This is the first in a series of blog posts highlighting the major legal and regulatory issues that are specific to the multichannel merchant. The Mail Order Merchandise Rule, promulgated by the Federal Trade Commission, is intended to ensure that mail order customers actually receive the items that they order from catalog or online merchants. The Rule requires that when a seller advertises merchandise, it must have a reasonable basis for stating or implying that it can ship the merchandise within a certain time. If the business makes no shipment statement, it must have a reasonable basis for believing that it can ship within 30 days. That is why direct marketers sometimes call this the "30-day Rule." Surprisingly, though, many well-established mail order companies have only a loose grip on the operational steps necessary to comply with this rule.
It is usually the case in the highly competitive, technologically advanced environment of mail order and internet sales, that merchants are easily able to comply with the Rule by providing a stated shipment representation. If a website says the product will be shipped in two days, it almost always is, and often it is shipped even sooner. But when products are not timely shipped, things sometimes go a little sideways. The most common reason for failure to ship within the stated time frame is the lack of a product–the back order issue.
The rule provides that, if after taking the customer’s order, a seller learn that it cannot ship within the time stated, it must seek the customer’s consent to the delayed shipment. If it is the first such delay, and if the seller can provide a revised shipment date, it must notify the customer of his or her right to cancel the order; sellers are permitted to treat the client’s silence in response as an expression of assent. But, if there is a second delay, or if the seller cannot provide a revised shipment date, then the seller MUST get the client to consent affirmatively to the continued delay. If a seller cannot obtain the customer’s consent to the delay – or if the customer refuses to consent -- the seller must, without being asked, promptly refund all the money the customer paid for the unshipped merchandise.
There are at least two safe harbors from which many catalog companies may benefit. First, the clock does not begin ticking on any shipment representations until there is a “properly completed order.” An order is properly completed when the seller receives the correct full or partial payment, accompanied by all the information needed to fill the order. In many instances, merchants do not collect payment on backordered items as a matter of routine-though they are permitted to do so. This prevents the shipping representation clock for beginning.
Second, a shipment representation made at the time of order trumps shipment representations contained on a product page or in a catalog. So if customer service representatives explain to a customer that an item is backordered for 6 weeks, then that becomes the new shipment representation.
Like many legal issues, the Mail Order Merchandise Rule need not present a business risk, provided that you are aware of its requirements and plan accordingly. It is important for catalog and web merchants to have business processes in place to track shipment representations, and to ensure that the proper notifications are sent to customers.
In my next blog post, we will touch on some unusual and unexpected California-specific regulations that can impact multichannel merchants.
Tuesday, November 26, 2013
Friday, November 22, 2013
Direct Marketing Association Re-files Challenge to Colorado Notice and Reporting Law in State Court
We have been updating readers on developments regarding the court challenge brought by the Direct Marketing Association (“DMA”) to a 2010 Colorado law that purported to require Internet retailers and other remote sellers that do not collect Colorado sales tax to: (1) give certain notices to their Colorado customers regarding the purchaser’s obligation to self-report Colorado use tax; and (2) file reports with the Colorado Department of Revenue detailing the private purchasing information of their Colorado customers. The DMA won a preliminary injunction in January 2011 in federal District Court suspending the law on the grounds that it violated the Commerce Clause. The Court later made the injunction permanent when it awarded the DMA summary judgment in March 2012. The State appealed.
In August 2013, the Court of Appeals for the Tenth Circuit ruled on its own initiative that the Tax Injunction Act (“TIA”) barred federal court jurisdiction over the DMA’s claims. The Court of Appeals did not reach the merits of the DMA’s Commerce Clause claims, but rather ordered that the claims be dismissed on procedural grounds. The Court held that the DMA was required under the TIA to bring its claims in Colorado state court. The DMA requested rehearing on the jurisdictional issue, but the Tenth Circuit declined in early October to rehear the matter. The Court of Appeals then issued a mandate to the District Court on October 9, directing the lower court to dissolve the injunction and dismiss the claims. (The District Court has not yet implemented the mandate, so for now the federal injunction remains in place.)
On November 5, 2013, the DMA re-filed its challenge to the Colorado notice and reporting law in state District Court in Denver. At the same time, the DMA moved for a preliminary injunction, in order to continue the suspension of the law after the federal court injunction is lifted. Briefing on the motion for a preliminary injunction is expected to conclude in December, with a hearing on the motion likely to be scheduled for early January 2014. The DMA will request that the state court rule on the injunction request prior to January 31, the deadline under the law for retailers to send certain annual notices to customers who purchased at least $500 in goods from the retailers in the prior year.
Brann & Isaacson partners George Isaacson and Matthew Schaefer are co-counsel to the DMA in connection with the appeal.
We will keep you apprised of further developments in the state court proceeding.
In August 2013, the Court of Appeals for the Tenth Circuit ruled on its own initiative that the Tax Injunction Act (“TIA”) barred federal court jurisdiction over the DMA’s claims. The Court of Appeals did not reach the merits of the DMA’s Commerce Clause claims, but rather ordered that the claims be dismissed on procedural grounds. The Court held that the DMA was required under the TIA to bring its claims in Colorado state court. The DMA requested rehearing on the jurisdictional issue, but the Tenth Circuit declined in early October to rehear the matter. The Court of Appeals then issued a mandate to the District Court on October 9, directing the lower court to dissolve the injunction and dismiss the claims. (The District Court has not yet implemented the mandate, so for now the federal injunction remains in place.)
On November 5, 2013, the DMA re-filed its challenge to the Colorado notice and reporting law in state District Court in Denver. At the same time, the DMA moved for a preliminary injunction, in order to continue the suspension of the law after the federal court injunction is lifted. Briefing on the motion for a preliminary injunction is expected to conclude in December, with a hearing on the motion likely to be scheduled for early January 2014. The DMA will request that the state court rule on the injunction request prior to January 31, the deadline under the law for retailers to send certain annual notices to customers who purchased at least $500 in goods from the retailers in the prior year.
Brann & Isaacson partners George Isaacson and Matthew Schaefer are co-counsel to the DMA in connection with the appeal.
We will keep you apprised of further developments in the state court proceeding.
Thursday, November 21, 2013
Upcoming International Contracts Conference at St. Thomas University School of Law
I just wanted to encourage those who are considering proposals for presentation at the 9th International Conference on Contracts to be held at St. Thomas University in Miami February 21-22, 2014 to send them on to me in the coming weeks. The Call for Papers is already out and the Conference website is at http://www.contractsconference.com/kcon/KCON9__Miami.html. Our Law Review is doing a Symposium around the Conference and still has a few spots for papers that it will consider for publication no later than January 15, 2012. Please let me know if you're interested in the symposium issue and I will put you in contact with the symposium editors. If you are not interested in presenting, but would like to moderate a panel, please let me know as I am in need of moderators as well.
This is going to be a really wonderful conference this year all-conference honoree is Linda Rusch. Prof. Robin West (Georgetown) will be giving the planetary speech on Saturday and Kingsley Martin (KM standards) will be giving the talk at Friday's luncheon.
Confirmed Participants include:
Kristen Adams – Stetson University
Bader Almaskari - University of Leicester, England
Reza Baheshti - University of Leicester, England
Wayne Barnes – Texas A&M University
Daniel Barnhizer – Michigan State University
Thomas Barton – California Western School of Law
Shawn Bayern – Florida State University
Amy Boss – Drexel University
Steve Callandryllo – University of Washington
Miriam Cherry – University of Missouri
Kenneth Ching – Regent University
Neil Cohen – Brooklyn Law
Gerrit De Geest – Washington University School of Law
Sidney Delong – Seattle University
Scott Devito – Florida Coastal School of Law
Zev Eigen – Northwestern University School of Law
Larry Garvin – Ohio State University
Katie Gianasi – Husch Blackwell L.L.P.
