Articles Posted in BUSINESS LAW

As an Atlanta foreclosure lawyer, it is apparent to me that in today’s economy, many people are having problems with their mortgage payments and their mortgage companies. Many people have suffered a loss of income that has affected their ability to make their monthly mortgage payment. Others have found themselves stuck in homes that are worth far less than what is owed on the mortgage. Should you have any trouble making your mortgage payments, you likely are going to have to deal with a mortgage company in order to retain your home and move on with your life. Unfortunately, this is easier said than done.

Our Georgia loan modification lawyers realize Mortgage Companies and Banks were not prepared for the economic changes that have occurred in the housing market. Over 3.3 million homes have gone into foreclosure since January of 2008. The Banks simply do not have the employees, time or resources to adequately deal with the number of foreclosures and loan defaults that are occurring. This means long delays in modification deals, never speaking to the same person at the bank twice and general confusion that can lead to losing your home in foreclosure, even if you think that you are negotiating a modification or that you have an agreement concerning you arrearage in place with your lender.

Complicating the situation even further is the fact that most mortgages in Georgia provide that any foreclosure are “non-judicial”. This means that the lender does not have to use the court system to foreclose on your property and sell your house. Instead, they are allowed to send you a notice that they intend to sell your house on the courthouse steps on the first Tuesday of the next month. They also publish this notice in the local paper. Then when four weeks have passed, they auction the house at a sheriff’s sale to the highest bidder.

Fortunately, legal options are available those are facing foreclosure. In Georgia, mortgagors are required to use the utmost good faith in their dealings with you.

Specifically, O.C.G.A. § 23-2-114 provides:

Powers of sale in deeds of trust, mortgages, and other instruments shall be strictly construed and shall be fairly exercised. In the absence of stipulations to the contrary in the instrument, the time, place, and manner of sale shall be that pointed out for public sales. Unless the instrument creating the power specifically provides to the contrary, a personal representative, heir, heirs, legatee, devisee, or successor of the grantee in a mortgage, deed of trust, deed to secure debt, bill of sale to secure debt, or other like instrument, or an assignee thereof, or his personal representative, heir, heirs, legatee, devisee, or successor may exercise any power therein contained; and such powers may so be exercised regardless of whether or not the transfer specifically includes the powers or conveys title to the property described. A power of sale not revocable by death of the grantor or donor may be exercised after his death in the same manner and to the same extent as though the grantor or donor were in life; and it shall not be necessary in the exercise of the power to advertise or sell as the property of the estate of the deceased nor to make any mention of or reference to the death.

The Supreme Court of Georgia has interpreted this statute to mean that a mortgagor must deal with a mortgagee in the utmost good faith, and if they do not, then the mortgagee may have a cause of action against the mortgagor for not acting in good faith. This includes lenders and banks failing to negotiate in good faith with the homeowner regarding payment and when lenders fail to provide the proper notices in foreclosure. If a court determines a foreclosure to have been in violation of these duties, then the foreclosure may be rescinded or the homeowner may be awarded monetary damages.
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As a business lawyer, I have had a number of business persons ask me, “do corporations in Georgia need to be represented by an attorney?” The answer is a resounding “Yes”.

First, in Georgia business litigation matters, corporations must be represented by a licensed Georgia attorney in “courts of record.” Eckles v. Atlanta Tech Group, 267 Ga. 801, 485 S.E.2d 22 (1997). The Georgia Supreme Court found that although a corporation may be considered to be a “person” under Georgia law, when the corporation is facing litigation, it must hire an attorney to be represented in court. The Court reasoned that because a corporation can only act through its agent, when that agent represents a corporation in court, he or she is acting as a legal representative and must be a licensed attorney. Thus, a corporation cannot represent itself in court and must hire a business attorney.

Although not required by law, several other essential reasons exist for having an experienced Georgia business attorney involved in your company’s non-litigation matters. Having a knowledgeable attorney represent your business from the outset can save your corporation substantial monies, unnecessary trouble and expense, and protect your business from costly disputes and litigation. Areas in which an attorney can be extremely beneficial include, but are not limited to, ensuring proper corporate entity formation, employment contracts and hiring or firing decisions, entering into third party contracts, and avoidance of disputes and litigation.

• Incorporation: Deciding whether to form a corporation or a limited liability corporation (LLC) can have significant personal liability and tax consequences. Further, many specific legal formalities must be followed in order to incorporate or form an LLC, including the execution of many legal documents. Thus, it’s essential to have a knowledgeable corporate attorney advise you on the type of business entity that is best suited for your company. If you are unsure what steps your business should take, investing in even an hour of an attorney’s time can lead to a huge return on investment. Simple mistakes in incorporating can lead to serious financial and legal issues at a later time.

