Credit Freeze

Nearly half of Americans may have had their information stolen in the massive Equifax data breach revealed last week.  One way to protect yourself from further harm is to freeze your credit.  A credit freeze prevents creditors from accessing your credit report and prevents credit cards, loans, and other services from being approved in your name without your consent.  You can place a credit freeze on your account by calling each of the credit reporting agencies listed below.  For more information, visit the Federal Trade Commission’s Credit Freeze FAQs.

Equifax: (800) 349-9960
Experian: (888) 397‑3742
TransUnion: (888) 909-8872

You can also choose to contact the three agencies by mail. Below is their contact information and copies of their individual form letters.

Equifax
PO Box 105069
Atlanta, GA 30348-5069
Equifax Form Letter

Experian
PO Box 9554
Allen, TX 75013
Experian Form Letter

TransUnion
PO Box 2000
Chester, PA 19016
TransUnion Form Letter

 

“As Is” Clause in Real Estate Agreement

When using an “as is” clause, the seller and the realtor are still obligated to make disclosures about the property, unless the buyers executed a valid waiver to receive the real estate condition report.

Under Wis. Stat. § 709.01, the law requires that sellers of real estate complete a real estate condition report. There is no exception for property sold “as is.” The only exceptions from the requirement of providing the real estate condition report are for (a) Personal Representatives; (b) Trustees; (c) Conservators; and (d) Fiduciaries who are appointed by, or subject to the supervision of a court. Wis. Stat. § 709.01(2).

Sellers of real property also have a duty to exercise ordinary care — the legal obligation to refrain from any act which would cause foreseeable harm to another or create an unreasonable risk to another. Sellers may be liable if they intentionally conceal defects or prevent buyers from investigating the property to discover the defects. Sellers may also be liable to buyers if they make false affirmative statements about the property. Sellers may further be liable if they do not disclose material conditions which buyers are in a poor position to discover (e.g., fire damage that has been repaired or prior mold or pest issues).

Similarly, pursuant to Wis. Admin. Code REEB 24.07, real estate agents are required to inspect the property to familiarize themselves with the property’s condition and disclose adverse conditions to potential buyers. Wis. Admin. Code REEB 24.07(1)(b) further requires real estate agents to “make inquiries of the seller on the condition of the structure, mechanical systems, and other relevant aspects of the property as applicable.” Simply because the real estate is being sold “as is” does not mean that a real estate agent no longer must comply with such prescribed duties.

In conclusion, if you are selling your property and you want the sale to be an “as is” sale, you may still be required to make disclosures about the condition of the property. To limit your risks, talk to your attorney about proper disclosures when selling real estate.

Health Savings Account Account (HSA)

Have a Health Savings Account? Do you know what happens to your HSA when you die?

An HSA account is a tax-exempt, medical savings account that is available to United States taxpayers who are enrolled in a high-deductible health plan. Over the last few years, HSA accounts have become more common. However, many HSA account owners are unaware of the implications of the rules governing HSA accounts in the event of their death.

Death of an HSA Holder

If you die with an HSA account and you have named your spouse as the designated beneficiary of your HSA, then the HSA will continue to be treated as your spouse’s HSA after your death. Your spouse will then be able to use the money tax-free to pay for qualified medical expenses even if your spouse is not enrolled in a high-deductible health plan. Your spouse will also be able to use the account funds to pay for any qualified medical expenses that you incurred prior to your death if your spouse pays those expenses within a year of your date of death. However, if your spouse is younger than 65, takes a distribution of funds, and uses the funds for something other than medical expenses, then your spouse will be required to pay a 20% penalty tax on the amount withdrawn plus income taxes. (This is the same rule that applies to you while you are alive.)

If you named someone other than your spouse as the HSA account beneficiary, then the HSA account stops being an HSA, and the fair market value of the HSA becomes taxable to the beneficiary in the year in which you die. However, the taxable amount can be reduced by any qualified medical expenses that you incurred prior to your death if those expenses are paid by the beneficiary within a year of your date of death.

If no beneficiary is named or, in other words, if your estate is the beneficiary of the account, then the HSA and the account value shall be included on your final income tax return. The amount reported on your return cannot be reduced for the payment of any qualified medical expenses incurred by you and that your estate paid within a year of the date of your death. This is true even if your spouse is the sole beneficiary to your estate.

In conclusion, naming your spouse as the beneficiary of your HSA account carries numerous tax advantages. If you are not married, naming another person as the beneficiary of your HSA account is a good option, depending on the value of the account and the tax implications you might have if you named no beneficiary and had the value reported on your final income tax return.

Seller’s Closing Costs

Many sellers of real estate do not realize the costs associated with selling real estate in Wisconsin. I am frequently in meetings with clients and catch sellers by surprise when I start mentioning the fees that are associated with the standard offer to purchase form which provides for the seller to pay for an owner’s title policy, the real estate transfer return fee (charged by the Wisconsin Department of Revenue and based on .003% of the value of the property being transferred), mortgage satisfaction fees, closing service fees (normally to a title company), wire transfer fees, and unpaid real estate taxes and assessments (if any). Additionally, a seller is expected to prorate real estate taxes and give the buyer a credit at closing which is usually based on the number of days the seller owned the property in the year of closing and based on the net general real estate taxes for the preceding year.

Altogether, these charges and buyer credits add up and can result in an unexpected surprise if the seller is unprepared. It is possible to negotiate whether the buyer or the seller will pay for the above fees. Therefore, if you are aware of what fees are typically associated with the transaction, then you will know what fees to negotiate with the other party to pay for.

Seller’s “Right to Cure”

A Seller’s “right to cure” does not mean that the Seller must cure any defects uncovered during a home inspection. Rather, a Seller’s “right to cure” means that the Seller simply has the option to cure a defect once the Buyer notifies the Seller that there are defects to which the Buyer objects.

When the Buyer provides notice of defects to the Seller, the Buyer must include a copy of the inspection report and a list of the defects to which the Buyer objects. After delivering the inspection report and the objectionable defects to the Seller, the Seller may elect to cure such defects. If the Seller elects to cure the defects, then the Seller shall deliver written notice to the Buyer stating that the Seller is electing to cure the defects.

If Seller does not wish to elect to cure the defects, the Seller may deliver notice to the Buyer stating that the Seller will not cure the defects. The Seller also could do nothing after receiving Buyer’s notice of defects. If the Seller does nothing or delivers a notice to the Buyer stating that the Seller will not cure the defects, then the Offer to Purchase will be null and void, and the Buyer should receive its earnest money back. In conclusion, a “right to cure” does not mean that the Seller must cure any defects; it simply gives the Seller the option to cure defects.

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