, that is, an implied agreement existed that the parents-general partners would retain lifelong enjoyment and economic benefit of the FLP assets.
The Internal Revenue Service (IRS) seeks to show no discount in gift valuation, as well as to include in a parent-donor’s gross estate assets transferred to a FLP, pursuant to Internal Revenue Code § 2036(a), which allows only a bona fide sale exemption.
Indeed, a FLP is vulnerable if it does not have a legitimate business purpose, not have business property as assets, nor a non-tax purpose. Avoidance of gift or reduction of estate and income taxes may be found to be insufficient rationale for its existence.
B. Lack Of Step-up In Cost Basis For Partnership
Asset At Death Of General Partner:
If an asset with low cost basis is transferred to a FLP, the owner-parent relinquishes the potential step-up in basis at the parent’s death. If an asset has been fully depreciated and/or highly appreciated, a FLP may not be advantageous at all, even risky, because of the inability to use the original cost basis of the asset.
Indeed, transfers of assets to a FLP result in transfer taxes, which could have been avoided, as well as the resulting inability to pass on to heirs the asset with a full step-up cost basis.
III. Conclusion:
A Family Limited Partnership (FLP) presents complex issues and pitfalls of gift valuations, inclusions of transferred assets to donor’s gross estate, tax burdens, and applications of the criteria for bona fide sale at fair market value.
As a vehicle for estate planning and asset protection, a FLP is meant for wealthy individuals, who are not faint at heart and willing to spend for their proper set up, funding, implementation, active management, and operation.
(The Author, Roman P. Mosqueda, has practiced partnership and family law for over 15 years in California.
This article is meant for information only, and is not legal advice. If the reader has specific issues on family limited partnership, he or she is well-advised to consult with a competent attorney and an accountant.)
# # # #
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
If you have assets of $1,000,000 (or even less in certain circumstances) to contribute, and still retain other assets sufficient to support you for the remainder of your life, you may consider forming and operating a family limited partnership (FLP) among members of your family.
Yes, a FLP is only for wealthy persons, who have significant assets and can afford to pay thousands of attorney’s fees to set it up, defray expert’s valuation costs, as well as bankroll operating expenses to properly maintain it.
It can be as simple as husband and wife-donors creating a FLP with $1,000,000 or less worth of assets, whether real estate such as rental property (but not primary residence), cash, securities, business interests, etc.
As general partners in a FLP, the husband and wife may hold ten (10) percent general partnership interest and ninety (90) per cent limited liability interest.
The husband and wife, as general partners retaining general partnership interest, may then transfer limited partnership units, representing the remaining 90% of the partnership interests to their children.
I. Benefits Of A FLP:
A. Control Over Transferred Assets:
The FLP operating agreement governs the administration, management, investment, and distribution of income and assets upon termination. It can also restrict the transfer of partnership units or interests to others.
The general partners-parents would have management and investment control over the partnership assets to the exclusion of limited partners-children.
More importantly, the general partners decide when and how much of partnership income may be distributed to partners. They can also prohibit the transfer of partnership units or interests outside of the family.
The general partners may further form an irrevocable trust to which their general partnership interests would be transferred and administered by an independent trustee, or form an entity as the general partner managed by an independent fiduciary.
B. Discounted Valuation Of Gifts To Children:
Parents are allowed to give tax-free gifts to children or grandchildren valued at $12,000 (or $24,000 of split gift by both parents) each year.
These annual gifts may take the form of limited partnership units in a FLP, thereby taking advantage of the annual $12,000 gift-tax exclusion to lower estate taxes.
In the context of a FLP, the parents can further take advantage of gift and estate tax valuation rules on minority interests, resulting in lack of control, as well as lack of marketability (non-liquidity) to reduce transfer taxes.
A valuation expert may determine a 20 percent discount in value to a partnership unit given as a gift, due to lack of control, as well as another 20 percent discount due to lack or marketability. Such discounts cannot normally be done in a gift of similar value given outright to children.
The estate values of the partnership units belonging to the parents may also be reduced by aforesaid discounts, resulting in reduced estate taxes when they pass way.
C. Income-Tax Benefits:
A FLP, as a partnership, is a pass-through mechanism, whereby partnership deductions and incomes are charged directly to the partners, general and limited, and taxed at their individual tax rates.
Thus, a FLP allows the shifting of the proportionate share of the partnership’s income from the parents’ relatively higher tax rate to the lower income tax rates of the children with limited incomes.
Moreover, a FLP may make income distributions to limited partners-children to assist them in paying income taxes attributed to the FLP.
D. Asset Protection Benefits:
Another benefit of a FLP is asset protection of general and limited partners from their creditors, seeking to execute judgments against the underlying partnership assets. But the lack of business purpose of a FLP may cause the court to pierce its veil, and find it an alter-ego of the general partners.
Indeed, general and limited partners own only general or limited partnership units or interests (personal property) in a FLP. They do not own directly the (real or personal property) of the FLP.
Limited partnership interests may be gifted to minor children through irrevocable children’s trust that would provide additional asset protection from the general partner-donor’s and children’s creditors.
II. RISKS OF A FLP:
A. Court Determination That Assets Transferred To A
FLP Are Includable In Parent’s Gross Estate:
A FLP would not work as discussed above, if a court determines that a FLP is not created, implemented, and operated correctly, that is, an implied agreement existed that the parents-general partners would retain lifelong enjoyment and economic benefit of the FLP assets.
The Internal Revenue Service (IRS) seeks to show no discount in gift valuation, as well as to include in a parent-donor’s gross estate assets transferred to a FLP, pursuant to Internal Revenue Code § 2036(a), which allows only a bona fide sale exemption.
Indeed, a FLP is vulnerable if it does not have a legitimate business purpose, not have business property as assets, nor a non-tax purpose. Avoidance of gift or reduction of estate and income taxes may be found to be insufficient rationale for its existence.
B. Lack Of Step-up In Cost Basis For Partnership
Asset At Death Of General Partner:
If an asset with low cost basis is transferred to a FLP, the owner-parent relinquishes the potential step-up in basis at the parent’s death. If an asset has been fully depreciated and/or highly appreciated, a FLP may not be advantageous at all, even risky, because of the inability to use the original cost basis of the asset.
Indeed, transfers of assets to a FLP result in transfer taxes, which could have been avoided, as well as the resulting inability to pass on to heirs the asset with a full step-up cost basis.
III. Conclusion:
A Family Limited Partnership (FLP) presents complex issues and pitfalls of gift valuations, inclusions of transferred assets to donor’s gross estate, tax burdens, and applications of the criteria for bona fide sale at fair market value.
As a vehicle for estate planning and asset protection, a FLP is meant for wealthy individuals, who are not faint at heart and willing to spend for their proper set up, funding, implementation, active management, and operation.
(The Author, Roman P. Mosqueda, has practiced partnership and family law for over 15 years in California.
This article is meant for information only, and is not legal advice. If the reader has specific issues on family limited partnership, he or she is well-advised to consult with a competent attorney and an accountant.)
# # # #
EFFECTS OF BANKRUPTCY DISCHARGE
EFFECTS OF BANKRUPTCY DISCHARGE
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., & S.J.D.
A debtor filed Chapter 7 bankruptcy petition through this Author, seeking to discharge secured and unsecured claims of creditors.
A Section 341(a) meeting of creditors (actually an examination under oath of the debtor by the appointed trustee, with creditors welcomed to attend, but not required to do so) was conducted by the bankruptcy trustee, attended by the debtor and this Author. All listed and scheduled creditors must receive at least 30 days’ advanced notice of the creditors’ meeting, under Bankruptcy Rule 4007(c).
After several months, the assigned Bankruptcy Judge issued a discharge order, discharging the debtor from all personal liability for any and all secured and unsecured claims listed in the bankruptcy petition schedules. Secured creditors can foreclose on the security interest or collateral in case of debtor’s default.
Discharge Injunction Against
Personal Liability Of Debtor:
The discharge order carries the discharge injunction of 11 U.S.C. §524(a)(2)-(3), “which operates against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any debt as a personal liability of the debtor, whether or not discharge of such debt is waived.”
Indeed, the discharge injunction under aforesaid Bankruptcy Code section 524(a)(2)-(3) effectively prevents or terminates any collection action against the debtor that holds him personally liable, except for recourse against the security interest or collateral by a secured creditor.
State Court Cannot Modify
Discharge Injunction Or Its Effects:
In McGhan v. Rutz (In re McGhan), 288 F3d 1172 (9th Cir. 2002), the Ninth Circuit held that “…the state court (where the civil action was filed to collect on the discharged debt) lacked authority to modify the bankruptcy court’s orders discharging Rutz’s claim and permanently enjoining Rutz from collecting on the debt.”
Thus, the aforesaid discharge injunction is permanent and remains in effect indefinitely.
Moreover, the Ninth Circuit concluded that “it was an abuse of discretion for the bankruptcy court to decline to reopen McGhan’s bankruptcy case…” (because it) was required to reopen the proceedings to protect its exclusive jurisdiction over the enforcement of its own orders.”