Employment Contracts: Many employee disputes and lawsuits could be avoided by having an attorney involved at the outset. Claims may arise because of confusion over job duties, payment of wages, and the failure to sign important documents such as non-disclosure of company secrets or non-competition agreements. Having an attorney ensure proper employment agreements and documents are in place at the beginning of an employment relationship can save your company from unnecessary trouble and expense down the road arising from employee disputes and litigation.

• Hiring and Firing: Our Atlanta business lawyers are well versed in the employment law. We know and understand there are legally correct methods to hire, fire, and lay off employees. The business employment lawyers at our firm understand the importance properly hiring new employees and setting expectations of them, executing the proper employment contracts, legally documenting these matters, as well as engaging in an appropriate amount of other protective measures for your business. Likewise, our Atlanta business employment lawyers understand the necessary steps and measures and document employee performance, adherence to business standards, and the proper way to fire or lay off employees should the need arise. The procedures and actions we take can be crucial in case a disgruntled employee decides to file a lawsuit or an action with a governmental entity such as the EEOC.

Third Party Contracts: It is extremely important to have your own Georgia business lawyers draft contracts and agreements in a manner favorable and protective of your business interests. Likewise, contracts offered by third party vendors, leases, and distribution agreements are often one-sided in favor of another party. As such, it is important to have a knowledgeable business attorney review all documents and contracts in order to ensure your company’s best interests are protected. Oftentimes, this includes negotiations concerning essential and material terms of any contract.

• Avoiding Disputes and Litigation: The experienced Georgia business law firm immediately.

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As Atlanta, Georgia, real estate fraud lawyers, we have seen a rise in the “house flipping” trend over the last several years. House flipping is the process of buying a home, renovating the home, and then selling it for a substantial profit within the course of a very short time. Often, an investor is able to make money from flipping a house by fixing less costly cosmetic issues – such as carpeting, painting, and appliances – and then selling the house at a significantly higher price.

If you are an investor interested in house flipping, you should contact a knowledgeable real estate attorney who can help with all aspects of your real estate transaction. Recently, several house flipping schemes aimed at potential real estate investors have come to light, exposing housing management investment companies and banks working together to defraud potential investors.

In one scheme, a Georgia Bank came under fire after the revelation that one of its co-founders and a chief executive was heavily involved in making fraudulent loans. Through the Bank, chief executive made short-term loans to inner-city investors interested in flipping house in low-income neighborhoods. Because the investors often did not have easy access to loans from traditional banks, the company charged hefty fees and exorbitant interest rates.

Another scheme in involved a European man who enticed flippers – for a substantial fee – with cheap properties and access to expert renovators. He then sent his investors to the Georgia Bank to obtain loans to buy his properties. Allegedly, kickbacks were paid to the loan officers at Georgia Bank who approved the funding. The European man is now in federal custody on charges of fraud. The European Man and the unnamed loan officer made money, but many of the properties were never renovated and the investors lost their money.

These flipping schemes have created additional problems in some of Atlanta’s most needy neighborhoods – with newly flipped homes sitting vacant and attracting criminals and squatters. Although many flipping schemes have come to light over the last several months, The Wall St. Journal reports that home flipping is making a comeback with investors buying up foreclosed properties. These flippers need “cold cash, lots of local-market knowledge and strong nerves.”

The best advice for real estate investors interested in getting involved in the flipping market is to do your homework, be wary of schemes, and be willing to take some risks. Contact a dedicated Georgia real estate fraud attorney who can help you determine if the property you are interested in is suitable for flipping. However, if you believe, you have been a victim of house flipping fraud; please contact The Libby Law Firm immediately to discuss your case.
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The Atlanta, Georgia, business litigation lawyers at our firm find that most plaintiffs and defendants involved in Georgia business lawsuits turn exclusively to the state or federal courts to resolve their cases. In fact, most clients assume state and federal courts are their only option for resolving their disputes. However, there are excellent dispute resolution alternatives, which may have exhaustive benefits for our clients.

Arbitration can be an effective means of dispute resolution, especially for parties who desire a fast resolution on a complex issue. The Official Code of Georgia contains a section laying out the necessary procedures for arbitration in Georgia. This section is generally referred to as the Georgia Arbitration Code, and is located at O.C.G.A. §9-9-1, et seq.

Arbitration, though very similar to the court system, can provide parties involved in business disputes with some unique advantages. First, the parties dictate how they want the arbitration to proceed by designing their own timelines. Unlike the Georgia court system where it typically takes at least a year (or sometimes much longer) for a case to proceed to trial, the parties to an arbitration can schedule a final arbitration hearing within a few months after initiating the arbitration process. This is why many business contracts specify that arbitration is the required form of dispute resolution if a conflict arises. Another advantage to arbitration is that the parties can select an arbitrator who has specialized training or experience in a technical or specialized area of the law. This is in marked contrast to the court system where judges, though generally knowledgeable on the law, may not have any pertinent experience related to a complex business matter, such as construction, intellectual property, or employment. When parties use the court system, it is also important to note that they have no say in which judge is ultimately appointed to oversee their cases, while in arbitration, the parties typically collaborate in choosing a specific arbitrator.

