Delaware Business Lawyer Blog

With some married couples, their house is owned by only one of them because the other spouse doesn’t have great credit. The purpose of this article is to explain that poor credit is not a reason for your spouse to be deprived of home ownership.

In order to get the most of this article, you need to understand the difference between a Note and a Mortgage. The Note is your written promise to pay back the money you're borrowing from your lender. The Mortgage, on the other hand, is a lien against your home which gives your lender collateral backing up your promise in the Note.

The Note is signed by the individual who has to pay back the loan. The Mortgage is signed by whoever owns the home.

When you apply with the mortgage company, let’s say they tell you that your spouse can’t be on the mortgage due to credit issues. What they really mean is that your spouse can’t be one of the “borrowers” whose credit determines whether the loan will be approved. Again, that's the person who will sign the Note. When your mortgage company says your spouse can’t be on the mortgage due to credit issues, they don't really mean that your spouse can't be on the mortgage document that gives then collateral backing up your promise to pay.

Let's take a look at two scenarios.

#1. Husband is the sole owner of the house. He signs the Note promissing to repay the loan. As the owner, he signs the Mortgage as collateral for his promise. On top of that protection, the mortgage company is also given title insurance.

#2. Husband and wife are both owners of the house. Husband signs the Note promissing to repay the loan. As the owners, both husband and wide sign the Mortgage as collateral for husband's promise. On top of that protection, the mortgage company is also given title insurance.

In both scenarios, the mortgage company has the husband's promise to pay back the loan, and it also has the house as collateral.

Based on all of the above, if your spouse is not on the Deed to your house, it might make sense to use the occasion of refinancing to have your spouse's name added to the Deed. You're real estate attorney can get this done for you.

As a Delaware real estate attorney, I’m often asked to give an estimate of what the closing costs will be for a refinancing settlement. One of the costs that applies to every refinancing settlement in Delaware is the cost of a lender’s title insurance policy. Calculating the amount it will cost you for title insurance is pretty easy. The formula is $2.50 per thousand for the first $100,000.00 of the mortgage amount, and $2.00 per thousand for the balance of the mortgage.

Here’s an example of how it works. Let’s assume you’re getting a mortgage in the amount of $260,000.00. For the first $100,000.00, it’s $2.50 per thousand. There are 250 thousands in $250,000.00 and so the cost for the first $100,000.00 is $250.00. For the remaining $160,000.00 ($260,000.00 - $100,000.00), you can see that there are 160 thousands in $160,000.00. Multiply 160 times $2.00, and you get $320.00. The final step is to add $250.00 and $320.00, and you end up with $570.00 as the total cost for lender’s title insurance for a mortgage of $260,000.00.

If you purchased title insurance within the last 5 years, you may qualify for a 40% discount. Be sure to ask your settlement attorney to let you know whether you qualify for what’s known as a “re-issue rate.”

The San Francisco Chronicle runs a regular column written by Kathleen Pender. It’s called “Net Worth.” Ms. Pender touches on very interesting issues, and I recommend that you check it out from time to time. Recently, she wrote “Lose Your Job? There Could Be Tax Surprises," and "Are You An Idiot To Keep Paying Your Mortgage."

There's an informative blog written by Jay Fleishman, an attorney in New York, that focuses on how consumers can fight back aginst abusive debt collectors. Two recent articles are "Debt Collectors Are Facing Reality" and "Dealing With Debt Collectors 101."

As a Delaware business owner, what would you think if one of your employees who quit her job applied for unemployment compensation? At first, you’d probably think that there’s no way she could possibly qualify for benefits. But then you check with your Delaware business lawyer and learn that there are situations where an employee who resigns can in fact collect unemployment compensation.

The case is usually decided on a finding of whether she voluntarily quit her job with or without good cause. Under Delaware law, in order to be eligible to collect unemployment compensation benefits, the employee must show that (1) she either voluntarily quit her job with good cause or involuntarily quit, and (2) that she’s eligible to work.