Discharge Injunction Applied
To Attachment Lien:
In a state action for collection against a client of this Author, the plaintiff jewelry company applied for ex parte and was granted a writ of attachment, attaching certain interests of the defendant, including her ownership interest in a condominium in Torrance, California.
After this Author had filed the defendant’s answer to the complaint in the Superior Court action, the defendant decided to file Chapter 7 bankruptcy petition. She retained this Author to do so.
The filing of the Chapter 7 petition resulted in an automatic stay of the state action, pursuant to Bankruptcy Code section 362. Plaintiff, a listed and scheduled creditor, filed its motion for relief from automatic stay with the Bankruptcy Court. It was opposed by written Response by this Author, on behalf of the debtor in bankruptcy.
After oral arguments at the hearing on the motion for relief from automatic stay, Los Angeles Bankruptcy Judge Vincent P. Zurzolo denied the motion on December 11, 2008. So, Plaintiff was unable to lift the automatic stay and obtain a judgment in the state action.
On July 22, 2009, the Bankruptcy Court issued its order of discharge of debtor under 11 U.S.C. §727. The exception to the discharge is: “a creditor has a right to enforce a valid lien, such as a mortgage or security interest, against the debtor’s property after the bankruptcy.”
Attachment Lien Not Perfected
By Judgment Before Discharge:
In Diamant v. Kasparian (In Re Southern California Plastics, Inc), 165 F.3d 1243, 1246 (9th Cir. 1999), the Ninth Circuit held that: “(a)ttachement liens are solely creatures of state statutory law…California law requires a judgment for perfection” (of an attachment lien).
It warned that: “(p)ermitting an allowance of claim (in the bankruptcy case) to substitute for a judgment perfecting an attachment lien undermines the rights and protections created by the California Legislature.”
So, the failure of the Plaintiff discussed above to obtain a judgment in the state action to perfect its attachment lien before the discharge order of the Bankruptcy Court resulted in an unsecured claim discharged in the Chapter 7 bankruptcy petition.
State Court Declined To Apply Discharge
Injunction And Proceeded With State Action:
This Author’s first motion to dismiss the state action because of the discharge injunction was denied without prejudice by the Hon. Irving Shimer, who honestly stated at the hearing that he was not sure of his ruling. So, the state action proceeded to discovery despite the discharge order and permanent injunction.
But since the denial was without prejudice, this Author, on behalf of the defendant-debtor, filed her second motion to dismiss and argued that “(d)enial of a motion without prejudice impliedly invites the moving party to renew the motion at a later date, when he can correct the deficiency that led to the denial, citing Farber v. Bay View Terrace Homeowners Ass’n., 46 Cal. Rptr.3d. 425 (App. 4 Dist. 2006).
A new Los Angeles Superior Court Judge, the Hon. Michelle I. Rosenblatt, also declined to apply the discharge injunction of the Bankruptcy Code. And the state action for collection proceeded to judgment against the defendant-debtor already discharged in bankruptcy.
The consolation to the defendant-debtor who did not appeal the judgment, nor reopen the bankruptcy case is that: she is a retired widow over 65 years old and does not have sufficient equity in her ownership interest on the co-owned condominium, over and beyond her $150,000 homestead exemption from judgment execution.
*****
(The Author, Roman P. Mosqueda, has practiced bankruptcy law for over ten years, among other areas of law. For comments or questions on this article, please call at (213) 252-9481 or e-mail to rpm_law@yahoo.com, or visit www.mosquedalaw.com.
This article is not legal advice, but is for information only. The reader with a specific problem is advised to consult a competent bankruptcy attorney.)
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., & S.J.D.
A debtor filed Chapter 7 bankruptcy petition through this Author, seeking to discharge secured and unsecured claims of creditors.
A Section 341(a) meeting of creditors (actually an examination under oath of the debtor by the appointed trustee, with creditors welcomed to attend, but not required to do so) was conducted by the bankruptcy trustee, attended by the debtor and this Author. All listed and scheduled creditors must receive at least 30 days’ advanced notice of the creditors’ meeting, under Bankruptcy Rule 4007(c).
After several months, the assigned Bankruptcy Judge issued a discharge order, discharging the debtor from all personal liability for any and all secured and unsecured claims listed in the bankruptcy petition schedules. Secured creditors can foreclose on the security interest or collateral in case of debtor’s default.
Discharge Injunction Against
Personal Liability Of Debtor:
The discharge order carries the discharge injunction of 11 U.S.C. §524(a)(2)-(3), “which operates against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any debt as a personal liability of the debtor, whether or not discharge of such debt is waived.”
Indeed, the discharge injunction under aforesaid Bankruptcy Code section 524(a)(2)-(3) effectively prevents or terminates any collection action against the debtor that holds him personally liable, except for recourse against the security interest or collateral by a secured creditor.
State Court Cannot Modify
Discharge Injunction Or Its Effects:
In McGhan v. Rutz (In re McGhan), 288 F3d 1172 (9th Cir. 2002), the Ninth Circuit held that “…the state court (where the civil action was filed to collect on the discharged debt) lacked authority to modify the bankruptcy court’s orders discharging Rutz’s claim and permanently enjoining Rutz from collecting on the debt.”
Thus, the aforesaid discharge injunction is permanent and remains in effect indefinitely.
Moreover, the Ninth Circuit concluded that “it was an abuse of discretion for the bankruptcy court to decline to reopen McGhan’s bankruptcy case…” (because it) was required to reopen the proceedings to protect its exclusive jurisdiction over the enforcement of its own orders.”
Discharge Injunction Applied
To Attachment Lien:
In a state action for collection against a client of this Author, the plaintiff jewelry company applied for ex parte and was granted a writ of attachment, attaching certain interests of the defendant, including her ownership interest in a condominium in Torrance, California.
After this Author had filed the defendant’s answer to the complaint in the Superior Court action, the defendant decided to file Chapter 7 bankruptcy petition. She retained this Author to do so.
The filing of the Chapter 7 petition resulted in an automatic stay of the state action, pursuant to Bankruptcy Code section 362. Plaintiff, a listed and scheduled creditor, filed its motion for relief from automatic stay with the Bankruptcy Court. It was opposed by written Response by this Author, on behalf of the debtor in bankruptcy.
After oral arguments at the hearing on the motion for relief from automatic stay, Los Angeles Bankruptcy Judge Vincent P. Zurzolo denied the motion on December 11, 2008. So, Plaintiff was unable to lift the automatic stay and obtain a judgment in the state action.
On July 22, 2009, the Bankruptcy Court issued its order of discharge of debtor under 11 U.S.C. §727. The exception to the discharge is: “a creditor has a right to enforce a valid lien, such as a mortgage or security interest, against the debtor’s property after the bankruptcy.”
Attachment Lien Not Perfected
By Judgment Before Discharge:
In Diamant v. Kasparian (In Re Southern California Plastics, Inc), 165 F.3d 1243, 1246 (9th Cir. 1999), the Ninth Circuit held that: “(a)ttachement liens are solely creatures of state statutory law…California law requires a judgment for perfection” (of an attachment lien).
It warned that: “(p)ermitting an allowance of claim (in the bankruptcy case) to substitute for a judgment perfecting an attachment lien undermines the rights and protections created by the California Legislature.”
So, the failure of the Plaintiff discussed above to obtain a judgment in the state action to perfect its attachment lien before the discharge order of the Bankruptcy Court resulted in an unsecured claim discharged in the Chapter 7 bankruptcy petition.
State Court Declined To Apply Discharge
Injunction And Proceeded With State Action:
This Author’s first motion to dismiss the state action because of the discharge injunction was denied without prejudice by the Hon. Irving Shimer, who honestly stated at the hearing that he was not sure of his ruling. So, the state action proceeded to discovery despite the discharge order and permanent injunction.
But since the denial was without prejudice, this Author, on behalf of the defendant-debtor, filed her second motion to dismiss and argued that “(d)enial of a motion without prejudice impliedly invites the moving party to renew the motion at a later date, when he can correct the deficiency that led to the denial, citing Farber v. Bay View Terrace Homeowners Ass’n., 46 Cal. Rptr.3d. 425 (App. 4 Dist. 2006).
A new Los Angeles Superior Court Judge, the Hon. Michelle I. Rosenblatt, also declined to apply the discharge injunction of the Bankruptcy Code. And the state action for collection proceeded to judgment against the defendant-debtor already discharged in bankruptcy.
The consolation to the defendant-debtor who did not appeal the judgment, nor reopen the bankruptcy case is that: she is a retired widow over 65 years old and does not have sufficient equity in her ownership interest on the co-owned condominium, over and beyond her $150,000 homestead exemption from judgment execution.
*****
(The Author, Roman P. Mosqueda, has practiced bankruptcy law for over ten years, among other areas of law. For comments or questions on this article, please call at (213) 252-9481 or e-mail to rpm_law@yahoo.com, or visit www.mosquedalaw.com.