Whether you may be involved in a Georgia business litigation case or are presently engaged in an ongoing business dispute, our Atlanta business lawyers would welcome the opportunity to evaluate your situation and advise you of your options.
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As an Atlanta, Georgia construction defect litigation lawyer, I place most construction defects into four (4) legally distinct groups:

Design Defects: These defects occur when a design professional, such as an architect or engineer, creates a building design, which is not within acceptable industry standards. A simple illustration of design defect is the creation of a building with a roof that results in poor drainage, inadequate structural support, or allows water penetration.

Material Defects: These occur when substandard building materials are used and/or cause damage to the building. An illustration of the use of substandard building materials would be leaking windows even though they have been properly installed (Note: Here, the window materials must be defective).

Construction Deficiencies: These usually arise from poor craftsmanship or workmanship that is not performed in a professional workmanlike manner, which is acceptable in the industry. An illustration is cracks in foundations or walls, rotting wood, electrical problems, and plumbing leaks.

Subsurface Deficiencies: These usually arise when houses are built on hills and areas were providing a stable foundation is difficult or where the builder fails to secure a suitable foundation. An illustration of this would be structural movement or shifting, building without proper grading or below grade.

If you believe your construction defects or significant problems, you should have it inspected immediately by an experienced architect or engineer. The type of inspection you should have largely depends on the type of problems you are experiencing. Hiring an experienced Georgia construction lawyer is a critical step in protecting your rights as a homeowner and assisting you in finding the right architect or engineer. Not every architect or engineer is in the business of inspecting and evaluating defective work.

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As an Atlanta, Georgia Business Attorney, I advocate many different forms of business entities under which a Georgia company can operate. One of my favorite entities is the Georgia Limited Liability Company (LLC). This is an entity recognized by the State of Georgia and affords its owners and investors (members) significant protection from liability as well as significant tax advantages. Such protections and savings are the primary benefits of setting up and operating under a Georgia LLC.

It is important to have an experienced Georgia business law firm set up your Georgia LLC. The costs are relatively inexpensive considering the time, investment, and serious nature of operating your Georgia LLC. Our Atlanta, Georgia, business attorneys can give you an overview and guidance on how to keep records and conduct business. Moreover, while it may seem easy to operate an LLC, seeking and following the advice and guidelines of an experienced Georgia Business Attorney is critical. Our Georgia business lawyers will walk you through the steps to protect your business as well as your personal assets. This could very well prevent “Piercing the Corporate Veil” and accessing your personal assets to pay liabilities and debts of the LLC. This is just one reason it is so important to have an experienced Georgia business lawyer work with you in setting up your LLC.

NOTE: Buying some “operating agreement” form over the internet to set up your business affairs likely is an immense and potentially costly mistake. This type action can get you in significant legal trouble with dire legal consequences. Likewise, setting up an LLC online and/or without the representation of a Georgia business lawyer is a dangerous and likely costly and poor business decision.

Once the initial research has been performed and information has been gathered concerning the structure of the Georgia LLC, the LLC’s application, By-Laws, Articles, Registered Agent, and other important matters are submitted to the Georgia Secretary of State for processing. Georgia law firms with significant experience in this area also can set these matters up online and a proper Georgia LLC can be set up in just a couple of days. Provided everything is in order, the Georgia LLC is created and its members will be authorized to do business as the LLC in the state in which the LLC is organized.
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The Atlanta tax attorneys as well as the Atlanta Business Attorneys at The Libby Law Firm are always informing, educating, and assisting individuals and business owners about incurring taxable income (tax liability) without the liquidity to pay taxes on this income. This scenario can be a taxpayer’s worst nightmare and often generates significant internal struggles, infighting, and conflict between business owners. The Atlanta business lawyers and Atlanta tax lawyers at our Firm refer to the scenario of incurring tax liability without producing the liquidity to pay these taxes as “phantom income.” “Phantom income” means you have taxable income but no cash to pay taxes on this income.

“Phantom income” occurs most frequently in Subchapter S corporations and limited liability companies (LLCs), which are presently the most common and popular business entity forms for doing business in Georgia. This is especially true in small businesses owned by taxpayers who may not be aware how “phantom income” can be incurred or what “phantom income” is.

“Phantom income” occurs when Subchapter S corporations and LLCs are taxed. The income in these business entities is passed to the owners whether or not cash is actually distributed to the owners. Moreover, if a business makes a profit, at least for tax purposes, but the business owner(s) keeps most of the money in the business as so often is the case (especially in small businesses), then a “phantom income” scenario can result.