If the employee quit her job involuntarily and is available for work, she can collect unemployment benefits. If, however, she quit her job voluntarily, in order to be eligible for unemployment compensation, she has to show that she had good cause to quit her job.

What’s considered “good cause to quit?” Good cause has been defined as such cause as would justify one in voluntarily leaving the ranks of the employed. It can include a substantial reduction in wages, work hours or a substantial deviation in the working conditions from the original agreement of hire to the detriment of the employee. The burden to show good cause is on the claimant. Good cause does not exist, however, just because the employer created an undesirable situation. The employee must first exhaust her administrative remedies by, for example, notifying the employer of the undesirable situation.

The IRS has published a Tax Calendar For Small Businesses and Self Employed. This 2009 calendar of due dates and actions can actually be imported into Outlook. According to the IRS, this calendar is packed with useful information on General business taxes • Internal Revenue Service and Social Security Administration customer assistance • electronic filing and paying options • retirement plans • business publications and forms • common tax filing dates • federal legal holidays. Look for some brain teasers too! Each page highlights a different tax issue that may be relevant to your business. You may find it helpful to read through the entire calendar, then refer back to pages that pertain to you. Don’t miss the tear-out Hints & Help Guide at the end of this calendar. You’ll find room on each month to add your notes, such as state tax dates or appointments.

Many homeowners have decided to refinance but they're wondering whether they should apply now or wait until rates fall some more. As a Delaware real estate attorney who's been asked this question many times, one of the answers I used to give is that you'll never know when the rates have gone as low as they can until you've missed it and the rates have gone back up. Interest rates are lower than they've been since World War II, and as long as you can reduce your monthly payments significantly by refinancing now, there's no reason to wait.

But there's something else to consider when deciding the right time to refinance. Many of my clients have been applying to mortgage companies whose settlement costs are so low that it makes sense to refinance now with the plan being that if rates go down further, they will refinance again. In fact, one client had a settlement last week where the mortgage broker paid 100% of the costs, so refinancing was a no-brainer for this client. On the way out of my office, my client said that he would do this again and again if rates keep dropping.

Some recent articles to read on the subject of when to refinance are:

"Time To refinance?"

"Homeowners Rush To Refinance"

As Delaware real estate lawyer, I’ve been closely following the mad rush to refinance home mortgages. When you apply for a new mortgage, your credit score will be looked at closely. Credit scores have been in the news a lot lately, and there are some very good articles on this subject.

Two extremely interesting articles are "How to Add A Written Statement To Your Credit Report" and "Consumer Credit Report Statement Sample Letters."

There are also things you can do before you apply to improve your credit score. Check out:
"Increase Your Credit Score Before Refinancing That Mortgage"

"This Year, Resolve to Save More and Improve Your Credit Score"

"Knowing Your FICO Credit Score"

If you're an employer here in Delaware, it's important to understand the rules relating to unemployment compensation. A great place to start is the Delaware Dept. of Labor's "Unemployment Insurance Handbook For Employers."

You should also become familiar with the term "just cause." Let's say you've just received written notice that an employee you recently fired has applied for unemployment compensation. You're going to have to decide whether or not to challenge this employee's eligibility for benefits. In making this determination, a term that often comes up is "just cause."

As a Delaware business attorney, I reviewed this issue just last week with a business owner. Simply stated, an employee who is fired for just cause is disqualified from receiving unemployment compensation benefits. The Courts in Delaware define just cause to mean a willful or wanton act or pattern of conduct that's in violation of (1) the employer's interest, (2) the employee’s duties, or (3) the employee’s expected standard of conduct.

“Willful and wanton conduct" means conduct that's evidenced by either a conscious act by the employee or reckless indifference that leads to a deviation from established and acceptable workplace performance.

Just cause has been found to exist, for example, where an employee failed to comply with his employer's policies. As the employer, you'll have to show that the policy actually existed, that the employee was aware of the policy, and that the employee knew a violation of the policy could be reason for termination.