This article is not legal advice, but is for information only. The reader with a specific problem is advised to consult a competent bankruptcy attorney.)
WHAT CAN YOU GET FROM YOUR DIVORCE?
WHAT CAN YOU GET FROM
YOUR DIVORCE?
By:
Roman P. Mosqueda, Esq.
You have endured for years living with your spouse: his or her infidelity, lack of care, attention, and love, and extravagance in spending community monies, even jealousy. Or you have simply drifted away from each other.
You can no longer take it. Counseling does not or cannot help mend the severed relationship. You decide to leave your spouse, and file divorce.
What is in it for you beside the dissolution of marriage status? You may be entitled to spousal support and community property apportionment.
Duty To Support
Spouse And Circumstances
To Be Considered:
Under section 4300 of the California Family Code, subject to certain conditions, “a person shall support the person’s spouse.” And section 4320 thereof enumerates the circumstances to be considered in ordering spousal support.
These circumstances for spousal support are:
(a) The extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage; taking into account all of the following:
(1) The marketable skills of the supported party; the job market for those skills; the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills; and the possible need for retaining or education to acquire other, more marketable skills or employment.
(2) The extent to which the supported party’s present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties.
(b) The extent to which the supported party contributed to the attainment of an education, training, a career position, or a license by the supporting party.
(c) The ability of the supporting party to pay spousal support, taking into account the supporting party’s earning capacity, earned and unearned income, assets, and standard of living.
(d) The needs of each party based on the standard of living established during the marriage.
(e) The obligations and assets, including the separate property, of each party.
(f) The duration of the marriage.
(g) The ability of the supported party to engage in gainful employment without unduly interfering with the interest of dependent children in the custody of the party.
(h) The age and health of the parties.
(i) Documented evidence of any history of domestic violence, as defined in Section 6211, between the parties, including, but not limited to, consideration of emotional distress resulting from domestic violence perpetrated against the supported party by the supporting party, and consideration of any history of violence against the supporting party by the supported party.
(j) The immediate and specific tax consequences to each party.
(k) The balance of the hardships to each party.
(l) The goal that the supported party shall be selfsupporting within a reasonable period of time. Except in the case of a marriage of long duration as described in Section 4336, a “reasonable period of time” for purposes of this section generally shall be one-half the length of the marriage. However, nothing in this section is intended to limit the court’s discretion to order support for a greater or lesser length of time, based on any of the other factors listed in this section, Section 4336, and the circumstances of the parties.
(m) The criminal conviction of an abusive spouse shall be considered in making a reduction or elimination of a spousal support award in accordance with Section 4325.
(n) Any other factors the court determines are just and equitable.
Community Property
Apportionment In Divorce:
A. Personal Injury Damages:
All monetary damages recovered by a spouse in compensation for tortious injury and property purchased with proceeds therefrom including bodily injury, emotional distress, worker’s compensation benefits, disability pay, defamation, etc. are community property(s), if the injured person was married at the time of injury.
But upon dissolution of marriage, personal injury damages and property purchased therewith, even if characterized as community property, are ordinarily awarded one hundred percent (100%) to the injured spouse, or not less than fifty percent (50%).
B. Property Or Loan Acquired On Credit:
The characterization of property or loan proceeds acquired on credit depends on the lender’s reliance or recourse on the satisfaction of the debt.
If the lender relies on separate property for payment of the debt, the loan proceeds are characterized as separate property.
On the other hand, if the lender lies on community property owned by both spouses for payment of the debt, the loan proceeds are characterized as community property.
More particularly, property obtained on either spouse’s general credit during the marriage is characterized as community property. But loan proceeds procured by mortgage of a spouse’s separate property are considered separate property.
Conversely, loan proceeds secured by the purchased property itself is ordinarily community property, if the loan was obtained during the marriage.
After separation of the spouses, even before dissolution of the marriage, all acquisitions by either separated spouse are characterized as separate property.
C. Apportionment Of Interests
In Family Residence:
I. Home Acquired During Marriage:
If both spouses purchased a home during marriage with down payment from a spouse’s separate property (funds) and a purchase money loan, with deed of trust thereon, signed by both spouses, the issue is whether there is both a separate and community property interest in the home.
Ordinarily, if the title to the home is taken in joint form such joint tenancy, tenancy in common, or as husband and wife, the home is characterized as community property at the dissolution of the marriage, under the community property presumption.
Even so, the spouse who paid for the down payment has a right of reimbursement for the traceable separate property (funds) contributions to the principal as well as any equity.
But if the community property presumption is rebutted or overcome, the interests in the family house must be apportioned between the separate and community property: the separate property interest in the proportion the down payment bears to the purchase price, and the community property interest in the proportion the community loan bears to the purchase price.
If the mortgage obligation has been reduced by payment of community property (funds), the community property is entitled to equity contribution in reduction of the principal obligation.
Both separate and community property obtain proportionate shares in the increased value of the family home.
II. Home Acquired Before Marriage:
(Moore/Marsden Apportionment):
A spouse purchased a home while single, paying down payment and executing a purchase money trust deed loan for the balance of the purchase price.
At the time of the marriage, loan payments were made by the purchasing spouse to reduce the principal balance of the loan and the home has increased in value.
During the marriage and before separation, the community made payments in reduction of the principal loan balance. And post-separation, the purchasing spouse used separate earning to further reduce the loan principal.
According to the Moore/Marsden apportionment formula, the purchasing spouse is entitled to separate property cash interest, consisting of: downpayment, premarital loan payments, and post separation loan payments plus premarital appreciation and the separate property interest percentage of the during-marriage appreciation.
The separate property interest percentage of the purchasing spouse is determined by adding the down payment plus the difference of the separate property loan, less the community property payments, and dividing the total by the purchase price.
The community cash interest consists of: its loan payments during the marriage and the community interest percentage of the during-marriage appreciation. The community interest percentage is determined by dividing the total amount of community payments reducing the loan principal by the purchase price.
In addition to the cash share of the purchasing spouse, he or she is entitled to one-half of the community interest. And the other spouse is entitled to the other half of the community interest.
The purchasing spouse who has title to the home is of course obligated to pay for the balance(s) on the principal loan or loans.
(The Author, Roman P. Mosqueda, has handled numerous property divisions in divorce cases as a family law attorney. He is also a licensed California real estate broker.)
YOUR DIVORCE?
By:
Roman P. Mosqueda, Esq.
You have endured for years living with your spouse: his or her infidelity, lack of care, attention, and love, and extravagance in spending community monies, even jealousy. Or you have simply drifted away from each other.
You can no longer take it. Counseling does not or cannot help mend the severed relationship. You decide to leave your spouse, and file divorce.
What is in it for you beside the dissolution of marriage status? You may be entitled to spousal support and community property apportionment.
Duty To Support
Spouse And Circumstances
To Be Considered:
Under section 4300 of the California Family Code, subject to certain conditions, “a person shall support the person’s spouse.” And section 4320 thereof enumerates the circumstances to be considered in ordering spousal support.
These circumstances for spousal support are:
(a) The extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage; taking into account all of the following:
(1) The marketable skills of the supported party; the job market for those skills; the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills; and the possible need for retaining or education to acquire other, more marketable skills or employment.
(2) The extent to which the supported party’s present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties.
(b) The extent to which the supported party contributed to the attainment of an education, training, a career position, or a license by the supporting party.
(c) The ability of the supporting party to pay spousal support, taking into account the supporting party’s earning capacity, earned and unearned income, assets, and standard of living.
(d) The needs of each party based on the standard of living established during the marriage.
(e) The obligations and assets, including the separate property, of each party.
(f) The duration of the marriage.
(g) The ability of the supported party to engage in gainful employment without unduly interfering with the interest of dependent children in the custody of the party.
(h) The age and health of the parties.
(i) Documented evidence of any history of domestic violence, as defined in Section 6211, between the parties, including, but not limited to, consideration of emotional distress resulting from domestic violence perpetrated against the supported party by the supporting party, and consideration of any history of violence against the supporting party by the supported party.
(j) The immediate and specific tax consequences to each party.
(k) The balance of the hardships to each party.
(l) The goal that the supported party shall be selfsupporting within a reasonable period of time. Except in the case of a marriage of long duration as described in Section 4336, a “reasonable period of time” for purposes of this section generally shall be one-half the length of the marriage. However, nothing in this section is intended to limit the court’s discretion to order support for a greater or lesser length of time, based on any of the other factors listed in this section, Section 4336, and the circumstances of the parties.
(m) The criminal conviction of an abusive spouse shall be considered in making a reduction or elimination of a spousal support award in accordance with Section 4325.
(n) Any other factors the court determines are just and equitable.
Community Property
Apportionment In Divorce:
A. Personal Injury Damages:
All monetary damages recovered by a spouse in compensation for tortious injury and property purchased with proceeds therefrom including bodily injury, emotional distress, worker’s compensation benefits, disability pay, defamation, etc. are community property(s), if the injured person was married at the time of injury.