Jim Gibson – University of Richmond
Ariela Gross – USC Gould
Nancy Kim – Cal Western University
Christina Kunz – William Mitchell College of Law
Lenora Ledwon – St. Thomas University
Joasia Luzak – University of Amsterdam
Kingsley Martin – KM Standards
Jennifer Martin – St. Thomas University
John Mayer – CALI
Murat Mungan – Florida State University
Dr. John Murray – Duquense University
Marcia Narine – St. Thomas University
Wendy Netter Epstein – DePaul University
Karl Okamoto – Drexel University
Joe Perillo – Fordham University
Amir Pichhadze – University of Michigan (SJD Student)
Michael Pinsof - Attorney
Lucille Ponte – Florida A&M University, College of Law,
Deborah Post – Touro Law Center
Michael Pratt – Queens University, Canada
Cheryl Preston – Brigham Young University
Val Ricks – South Texas College of Law
Roni Rosenberg – Carmel Academic Center, Law School, Israel
Linda Rusch – Gonzaga University
Mark Seidenfeld – Florida State University
Gregory Shill – University of Denver
Frank Snyder – Texas A&M University
Jeremy Telman – Valparaiso University
David Tollen – Adili & Tollen, L.L.P.
Manuel Usted – Florida State University
Robin West – Georgetown University
Robert Whitman – University of Connecticut
Eric Zacks – Wayne State University
Deborah Zalesne – CUNY School of Law
Candace Zierdt – Stetson University
I look forward to seeing many of you in February. Please direct any paper proposals or questions to me at JMartin@STU.edu.
-JSM
Friday, November 15, 2013
MFA Update: Rep. Goodlatte’s Seven Principles and an Interview with George Isaacson
Although the Marketplace Fairness Act (S. 743) ("MFA") has not yet progressed out of a House committee since its Senate passage last spring, it continues to make headlines. In late September, the House Judiciary Committee, chaired by Rep. Bob Goodlatte (R-Va.), released seven “Principles on Internet Sales Tax.” Brann & Isaacson senior partner George Isaacson was recently profiled by State Tax Notes discussing both the MFA and Goodlatte’s Seven Principles.
The Seven Principles outlined by Representative Goodlatte provide for:
As Isaacson notes, “The keystone and common thread of these principles is the need for true simplification of the existing sales and use tax system and an assurance of fair treatment of remote sellers when compared with in-state retailers.” Isaacson goes on to describe several steps that could be taken to simplify sales tax collection, including setting a single rate (combined state and local) for remote sales into a state, creating uniform tax menus or bases, and establishing uniform sourcing rules for remote sellers.
Isaacson also calls for providing access to federal courts to address violations of remote sellers’ rights. As the MFA now stands, remote sellers must protest tax assessments made in violation of federal statutory or constitutional law through appeals before state administrative agencies and state courts that may, as Isaacson points out, “tilt in favor or state revenue departments.” Providing for federal court jurisdiction “is the only meaningful way to protect those companies’ constitutional rights and enforce statutory limitations on the scope of state taxing power.” To that end, Isaacson argues for repeal or limitation of the Tax Injunction Act (“TIA”).
We will continue to keep our readers apprised of any developments regarding the Marketplace Fairness Act.
The Seven Principles outlined by Representative Goodlatte provide for:
- Tax Relief – “no new or discriminatory taxes not faced in the offline world”
- Tech Neutrality – brick and mortar and online businesses “should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less…than that on similarly situated offline businesses”
- No Regulation Without Representation – taxpayers “should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement”
- Simplicity – no “onerous compliance requirements,” “laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary”
- Tax Competition – “Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-à-vis their foreign competitors”
- States’ Rights – “States should be sovereign” and “the federal government should not mandate that States impose any sales tax compliance burdens” and
- Privacy Rights – “Sensitive customer data must be protected.”
As Isaacson notes, “The keystone and common thread of these principles is the need for true simplification of the existing sales and use tax system and an assurance of fair treatment of remote sellers when compared with in-state retailers.” Isaacson goes on to describe several steps that could be taken to simplify sales tax collection, including setting a single rate (combined state and local) for remote sales into a state, creating uniform tax menus or bases, and establishing uniform sourcing rules for remote sellers.
Isaacson also calls for providing access to federal courts to address violations of remote sellers’ rights. As the MFA now stands, remote sellers must protest tax assessments made in violation of federal statutory or constitutional law through appeals before state administrative agencies and state courts that may, as Isaacson points out, “tilt in favor or state revenue departments.” Providing for federal court jurisdiction “is the only meaningful way to protect those companies’ constitutional rights and enforce statutory limitations on the scope of state taxing power.” To that end, Isaacson argues for repeal or limitation of the Tax Injunction Act (“TIA”).
We will continue to keep our readers apprised of any developments regarding the Marketplace Fairness Act.
Monday, November 4, 2013
Local Real Estate Agency Launches National Business with Commemorative Wine Label for Charity
The launch of Rapid Realty Australia's wine label also commemorates a Townsville founded real estate business with both a North Queensland and national growth strategy. Rapid Realty Australia is seeking to grow its national foot print with a network of affiliates, partnerships and franchise offices starting in Cairns, Townsville and Mackay.
Managing Director of Rapid Realty Pty Ltd and Principal of Rapid Realty Townsville, Aaron McLeod said; "we are proud to launch our new limited edition wine collection in support of a well deserving local North Queensland Charity. The launch also coincides with Rapid Realty Australia's launch of its national real estate business on the Australian real estate scene."
Founded by two brothers in Townsville in 2007, Rapid Realty Townsville has grown to over 200 residential and commercial properties under management and over $20M in sales last financial year alone. The business has grown nearly 40 percent in the past 12 months. The office headquarters is located on Boundary Street, South Townsville. From this office, Rapid Realty Townsville services Townsville including rural areas and parts of the broader North Queensland market.
The business was established in Townsville and grown successfully because of our passionate and skilled staff and the welcome support of our "locally grown" business. Our clients have said how excited they are to support a national real estate brand created in Townsville.", Mr McLeod said.
Each of Rapid Realty Australia offices will be modelled on the Townsville one-stop-shop model to service real estate buyers, investors and sellers from the "cradle to the grave"; Mr McLeod said. Property owners and clients alike trust the professional approach and "real service, rapid results" customer service commitment.
Rapid Realty is seeking the support of the Townsville and North Queensland community as they search more good employees and contractors and leaders and investors to join the company as affiliates, partners or franchisees. Critical to the continued growth of the company is skilled salesperson's, property managers and marketing administrators.
Expressions of interest to join the Rapid Realty Australia business can be done by contacting Mr McLeod at www.rapidrealty.com.au
Wednesday, October 30, 2013
Friday, October 25, 2013
California Ups the Ante On Privacy Policy Disclosures
For the past decade, California law has set the template for commercial website privacy policies. With the passage of a new law, set to take effect January 1, 2014, the state has updated the disclosures required of any commercial website operator who collects personally identifiable information from California residents.
California’s Online Privacy Protection Act. In 2003, California became the only state to require all websites that collect personal information (“PII”) from visitors – in this case, California residents – to post a privacy policy. Until then, there was no generally applicable privacy policy requirement under either state or federal law, and, to this day, neither the other states nor the federal government have imposed such a requirement. Federal privacy policy requirements have been limited to specific kinds of information (such as under Children’s Privacy Protection Act) or industries (under the Health Insurance Portability and Accountability Act). Under the 2003 law, Internet sites need to identify the “categories” of personally identifiable information collected about “individual consumers”; describe the “categories” of third parties with whom the information may be shared; disclose (if there is one) any process for individuals to review or request changes to their personal information; explain how notice is given to consumers of changes in the privacy policy; and post the policy’s effective date. The definition of PII is more expansive than encountered in data breach statutes, and includes email addresses, partial addresses (including street names and towns), and first and last names. The privacy policy also must be “conspicuously” posted, as defined by the statute.
Now, however, the law has been significantly expanded.
