Buying a Condo? Special Issues to Take Into Consideration.

Condominiums are growing in popularity, and for a number of reasons. But when purchasing a condo, people tend to assume that the level of due diligence required prior to purchase is less then that of a standard house. In fact more due diligence is required. This article goes over some of the key elements, with respect to a Condo purchase, you need to make sure you look at prior to giving a binding offer.

Due Diligence is the process of taking the required steps for you to become properly informed about the situation surrounding the potential transaction. If you are a Real Estate expert, you probably don't need to ask as many questions then if you are not.

With all property there are basic forms of due diligence, such as title checks. In addition to standard title issues, buyers should also do the following

• Contact the police detachment in the area and ask if there is any knowing criminal history with the property, or open complaints.
• Contact the fire department and ask if there have been any fire calls to the property.
  
• Contact the local health board and ask if there are any open or past complaints from the address.
• Contact City Hall, and make sure there are no pending compliance orders (tree removal, etc)
• Contact City Hall and ensure you have the latest assessment, and the valuation model used for that assessment.
  

Five phone calls and a wealth of historical information that could have serious implications to your insurance policies, or resale potential later on.

But what about Condo's. Certainly they are managed by boards, so you don't have run down or other issues right?

WRONG.

I find Condo's interesting for one main reason. They are multi million dollar corporations that are managed by people with little or no business training. So it is vital that you are not assumptive about a Condo's operating model. You need to ask the questions. We will break these questions up into three categories. The Corporation, Legal Issues,and Structural/Building Issues.

The Corporation is effectively the board. They are the ones responsible for managing the day to day maintenance and obligations of the condo. Every owner pays a monthly fee into a general fund that is used to manage general expenses. With that, there are rules and regulations that the occupants need to follow, in the form of by-laws.

CORPORATION

1. Know and ask about the board. Current, and past.

Here you want to get the pulse of governance. Is this a dictatorship by one or two people who feel the board is their own pet project. Or is this a communal effort? Talk to a board member, and ask them about things like

a) how many vacancies are their on the board

This helps show the interest in the board, and may highlight control issues.

b) are their known significant political issues

This helps show if there are internal struggles, that may cause problems for significant capital expenses later on.

c) Ask for a copy of the last 2 or 3 years of board meetings.

These minutes will show all the issues tenants have brought up. It gives you an idea of the tenant profile, what issues are outstanding, and the way the board handled it.

2. Know the finances.

The finances are like windows to the soul of a corporation, and condos are no different.

a) Get last years budget and audit statement. Get this years budget.

You may not be a financial guru, but you should get a copy of the last years budget, and year end audit to see how close they are together. Also ask for this years budget. That shows what type of expenses are forthcoming.

b) Map out what the condo fees are for.

You should also map out exactly what the condo fees include. Heat, Water, shared facilities like pool/tennis court etc.

c) Know what the reserve fund is.

A Reserve fund is a pool of money that the condo corp will keep on hand in the event there is the need for immediate or emergency repairs. For example if it is a central shared heat, $12-$15k should be on hand to handle boiler central heat issues at any time. The reserve fund is important. If this is an older condo (20 years or more), then the risk of a major roof/structural issue increases significantly. If there is no reserve fund, then when such repairs are required, each tenant needs to cough up their share.

So if you buy a condo with no reserve fund, a few weeks after you move in, you may be slapped with a $15k shared reserved contribution for a new roof. This is why you need to know the health of the finances before you move in.

If there has been a call to contribute by the owners, this is called a pending or current cash call. Be careful as these are liabilities on the condo, that you may get bit with if you don't do your due diligence.

d) Know the management services.

Try to talk to the management company and get their feel for operations, the board, the property, and [pending issues. Third party contractors have an interested habit of being blunt when they are unhappy. You should also keep track of the expenses, knowing if the operating or management costs are due to increase, or if the contract is up for renegotiation.

This knowledge helps you anticipate costs, and shows stability in the organization.

e) If you are looking to rent out the Condo, know if there is a rental pool, and other rental issues such as vacancy rate, owner:renter ratio etc.

Fees, guidelines, regulations are all important so you know the issues for potentially renting.

LEGAL

Legal issues include current liabilities, anticipated liabilities, and compliance issues.

a) Is anyone suing the condo right now?

Has someone been injured on the property, is a management company suing to get their money they are owed, or is the condo suing a tenant for failure to pay, or breach of a by-law. Know where the corporation currently sits with law suits. That could have a significant financial impact down the road. You don't want the reserve fund for the roof to pay for a claim.

b) What type of insurance does the condo carry. Is it sufficient and how is it managed. Is there a claim process? Does it include water breaks?