But upon dissolution of marriage, personal injury damages and property purchased therewith, even if characterized as community property, are ordinarily awarded one hundred percent (100%) to the injured spouse, or not less than fifty percent (50%).
B. Property Or Loan Acquired On Credit:
The characterization of property or loan proceeds acquired on credit depends on the lender’s reliance or recourse on the satisfaction of the debt.
If the lender relies on separate property for payment of the debt, the loan proceeds are characterized as separate property.
On the other hand, if the lender lies on community property owned by both spouses for payment of the debt, the loan proceeds are characterized as community property.
More particularly, property obtained on either spouse’s general credit during the marriage is characterized as community property. But loan proceeds procured by mortgage of a spouse’s separate property are considered separate property.
Conversely, loan proceeds secured by the purchased property itself is ordinarily community property, if the loan was obtained during the marriage.
After separation of the spouses, even before dissolution of the marriage, all acquisitions by either separated spouse are characterized as separate property.
C. Apportionment Of Interests
In Family Residence:
I. Home Acquired During Marriage:
If both spouses purchased a home during marriage with down payment from a spouse’s separate property (funds) and a purchase money loan, with deed of trust thereon, signed by both spouses, the issue is whether there is both a separate and community property interest in the home.
Ordinarily, if the title to the home is taken in joint form such joint tenancy, tenancy in common, or as husband and wife, the home is characterized as community property at the dissolution of the marriage, under the community property presumption.
Even so, the spouse who paid for the down payment has a right of reimbursement for the traceable separate property (funds) contributions to the principal as well as any equity.
But if the community property presumption is rebutted or overcome, the interests in the family house must be apportioned between the separate and community property: the separate property interest in the proportion the down payment bears to the purchase price, and the community property interest in the proportion the community loan bears to the purchase price.
If the mortgage obligation has been reduced by payment of community property (funds), the community property is entitled to equity contribution in reduction of the principal obligation.
Both separate and community property obtain proportionate shares in the increased value of the family home.
II. Home Acquired Before Marriage:
(Moore/Marsden Apportionment):
A spouse purchased a home while single, paying down payment and executing a purchase money trust deed loan for the balance of the purchase price.
At the time of the marriage, loan payments were made by the purchasing spouse to reduce the principal balance of the loan and the home has increased in value.
During the marriage and before separation, the community made payments in reduction of the principal loan balance. And post-separation, the purchasing spouse used separate earning to further reduce the loan principal.
According to the Moore/Marsden apportionment formula, the purchasing spouse is entitled to separate property cash interest, consisting of: downpayment, premarital loan payments, and post separation loan payments plus premarital appreciation and the separate property interest percentage of the during-marriage appreciation.
The separate property interest percentage of the purchasing spouse is determined by adding the down payment plus the difference of the separate property loan, less the community property payments, and dividing the total by the purchase price.
The community cash interest consists of: its loan payments during the marriage and the community interest percentage of the during-marriage appreciation. The community interest percentage is determined by dividing the total amount of community payments reducing the loan principal by the purchase price.
In addition to the cash share of the purchasing spouse, he or she is entitled to one-half of the community interest. And the other spouse is entitled to the other half of the community interest.
The purchasing spouse who has title to the home is of course obligated to pay for the balance(s) on the principal loan or loans.
(The Author, Roman P. Mosqueda, has handled numerous property divisions in divorce cases as a family law attorney. He is also a licensed California real estate broker.)
REQUEST FOR GOOD FAITH MARRIAGE EXEMPTION TO 2-YEAR FOREIGN RESIDENCY
REQUEST FOR GOOD FAITH MARRIAGE EXEMPTION
TO 2-YEAR FOREIGN RESIDENCY
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
Marrying while in removal proceedings with the Immigration Court requires approval of a written request for good faith (bona fide) exemption, under Section 245(e)(3) of the Immigration and Nationality Act (INA), to adjust status to permanent resident.
The written request for good faith exemption must be submitted with the Form I-130, Alien Relative Petition, per 8 C.F.R. § 204.2(a)(1)(iii)(A), to avoid residing outside the United States for a 2-year period beginning after the date of the marriage, as required by Section 204(g) of the INA.
In order to establish eligibility for the bona fide exemption, the petitioner in the Form I-130 requesting the exemption must: (1) state the reason for seeking the exemption; and (2) submit documents which establish that the marriage was entered into in good faith and not for the purpose of merely procuring the alien’s entry as an immigrant, per 8 C.F.R. § 204.2(a)(1)(iii)(A) and (B).
Types Of Documents Showing
Good Faith Marriage:
An alien may not adjust status to permanent resident or have the visa petition (Form I-130) for permanent status as spouse approved, unless the marriage entered into while a removal/deportation proceedings are pending is proved by clear and convincing evidence to be in good faith.
The evidence required by 8 C.F.R. § 204.2(a)(1)(iii)(B) to establish eligibility for the bona fide exemption include, but are not limited to:
(1) documentation showing joint ownership of property;
(2) lease showing joint tenancy of a common residence;
(3) documentation showing commingling of financial resources;
(4) birth certificate(s) of child(ren) born to the petitioner and beneficiary;
(5) affidavits of third parties having knowledge of the bona fides of the marital relationship, stating the full name and address, date and place of the birth of the person making the affidavit and his or her relationship to the spouses if any, and containing complete information and details explaining how the person acquired his or her knowledge of the marriage, and supported by documentary evidence, if possible.
Service’s Adjudication Of The
Form I-130 And Request For
Good Faith Marriage Exemption:
Failure to request a bona fide marriage exemption and to submit clear and convincing evidence of a bona fide marriage with the visa petition (Form I-130) will cause the Service (USCIS) to deny the Form I-130 visa petition.
Indeed, even as the alien spouse is in removal proceedings with the Immigration Court, the Form I-130 visa petition of the petitioning spouse and the written request for good faith marriage exemption are adjudicated by the Service, not by the Immigration Judge.
After approval of the Form I-130 visa petition and grant of the good faith marriage exemption, the Immigration Judge adjudicates the Form I-485 adjustment of status application of the alien in removal proceedings.
If the Government’s District Counsel agrees to terminate the removal proceedings in view of the approval of the Form I-130 visa petition, the Service will adjudicate the Form I-485 adjustment application of the alien.
Appeals From Denial Of Petition
And Denial Of Adjustment:
If the Form I-130 visa petition is approved, it is “considered primary evidence of eligibility for the bona fide marriage exemption,” per 8 C.F.R. § 245.1(c)(8)(v).
If the Form I-130 petition is denied for failure to establish eligibility for the bona fide marriage exemption, the denial is appealable to the Board of Immigration Appeals (Board) in Falls Church, Virginia, on Form EOIR-29 with a fee of $110.00, within 30 calendar days from the date the notice of Decision of the Service is served (33 days if the notice is mailed), and sent to the USCIS District Office that denied the petition.
If the Form I-485 adjustment application of the alien is denied for failure to establish the bona fide- marriage exemption, the denial is appealable to the Administrative Appeals Unit (AAO) in Washington D.C. on Form I-290B with a fee of $585.00, and sent to USCIS, P.O. Box 805887, Chicago, IL 60680-4120, within 30 calendar days from the date the notice of Decision of the Service is served (33 days if the notice is mailed).
Obtaining a good faith marriage exemption by clear and convincing evidence (quantum of evidence to overcome marriage fraud) requires marshalling and presenting sufficient evidence to meet the higher standard of clear and convincing evidence, as compared to preponderance of the evidence (51% in favor).
*****
(The Author, Roman P. Mosqueda, has practiced immigration law for over 15 years. He is a member of AILA, Southern California Chapter. Please visit www.mosquedalaw.com, or email at rpm_law@yahoo.com or call at (213) 252-9481 for questions.
This Article is not meant to give legal advice, but for information only. The reader should consult with a competent immigration attorney for any immigration problem.)
TO 2-YEAR FOREIGN RESIDENCY
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
Marrying while in removal proceedings with the Immigration Court requires approval of a written request for good faith (bona fide) exemption, under Section 245(e)(3) of the Immigration and Nationality Act (INA), to adjust status to permanent resident.
The written request for good faith exemption must be submitted with the Form I-130, Alien Relative Petition, per 8 C.F.R. § 204.2(a)(1)(iii)(A), to avoid residing outside the United States for a 2-year period beginning after the date of the marriage, as required by Section 204(g) of the INA.
In order to establish eligibility for the bona fide exemption, the petitioner in the Form I-130 requesting the exemption must: (1) state the reason for seeking the exemption; and (2) submit documents which establish that the marriage was entered into in good faith and not for the purpose of merely procuring the alien’s entry as an immigrant, per 8 C.F.R. § 204.2(a)(1)(iii)(A) and (B).