The New Requirements. Under recently enacted Assembly Bill 370, the privacy policy requirements of California’s Online Privacy Protection Act have been expanded to include (1) disclosure of how the web site “responds to Web browser ‘do not track’ signals or other mechanisms that provide consumers the ability to exercise choice regarding the collection of personally identifiable information about an individual consumer’s online activities over time and across third-party Web sites or online services, if the operator engages in that collection”; and (2) disclosure of “whether other parties may collect personally identifiable information about an individual consumer’s online activities over time and across different Web sites when a consumer uses the operator’s Web site or service.” The statute was approved by the Governor and chaptered by the Secretary of State on September 27, 2013. It will take effect on January 1, 2014. Fortunately for Internet sellers, the law provides that “[a]n operator shall be in violation of this subdivision only if the operator fails to post its policy within 30 days after being notified of noncompliance.” As a result, potential liability will only attach after a notice of noncompliance. Nonetheless, it is prudent to review and amend privacy policies to conform with the new law to avoid having to implement last minute changes should your company receive notice of non-compliance (which is not defined, and presumably could include a telephone call or email from a consumer).
The Light Still Shines. Companies should also remain mindful of California’s so-called “Shine the Light” Law, which can be found at California Civil Code § 1798.83, and as to which we’ve previously blogged. Violations of this law, which, among other things, requires privacy policy disclosures, have led to class actions being filed against Internet sellers. Customers can be awarded up to $3,000 per each violation, plus attorneys’ fees and costs. Some of these cases have been dismissed, but the costs of defending even an unsuccessful class action lawsuit can be substantial.
The Shape Of Things To Come. California isn’t stopping there. Beginning on January 1, 2015, all web sites that direct services to minors, or have actual knowledge that minors are using their sites, must provide a “delete” button to permit minors to remove all of their online content (together with clear instructions for doing so). The law will also prohibit Internet marketing of a wide variety of products and services to minors, including aerosol paint (apparently to inhibit graffiti), etching creams, BB guns, and tanning services. Unlike the COPPA, which is directed to persons under the age of 13, the California law applies to all persons under the age of 18.
California’s Online Privacy Protection Act. In 2003, California became the only state to require all websites that collect personal information (“PII”) from visitors – in this case, California residents – to post a privacy policy. Until then, there was no generally applicable privacy policy requirement under either state or federal law, and, to this day, neither the other states nor the federal government have imposed such a requirement. Federal privacy policy requirements have been limited to specific kinds of information (such as under Children’s Privacy Protection Act) or industries (under the Health Insurance Portability and Accountability Act). Under the 2003 law, Internet sites need to identify the “categories” of personally identifiable information collected about “individual consumers”; describe the “categories” of third parties with whom the information may be shared; disclose (if there is one) any process for individuals to review or request changes to their personal information; explain how notice is given to consumers of changes in the privacy policy; and post the policy’s effective date. The definition of PII is more expansive than encountered in data breach statutes, and includes email addresses, partial addresses (including street names and towns), and first and last names. The privacy policy also must be “conspicuously” posted, as defined by the statute.
Now, however, the law has been significantly expanded.
The New Requirements. Under recently enacted Assembly Bill 370, the privacy policy requirements of California’s Online Privacy Protection Act have been expanded to include (1) disclosure of how the web site “responds to Web browser ‘do not track’ signals or other mechanisms that provide consumers the ability to exercise choice regarding the collection of personally identifiable information about an individual consumer’s online activities over time and across third-party Web sites or online services, if the operator engages in that collection”; and (2) disclosure of “whether other parties may collect personally identifiable information about an individual consumer’s online activities over time and across different Web sites when a consumer uses the operator’s Web site or service.” The statute was approved by the Governor and chaptered by the Secretary of State on September 27, 2013. It will take effect on January 1, 2014. Fortunately for Internet sellers, the law provides that “[a]n operator shall be in violation of this subdivision only if the operator fails to post its policy within 30 days after being notified of noncompliance.” As a result, potential liability will only attach after a notice of noncompliance. Nonetheless, it is prudent to review and amend privacy policies to conform with the new law to avoid having to implement last minute changes should your company receive notice of non-compliance (which is not defined, and presumably could include a telephone call or email from a consumer).
The Light Still Shines. Companies should also remain mindful of California’s so-called “Shine the Light” Law, which can be found at California Civil Code § 1798.83, and as to which we’ve previously blogged. Violations of this law, which, among other things, requires privacy policy disclosures, have led to class actions being filed against Internet sellers. Customers can be awarded up to $3,000 per each violation, plus attorneys’ fees and costs. Some of these cases have been dismissed, but the costs of defending even an unsuccessful class action lawsuit can be substantial.
The Shape Of Things To Come. California isn’t stopping there. Beginning on January 1, 2015, all web sites that direct services to minors, or have actual knowledge that minors are using their sites, must provide a “delete” button to permit minors to remove all of their online content (together with clear instructions for doing so). The law will also prohibit Internet marketing of a wide variety of products and services to minors, including aerosol paint (apparently to inhibit graffiti), etching creams, BB guns, and tanning services. Unlike the COPPA, which is directed to persons under the age of 13, the California law applies to all persons under the age of 18.
Thursday, October 24, 2013
Townsville Born "My Property Time Blog" Launched for Investors
Townsville's leading independent real estate Principal and Managing Director of Rapid Realty Australia and Trustee of McLeod Investments and Consultancy (MCINC) firm, Mr Aaron McLeod has launched a new website blog called My Property Time.
Mr McLeod said; "the new website will be administered in North Queensland. It will be a public meeting place like the old bookstore and library with a social atmosphere where useful stories can be told and collaborated."
Mr McLeod expects the My Property Time blog reflects the knowledge and experience of his team of business owners and employees including property managers, real estate professionals, financial planners, mortgage brokers, solicitors, etc. to help new and emerging property investors to achieve success and avoid the many hidden costs and pitfalls of property investing.
From the My Property Time Blog:
Welcome to the new My Property Time Blog created to help investors and property owners with the joy, and dare I say it, the sadness of property ownership. We hope My Property Time adds value to our readers' efforts whether you might be researching, observing or actively investing in real estate across Australia and the world.
My Property Time will source pertinent and trending stories on real estate and property markets impacting investors. Whether you are experienced or new to the property investment industry, this blog aims to be useful for all interest groups. However, My Property Time's target audience and focus by and large will be active investors.
Although some of you may never become an active investor, or at least identify yourself as one, it is this group of people who are more likely to benefit from the My Property Time blog.
Being an active investor means you have an acute need for reliable, pertinent, trustworthy, accurate and timely information and facts about legislative changes, niche market trends, hints and tips on selecting a mortgage broker, real estate professional, property manager, conveyance specialist or even building and pest inspection reports.
Investing in real estate for cash flow, capital gains or tax minimization purposes needs to be purposeful, and often most effective when linked to specific goals. The delivery of investment measures and strategies are constrained by various risks while opportunities are realised more often when the investor has clear investment plans and specific goals.
Almost all successful investors understand these risks, opportunities, strengths and weaknesses, often referred to the SWOT analysis. So if you are a first time investor reading this blog on your mobile device or office PC, understanding the keys to successful property investing is understanding your goals, establishing a clear investment plan, identifying your constraints, risks and appetite for loss or gain, and minimising your assumptions while having the courage and decisiveness to secure your first investment property.
As a first time investor, if this is your situation, you can feel a sense of comfort knowing that My Property Time is at the beginning of your journey, just as this blog is at the beginning of our journey. We hope you have discovered this blog and we share My Property Time together.
As an experienced investor, we trust you can make My Property Time one of your favourite sites to gain knowledge and information but also share your extensive knowledge with our supporters and our team.
So as an opening introduction to our purpose, investment planning, risk management and decision-making is a prelude to what our opening series of stories will cover. Once again, welcome to My Property Time and we look forward to making a small difference in your life. My Property Time is your time!