The insurance is often skimped on by boards who are struggling to keep their books balanced. But without proper insurance your investment is at serious risk. the type level, and quality of insurance shows the attention the board keeps. In a condo situation, I have never seen 'too much" insurance. I all too often don't see enough.

c) Does the condo qualify for insured mortgages like Fannie/Freddie Mae, CMHC?

There are regulatory requirements for your home to qualify for a low down payment insured mortgage in Canada by CMHC, or in the US through the Mae organizations. You will need to make sure this condo fits the bill if you intend on using an insured mortgage provider. In addition it will effect your resale abilities.

d) Contact City hall, as pointed out above.

I need to repeat this as this is a regulatory issue. If this is multi phased, ask the zoning office if there are any issues or contentions with the zoning process for this project. In addition talk to the building inspectors office and ask what type of failures, remedies,or complaints have been lodged if any. It all paints a picture for you.

STRUCTURAL

Let me reiterate. You must ALWAYS get an inspection on the home. Just because it is a condo does not mean you don't have to get it inspected. In fact the risk of collateral effects is higher, so an inspection is even more important. It will also reveal dodgy maintenance which shows the board may be corner cutting or incompetent. Two things you don't want in your investment.

ALWAYS GET AN INSPECTION.

a) What is the age of the building?

Straightforward but important. If this is multi phased what are the years of the different phase completions.

b) What are the significant maintenance or refirb projects that have been completed in the last 2 years.

These are things like anew sprinkler system, roof, resurfacing driveways, exterior windows etc

c) Are there any deferred projects, put off for lack of funds, or properly planned?

This is the one question that should really give you a sense of the overall maturity of the condo board. How well do they plan, strategize, and execute.

Things you should ask or look out for include the roof, exterior surfaces windows, siding), gardens, common facilities (heating, pool), communications, garage/parking lot.

d) use a standard check list for the actual unit, looking for all the usual suspects.

This is where your inspection is very important. Your inspector will highlight issues of contention for you with the unit, and can be used to tour common areas as well.

It might seem like a large task, but its not. Its just a few extra steps with the condo's to ensure that people who are able to make decisions about your investment, know what they are doing and have a track record for it. Condos are the last places to be assumptive it will be fine. Condo's can be very political and tense to live in when you are not happy with how things are being handled.

In addition your mortgage provider will also want most of this information, so doing the work upfront saves time, and shows a professional attitude on your part down the road.

So now that you have done your due diligence you can decide to make the offer. Always try to make it conditional on your inspection, on financing, on selling you home, and if possible on your retention of employment up to closing.

If you do have a specific real estate or condo legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney. All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

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Property Disclosure, Statement of Condition

Buying a house can be a very stressful experience. There are so many unknowns with the quality of the house, not including the bucket loads of money you need to spend. Most locations require that sellers provide buyers with a Property Disclosure Statement, or A Property Condition Disclosure Statement. They are the same thing and basically it is a report card of the property filled out by the seller.

If you are a seller, it is vital that you fill this out correctly. Knowingly forgetting, or misleading can cause serious problems down the road. This is part of your sales pitch, and if it is false, it is a type of misrepresentation. You should also know that false inspections can be used to undervalue your home.

If you are a buyer it is very important to read the statement, and make sure that you understand the key elements that may cause a problem. Also look for soft language, such as "slight, mild, minor, suspected, possible". Those are all words that could be hiding a bigger problem.

But most important. Get a home inspection. If you do not get an inspection and take the disclosure statement at face value, there are two problems.

1. It is hard to prove the problem knowingly existed before you moved in;

2. You have not done your due diligence. In other words the court expects a buyer to take basic steps to protect themselves. Failing to get a home inspection is the single largest problem new home owners have when suing the former owner.

The market has shifted, so it is now much easier for a buyer to take the time and get an inspection prior to signing on the dotted line. Should you put an offer on a house, make sure that it is conditional on the inspection. Also consider other conditions such as subject to your selling your home, financing, and a new one... subject to employment retention.

Contracts for the sale of land are different then other contracts. If you contracted with the small store on the corner you would buy a bag of tomatoes, and you did not, the courts would not force you to buy the bag. They would rule you have to pay the profit margin.

Houses, Land, Art, and Collectibles are different. The courts can try to force the transaction. So if you try to back out of buying a house, and you don't have the conditions in place, you may be in a bit of a pickle.

This is why it is VITAL to get a few conditions on buying the property. Most important is the subject to the inspection.