Types Of Documents Showing
Good Faith Marriage:
An alien may not adjust status to permanent resident or have the visa petition (Form I-130) for permanent status as spouse approved, unless the marriage entered into while a removal/deportation proceedings are pending is proved by clear and convincing evidence to be in good faith.
The evidence required by 8 C.F.R. § 204.2(a)(1)(iii)(B) to establish eligibility for the bona fide exemption include, but are not limited to:
(1) documentation showing joint ownership of property;
(2) lease showing joint tenancy of a common residence;
(3) documentation showing commingling of financial resources;
(4) birth certificate(s) of child(ren) born to the petitioner and beneficiary;
(5) affidavits of third parties having knowledge of the bona fides of the marital relationship, stating the full name and address, date and place of the birth of the person making the affidavit and his or her relationship to the spouses if any, and containing complete information and details explaining how the person acquired his or her knowledge of the marriage, and supported by documentary evidence, if possible.
Service’s Adjudication Of The
Form I-130 And Request For
Good Faith Marriage Exemption:
Failure to request a bona fide marriage exemption and to submit clear and convincing evidence of a bona fide marriage with the visa petition (Form I-130) will cause the Service (USCIS) to deny the Form I-130 visa petition.
Indeed, even as the alien spouse is in removal proceedings with the Immigration Court, the Form I-130 visa petition of the petitioning spouse and the written request for good faith marriage exemption are adjudicated by the Service, not by the Immigration Judge.
After approval of the Form I-130 visa petition and grant of the good faith marriage exemption, the Immigration Judge adjudicates the Form I-485 adjustment of status application of the alien in removal proceedings.
If the Government’s District Counsel agrees to terminate the removal proceedings in view of the approval of the Form I-130 visa petition, the Service will adjudicate the Form I-485 adjustment application of the alien.
Appeals From Denial Of Petition
And Denial Of Adjustment:
If the Form I-130 visa petition is approved, it is “considered primary evidence of eligibility for the bona fide marriage exemption,” per 8 C.F.R. § 245.1(c)(8)(v).
If the Form I-130 petition is denied for failure to establish eligibility for the bona fide marriage exemption, the denial is appealable to the Board of Immigration Appeals (Board) in Falls Church, Virginia, on Form EOIR-29 with a fee of $110.00, within 30 calendar days from the date the notice of Decision of the Service is served (33 days if the notice is mailed), and sent to the USCIS District Office that denied the petition.
If the Form I-485 adjustment application of the alien is denied for failure to establish the bona fide- marriage exemption, the denial is appealable to the Administrative Appeals Unit (AAO) in Washington D.C. on Form I-290B with a fee of $585.00, and sent to USCIS, P.O. Box 805887, Chicago, IL 60680-4120, within 30 calendar days from the date the notice of Decision of the Service is served (33 days if the notice is mailed).
Obtaining a good faith marriage exemption by clear and convincing evidence (quantum of evidence to overcome marriage fraud) requires marshalling and presenting sufficient evidence to meet the higher standard of clear and convincing evidence, as compared to preponderance of the evidence (51% in favor).
*****
(The Author, Roman P. Mosqueda, has practiced immigration law for over 15 years. He is a member of AILA, Southern California Chapter. Please visit www.mosquedalaw.com, or email at rpm_law@yahoo.com or call at (213) 252-9481 for questions.
This Article is not meant to give legal advice, but for information only. The reader should consult with a competent immigration attorney for any immigration problem.)
CONVERSION OF I-130 TO I-360 FOR ALIEN WIDOW(ER) OF DECEASED U.S. CITIZEN INCLUDING UNMARRIED MINOR CHILDREN OR REINSTATEMENT OF APPROVAL OF I-130 OF
CONVERSION OF I-130 TO I-360 FOR ALIEN WIDOW(ER) OF DECEASED
U.S. CITIZEN INCLUDING UNMARRIED MINOR CHILDREN
OR
REINSTATEMENT OF APPROVAL OF I-130 OF DECEASED
SPOUSE/FATHER FOR HUMANITARIAN REASONS
BY:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
Prior to October 28, 2009, the surviving spouse of a deceased U.S. citizen, who were both married for less than two (2) years at the time of the citizen’s death, had no relief for adjustment of status or immigrant visa through consular processing as an immediate relative.
Indeed, Section 201(b)(2)(A)(i) of the Immigration and Nationality Act (INA) classifies as an immediate relative the spouse (and each child of the alien) of a U.S. citizen if: (1.) married for at least two (2) years at the time of the citizen’s death; (2.) not remarried, and not legally separated from the citizen at the time of the citizen’s death; and (3.) applies on Form I-360 within two (2) years of the citizen’s death.
On October 28, 2009, Pres. Obama signed into law the FY2010 DHS Appropriations Act, which allows widows or widowers of U.S. citizens to qualify as immediate relatives no matter how long their marriages were, thereby amending aforesaid Section 201(b)(2)(A)(i) of the INA by removing the two-year marriage requirement.
And when a widow or widower qualifies as an immediate relative of the deceased citizen, his or her unmarried minor children will automatically qualify for the same immediate relative status.
Pending, Approved, Or No I-130
Petition As Of October 28, 2009:
Any pending I-130 petition as of October 28, 2009, filed on a widow or widower’s behalf prior to the death of the citizen spouse, will automatically convert to a widow(er)’s Form I-360 petition, as long as the widow(er) qualified as an immediate relative on the date of the citizen spouse’s death, under the INA and the FY2010 DHS Appropriations Act.
Any approved I-130 petition as of October 28, 2009, and before the U.S. citizen petitioner’s death, will automatically convert to an approved I-360. An unmarried minor child of the widow(er) who meets the definition for “child” under the INA will also be eligible for adjustment of status or immigrant visa based on the approved I-360.
An individual qualifies as the “child” of a widow(er), if he or she is the son or daughter of a widow(er) who was under 21 years of age when the deceased citizen filed the I-130 petition. He or she is still considered under 21 years of age for purposes of the widow(er)’s I-360.
If there is no pending I-130 petition as of October 28, 2009, filed by the deceased citizen who died before October 28, 2009, the widow(er) has until October 28, 2011 to file I-360 petition for himself or herself and his or her unmarried minor children with the Vermont Service Center.
If the citizen spouse died on or after October 28, 2009, without having filed an I-130 petition, the widow(er) has also two (2) years from the date of the death of the citizen spouse to file I-360 petition with the Vermont Service Center.
Reinstatement Of Approval Of I-130Of Deceased
Spouse/Father For Humanitarian Reasons:
The above-stated provisions of the FY2010 DHS Appropriations Act relate only to the eligibility for classification as an immediate relative of a widow(er) due to the death of the U.S. citizen spouse, as well as the eligibility for the same classification as immediate relative by unmarried minor children of the widow(er).
Unmarried minor children of the deceased U.S. citizen spouse can be included in the converted or new I-360 petition of the widow(er), if they are the children of the widow(er) as well, including step-children through marriage to the U.S. citizen spouse, if they were under 18 years of age at the time of the marriage, unless they are already U.S. citizens through the deceased citizen at birth, or on entry into the United States under the Child Citizenship Act of 2000.
Widow(er)s and children who do not qualify as immediate relatives under the INA and the FY2010 DHS Appropriations Act, but with approved I-130 petition prior to the death of the U.S. citizen spouse and father, may request reinstatement of the revoked I-130 petition due to humanitarian reasons, under 8 C.F.R. § 205.1(a)(3)(i)(C)(2).
Indeed, under 8 C.F.R. § 205.1(a)(3)(i)(C), an approved I-130 petition is automatically revoked upon the death of the U.S. citizen petitioner.
USCIS Discretionary
Humanitarian Reinstatement:
No form and filing fee have been generated by the USCIS for the request for reinstatement of the revoked I-130 petition. This Author uses a letter-request sent to the District Director who approved the I-130 petition.
The USCIS exercises discretion in granting or denying the request for humanitarian reinstatement (which should include an Affidavit of Support, I-864, of a substitute sponsor), after considering the facts and humanitarian merits of each case.
Pursuant to USCIS Guidance dated June 15, 2009, “absent extraordinary factors or a failure to meet the regulatory requirements of 8 C.F.R. § 205.1(a)(3)(i)(C)(2), adjudicators should favorably exercise discretion accordingly.”
The caveat is: if and when the USCIS adjudicators decide to adjudicate the request for humanitarian reinstatement and exercise their discretion. This Author has numerous requests for humanitarian reinstatement still pending for months, some even years.
*****
(The Author, Roman P. Mosqueda, has practiced immigration law for over 15 years. He is a member of AILA, Southern California Chapter.
This article is not meant to give legal advice to the readers, but is for information only. Readers with specific legal issues are well-advised to seek the services of a competent immigration attorney.)
U.S. CITIZEN INCLUDING UNMARRIED MINOR CHILDREN
OR
REINSTATEMENT OF APPROVAL OF I-130 OF DECEASED
SPOUSE/FATHER FOR HUMANITARIAN REASONS
BY:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
Prior to October 28, 2009, the surviving spouse of a deceased U.S. citizen, who were both married for less than two (2) years at the time of the citizen’s death, had no relief for adjustment of status or immigrant visa through consular processing as an immediate relative.