You can visit the new My Property Time Blog at http://mypropertytime.wordpress.com/
Mr McLeod said; "the new website will be administered in North Queensland. It will be a public meeting place like the old bookstore and library with a social atmosphere where useful stories can be told and collaborated."
Mr McLeod expects the My Property Time blog reflects the knowledge and experience of his team of business owners and employees including property managers, real estate professionals, financial planners, mortgage brokers, solicitors, etc. to help new and emerging property investors to achieve success and avoid the many hidden costs and pitfalls of property investing.
From the My Property Time Blog:
Welcome to the new My Property Time Blog created to help investors and property owners with the joy, and dare I say it, the sadness of property ownership. We hope My Property Time adds value to our readers' efforts whether you might be researching, observing or actively investing in real estate across Australia and the world.
My Property Time will source pertinent and trending stories on real estate and property markets impacting investors. Whether you are experienced or new to the property investment industry, this blog aims to be useful for all interest groups. However, My Property Time's target audience and focus by and large will be active investors.
Although some of you may never become an active investor, or at least identify yourself as one, it is this group of people who are more likely to benefit from the My Property Time blog.
Being an active investor means you have an acute need for reliable, pertinent, trustworthy, accurate and timely information and facts about legislative changes, niche market trends, hints and tips on selecting a mortgage broker, real estate professional, property manager, conveyance specialist or even building and pest inspection reports.
Investing in real estate for cash flow, capital gains or tax minimization purposes needs to be purposeful, and often most effective when linked to specific goals. The delivery of investment measures and strategies are constrained by various risks while opportunities are realised more often when the investor has clear investment plans and specific goals.
Almost all successful investors understand these risks, opportunities, strengths and weaknesses, often referred to the SWOT analysis. So if you are a first time investor reading this blog on your mobile device or office PC, understanding the keys to successful property investing is understanding your goals, establishing a clear investment plan, identifying your constraints, risks and appetite for loss or gain, and minimising your assumptions while having the courage and decisiveness to secure your first investment property.
As a first time investor, if this is your situation, you can feel a sense of comfort knowing that My Property Time is at the beginning of your journey, just as this blog is at the beginning of our journey. We hope you have discovered this blog and we share My Property Time together.
As an experienced investor, we trust you can make My Property Time one of your favourite sites to gain knowledge and information but also share your extensive knowledge with our supporters and our team.
So as an opening introduction to our purpose, investment planning, risk management and decision-making is a prelude to what our opening series of stories will cover. Once again, welcome to My Property Time and we look forward to making a small difference in your life. My Property Time is your time!
You can visit the new My Property Time Blog at http://mypropertytime.wordpress.com/
Friday, October 18, 2013
Illinois Supreme Court Rules Illinois “Click Through” Nexus Statute Is Void And Preempted By Federal Law
The Illinois Supreme Court issued its decision today in Performance Marketing Association v. Hamer, ruling that the Illinois “affiliate nexus” (also known as “click-through nexus”) law is “void and unenforceable” because it is preempted by federal law. Brann & Isaacson partners George Isaacson and Matthew Schaefer represented the PMA in this case, and Isaacson argued the case before the Illinois Supreme Court on May 22, 2013. The case was on appeal from the Circuit Court, which had had held that the affiliate nexus law was an unconstitutional violation of the Commerce Clause, and was also preempted by the Internet Tax Freedom Act (“ITFA”), because it impermissibly discriminated against electronic commerce. In affirming the lower court’s decision, the Illinois Supreme Court based its holding on a violation of the ITFA, and did not reach the Constitutional argument.
The Illinois law had purported to impose a use tax collection obligation on any out-of-state retailer or serviceman who had a contract with a person located in Illinois that paid a commission based on sales generated from referral links placed on that person’s website, provided the retailer realized a minimum in $10,000 in sales to customers through such links. Under the Internet Tax Freedom Act, states are prohibited from imposing “discriminatory taxes on electronic commerce.” A discriminatory tax is defined as a tax that “imposes an obligation to collect or pay tax on a different person or entity than in the case of transactions involving similar property, goods, services, or information accomplished through other means.” 47 U.S.C. §151 note.
The ruling is a significant victory for online retailers, and for the Illinois individuals who generate income through affiliate links.
The Illinois law had purported to impose a use tax collection obligation on any out-of-state retailer or serviceman who had a contract with a person located in Illinois that paid a commission based on sales generated from referral links placed on that person’s website, provided the retailer realized a minimum in $10,000 in sales to customers through such links. Under the Internet Tax Freedom Act, states are prohibited from imposing “discriminatory taxes on electronic commerce.” A discriminatory tax is defined as a tax that “imposes an obligation to collect or pay tax on a different person or entity than in the case of transactions involving similar property, goods, services, or information accomplished through other means.” 47 U.S.C. §151 note.
The ruling is a significant victory for online retailers, and for the Illinois individuals who generate income through affiliate links.
Friday, October 11, 2013
Litigation News: Colorado and Cook County Update
We have written frequently about the DMA case challenging Colorado’s notice and reporting law. The law, which requires remote sellers to inform consumers of their obligation to self-report sales and use tax and which also requires sellers to hand over Colorado customers’ names to the state’s Department of Revenue, was declared unconstitutional in 2012 by the United States District Court in Denver. See DMA v. Brohl, 2012 WL 1079175 (D. Colo. Mar. 30, 2012). The Court issued an injunction barring enforcement of the law. But, in August, the Tenth Circuit found that the District Court did not have jurisdiction over the case, and issued a decision calling for the case to be remanded to the District Court with instructions to dissolve the injunction. The DMA subsequently filed a petition for rehearing en banc by the Tenth Circuit, thereby staying implementation of the decision. But, on October 1, that petition was denied. As a result, the Court of Appeals’ mandate was issued on October 9. The District Court has not yet implemented the Tenth Circuit’s order, however, so for the time being the injunction remains in place--at least until the District Court acts. In response to the ruling, the DMA intends to refile its challenge to the law in state court in Colorado and seek a new injunction from the state court to prevent enforcement of a law that the federal District Court has found to be unconstitutional on its face. Brann & Isaacson’s George Isaacson and Matthew Schaefer represent the DMA in the case.
Meanwhile, we wrote in July about Judge Lopez Cepero of the Cook County Circuit Court issuing a preliminary injunction which barred Cook County from enforcing its recently enacted use tax. On October 4, the Appellate Court stayed the preliminary injunction, but on October 8, Judge Lopez Cepero granted the plaintiffs’ motion for summary judgment. The judge’s ruling will be issued in written form today and effectively is a permanent injunction barring Cook County from enforcing the use tax. It remains uncertain, however, whether the County will appeal this decision.
We will continue to update our readers on these and other cases throughout the country.
Meanwhile, we wrote in July about Judge Lopez Cepero of the Cook County Circuit Court issuing a preliminary injunction which barred Cook County from enforcing its recently enacted use tax. On October 4, the Appellate Court stayed the preliminary injunction, but on October 8, Judge Lopez Cepero granted the plaintiffs’ motion for summary judgment. The judge’s ruling will be issued in written form today and effectively is a permanent injunction barring Cook County from enforcing the use tax. It remains uncertain, however, whether the County will appeal this decision.
We will continue to update our readers on these and other cases throughout the country.
Monday, October 7, 2013
Space-age, Spacing-saving Italian Design.
The trend towards smaller condos is here to stay and with it comes a trend towards compact, space-saving furniture. One of my clients was recently looking for a murphy bed for the guest room in her sleek loft near the the Lachine Canal. She wanted something both stylish and practical - a fold-out bed hidden behind a desk and bookshelf set up, for example. This video is making the rounds just a little too late for my canal-side acquaintance, but it might be of interest to someone else out there hoping to add a little Italian brio to their home decor.
Best of all, Montreal's Fraser Furniture is the exclusive retailer for this totally cool line.