For example, suppose your business has a tax profit of $100,000, but you only distribute $10,000 because you need the rest of the money in the business to keep operating the business. However, you are taxed on $100,000 even though you only received $10,000. This is one instance where you have been the unknowing casualty of “phantom income.”

Thus, the question arises: How do you avoid phantom income? The answer is the proper drafting and prudent use of a well-crafted operating agreement.

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The Atlanta business litigation attorneys at our law Firm have seen a dramatic increase in Georgia business litigation claims pertaining to partnerships, contracts, leases, and other business matters. This is especially true in the Metro Atlanta area where business failures are on the rise, financial stresses are abundant, and business outlooks and attitudes have seemingly forever changed.

On top of the legitimate “deals gone bad” amongst Atlanta, Georgia business deals and relationships, the perceptions of doing business in the Metro Atlanta area have also changed. Business persons of all sorts have become ever increasingly apprehensive and even mistrustful of many business dealings with otherwise close partners, acquaintances, and colleagues.

In these ever-changing economic times, one premise of business relationships has become abundantly clear. It is as follows: Look out for number one and be wary, skeptical, and guarded of all others! In fact, deals that would have otherwise have been done on a handshake; now need top-level scrutiny by experienced and sophisticated Atlanta business attorneys.

If you feel you are in a vulnerable situation as to your business relations or you may suffer damages because of the business dealings of others, or you just want to make sure you are protected in these troubled ruthless times, you should contact one of our Atlanta business lawyers to evaluate your situation and advise you accordingly. The Libby Law Firm assists individuals, businesses, and entrepreneurs in Atlanta business litigation claims, business transactions, and protection of businesses and their corresponding individuals.
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As an Atlanta, Georgia, arbitration, home defect, and construction lawyer, I am noticing more and more frivolous claims from Georgia home purchasers and buyers that architects, contractors, builders, sub-contractors, and other persons involved in the construction of a new home, are failing to meet the obligations of the construction contract. These same Georgia home purchasers and buyers are refusing or failing to allow “draws”, or otherwise pay construction professionals, per the construction contract. In fact, they are finding any reason to say that the Georgia construction professionals have not met their obligations per the Georgia construction contract. In my Atlanta, Georgia, construction arbitration and real estate dispute law firm, I am finding that many of these claims, by the purchasers and buyers of these homes, are arising from the fact that these new home purchasers and buyers have fallen on hard financial times.

To be brief, they are looking for a way out of paying you under the obligations of your Georgia new construction contract. Under their theory, a penny owed and not paid, is a penny earned. This is a terrible and pitiful way to try to get of paying under the new construction or new home purchase contract or bargain for a reduction in price. This is especially true given the tough times that construction professionals are enduring in Georgia. These hard-working construction professionals must be paid every penny they have contracted for and earned. This is especially true given the harsh financial and real estate environment they must endure.

In my Georgia construction arbitration and real estate dispute law firm, I handle many matters where purchasers and buyers of new homes are refusing to pay for the design and construction of their home and complaining about upgrades, construction timing issues, “punchlist” items, quality of work, and sub-contractors issues. The list of items and excuses I have heard is endless, somewhat pathetic and every now and then, humorous.

In successfully representing countless Georgia architects, contractors, builders, sub-contractors and other construction professionals, it is important to note that arbitration clauses in new construction contracts are binding and the sole remedy for causes of action and claims, which occur on or after April 28, 2006. Any prior construction or building dispute claims shall continue to be governed by prior law.

As such, every construction professional should know that new home purchasers and buyers are looking for any and every way to avoid paying the full and just price for their new home. The fact that they may have fallen on difficult financial times is their problem, not yours.

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In my practice as an Atlanta, Georgia partnership dispute lawyer, I often see one partner left trying to keep up all the accountability of the business and/or partnership responsibilities to the detriment of their livelihood, family, monies, and credit, while the other business partner or partners disappear into the “woodwork” having little or no accountability for partnership debts, liabilities or problems.

Partners owe a fiduciary duty to each other and are generally jointly and severally liable for partnership responsibilities, liabilities, and debts. Therefore, our Firm’s advice is not to let your partner off the hook just because you are adhering to your own sense of responsibility. If you have been in partnership and feel you have been left with all the responsibilities, liabilities and debts of a failed partnership, please know that you should contact an Atlanta partnership litigation attorney immediately. The Libby Law Firm assist individuals, businesses, and entrepreneurs in holding their respective partners to their obligations. Despite the circumstances of your failed business and/or partnership, our Firm would appreciate the opportunity to hear about your circumstances and offer our assistance in rectifying and equalizing your partnership responsibilities.
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