Indeed, Section 201(b)(2)(A)(i) of the Immigration and Nationality Act (INA) classifies as an immediate relative the spouse (and each child of the alien) of a U.S. citizen if: (1.) married for at least two (2) years at the time of the citizen’s death; (2.) not remarried, and not legally separated from the citizen at the time of the citizen’s death; and (3.) applies on Form I-360 within two (2) years of the citizen’s death.
On October 28, 2009, Pres. Obama signed into law the FY2010 DHS Appropriations Act, which allows widows or widowers of U.S. citizens to qualify as immediate relatives no matter how long their marriages were, thereby amending aforesaid Section 201(b)(2)(A)(i) of the INA by removing the two-year marriage requirement.
And when a widow or widower qualifies as an immediate relative of the deceased citizen, his or her unmarried minor children will automatically qualify for the same immediate relative status.
Pending, Approved, Or No I-130
Petition As Of October 28, 2009:
Any pending I-130 petition as of October 28, 2009, filed on a widow or widower’s behalf prior to the death of the citizen spouse, will automatically convert to a widow(er)’s Form I-360 petition, as long as the widow(er) qualified as an immediate relative on the date of the citizen spouse’s death, under the INA and the FY2010 DHS Appropriations Act.
Any approved I-130 petition as of October 28, 2009, and before the U.S. citizen petitioner’s death, will automatically convert to an approved I-360. An unmarried minor child of the widow(er) who meets the definition for “child” under the INA will also be eligible for adjustment of status or immigrant visa based on the approved I-360.
An individual qualifies as the “child” of a widow(er), if he or she is the son or daughter of a widow(er) who was under 21 years of age when the deceased citizen filed the I-130 petition. He or she is still considered under 21 years of age for purposes of the widow(er)’s I-360.
If there is no pending I-130 petition as of October 28, 2009, filed by the deceased citizen who died before October 28, 2009, the widow(er) has until October 28, 2011 to file I-360 petition for himself or herself and his or her unmarried minor children with the Vermont Service Center.
If the citizen spouse died on or after October 28, 2009, without having filed an I-130 petition, the widow(er) has also two (2) years from the date of the death of the citizen spouse to file I-360 petition with the Vermont Service Center.
Reinstatement Of Approval Of I-130Of Deceased
Spouse/Father For Humanitarian Reasons:
The above-stated provisions of the FY2010 DHS Appropriations Act relate only to the eligibility for classification as an immediate relative of a widow(er) due to the death of the U.S. citizen spouse, as well as the eligibility for the same classification as immediate relative by unmarried minor children of the widow(er).
Unmarried minor children of the deceased U.S. citizen spouse can be included in the converted or new I-360 petition of the widow(er), if they are the children of the widow(er) as well, including step-children through marriage to the U.S. citizen spouse, if they were under 18 years of age at the time of the marriage, unless they are already U.S. citizens through the deceased citizen at birth, or on entry into the United States under the Child Citizenship Act of 2000.
Widow(er)s and children who do not qualify as immediate relatives under the INA and the FY2010 DHS Appropriations Act, but with approved I-130 petition prior to the death of the U.S. citizen spouse and father, may request reinstatement of the revoked I-130 petition due to humanitarian reasons, under 8 C.F.R. § 205.1(a)(3)(i)(C)(2).
Indeed, under 8 C.F.R. § 205.1(a)(3)(i)(C), an approved I-130 petition is automatically revoked upon the death of the U.S. citizen petitioner.
USCIS Discretionary
Humanitarian Reinstatement:
No form and filing fee have been generated by the USCIS for the request for reinstatement of the revoked I-130 petition. This Author uses a letter-request sent to the District Director who approved the I-130 petition.
The USCIS exercises discretion in granting or denying the request for humanitarian reinstatement (which should include an Affidavit of Support, I-864, of a substitute sponsor), after considering the facts and humanitarian merits of each case.
Pursuant to USCIS Guidance dated June 15, 2009, “absent extraordinary factors or a failure to meet the regulatory requirements of 8 C.F.R. § 205.1(a)(3)(i)(C)(2), adjudicators should favorably exercise discretion accordingly.”
The caveat is: if and when the USCIS adjudicators decide to adjudicate the request for humanitarian reinstatement and exercise their discretion. This Author has numerous requests for humanitarian reinstatement still pending for months, some even years.
*****
(The Author, Roman P. Mosqueda, has practiced immigration law for over 15 years. He is a member of AILA, Southern California Chapter.
This article is not meant to give legal advice to the readers, but is for information only. Readers with specific legal issues are well-advised to seek the services of a competent immigration attorney.)
A TALE OF TWO FILIPINO FAMILY ADJUSTMENTS
A TALE OF TWO FILIPINO FAMILY ADJUSTMENTS
By:
Roman P. Mosqueda, B.S., LL. B., LL. M., S.J.D.
On January 22, 2010, starting at 7:15 a.m., two Filipino families were interviewed by two District Adjudication Officers (DAOs) of the Los Angeles District Office of the U.S. Citizenship and Immigration Services at 300 N. Los Angeles St., Los Angeles, CA. 90012, Room 4012.
This Author represents and personally attended the interviews of both families whose identities are withheld to protect their privacy and safeguard confidentiality.
The first Filipino family interviewed presented issues: of derivative status, Child Protection Act, and the Patriot Act, with Los Angeles DAO Sinocruz requiring the derivative daughter on student (F-1) status of a principal beneficiary mother petitioned by her U.S.-citizen brother to obtain police report (clearance) from the Torrance Police Department, as well as the withdrawal of adjustment applications due to consular processing of the immigrant visas of the principal beneficiary and other children.
The second Filipino family interviewed presented issues: of no availability of immigrant visas for third-preference employment-based (EB-3) petitions (Form I-140s) for the Philippines (regressed to August 1, 2002 as of January 2010 Visa Bulletin), unauthorized employment by the husband not grandfathered under section 245(i) of the Immigration and Nationality Act (Act), grant of 180 days of unlawful presence to EB-3 beneficiary under section 245(k) of the INA, and no unlawful presence of minor children seeking adjustment of status to lawful permanent residence.
First Filipino Family
Interviewed : Issues
and Resolutions:
The main beneficiary of the first Filipino family interviewed is a sister of a U.S. citizen brother residing in Chula Vista, California. The priority date of the Petition for Alien Relative (F-4) Form I-130 was March 31, 1986.
The derivatives of the beneficiary are her husband, three daughters, and one son. Except for the eldest daughter who is on student (F-1) status at California State University at Long Beach, and residing in Torrance, California, the rest obtained immigrant visa through consular processing at the U.S. Embassy in Manila, Philippines.
The second daughter had turned twenty-one years of age and had aged-out under Section 3 of the Child Status Protection Act (CSPA) of 2002, PL 107-208, 116 Stat. 927, but was granted an immigration visa under the Patriot Act.
Indeed, section 424 of the Patriot Act (PL 107-56, 115 Stat. 272), 22 C.F.R. § 42.32 (d)(9), provides a child beneficiary under the age of 21 of a petition filed on or behalf September 11, 2001, with an automatic forty-five (45)-day extention.
Thus, the U.S. Cousul in Manila considered the second daughter as remaining in the status of a “child” for an additional period of 45 days after her 21st birthday, and granted her an immigrant visa.
Adjustment Of Status
Interview For Daughter
On F-1 Status:
At the adjustment interview on January 22, 2010, Los Angeles District Adjudication Officer (DAO) Sinocruz verified the identity and eligibility of the derivative daughter on student status.
She was required to obtain a police (clearance) report from the Torrance Police Department, which she did and was submitted to DAO Sinocruz that afternoon.
She is awaiting grant of her adjustment of status to lawful permanent residence to join the rest of her family in the same status through consular processing.
Second Filipino Family
Interviewed: Issues
And Resolutions:
The main beneficiary of the second Filipino family interviewed on January 22, 2010, is a wife who was petitioned for labor certification and as an alien worker (Form I- 140) on November 2, 2007, by a hotel in Los Angeles County.
Her derivatives are her husband, two minor sons, and a daughter. But since there are no immigrant visas available for third preference employment-based petitions (EB-3) for the Philippines as country of chargeability for the January 15, 2004 priority date, per January 2010 Visa Bulletin, DAO L. Hadnot-Jacobs merely checked the identities and eligibilities for adjustment of the family members.
Indeed, the principal beneficiary who was formerly on H-1B status before she was petitioned as an alien worker, qualifies for adjustment of status under section 245(k) of the Immigration and Nationality Act, because the adjustment application was filed within 180 days from termination of her H-1B status.
The three (3) minor children are also eligible for adjustment of status, although their H-4 status were not extended, because minors under 18 years of age do not incur unlawful presence.