Saturday, October 5, 2013
3rd Quarter 2013 Ventura County Market Analysis
3rdQuarter 2013 Ventura County Market Analysis
(July, August September)
Camarillo has seen its’ market shrink significantly this quarter. The total number of homes for sale has dropped from 163 homes in July to 130 homes in September. On a month by month basis we saw the number of homes that came to market drop from 72 single family homes for July to 52 homes in August and finally 28 homes for the month of September. Yikes! Wrong direction!
The number of actual sales dropped from 110 homes in July to 102 homes in August and dropped again to 79 homes in September. This may indicate buyers are a little tired of rising home prices and higher mortgage interest rates which have increased by a point since January.
As home prices have risen (up 15% – 20% over the last twelve months depending on who you choose to quote) the lower priced condo and townhome markets have gotten more popular. The number of townhome properties coming to market has been hovering around 10 homes each month. Also, the average length of time required to sell these condos and townhomes has been dropping from the beginning of the quarter at 71 days in July to 53 days in August and finally 48 days in September. This trend shows fairly strong buyer demand.
Nicer townhome prices now overlap the sale prices of low end single family homes. This puts buyers into the quandry of “Do I buy a nice townhome with a $$$ Home Owners Association Fee or do I buy a fixer upper single family home that needs a lot of work, but which might not have an HOA.” Tough choices.
Oxnardhas had a fairly constant number of properties for sale compared to Camarillo. There were 144 single family detached (SFD) homes on the market in July. Then came a big jump up to 164 homes in August which fell back almost exactly to where it had been before at 143 homes in September. The number of new listings coming to market each month has been relatively constant, ranging from 79 to 86 homes.
The number of properties which have sold each month has increased from 110 homes in July to 125 homes in September. So… where Camarillos’ market has diminished in the last 3 months, Oxnards’ market has been stronger with a big spike in August, returning close to July’s numbers in September.
Ventura is experiencing a steady upward trend in its’ housing inventory. The total inventory of SFD and Condos has grown from 133 homes in July to 140 homes in August and finally 150 homes in September. Most of that increase came from the Single Family Detached (SFD) inventory which rose from 104 homes in July to 113 homes in August and 127 homes in September.
There are a few signs of weakness however, in the increasing length of time it takes to sell a home. The average time to sell an SFD has risen from 54 days to 68 days while condos which used to sell in 36 days, now require an average 51 days to close.
The total number of homes which sold in July was 96 and this number dropped to 78 homes in August and 77 homes in September. So Ventura has more homes coming to market each month but the actual number of homes selling each month has dropped. If this trend were to continue, I would expect to see home prices begin to moderate or soften a bit from the huge monthly increases in home prices that we saw earlier this year.
Santa Paula and Fillmore have seen a very gradual increase in their home inventories (like Ventura). In Santa Paula 33 homes were available in July, 35 homes in August and 42 homes in September.
The number of SFD home sales rose from 11 homes sold in July, peaked in August with 18 homes sold, then dropped back to 14 homes sold in September. Fillmore home sales were 10 homes, 15 homes and back to 10 homes in September. Fillmore is often a smaller carbon copy to Santa Paula’s market. This quarter at least, their inventories followed Ventura’s trend, while the number of their home sales followed Oxnard’s trend.
Moorpark has seen market changes very similar to Oxnard with total home inventory increasing from 49 homes in July, spiking up to 66 homes in August and retracing a bit to 60 homes in September.
The number of home sales has dropped overall from 39 homes in July, with a spike in August to 46 homes and then falling back to 32 homes for September. Also, the time it takes to sell a SFD home has risen during these three months from 44 days in July, to 54 days in August and again to 78 days in September. Buyers here may be responding to the higher interest rates and higher home prices.
Simi Valley & Wood Ranch are still seeing an uptrend in the number of homes for sale. The SFD market has seen its’ inventory climb from 117 homes in July, to 142 homes in August and a slight consolidation back to 138 homes in September.
There were 135 home sales for July, a nice upward spike to 148 homes in August and then a big drop to 120 homes in September. Sound familiar? Also, the length of time it takes to sell a SFD home has basically doubled from Julys’ 37 days to 70 days in September.
Thousand Oaks and Newbury Park have seen their market inventory in Single Family Detached homes (SFD) shrink from 200 homes in July to 186 homes in August and on down to 163 homes in September. This is in stark contrast to the second quarter where the inventory grew from 118 homes in April to 178 homes in June.
Townhome and condo inventory has remained fairly stable at between 33 to 35 homes available each month this quarter.
It appears that the home inventory grew rapidly from Januarys’ 102 homes – peaked in July with 235 homes and is shrinking a bit for the early Fall. I think it is safe to say this is typical of most of the rest of Ventura County as well.
Actual home sales rose from 121 homes in June to140 homes in July. August saw sales spike back downward to 120 homes and bounce back up to 136 homes in September. This is a stronger sales market than most of the other towns in West Ventura County, confirmed with fairly consistent sale times of roughly 55 to 65 Days On Market (DOM).
Westlake Village & Agoura Hills is a slightly smaller market than TO and Newbury Park with a home inventory which has grown from 92 homes(vs 136 for TO/NP) at the beginning of the 2nd quarter to 153 homes (vs 197 for TO/NP) at the end of the 3rd quarter. That is a 62 home increase in inventory in 6 months – or roughly an increase of 10 homes per month. That’s a solid achievement.
Sales continued to increase through July with 54 homes selling, then 64 homes in August. September saw what I’m hoping is just a temporary spike down to 46 homes sold. DOM has risen from July’s 73 days to September’s 89 days for SFD homes. Overall I’d say that Westlake Village and Agoura Hills are fairly strong markets, even allowing for the September drop in sales.
Summary It appears that the major trend in our Ventura County markets is a gradual decrease in the size of our home inventory, with the number of home sales increasing through August. Camarillo’s weak market being one major exception and Westlake/Agoura Hills being a stronger market exception. September saw a decrease in the number of home sales in most local markets. This may be a reflection of weak buyer demand due to high home prices, higher mortgage interest rates or maybe just the natural slowing we often see when summer is over and families get ready to send kids to school again.
I’m not ready to get alarmed by last months weaker trends, but I do think what happens in the next several months will be crucial in determining what direction our market is actually moving. Just the way I see it.
Mark Thorngren
(805)443-3366 mark@movewest.com www.markthorngren.com BRE#01413932 Like me on facebook at www.facebook.com/markthorngrenrealtor
Wednesday, October 2, 2013
Beware of Taxation of Advertising Inserts
During the last legislative session in Maine, the legislature approved, and Governor Lepage signed, a bill to eliminate the exemption from the sales tax for publications. L.D. 1509, 126th Legs., Part P, (Me. 2013). This law went into effect yesterday. The law now requires the taxation of magazines and newspapers. The sleeping dog, however, is the taxation of advertising flyers and other free publications.
Taxation of free advertising materials has become a “hot button” issue in Maine. In an Informational Notice dated September 27, 2013, Maine Revenue Services stated that the costs of printing advertising flyers, including those inserted in newspapers, are now subject to the sales tax if those materials are distributed in Maine. In other words, the publisher will be required to pay a use tax, either to its printer or directly to the state, on the printing charges for advertising flyers.
This caught the Governor and members of the legislature by surprise. In a recent press release, the Governor announced that he, together with legislative leaders, will be introducing legislation in the next legislative session to exempt retroactively the printing costs of free publications and advertising flyers. Please note the next legislative session begins in January 2014. Such legislation may face a rough road ahead, given the State’s fiscal issues, so that whether the exemption is adopted, and its scope and effective date, are up in the air.
In the interim, advertisers should consider their options. Maine Revenue Services’ September 27 Notice does not mean that after October 1 advertisers must pay the sales tax on printing costs of advertising flyers included in newspapers and other advertisements distributed in Maine. Advertisers should consider the availability of other exemptions. For example, in its September 27 Notice, Maine Revenue Services notes that the sales tax will not apply if the advertisers purchase the flyers for resale. Thus, if the advertiser were selling the flyers to newspapers or others, it might be able to argue for exclusion by virtue of the sale for resale exemption. Another potential argument is, if an advertiser used an out-of-state printer, it might assert that it did not make a taxable use of the flyers. The point is that advertisers should carefully weigh their alternatives regarding advertising flyers and other advertising materials circulated in the State of Maine.