When picking an inspector it is not suggested you use one from your realty company. Get an independent inspector. In addition walk through with the inspector. Make sure they are earning their money. Ask question. If you have a contracting friend it is always a good idea to have them tag along with the inspector.

I have a friend named Polly. He builds foundations. The city inspector often does not inspect properly. However if Polly is there, the inspector feels they need to "earn their wage" and gives a better effort. The same goes with any service. When their are eyes, there is doubt. People as a rule work better under supervision.

So don't cut the corner and try to save $200 for a home inspection. If you are confident in the value of your home, have your own inspection done. This can be used to counter any inspection that may be fraudulent. It also helps if there is a dispute down the road.

Hire an inspector, follow them through, and read the report. Finally make sure you fill out the Disclosure statement properly, and if you are buying, read it!

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



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Land Ownership Basics Explained

Property law in law school is not one of the most popular subjects, although it is mandatory in most schools. As a result of land existing far before humans, or the creation of law, the rules for land ownership are a mismatch of old and current influence. Regardless of the history, there are a few elements that are easy to explain, that will give you a solid foundation on understanding land ownership. This applies to the entire Common Law area.

The concept of land ownership is based on Title. Title is the description of someones rights over a piece of land. Someones rights over a piece of land can vary immensely. It is a sliding scale from no rights to absolute control. The type of control is called an interest. If you are in control now, you have a present interest. If you are going to be in control in the future you have a future interest. Here are some examples of a present interest:

• Most people have no rights to enter Area 51. They are trespassers with no title.
  
• When you enter Tim Hortons or Starbucks as a customer you are a business guest. Your title is a License (permission) to use the property as a customer. That License can be revoked at any time. You can get kicked out for any reason.
• If you are at a Hotel, your title is the right to stay and live in the room for the contracted period, in private. This is quiet possession.
• If you rent from a home owner, you have the right to live in the house/apt for the lease period in private. This is also quiet possession.
• You have a shared driver with your neighbour. The land is technically theirs but you have a certain title to use the land for that purpose. (easement)
  
• If you own a home outright you live in your title is absolute.

Here are some examples of a future interest.

• If you rent out your home, you have a future interest to live in it, when the lease expires. That is future possessory interest. You have the right to posses it in the future. You can sell that interest by re-leasing, or re-renting the property out.
• Your parents have transferred their house into a life estate, and you get the house on their death. That means your parents have a present possessory interest in the house until their death, and you have a future possessory interest after their death.

Here are some items that complicate title, which are called encumbrances. These issues can seriously complicate a sale.

• If you owe someone/business money, they may go to court and ask for a lien to be placed on your house title. That basically says to anyone, "If you buy this piece of property, I need to be paid off before you get clean title"
• If you owe Tax, either property or income, that may be put on as a lien/encumbrance.
• If you have a mortgage or have used the house as collateral for a loan, that is an encumbrance
• If you owe child support that will cause title problems
• If the house is co-owned, and one of the owners wont co-operate in a sale, that can complicate things.
• If you have rented or leased the land, that is a right that gets passed on with the sale (unless your lease states otherwise)
  

So you can have a present or a future right to the land. As mentioned that is the interest. While you have a current right to own the land, you may not have a right to be on it. That is the possessory part. Your landlord although she owns the land, is not allowed to enter it while you are living their. Your landlord has a non-possessory interest in the land.

If you have a 10 year business lease, and the building is sold, the new buyers buy it SUBJECT to (which means they must honour) the 10 year lease.

The various types of title are looked at when doing a title search prior to a sale. Your Lawyer/Title Insurance Company will go to the land registry in your area (or recorder of deeds in your county), and look up the piece of land (Roll Number), and check to see if there is anything on file, like the items listed above, that will complicate a sale.

Changing the ownership or interest in the land is called a conveyance. Any time there is a conveyance or a lien or something put on the land, it is recorded in the county, or land registry office. This is a central location for people to be able to know who owns land, and under what circumstances.

That explains the basic concepts of land ownership. In the next article we will look at the sale of land, deed types, and disclosure.



If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



Copyright © 2009 Peter MacSweeney. All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

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Difference in Country, State, Provincial Laws Explained

Lana is an HR guru who live in Ontario. She was wondering how useful it is to have general legal information. Specifically she asked

"Why would I read anything that is not related to Canadian law? If something says U.S. law I will ignore it. It is not relevant to me."