The problem is with the derivative husband, who was formerly also on H-1B, then changed to H-4 status, and worked without employment authorization on H-4 status. And since he was not previously petitioned by family or employer on or before April 30, 2001, he is not grandfathered under Section 245(i) of the Act.
He still is a derivative of his wife, who would be granted lawful permanent residence, but cannot adjust in the United States. He may be issued an immigrant visa by consular processing at the U.S. Embassy in Manila, Philippines, if he is able to obtain a waiver for unlawful presence by proving extreme hardship to a permanent resident wife, under section 212(a)(9)(B)(v) of the Act.
Thus, the tale of two Filipino family adjustments is not over. It has just begun.
*****
(The Author, Roman P. Mosqueda, has practiced immigration law in the United States for over 15 years, with the Service (USCIS), Immigration Court, Board of Immigration Appeals, and Federal Circuit Court of Appeals.
This Article does not constitute legal advice or a legal opinion on any specific facts or circumstances. Its contents are intended as general information only. The reader is urged to consult with his/her own attorney concerning his/her specific legal questions.)
By:
Roman P. Mosqueda, B.S., LL. B., LL. M., S.J.D.
On January 22, 2010, starting at 7:15 a.m., two Filipino families were interviewed by two District Adjudication Officers (DAOs) of the Los Angeles District Office of the U.S. Citizenship and Immigration Services at 300 N. Los Angeles St., Los Angeles, CA. 90012, Room 4012.
This Author represents and personally attended the interviews of both families whose identities are withheld to protect their privacy and safeguard confidentiality.
The first Filipino family interviewed presented issues: of derivative status, Child Protection Act, and the Patriot Act, with Los Angeles DAO Sinocruz requiring the derivative daughter on student (F-1) status of a principal beneficiary mother petitioned by her U.S.-citizen brother to obtain police report (clearance) from the Torrance Police Department, as well as the withdrawal of adjustment applications due to consular processing of the immigrant visas of the principal beneficiary and other children.
The second Filipino family interviewed presented issues: of no availability of immigrant visas for third-preference employment-based (EB-3) petitions (Form I-140s) for the Philippines (regressed to August 1, 2002 as of January 2010 Visa Bulletin), unauthorized employment by the husband not grandfathered under section 245(i) of the Immigration and Nationality Act (Act), grant of 180 days of unlawful presence to EB-3 beneficiary under section 245(k) of the INA, and no unlawful presence of minor children seeking adjustment of status to lawful permanent residence.
First Filipino Family
Interviewed : Issues
and Resolutions:
The main beneficiary of the first Filipino family interviewed is a sister of a U.S. citizen brother residing in Chula Vista, California. The priority date of the Petition for Alien Relative (F-4) Form I-130 was March 31, 1986.
The derivatives of the beneficiary are her husband, three daughters, and one son. Except for the eldest daughter who is on student (F-1) status at California State University at Long Beach, and residing in Torrance, California, the rest obtained immigrant visa through consular processing at the U.S. Embassy in Manila, Philippines.
The second daughter had turned twenty-one years of age and had aged-out under Section 3 of the Child Status Protection Act (CSPA) of 2002, PL 107-208, 116 Stat. 927, but was granted an immigration visa under the Patriot Act.
Indeed, section 424 of the Patriot Act (PL 107-56, 115 Stat. 272), 22 C.F.R. § 42.32 (d)(9), provides a child beneficiary under the age of 21 of a petition filed on or behalf September 11, 2001, with an automatic forty-five (45)-day extention.
Thus, the U.S. Cousul in Manila considered the second daughter as remaining in the status of a “child” for an additional period of 45 days after her 21st birthday, and granted her an immigrant visa.
Adjustment Of Status
Interview For Daughter
On F-1 Status:
At the adjustment interview on January 22, 2010, Los Angeles District Adjudication Officer (DAO) Sinocruz verified the identity and eligibility of the derivative daughter on student status.
She was required to obtain a police (clearance) report from the Torrance Police Department, which she did and was submitted to DAO Sinocruz that afternoon.
She is awaiting grant of her adjustment of status to lawful permanent residence to join the rest of her family in the same status through consular processing.
Second Filipino Family
Interviewed: Issues
And Resolutions:
The main beneficiary of the second Filipino family interviewed on January 22, 2010, is a wife who was petitioned for labor certification and as an alien worker (Form I- 140) on November 2, 2007, by a hotel in Los Angeles County.
Her derivatives are her husband, two minor sons, and a daughter. But since there are no immigrant visas available for third preference employment-based petitions (EB-3) for the Philippines as country of chargeability for the January 15, 2004 priority date, per January 2010 Visa Bulletin, DAO L. Hadnot-Jacobs merely checked the identities and eligibilities for adjustment of the family members.
Indeed, the principal beneficiary who was formerly on H-1B status before she was petitioned as an alien worker, qualifies for adjustment of status under section 245(k) of the Immigration and Nationality Act, because the adjustment application was filed within 180 days from termination of her H-1B status.
The three (3) minor children are also eligible for adjustment of status, although their H-4 status were not extended, because minors under 18 years of age do not incur unlawful presence.
The problem is with the derivative husband, who was formerly also on H-1B, then changed to H-4 status, and worked without employment authorization on H-4 status. And since he was not previously petitioned by family or employer on or before April 30, 2001, he is not grandfathered under Section 245(i) of the Act.
He still is a derivative of his wife, who would be granted lawful permanent residence, but cannot adjust in the United States. He may be issued an immigrant visa by consular processing at the U.S. Embassy in Manila, Philippines, if he is able to obtain a waiver for unlawful presence by proving extreme hardship to a permanent resident wife, under section 212(a)(9)(B)(v) of the Act.
Thus, the tale of two Filipino family adjustments is not over. It has just begun.
*****
(The Author, Roman P. Mosqueda, has practiced immigration law in the United States for over 15 years, with the Service (USCIS), Immigration Court, Board of Immigration Appeals, and Federal Circuit Court of Appeals.
This Article does not constitute legal advice or a legal opinion on any specific facts or circumstances. Its contents are intended as general information only. The reader is urged to consult with his/her own attorney concerning his/her specific legal questions.)
TOYOTA’S PRODUCT LIABILITY ISSUES
*This article was posted in several newspaper and is highly read on ezinearticles.com
TOYOTA’S PRODUCT LIABILITY ISSUES
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
Toyota Motor Corporation’s product liability for unintended acceleration and braking problems, which has reportedly led to 10 million recalls and counting, would eventually be found to be manufacturing and/or design safety defects.
From the reported accounts of several accidents involving sudden acceleration and brake failure, the safety defects may, hopefully for Toyota, be limited to accelerator-pedal trapping floor mats, sticking accelerator pedals, and inconsistent anti-lock brake systems (ABS), and not include defective electronic throttle control systems (ETCS) or stirring systems, on Corollas, Camrys, and other Toyota models.
Toyota’s global recalls have included Prius and Lexus hybrids, which indicate that the safety defects related to unintended acceleration and braking problems are systemic in nature.
Indeed, Toyota dealers nationwide have reportedly begun fixing accelerator pedals on recalled vehicles by installing a precision-cut reinforcement bar into the accelerator pedal assembly to eliminate the excess friction that has caused pedals to stick on occasions.
Dealers will also place reconfigured accelerator pedals and newly-designed floor mats on affected models to remedy floor mat pedal entrapment, and remedy the inconsistent brake feel of the anti-lock system (ABS) in 2010 Prious.
Moreover, Toyota will install a brake override system that cuts the engine on simultaneous application of accelerator and brake pedals. Even as Toyota is implementing the brake override system, it asserts that it “is confident that no defect exists in the electronic control unit (ECU).”
Manufacturing Versus
Design Defects:
A. Manufacturing Defects:
The manufacturing process of a product consists of the formation, assembly, adjustment, combination, or processing of raw materials or ingredients according to the product design, per CCH, I Products Liability Reporter, Section 4785.
Thus, manufacturing defects may arise from improper formation, faulty assembly or adjustment, incorrect composition, or defective raw materials or component parts.
Toyota has identified the manufacturing defect that causes sticking accelerators as the: “friction device that includes a ‘shoe’ that rubs against an adjoining surface during normal pedal operation. Due to the “materials used, wear and environmental conditions,” these surfaces may begin to stick . . . . In some cases, friction could increase to a point . . . that the pedal sticks, leaving the throttle potentially open.”
In one of the early Firestone cases filed by this Author in August 1999, with the Superior Court of Los Angeles County, the left rear tire of the injured family’s Ford Explorer, a 1994 Firestone Radial ATX, had its tread along with one steel ply coming off completely all the way around the tire.
It caused the 1995 Ford Explorer running at 65 miles per hour on US 101 Freeway in Solvang County, Santa Barbara, California to run out of control and overturn, injuring a couple and their two minor daughters in a nonfatal accident in August 1998.
