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Saint Paul Estate Planning Law Blog

Understanding the home-buying process

Buying a house in Minnesota may be your dream. It's a major step when you purchase your first property. However, there are many things you need to know about the home-buying process before you begin.

In Minnesota, a closing agent is used. That means that you'll work with a representative of the title company or your own real-estate attorney. You'll be able to close the purchase of the property alongside the seller but keep in mind that sellers might have the option to continue listing the home while awaiting the completion of contingency agreements, like inspections.

3 common commercial real estate questions

Choosing to invest in commercial real estate can be a good decision. You have the potential to have an immediate income with renters, and you have the potential for long-term gains thanks to the real estate values increasing.

There are questions you may have, though. For instance, how do you know it's the right time to invest? What kind of property would be right for you? Here's more that you can think about.

Breaches of fiduciary duty: A threat to your business

When you own a business, the last thing you want to find out is that your accountant has breached fiduciary duty. When this happens, it means your funds have been used in an inappropriate way, something that may catch you off guard and make you concerned for the future of your business.

Accountants working with business owners have a fiduciary duty to the business once the business places trust and confidence in the accountants and they are in a contract together.

Growing your business: 3 important steps

As your business becomes more popular and gains more customers, you may want to begin planning expansions and ways to grow. There are several steps to growing your business in a safe manner. If you grow too quickly, you risk investing more than you can make back and may end up in bankruptcy or shutting down completely.

Among the steps you need to take are making sure you know what sets you apart, identifying your customers and verifying your revenue. Here's a little more on the steps you should take next.

Improve your debt-to-income ratio to get a good mortgage

If you want to buy a home, something you have to know is your debt-to-income ratio. A ratio that is skewed too much toward debt is sure to make it more difficult for you to obtain a mortgage.

The problem is that mortgage lenders don't always calculate your rates in the same way. Lenders might not have a maximum debt-to-income ratio, but they do have stringent guidelines. For instance, most won't lend to those with housing debt over 33 percent of their monthly incomes. In all, most won't lend to you if you have more than 38 percent of your income going to debt. This helps protect the lenders from giving money to those who may struggle to pay it back.

Is commercial property a good investment?

When you are deciding if you want to invest in commercial real estate, it is a good idea to look at the negatives as well as the positives of doing so. With commercial real estate, there is a chance that you could have a high return. Like with all real estate, renting out the property could mean obtaining returns and an income immediately.

Commercial real estate isn't always a good investment, though. If you have a renter, one of the issues is that you could have them suddenly decide to move out. This immediately stops your cash flow. Aging owners can become another issue. Someone who is too old to continue in business may decide to end their tenancy. Similarly, when you are older, you may find it difficult to continue to manage your many commercial properties. That means you may have to hire a manager, which costs you money and takes away from what you earn each month.

Should you waive your home inspection?

You found a property you love, and there's nothing that is going to make you walk away. You think the price is good, and the seller states that they're selling the property as-is.

Your primary concern, at this point, is saving money. You'll soon be a homeowner, and you want to make sure you have your bases covered. Should you opt for the home inspection, which could cost you several hundred dollars, or ignore it, since the sale is as-is?

Buying out a partner? Don't make these mistakes

If you run a business, one of the things you might be interested in doing is buying out your partner. Maybe the partner isn't interested in continuing on, or you would prefer to take over as the sole owner. Either way, you'll need to look into buying out your partner.

Before you do, it's a good idea to consult with someone who is experienced in acquisitions. Your attorney can help you understand partnership laws and terms that could alter the options you have. Even if you're on good terms with your partner, you should work with your attorney to complete the transfer and buyout properly.

Nonrecourse lending versus recourse loans: The difference

There is one major difference between nonrecourse and recourse loans that you should know before you decide to take one. The primary difference is that in a nonrecourse loan, the lender cannot seek assets other than the home or property in the case that you default.

With a typical recourse loan, the lender can seek the collateral put down to obtain the loan as well as other assets, like your home or property. The lender can and may seek any property of yours that it could sell to make the debt right.

3 tips for getting the right commercial property

Commercial real estate can give you a great option for investing in a stable financial future. You may choose to purchase a factory, shopping mall or other commercial property, all of which can then be rented or eventually sold for a profit.

In most cases, the purchase of a commercial property as an income property can work out in your favor, but there are a few things you need to do before you buy. Here are three tips to help you get the right property for your goals.