Taxation of free advertising materials has become a “hot button” issue in Maine. In an Informational Notice dated September 27, 2013, Maine Revenue Services stated that the costs of printing advertising flyers, including those inserted in newspapers, are now subject to the sales tax if those materials are distributed in Maine. In other words, the publisher will be required to pay a use tax, either to its printer or directly to the state, on the printing charges for advertising flyers.
This caught the Governor and members of the legislature by surprise. In a recent press release, the Governor announced that he, together with legislative leaders, will be introducing legislation in the next legislative session to exempt retroactively the printing costs of free publications and advertising flyers. Please note the next legislative session begins in January 2014. Such legislation may face a rough road ahead, given the State’s fiscal issues, so that whether the exemption is adopted, and its scope and effective date, are up in the air.
In the interim, advertisers should consider their options. Maine Revenue Services’ September 27 Notice does not mean that after October 1 advertisers must pay the sales tax on printing costs of advertising flyers included in newspapers and other advertisements distributed in Maine. Advertisers should consider the availability of other exemptions. For example, in its September 27 Notice, Maine Revenue Services notes that the sales tax will not apply if the advertisers purchase the flyers for resale. Thus, if the advertiser were selling the flyers to newspapers or others, it might be able to argue for exclusion by virtue of the sale for resale exemption. Another potential argument is, if an advertiser used an out-of-state printer, it might assert that it did not make a taxable use of the flyers. The point is that advertisers should carefully weigh their alternatives regarding advertising flyers and other advertising materials circulated in the State of Maine.
Montreal Real Estate Board says Buh-bye to Cdn Real Estate Association
The Greater Montreal Real Estate Board, Canada's second largest, has served notice that it will withdraw from the Canadian Real Estate Association at the end of 2013. Quebec members pay about $3.4 million in CREA dues annually.
The GMREB represents 10,000 or so brokers, roughly a tenth of all CREA's membership. The national organization represents boards across Canada. The two have been at odds for years, with Montreal complaining about CREA's weak defense of Quebeckers' interests, spending, dues increases and the services members receive in return.
The big item is CREA's unwillingness or inability to block "for sale by owner" (FSBO) properties from the realtor.ca system in Quebec. These listings are legal in other jurisdictions but not in Quebec, where only brokers licensed through the provincial licensing agency, the OACIQ, are allowed to market and sell properties on behalf of a third party. This makes Quebec different from the rest of Canada.
Quebec's 12 boards were worried enough about the possibility of FSBOs being listed on the realtor.ca that they launched their own property-search website, centris.ca. It has asked CREA to default to Centris rather than Realtor for all Quebec property searches. So far, no response.
In a letter to members, the GMREB included links to two Montreal area FSBO listings recently posted to realtor.ca through a Toronto listing service affiliated with the Toronto Real Estate Board. That back door move bypasses Quebec's licensing and professional oversight requirements.
You can see how there would be irritation and hurt feelings, right?
But FSBOs aren't the only irritant. Montreal is also reluctant to take part in a national data distribution system that would put information collected by GMREB members into the hands of cut-rate sales firms and FSBOs. Data like average selling prices, days on the market, etc is gold to real estate professionals and, presumably to those who would feast on our labour. We've paid to have it collated by our association. We aren't about to give it away to the Du Proprios of the world.
There are other issues, as well. CREA wants to create a national code of ethics for real estate professionals. GMREB opposes the idea because its primary role is to protect and promote its membership. Quebec brokers are bound by a code of ethics administered by the OACIQ. The OACIQ fields complaints from the public, investigates, adjudicates and punishes brokers who break the rules. Best of all, every broker pays dues to maintain the agency even though we get no benefit from it. Needless to say, GMREB has no interest in paying for the implementation of a second code of ethics.
Finally, GMREB has been asking questions about where the CREA dues end up. Remember, this is Quebec, where we know a thing or two about expense-account padding, lavish dinners, cocktail parties, exotic meeting locales etc etc. Quebec's federation of real estate boards complained about lavish spending and duplication of services. For its part. GMREB managed to claw back $1.5 million in CREA dues in the last two years and has used the money to promote centris.ca and for other advertising tailored to the Quebec market.
Talks have been ongoing, but now the time of talking seems to be over. CREA is having a special general meeting later this month in Vancouver. According to the Montreal board, despite promises to the contrary, none of Quebec's concerns are addresses on the meeting's agenda.
Unless something changes between now and then, Quebec will cut itself loose from CREA's mothership. Says GMREB president Patrick Juanèda:
The board reserves the right to change its mind, especially if CREA responds to its concerns at the upcoming general meeting. Stay tuned.
************************************************************
While we're on the topic of people being annoyed by the way in which their dues are spent, there's a petition going around that takes issue with the way the OACIQ is spending brokers' money.
The straw that broke the camel's back is a recently announced mandatory course for all real estate brokers on the importance of "collaboration". Collaboration is what happens when one broker calls another broker to see a property. If you show it, you are collaborating. If you ignore the call or multiple calls, you are not collaborating. Pretty simple. The OACIQ is requiring all license holders to take take this 2-hour on-line course at a cost of $150 each.
$150 each and they don't even have to rent a room, put on a pot of coffee or lay out a tray of danish. That's an easy $2.6 million for the licensing agency. That's on top of the $16.3 million it collected in annual dues from saps like me in 2012.
People see this training as little more than a cash grab. They are concerned that if the OACIQ gets away with this it will implement more and more "imporatant" mandatory training at extra cost to the dues payers. It's the Quebec way, right? Can't balance your budget? Raise fees! Implement surcharges! Create a new tax! Easy money, right? The English version of the petition has 450+ signatures. The French version, nearly 2,900.
Here's the petition.
The GMREB represents 10,000 or so brokers, roughly a tenth of all CREA's membership. The national organization represents boards across Canada. The two have been at odds for years, with Montreal complaining about CREA's weak defense of Quebeckers' interests, spending, dues increases and the services members receive in return.
The big item is CREA's unwillingness or inability to block "for sale by owner" (FSBO) properties from the realtor.ca system in Quebec. These listings are legal in other jurisdictions but not in Quebec, where only brokers licensed through the provincial licensing agency, the OACIQ, are allowed to market and sell properties on behalf of a third party. This makes Quebec different from the rest of Canada.
Quebec's 12 boards were worried enough about the possibility of FSBOs being listed on the realtor.ca that they launched their own property-search website, centris.ca. It has asked CREA to default to Centris rather than Realtor for all Quebec property searches. So far, no response.
In a letter to members, the GMREB included links to two Montreal area FSBO listings recently posted to realtor.ca through a Toronto listing service affiliated with the Toronto Real Estate Board. That back door move bypasses Quebec's licensing and professional oversight requirements.
You can see how there would be irritation and hurt feelings, right?
But FSBOs aren't the only irritant. Montreal is also reluctant to take part in a national data distribution system that would put information collected by GMREB members into the hands of cut-rate sales firms and FSBOs. Data like average selling prices, days on the market, etc is gold to real estate professionals and, presumably to those who would feast on our labour. We've paid to have it collated by our association. We aren't about to give it away to the Du Proprios of the world.
There are other issues, as well. CREA wants to create a national code of ethics for real estate professionals. GMREB opposes the idea because its primary role is to protect and promote its membership. Quebec brokers are bound by a code of ethics administered by the OACIQ. The OACIQ fields complaints from the public, investigates, adjudicates and punishes brokers who break the rules. Best of all, every broker pays dues to maintain the agency even though we get no benefit from it. Needless to say, GMREB has no interest in paying for the implementation of a second code of ethics.