Bridgestone/Firestone Inc., settled before trial based on the expert report of Transamerican Consultant Engineers, Inc., obtained by this Author, which concluded that: “(T)he cause of the tread separation was due to a poor bond between the steel plies due to failure of the brass plating on the wires to completely fuse with the sulfur in the rubber during the vulcanizing process.”
That case exemplified the manufacturing defect of incorrect composition or defective bonding materials.
B. Design Defects:
The designing of a product consists of the selection of materials and their intended construction as to size, shape, inclusion, and arrangement of component parts, per CCH, I Products Liability Reporter, Section 4745.
Thus, defects in design may take the forms of inadequacies in the plans or specifications, in the choice of materials for the product composition, or in the absence of safety devices or features.
Toyota’s installation of a precision-cut reinforcement bar into the accelerator pedal assembly is a design safety device to remedy sudden acceleration. And its reconfiguration of the shape of the accelerator pedal and newly-designed floor mats are likewise design remedies to avoid floor mat pedal entrapment. Moreover, the installation of a brake override system is another design safety feature.
The placement of fuel tanks close to the rear bumpers in Ford’s Pintos in the 1970’s, which in a 1978 case in Orange County, California, caused the gas tank to explode in a rear-end collision, exemplified the design defect of inadequate plans or specifications.
Defective vehicle design was also at issue in the January 2002 roll-overs of a 1997 Ford Explorer SUV, which left a mother of two paralyzed from the waist down when the Explorer’s roof caved in.
The San Diego jury found that Ford knew that the Explorer had design defects that increased its propensity to tip over, as well as its inadequate roof strength. The U.S. Supreme Court let stand the $82.6 million award to the paralyzed California women, which included $55 million in punitive damages.
Conclusion:
A vehicle recall is an admission of a defect or defects, whether manufacturing or design or both. Hopefully, the recall of Toyota vehicles would cure the defects. And Toyota would be liable only for the reduction in value and loss of use of the vehicle while being fixed. Otherwise, it may be liable also for punitive damages if it knew the defects all along.
For accident cases resulting in bodily injuries or deaths for sudden acceleration and failure of the brakes, the plaintiffs need to prove by a preponderance of the evidence either manufacturing or design or both defects through reconstruction and automotive experts.
Toyota Motor Corporation through their own experts will need to prove lack of defects or lack of causation for the injuries or death, that is, the loss of control of the Toyota vehicle was due to driver error. The jury and the appeal courts in case of appeals from the jury award or defense verdict will decide the outcome.
Our adversarial system of deciding legal disputes in courts would hopefully do justice to whom it is due.
*****
(The Author, Roman P. Mosqueda, is the holder of a 1979 Doctor of Science of Law (S.J.D.) degree from The University of Michigan Law School, with a published doctoral dissertation on comparative product liability. He practices product liability, among other areas of law, in Southern California, based in Los Angeles.
For comments please email to rpm_law@yahoo.com or call his office at (213) 252-9481. Please feel free to visit www.mosquedalaw.com to know more about the Author’s practice.
This article is not meant to give legal advice, but is for information only. The reader with specific product liability issues is well-advised to seek the services of a competent product liability attorney.)
TOYOTA’S PRODUCT LIABILITY ISSUES
By:
Roman P. Mosqueda, B.S., LL.B., LL.M., S.J.D.
Toyota Motor Corporation’s product liability for unintended acceleration and braking problems, which has reportedly led to 10 million recalls and counting, would eventually be found to be manufacturing and/or design safety defects.
From the reported accounts of several accidents involving sudden acceleration and brake failure, the safety defects may, hopefully for Toyota, be limited to accelerator-pedal trapping floor mats, sticking accelerator pedals, and inconsistent anti-lock brake systems (ABS), and not include defective electronic throttle control systems (ETCS) or stirring systems, on Corollas, Camrys, and other Toyota models.
Toyota’s global recalls have included Prius and Lexus hybrids, which indicate that the safety defects related to unintended acceleration and braking problems are systemic in nature.
Indeed, Toyota dealers nationwide have reportedly begun fixing accelerator pedals on recalled vehicles by installing a precision-cut reinforcement bar into the accelerator pedal assembly to eliminate the excess friction that has caused pedals to stick on occasions.
Dealers will also place reconfigured accelerator pedals and newly-designed floor mats on affected models to remedy floor mat pedal entrapment, and remedy the inconsistent brake feel of the anti-lock system (ABS) in 2010 Prious.
Moreover, Toyota will install a brake override system that cuts the engine on simultaneous application of accelerator and brake pedals. Even as Toyota is implementing the brake override system, it asserts that it “is confident that no defect exists in the electronic control unit (ECU).”
Manufacturing Versus
Design Defects:
A. Manufacturing Defects:
The manufacturing process of a product consists of the formation, assembly, adjustment, combination, or processing of raw materials or ingredients according to the product design, per CCH, I Products Liability Reporter, Section 4785.
Thus, manufacturing defects may arise from improper formation, faulty assembly or adjustment, incorrect composition, or defective raw materials or component parts.
Toyota has identified the manufacturing defect that causes sticking accelerators as the: “friction device that includes a ‘shoe’ that rubs against an adjoining surface during normal pedal operation. Due to the “materials used, wear and environmental conditions,” these surfaces may begin to stick . . . . In some cases, friction could increase to a point . . . that the pedal sticks, leaving the throttle potentially open.”
In one of the early Firestone cases filed by this Author in August 1999, with the Superior Court of Los Angeles County, the left rear tire of the injured family’s Ford Explorer, a 1994 Firestone Radial ATX, had its tread along with one steel ply coming off completely all the way around the tire.
It caused the 1995 Ford Explorer running at 65 miles per hour on US 101 Freeway in Solvang County, Santa Barbara, California to run out of control and overturn, injuring a couple and their two minor daughters in a nonfatal accident in August 1998.
Bridgestone/Firestone Inc., settled before trial based on the expert report of Transamerican Consultant Engineers, Inc., obtained by this Author, which concluded that: “(T)he cause of the tread separation was due to a poor bond between the steel plies due to failure of the brass plating on the wires to completely fuse with the sulfur in the rubber during the vulcanizing process.”
That case exemplified the manufacturing defect of incorrect composition or defective bonding materials.
B. Design Defects:
The designing of a product consists of the selection of materials and their intended construction as to size, shape, inclusion, and arrangement of component parts, per CCH, I Products Liability Reporter, Section 4745.
Thus, defects in design may take the forms of inadequacies in the plans or specifications, in the choice of materials for the product composition, or in the absence of safety devices or features.
Toyota’s installation of a precision-cut reinforcement bar into the accelerator pedal assembly is a design safety device to remedy sudden acceleration. And its reconfiguration of the shape of the accelerator pedal and newly-designed floor mats are likewise design remedies to avoid floor mat pedal entrapment. Moreover, the installation of a brake override system is another design safety feature.
The placement of fuel tanks close to the rear bumpers in Ford’s Pintos in the 1970’s, which in a 1978 case in Orange County, California, caused the gas tank to explode in a rear-end collision, exemplified the design defect of inadequate plans or specifications.
Defective vehicle design was also at issue in the January 2002 roll-overs of a 1997 Ford Explorer SUV, which left a mother of two paralyzed from the waist down when the Explorer’s roof caved in.
The San Diego jury found that Ford knew that the Explorer had design defects that increased its propensity to tip over, as well as its inadequate roof strength. The U.S. Supreme Court let stand the $82.6 million award to the paralyzed California women, which included $55 million in punitive damages.
Conclusion:
A vehicle recall is an admission of a defect or defects, whether manufacturing or design or both. Hopefully, the recall of Toyota vehicles would cure the defects. And Toyota would be liable only for the reduction in value and loss of use of the vehicle while being fixed. Otherwise, it may be liable also for punitive damages if it knew the defects all along.
For accident cases resulting in bodily injuries or deaths for sudden acceleration and failure of the brakes, the plaintiffs need to prove by a preponderance of the evidence either manufacturing or design or both defects through reconstruction and automotive experts.
Toyota Motor Corporation through their own experts will need to prove lack of defects or lack of causation for the injuries or death, that is, the loss of control of the Toyota vehicle was due to driver error. The jury and the appeal courts in case of appeals from the jury award or defense verdict will decide the outcome.
Our adversarial system of deciding legal disputes in courts would hopefully do justice to whom it is due.
*****
(The Author, Roman P. Mosqueda, is the holder of a 1979 Doctor of Science of Law (S.J.D.) degree from The University of Michigan Law School, with a published doctoral dissertation on comparative product liability. He practices product liability, among other areas of law, in Southern California, based in Los Angeles.
For comments please email to rpm_law@yahoo.com or call his office at (213) 252-9481. Please feel free to visit www.mosquedalaw.com to know more about the Author’s practice.
This article is not meant to give legal advice, but is for information only. The reader with specific product liability issues is well-advised to seek the services of a competent product liability attorney.)
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Roman P. Mosqueda
Graduated from Michigan Law School with both an LLM and SJD. For more information check out www.MosquedaLaw.com