Lana has a very common perception about the law. However Lana may not be giving enough credit to the basic concepts of law that are nearly universal in the Common Law world. The major Common Law jurisdictions include, Australia, Canada, Ireland, England, New Zealand, Northern Ireland, United States and Wales. Scotland, Quebec and Louisiana have mixed civil/common law rules. Most Caribbean nations, Belize, and south pacific nations also use common law systems.

Countries with significant colonial influence such as Botswana, Hong Kong, India, Indonesia, Kenya, Malaysia, Namibia,South Africa, Tanzania, and Zimbabwe, all use Common Law to some significant extent in their judicial system.

Common Law, as we know it in the western world, is law that originated in England. Courts had been set up, and through trials, and hearings, different rules came to be. Judges created laws when there was no written law. This concept still applies today. Where a law needs interpretation, or needs to be applied, the courts will interpret the law. Often they will create a list of criteria that must be met for a provision in a law to be enforced.

When looking at a comment of law, and wondering if it applies in you area, think to yourself. "is this a general principle or specific". General principles of law are very similar between Common Law countries. Specific laws can be very different. The more technical, the more local, sometimes even down to the city level! The more general, the more wide spread.

Here are some examples from different legal categories.

Contract Law. It is generally accepted that a contract occurs when parties agree to exchange something of value. It is also generally accepted that contracts for property must be in writing. Specific local rules that vary from place to place, such as all contracts for electrical work must be submitted to city hall. Obviously that is a city rule and very local, to the city that enacted it.

Criminal Law. Defending property with lethal force is against the law virtually everywhere. Conceptually a crime consists of two parts. Intent, and Action. If you did not intend to do something, it may not be a crime. If you intended but did not act, it is not a crime. More specifically many places have Criminal Negligence, there was no intent, but it was obviously dangerous. Some locations have strange crimes, like drinking on Sunday. That is a very specific local crime.

Wills, Trusts and Estate Law. To ensure your wishes are honoured at death you need a will, that must be witnessed. That is a general accepted rule. Now the specifics are very important. Some places require two witnesses, others need three. Some say you need to have them sign together, others say within a week of each other. So the general principle applies, but the specifics depend on the location.

Evidence Law. In general anything you say, can be used against you. Some locations allow police reports as evidence, others don't and consider them hearsay and not trust worthy.

Liability Law. If someone is injured you are liable if you had a duty to protect them, or warn them. That applies universally. The level of liability, and duty depends on the location.

Insurance Law. You have a duty to disclose to your insurance company anything that may impact their underwriting. You can not do a "you did not ask if I was busted for DUI". It is universally accepted that failure to disclose a material fact can cause serious insurance issues. On a more detailed level some locations are required by law to give you an insurance quote. Others are not.

Family Law. What is best for the children is the priority for custody and visitation arrangements. This is universal. (although many courts assume the best is with the mother, even in 2009). What is not universal is the amount of support required. Some locations have formulas and guidelines, others are more case by case.

So when you are reading an article about law or about a legal issue, don't be afraid if it focuses on one country, or state or province. Look at the general concepts. Its those general concepts that most people don't know and give the best benefit. You will always take something away that will help, even if it may not be 100% applicable.

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.

Copyright © 2009 Peter MacSweeney. All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

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Renting a Room From a Friend. Lodger explained.

David owns a house in California. His friend James was going through a divorce, so David offered for him to rent a room in his house, by ask him to throw some weekly money towards food, beer and utilities. James got a uhaul and loaded his last possessions up, and put them in Davids garage.

James is not a tenant. He is a lodger

A lodger is someone who shares the resources and facilities with the landlord. In most jurisdictions, if there is only one lodger (i.e. David only 'rents' one room), they are NOT protected by the local landlord protection laws. STo evict them you usually need to give reasonable notice, which is usually the same amount of time as the money they contribute. So in James case this would be one week notice.

James is not protected by eviction laws, procedures etc. He is simply a guest, and would be considered a trespasser if he stays beyond his welcome period. In California Penal Code 602.3 allows the cops to take him away kicking and screaming if he is past the notice period.

Now after three weeks of living, David asked James about his plans. James said he would be looking for a new place as soon as he saves up first and last, which will be anther two weeks.
2 weeks later James picks up and leaves, with all his stuff behind.

David now needs to follow proper laws for selling abandoned property. In California that is Civil Code 1980. Whenever a tenant leaves property the usually steps are give the tenant notice (sending to their old address), and wait a certain period of time. You then sell the goods at auction, and keep whatever is owed to you. Technically the owner of the abandoned goods is allowed to receive the difference.