Finally, GMREB has been asking questions about where the CREA dues end up. Remember, this is Quebec, where we know a thing or two about expense-account padding, lavish dinners, cocktail parties, exotic meeting locales etc etc. Quebec's federation of real estate boards complained about lavish spending and duplication of services. For its part. GMREB managed to claw back $1.5 million in CREA dues in the last two years and has used the money to promote centris.ca and for other advertising tailored to the Quebec market.
Talks have been ongoing, but now the time of talking seems to be over. CREA is having a special general meeting later this month in Vancouver. According to the Montreal board, despite promises to the contrary, none of Quebec's concerns are addresses on the meeting's agenda.
Unless something changes between now and then, Quebec will cut itself loose from CREA's mothership. Says GMREB president Patrick Juanèda:
Your Board of Directors has evaluated the situation carefully and considers that, at this time, the risks and disadvantages outweigh the benefits of our membership in CREA. It is important to note that the code of ethics and data distribution rules are already in place. If we stay in CREA, we must ensure that we implement the necessary structures and have all of our members comply with them.
The board reserves the right to change its mind, especially if CREA responds to its concerns at the upcoming general meeting. Stay tuned.
************************************************************
While we're on the topic of people being annoyed by the way in which their dues are spent, there's a petition going around that takes issue with the way the OACIQ is spending brokers' money.
The straw that broke the camel's back is a recently announced mandatory course for all real estate brokers on the importance of "collaboration". Collaboration is what happens when one broker calls another broker to see a property. If you show it, you are collaborating. If you ignore the call or multiple calls, you are not collaborating. Pretty simple. The OACIQ is requiring all license holders to take take this 2-hour on-line course at a cost of $150 each.
$150 each and they don't even have to rent a room, put on a pot of coffee or lay out a tray of danish. That's an easy $2.6 million for the licensing agency. That's on top of the $16.3 million it collected in annual dues from saps like me in 2012.
People see this training as little more than a cash grab. They are concerned that if the OACIQ gets away with this it will implement more and more "imporatant" mandatory training at extra cost to the dues payers. It's the Quebec way, right? Can't balance your budget? Raise fees! Implement surcharges! Create a new tax! Easy money, right? The English version of the petition has 450+ signatures. The French version, nearly 2,900.
Here's the petition.
Small Businesses Sometimes Learn Hard Lessons About Check Fraud
Dr. Luis Fabelo, a Miami Dentist, recently found out that he'd lost about $500,000 in a check fraud scheme perpetrated by an employee (now former employee). The employee, Elizabeth De Leon, allegedly stole patient checks made out to the dentist and then deposited the checks into her own account through Wells Fargo's ATM machines. The dentist discovered the losses when alerted by a patient whose payment was not posted. The dentist then checked the security cameras on premises and was able to uncover the wrongdoing. The employee had deleted account records while at the office or during social functions. After she left his employ, she did the same fraud at another office. De Leon is now facing charges for grand theft and fraud. Wells Fargo refused to return the funds to Dr. Fabelo.
But what about the losses of Dr. Fabelo? Dr. Leon has brought suit against Wells Fargo claiming it "has no system, policy, and/or procedure in place to verify the depositor/account holder, was entitled to cash the checks." Sure the theft of the checks appears to raise the issue of a conversion claim under UCC 3-420, but there is more to this. Under UCC 3-405, where an employee delegates responsibility to an employee and entrusts the employee with indorsing checks, if the employee converts the check for his own use, the bank is generally not liable. So, the message to employers is take care in hiring those entrusted office employees. The rule is not absolute, though, it continues on:
Here is the heart of Dr. Fabelo's argument against Wells Fargo, I suspect (unless the employee was not actually an entrusted employee). Does a bank exercise "ordinary care" when it allows ATM deposits of checks deposited into an account other than that of the payee (i.e. third party checks)? Alternatively, does a bank take the loss when it takes these items. This is a far less clear issue than the general rule of employer responsibility. In today's marketplace thieves have the ability to avoid discovery of check fraud through ATM, smart-phone and other remote deposit mechanisms where identity is not verified by banks. I suspect that Wells Fargo is not alone in permitting deposit of third party checks remotely. If banking practice includes this type of remote deposit of third party check, then Dr. Fabelo will have a tough case to make out.
The ability of a customers to do remote depositing surely is a convenience benefit, but also carries with it a potentially higher increase in fraud as there is convenience for the thieves as well. See, Mobile Check Boom Brings Risks. Many banks put daily and monthly limits on the higher risk deposits, though, as well as placing holds on account funds. In the case of Dr. Fabelo, the types of security procedures used by Wells Fargo will surely be at issue. With the rapid changes in banking pushing more customers into remote banking features, banks are well advised to continue to assess risk strategies to reduce the level of fraud in this area. UCC 3-405 makes clear that banks have a role to play in mitigating the risk of emerging banking practices to put in place the right safeguards.
As to small business owners, UCC 3-405 makes clear that they should continue to carefully screen employees to ward off this type of theft as well. Otherwise, the hard lesson of substantial loss may come as a hard one.
But what about the losses of Dr. Fabelo? Dr. Leon has brought suit against Wells Fargo claiming it "has no system, policy, and/or procedure in place to verify the depositor/account holder, was entitled to cash the checks." Sure the theft of the checks appears to raise the issue of a conversion claim under UCC 3-420, but there is more to this. Under UCC 3-405, where an employee delegates responsibility to an employee and entrusts the employee with indorsing checks, if the employee converts the check for his own use, the bank is generally not liable. So, the message to employers is take care in hiring those entrusted office employees. The rule is not absolute, though, it continues on:
If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss
Here is the heart of Dr. Fabelo's argument against Wells Fargo, I suspect (unless the employee was not actually an entrusted employee). Does a bank exercise "ordinary care" when it allows ATM deposits of checks deposited into an account other than that of the payee (i.e. third party checks)? Alternatively, does a bank take the loss when it takes these items. This is a far less clear issue than the general rule of employer responsibility. In today's marketplace thieves have the ability to avoid discovery of check fraud through ATM, smart-phone and other remote deposit mechanisms where identity is not verified by banks. I suspect that Wells Fargo is not alone in permitting deposit of third party checks remotely. If banking practice includes this type of remote deposit of third party check, then Dr. Fabelo will have a tough case to make out.
The ability of a customers to do remote depositing surely is a convenience benefit, but also carries with it a potentially higher increase in fraud as there is convenience for the thieves as well. See, Mobile Check Boom Brings Risks. Many banks put daily and monthly limits on the higher risk deposits, though, as well as placing holds on account funds. In the case of Dr. Fabelo, the types of security procedures used by Wells Fargo will surely be at issue. With the rapid changes in banking pushing more customers into remote banking features, banks are well advised to continue to assess risk strategies to reduce the level of fraud in this area. UCC 3-405 makes clear that banks have a role to play in mitigating the risk of emerging banking practices to put in place the right safeguards.
As to small business owners, UCC 3-405 makes clear that they should continue to carefully screen employees to ward off this type of theft as well. Otherwise, the hard lesson of substantial loss may come as a hard one.
-JSM
Tuesday, September 24, 2013
Echo of Support for the Lifetime Achievement Award for Linda Rusch
Jeremy Telman over at the Contracts Prof Blog posted over there about the Lifetime Achievement Award that Linda Rusch will receive at the Ninth Annual International Conference on Contracts February 20-21, 2014 to be held at St. Thomas University in Miami, Florida. I must echo Jeremy's praise of Linda's accomplishments. Linda is a retired professor of law as of August 2012 and now is getting to enjoy the great outdoors. She was the inaugural holder of the Frederick N. and Barbara T. Curley Professor in Commercial Law at the Gonzaga University School fo Law from 2005-2010. She was also a co-director of the Law School’s Commercial Law Center. And, of course, Professor Rusch has been involved in the revision of the Uniform Commercial Code in many capacities and is the recent past Chair of the Business Law Section of the American Bar Association. It is great to see her contributions to contract and commercial law recognized! If you are considering presenting at the February Conference, the call for papers is currently OPEN.