Now if David had more then one room rented, James would be considered a Tenant. So if he was kicking up a storm in the house, David would need to follow the proper eviction procedures, and could not just give him unilateral notice. Whenever you are living somewhere that includes any of the following

• Share the kitchen with the landlord
• Are living in connection with work (farm, nanny)
• Half way houses, correctional facilities.
• Rehab houses
• Commercial properties not zoned for residence
• Emergency shelters
• Hospitals
• House confiscated as a result of crime (grow op)
• Where you share facilities with the owner of the house
• Hotel/Motel
• Campground

You are usually not a tenant, and not protected by tenancy laws. However you are protected by contractual agreements, so make sure that you read and understand any contract you have in relation to living or staying there.

If you are not sure about the status of your living accommodations, then contact your local housing board,. Alternatively you can ask through the link provided at the bottom of this article.

If you do have landlord tenant question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



Copyright © 2009 Peter MacSweeney. All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

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Call Centre Maze; Explained and The Proper Way.

Calling for customer support should be business only, but it is not. Getting what you want from a call centre is about people and relationships. Understanding some of the basic rules that call centres operate by certainly helps.

So here we have it. You are looking at your cable bill and say, "hmmm do I need to pay for all of these channels and services? I don't think I do. Lets call the cable company and ask them to adjust my package."

Trying to be savvy You write down what you want, you line up your account number, last bill, your phone number (you know they will ask for it so you want it handy), your mothers maiden name, your credit card number, and your father shoe size. You think that's all they will ask for. You then grab a pen and paper to write down all names, and times of people you talk to.

You go and grab a drink of water. You have to speak clearly into the auto attendant robot on the other end of the phone for the first five minute, hence the water, and then start to dial on you speakerphone ready phone.

After punching a total of 109 keys for different prompts, account number, phone numbers, and entering your father shoe size, an agent answers the phone.

"Thank you for calling Joe's Communications, my name is Michelle, may I have your telephone number please?"

If this adds frustration fuel to your fire, you are not alone. You just entered this information. How stupid can they be?

Well there are a number of reasons why they may ask you for your phone number again. Suffice it to say that the core reason is to try to ensure some form of confidentiality and identity proof when calling. But there are two very important issues that are forgotten.

1. The call is recorded so the voice is on record in the event there is a problem. That includes you speaking your phone number.
2. These are the first syllables out of your mouth talking to the agent. He/She will sense your tone, demeanor, and your guard all based on how you say your numbers. If you want the agent on your side, coughing up your number needs to be friendly polite, and crisp. You know the expression about first impressions. The way you say your number is part of the first impression. They are trained to judge you based on your response.

If you say your numbers friendly and welcoming of the agents help, their guard starts to go down. They may follow up with the standard security questions. Mothers Maiden name, year your first cat had kittens, or whatever other questions they ask. Remember the agents are still in complete job compliance administrative mode. There is nothing you can do that will alter their approach. Know that, don't fight it, just accept it. Speak friendly, clear and slow.

There is no point telling the agent you have entered this information before etc. They have heard it all before, and clearly there are some strategic reasons why this policy of double asking is in place. Don't fight it. Don't waste your breathe.

Now that the agent has not heard anything speculative out of you, they will ask, "How can I help".

Notice that? They actually want to help. They are not a psychotherapist. They are not a sounding board for the problems you had when American Idol's recording on your DVR stopped for 10 minutes because of a power outage. They are their to help your problem.

Remember your planning at the beginning. You know what your problem is. Unless you know what your problem is and how it can be solved, you will not have a pleasant experience with a call centre. Too may times people call to complain but they don't know what they want. Know what you want, and be reasonable about it prior to calling. That organization will calm you, and will bring more genuineness to your voice, and therefore more respect in your request.

"How are you today?" you ask (being friendly but not over personalizing it. You are not their neighbour, just a customer. Respect the boundary). Listen to the response. If they say "Oh its one of those days" empathise, show you are listening. "Well hopefully this will be quick and simple." Otherwise if they say "I am fine thank you, how can I help", you know they mean business.

"I am sure you can help me today. I have looked at my cable bill and want to change my package options to save money. Can you help me with this?" You state in a slow, polite, and purposeful manner.

Look at what you did there. You showed confidence they could help, you stated the problem, and what you wanted. You then followed with a question confirming this query was in their department.

"Certainly. Let me just bring up your account".

And there you have it. You are not off to the races of changing your cable package to save money.

Prior to getting off the phone, be polite about confirming what happened, what was changed and what the impact is. Always ask if there are any specials or bundles that you might qualify for. Savings come to those who ask.

The introduction and first few words are the most important. Most call centres have a zero escalation policy, which means under 99% of circumstances an agent is not to redirect the call if it is in their department. That means no team leads, no managers, no senior managers, directors, or VP's. Unless you get the co-operative bond from the person you are dealing with, you have no where to go.....

except.... Call Back.

Trying to escalate is very difficult. So before you go through the trouble of escalating, just call back, and try another agent, using the personal control tips outlined above. Take the 10 minutes and try again.

Does this solve a long term problem? No it does not, but you can get what you need at the time. If you do find you need to escalate, then you feel they are not honouring their obligations, ask to be sent to the Customer Retention Department.

This department has significant power. They can work with you, so you need them to love you more then your Grandmother loves you. This is not an exercise of principles, it is about getting what you want. I am not saying this at a philosophical level is right or wrong. Honestly, I don't care. It is how it is, and if I want to correct an issue I am not getting attention for, I will use the system to my advantage rather then fight it.

If you do get yourself on an escalation list, it is very important to check your anger at the door. The new person you talk to deals with escalations and anger. You need to "Use Charm To Disarm".

If you do find that you are getting no where, put your issue in writing, and ask for a written response. Make sure you claim is crisp, clear, point form, and supported by evidence.

Finally you can always file a complaint with the local BBB, FCC, or telecommunication agency in your state/province.

Remember, the staff are doing their job. So know what you want them to do for you. Plan ahead. Show respect for the position, understand the limited rules the operate under, be patient, polite, and calm. Always know what you want, and give the agent a way to give you that.

If you do have a specific legal question about consumer protection and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



Copyright © 2009 Peter MacSweeney. All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

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If Your Company Goes Belly Up, Will You Get Paid?

A friend of mine, Mary, works for the Citigroup. She was talking about the fear that their stock was down to less then $1, and she wondered if the place went belly up what would happen to her unpaid salary, and vacation pay.

This is a very difficult question to answer, as it could get very technical. However there are a few basic rules that I will explain. It is important to state that every situation is different, and this is a general representation. I will explain a very basic Canadian and US perspective.

In Canada bankruptcy's are governed by the Bankruptcy and Insolvency Act. If you go to work and see a note saying company is closed, do you get all your wages?

The answer is it depends.

Wages are protected by the Wage Earner Protection Program Act. This is called WEPP by Service Canada. If you have been terminated as a direct result of bankruptcy then you can make a claim for wages to a maximum of either $3000, or 4 weeks of insurable (EI) earnings, which is about $3250, minus deductions.

There are a few exceptions, such as if you had been an officer, controller, or senior manager that was effectively in control of the company. Additionally if you don't apply withing 56 days of the bankruptcy your claim will be rejected.

The WEPP will NOT cover severance or other contractual agreement. This only covers wages and unpaid vacation to the maximum as shown above.

Effectively the government guarantees payment of up to the maximum. To make a claim I suggest you go to the Service Canada website for WEPP. You can actually make your claim online.

For the U.S. I had a Bankruptcy Lawyer friend of mine explain the US position. His name is Dustin Owens and he is a practicing Lawyer in Northern California. http://www.lawdeo.com/ is his site. He can be contacted via email at dustin[@]lawdeo.com. For his spam safety I added the square brackets in his email address. Just remove them before you email

Paraphrasing Dustin: Companies will either file for Chapter 11 (restructuring to keep the creditors at bay) or Chapter 7 (complete liquidation). When they file for Chapter 11, they have an obligation to pay their ongoing expenses. This includes wages, benefits, commissions, vacation, sick pay, retirement contributions, etc. for work done after the filing. If they don't pay them, they may be found in violation of the bankruptcy laws and be forced into liquidation.
In other words, failing to pay wages when in a Chapter 11 protection could force the company to be wound up and sold.

If there are wages owed prior to the company asking for Bankruptcy protection (this is called filing a petition), employees have priority for those wages up to almost $11,000. Priority means that they will be paid before almost any other creditors. Anything over the $11,000 would not have priority and may or may not be paid. Like the Canadian position, officers, directors, and people who are in charge of the company, and therefor deemed responsible for the financial mess, do not benefit from this.

Bankruptcy is a complex beast, and while employees are not going to walk away risk free, there are some basic protections available. I strongly suggest that you invest in $15 or $30 and talk to a lawyer at the link provided, if your company is going "under". An ounce of protection is worth a pound of cure.

If you do have bankruptcy or employment legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



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Forced to quit your Job? Constructive Dismissal Explained.