Papers and works-in-progress are welcome from those who study Contracts from any perspective, whether doctrinal, pedagogical, theoretical, empirical, historical, economic, critical, comparative, or interdisciplinary. Works that take an international or civil law approach are also welcome. Junior scholars are particularly encouraged to participate. Those interested in proposing and organizing panels (3-5 presenters) on specific themes are especially encouraged to do so. Individual submissions should be made by a brief abstract (one page is sufficient) of the paper or WIP that includes contact information for the author(s). The deadline is Monday, December 16, 2013 with proposals submitted earlier will be accepted on a rolling basis. Proposals submitted after the deadline will be accepted on a space-available basis. Submissions should be directed to: Professor Jennifer S. Martin (me) at jmartin@ stu.edu.
-JSM
Amicus Briefs Filed in Amazon.com and Overstock.com Supreme Court Case
On September 23, 2013, several organizations and companies filed briefs as amici curiae in support of the petitions for a writ of certiorari filed by Overstock.Com, Inc., Amazon.com., Inc., and Amazon Services, LLC, requesting review by the United States Supreme Court of the New York Court of Appeals decision in Overstock.com, Inc. v. New York Department of Taxation and Finance, 20 N.Y.3d 586, 987 N.E.2d 621 (2013). Among the briefs filed was the Brief of Newegg, Inc. and the Direct Marketing Association, Inc. (the "DMA") as Amici Curiae in Support of the Petitioners. In their brief, Newegg and the DMA argue that the New York “click through affiliate nexus” statute, N.Y. Tax Law sec. 1101(b)(8)(vi), through an improper legislative presumption, narrows the zone of protected interstate advertising activity for out-of-state retailers under the Commerce Clause by shifting onto the retailers the burden of disproving “substantial nexus” with the state, in violation of the due process rights of retailers. Newegg and the DMA argue that the Constitution’s Due Process Clause prohibits states from using presumptions to interfere with matters that are removed from their authority by the Constitution, such as the regulation of interstate commerce. Brann & Isaacson partners Martin I. Eisenstein, George S. Isaacson, and Matthew P. Schaefer prepared the brief of amici on behalf of Newegg and the DMA.
Among the other organizations filing briefs were the Tax Foundation and the National Taxpayers Union, the American Legislative Exchange Council, the American Association of Attorney-Certified Public Accountants, and Scrapbook.com, Assisted Living Store, Inc., et al.
Among the other organizations filing briefs were the Tax Foundation and the National Taxpayers Union, the American Legislative Exchange Council, the American Association of Attorney-Certified Public Accountants, and Scrapbook.com, Assisted Living Store, Inc., et al.
Friday, September 20, 2013
Keeping it simple: Financial Advice on an Index Card
I heard about the the 4X6 inch index card financial advice on NPR this week. This advice comes from University of Chicago Professor Harold Pollack. My first thought is that he would be a business school prof, but Professor Pollack does social services work. The simplicy of the program is good, but the last piece of advice is cut off in the picture (and gives away his true calling):
Promote social insurance programs to help people when things go wrong.
This, of course, brings to mind the current debate in Congress over spending and attempts to defund healthcare, food stamps and other programs. Perhaps the nation's finances would be in better order if Congress consulted Professor Pollack. Simple advice, yes, but probably sound in basics. Typically that is enough for ordinary people to keep up with and improve their finances.
-JSM
Thursday, September 19, 2013
Ventura County Market Analysis for August 2013
Camarillohas seen its’ inventory grow from 136 homes in June to 163 Homes by the end of July and then to 168 homes by the end of August. Not much change in the last month but still a small increase in total inventory. The number of homes that came on the market for August was down by about 25% from 82 homes to 61 homes. The total number of homes sold was down slightly from 110 to 102 homes. Overall I’d say Camarillo has maintained most of its’ market strength in most categories except for fewer sellers in August.
Oxnardhas a bit larger market inventory than Camarillo with inventory increasing from 197 homes in June to 209 in July to 225 in August! The number of homes which came to market stayed fairly constant at 79 in August. The number of homes which went under contract increased from 149 in July to 161 in August which is a very nice trend. Sales have remained fairly constant between 110 and 120 homes per month over the last 3 months which interestingly enough is very close to Camarillo’s sales numbers.
Venturais experiencing steady inventory growth with 115 homes on the market in June, 133 in July and 140 in August. However, the number of homes that have gone into escrow has slowly decreased from a high of 111 homes in June to 95 homes in August. The number of homes sold during each month has decreased slightly as well from 94 and 96 home in June and July to just 78 homes sold in August. Maybe Ventura’s buyers are taking a little break.
Santa Paula and Fillmore are proportionately smaller markets than most others in Ventura County. Santa Paula averages just over 30 homes for sale per month, while Fillmore stays around 15 to 20 homes each month. Santa Paula saw a jump in sales in August from an average of 10 homes per month in June and July to 22 homes in August. Likewise, Fillmore saw an increase from an average of about 10 homes sold in June and again in July, to 15 homes sold in August. We don’t see big numbers with these towns, but they are headed in the right direction.
Moorparkhas seen a strong growth in inventory over the last 3 months. With just 44 homes on the market in June, increasing slightly to 49 homes in July and then jumping up to 66 homes in August. That’s close to a 30% jump in inventory in the last month. Unfortunately, the number of homes sold has remained fairly constant at between 40 to 45 homes over the last 3 months. Also, the number of homes going into escrow took a dive from 61 homes in July to 37 homes in August. Again, it appears that buyers took a little break in August.
Simi Valley and Wood Ranch have seen steady growth in home inventory from 133 homes in June to 140 homes in July and 156 homes in August. That was a pretty nice jump in August which our buyers can surely use. Like many other towns in Ventura County, Simi Valley and Wood Ranch are also experiencing a decrease in the number of homes going into escrow, down from a high of 177 homes in June, to 153 homes in July, and finally 142 homes in August. Just to confuse the issue, the actual number of homes sold has steadily increased from 116 homes in June, to 135 homes in July, to 148 homes in August. Could it be possible that there have been a number of homes in escrow for more than 30 days which are finally closing? That might indicate that many of these homes were distressed sales which are finally resolving themselves. (Distressed sales like short sales, foreclosures or bankruptcy sales typically have longer escrow periods than normal sales). With the number of homes selling (148) nearly matching the number of homes which came to market in August(156), this is a strong market.
Thousand Oaks and Newbury Park saw large increases in all our market categories from June to July, but reversing across the board in August - except for the number of homes going into escrow in August. This should mean we will see an increase in the number of total sales in September over previous months. Sales bounced from 120 homes in June to 140 in homes in July, and back to 120 homes again in August. The number of homes going into escrow did the reverse by dipping from 171 homes in June, to a low of 158 homes in July, then rebounding to 182 homes in August. Go figure. Overall I’d say this market is ratcheting its’ way upwards and I would guess we’ll see stronger numbers for them this Fall.
Westlake Village and Agoura Hills are experiencing a bit larger increase in inventory than TO and Newbury Park, with the number of homes for sale growing from 136 homes in June to 139 homes in July and 152 homes in August. The number of homes coming to market has ranged between 48 and 57 homes each month while the number of homes sold has risen from 54 homes each in June and July to 64 homes in August. That’s roughly a 3 month inventory of homes but with a larger number of homes selling each month (64 in Aug) than coming to market (48 in Aug). Again with more homes coming to market each month and more homes selling each month, this market is healing quickly.
In summary, it appears to me that we are seeing steady improvement in our Ventura County Market. More homes are coming into each of the inventories and total sales are increasing in most cases. It’s easy to read more into these numbers than we should, since we are just examining the last three months, however compared to last January’s numbers, the trends are very clear. Our market is strengthening.
Just the way I see it.
Mark Thorngren
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