In the worst financial meltdown since the Great Depression, people are losing their jobs left and right. Some people are being fired, and others are being laid off. But then there is a group of people that feel as if they are being forced to quit their job.

Every State/Province has their own laws when it comes to employment. The basic principle is that you have the right to leave whenever you want, and your employer is allowed to release you whenever they want. That is the BASIC principle. This is called the At-Will Doctrine.

The law then builds on it. No one can be fired for anything in the Constitution or protected at a federal level. Things like Age, Gender, Religion, etc. But the laws are a little more complex.Per this article some locations such as Florida, Georgia, Louisiana, and Rhode Island, have very few exceptions to the standard doctrine. While others such as Alaska, and Idaho respect far more exceptions. California and New York are somewhere in the middle.

To have a case for wrongful dismissal, or being illegally fired, you need to show that your employer broke a protected or accepted rule in your State or Province. In addition you can prove that the employer broke the actual contract of employment you have.

All employment agreements are contracts. It is a contract of service. The terms of your employment contract generally include anything you may have signed (offer letter), and the policies of the company (with limits).

Quiting vs being fired, or laid off has a significant impact on you obtaining benefits, like unemployment insurance, and references for further employment. The company can also save money if you quit, because of various notice periods in the contract, or in the local laws, severance etc. Many of those things don't apply if you quit.

But what if you are forced to quit. You are driven out by threats, abuse, harassment, or fraud.

That is the EXACT same as being fired. It is called CONSTRUCTIVE DISMISSAL. They are acting in a way that forces you to quit, is the same as if they fired you. Now you look at was it wrongful or not.

If a company has driven you out for the purposes of trying to trim head count, and not be liable for severance, or unemployment expenses, then they have broken the law. That is Constructive Dismissal.

If they have driven you out to avoid obligations in your contract, they have broken the law.

If they do NOT correct a problem, such as abuse or harassment from fellow workers, and/or management, then they could be liable for Constructive Dismissal. That's right. If they fail to correct something, that could reasonably cause you to quit, then it is the same as if they fired you directly.

If you feel you are being forced to quit, you need to take proper steps to maintain a claim. It does not matter where in the world you are, the majority of Courts always ask one question. Did the people take the chance to resolve or limit the problem themselves. You have a duty to try to solve the problem, and notify the others of the issue, so they have a chance to resolve it.

Taking these steps will help you maintain your claim.

1. Keep a diary of all the events. Include all names of witnesses, times and steps you have taken to correct the situation.
2. Make sure you follow company policy on filing issues, grievances etc. if you are not sure what those are, as your manager, or the HR/OD group. If possible write a flow chart about the process for filing a complaint, or how the issues are handled.
3. Write down the process if you are to be fired, or if there is a discipline issue against you. You want to make sure they don't fire you because you are kicking up a storm (which normally they cant, but they may try)
4. In all complaints be very specific about the issue, and about what you feel an effective resolution would be.
6. Do not take ANYTHING home that is company property
7. If there is no resolution, then before you quit you should try to bring your notes to a lawyer. A properly worded letter just before you quit can be very effective. The lawyer would advise you on how the letter should be written, so you give them proper notice.

If you are being driven out of a company, then the steps you take before you quite are very important. Take the proper steps, and protect yourself.

If you do need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



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Shopster Retail Agreement Part 2. -> Follow Up.

Shopster appeared to be very diligent and concerned that representation of their company and procedures is as favourable as possible. I received a followup email from Suzanne Vadori, with respect to my Part 2.

In my original analysis, which I admitted was less then 60 seconds, I did not see anything indicating that notice shall be provided in the event of an amendment.

Suzanne has pointed out that the agreement, which has no revision or date number, and which now appears to read in a darker font, clearly states notice will be provided. The agreement as it reads right now does in fact say

"Shopster will inform you when one of these documents has been amended by providing notice to you."

That entire provision looks substantially different then when I reviewed it on Friday. In addition Suzanne did not highlight this as a correction when she originally responded to my questions. Regardless of if the document has changed, or if I misread it, Shopster indicate that they will notify of changes to the agreement.

The agreement says that changes will be effective when you RECEIVE notification.

Wow, that looks really fair.

STOP

Towards the bottom, in the COMMUNICATION AND NOTICE, it clearly states that notice is provided to your email address used at sign up. In addition it says you have been deemed to RECEIVE notice the minute they send it. A very standard provision, but one i think is unnecessarily aggressive. Courts always hate it when people don't have an opportunity for notice.

So expect an email if the policies change, but don't expect a waiting period unless it is provided for specifically. Shopster would be advised to provide a change and compliance notice whenever possible.

Secondly, it appears that my reference to Doba was received the wrong way by Shopster. Let me re-explain the issue here.

According to Shopsters Retailer Agreement,

"Unless, you had a relationship with the supplier prior to using the Shopster Marketplace during the term of this Agreement and for a period of 1 year thereafter, you shall not establish or participate in a drop ship relationship outside of the Shopster Marketplace with any supplier that has listed products or services through the Shopster Marketplace."

Lets say you sign up for a trial period, scan the site, and don't buy a thing. You cancel 3 days later.

You are NOT allowed to establish a drop ship relationship with any supplier that has listed products on Shopster. REGARDLESS of if you know who they are, or if they have a relationship with Shopster. I would not be surprised that if you asked a dropshipping company if they work with Shopster they would say, "the list of our partners is confidential". As you have canceled your membership, you now do not have access to the catalogue of over 1 million products. You don't even know the suppliers, and therefore you don't know if you are breaking the agreement.

Suzanne advised me that Doba and Shopster do not use any of the same suppliers. Nevertheless my suggestion is to sign up with Shopster only after you have exhausted all other drop shippers in the market place, as you could be locking yourself out of a significant number of suppliers without knowing.

This is purely based on the agreement. It has nothing to do with anything in their business model, customer service, pricing, or product selection. This is a 100% due diligence issue. Should Shopster change their agreement, I would be happy to provide an update accordingly.

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



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Shopster Retail Agreement Part 2.

In the first part of this article we looked at the Shopster Retail Agreement. I noticed three issues, that I personally would call significant in an agreement like this. They are.

1. There is no express indication that Shopster will notify its Retailers of changes to the terms and conditions.
2. The agreement prohibits any changes in description or warranty.
3. The agreement, even the trial version, prohibits you from participating with any other drop shipper of the same products within 12 months.

I also was very unhappy with the size of the font, the contrast, and the inability to print the agreement.

I contact Shopster to get an answer, and found it rather difficult. Their phone number as listed on their web page, went to voicemail. So I looked at the Management Team page located in their About Us section.

After looking through the individual positions, I saw that Suzanne Vadori is the Executive Vice President of Operation. She appears to be the best person at the most Senior level to get an answer of my questions from. (The CEO is often not the best person to get a specific answer from. He/She will usually refer the issue to the relevant department Senior manager/VP.)

I sent her an email via the Contact Us form online. I made sure I put at the top of the message that this was to be directed to her. I asked a total of 6 questions and got an answer to three of them. (Tip, if you need a message to go direct to someone, and don't have their email address, send to the support and put ATTENTION: NAME. You can certain that at the very least they will get a copy of it.)

The answer I received was signed Suzy Vadori. So it looks as if my request made it to the EVP I was looking to contact.

She addressed the three main points I made above.

"We do consult with legal counsel when amending this agreement, and our retailer base is notified of each change." Suzy states.

So while the agreement does not expressly state that notification of amendments will be made, she implies there is a company policy to notify members of changes. If you ever get a notification of a change you need to ensure you read those changes.

With respect to the product description and warranties Suzy stated "Shopster provides all end user customer support for the products listed....If modification of
description or product warranties were allowed, Shopster would not be able to provide this service to its retailers."

While I appreciate where she is trying to go, it does not address the core of my original issue. Does this provision exclude the addition of a warranty, such as a SquareTrade? Does this prohibit the addition of a personal review?

Her answer here is incomplete, which is a concern that I will follow up on.

With respect to the terms binding "trial members" and restricting them from using a competitor who sells the same services for a period of 12 months, she confirmed that was the case.

"This agreement was designed to apply to all Retailers, whether during a free
trial or paying for Shopster services."

Where does this put you? Well if you thinking of entering the dropshipping business, as a retailer, a Shopster trial could stop you in your tracks before you get started. If you don't like Shopster, you are prohibited per their agreement from signing up with another provider unless you had a relationship with them before.

One of Shopster's main competitors is Doba. Their Agreement is much fairer on all my issues. If you sign up with Doba FIRST, then you can sign up with Shopster's trial. If you sign up with Shopster's trial, and don't like it, you can NOT then sign up for Doba.

I appreciate Suzanne Vadori's response. While it was a little incomplete, she certainly paid my concerns respect. She was direct in her response, and stated very clearly that this was a conscientious business decision. While I may disagree with some of those from both an operational and legal perspective, I respect their strategy.

If you do have legal question, and need to speak to a lawyer, click HERE. Lawyers are online, and can answer your question within minutes for as little as $15.



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