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Party Like its 2007!

The President’s Administration has recently touted the  economic recovery that has taken place over the past 6 years. Contrary to this desired reality, in perhaps an acknowledgement that the housing market has not yet full recovered, the President signed the Protecting Americans from Tax Hikes Act (or “PATH” Act) into law in December 2015. One key part of the PATH Act was the extension of The Mortgage Forgiveness Debt Relief Act of 2007 through the end of 2016.

Prior to 2007, when a homeowner experienced a foreclosure, short sale, deed in-lieu of foreclosure, or even a loan modification, the homeowner would get hit with a tax bill on any canceled debt caused by the phantom income. Under relevant tax laws, when a creditor cancels this type of debt (as well as other debts such as credit card and vehicle debt), it is obligated to report the amount of canceled debt directly to the Internal Revenue Service via what is called a 1099-C tax form. In effect, the 1099-C acts to report to the Internal Revenue Service the amount of canceled debt as income to a taxpayer. A taxpayer would have to then pay taxes on this income.

Given the volume of foreclosures, short sales, deeds in-lieu, or loan modifications that occurred during the Great Recession, President George Bush signed a law in 2007 to protect homeowners who had lost their primary residence from the impact of such canceled debt. This type of relief also extends to canceled second mortgages and equity line debt that were attached to a primary residence.

Given that the extension of this law occurred at the very last minute, it is unlikely that this law will be extended beyond 2016.  If you believe that time is not on your side as it relates to a issue concerning a foreclosure, short sale, deed in-lieu of foreclosure or even a loan modification, it is important that you discuss your legal options with the law firm of Grigaltchik & Galustov, P.A., at (904) 738-8398.

From Matrimony to Alimony

Dear John Letter, Asking for Divorce, Wedding Ring on Table

Most of us are aware of the abysmal statistics: 50% of marriages end in divorce. Florida is leading the fight against happy homes, sporting a divorce rate higher than the national average. Maybe it’s a good thing that many of us remain optimistic in the face of such odds as evidenced by our refusal to execute prenuptial agreements, but it certainly isn’t good for the bottom line.

If you are the earner in the family, the mighty bacon-bringer, as distinguished from the home-maker, the nester, the caregiver, then you should brace yourself. If you fail at marriage, your bottom line will take a major hit. The courts have long held that the nester’s contribution is equivalent to that of the earner, which makes a lot of sense when you shake off the ol’ patriarchal veil over your eyes and face reality. In many cases, the nester does the cleaning, shopping, cooking, and baby-rearing, and there are only so many hours in the day. Due to the nester’s contribution, the earner is free to pursue a slew of lucrative business ventures. While it is true that the line between nester and earner is blurring quite a bit, with many folks choosing to be both, for many American families, the nester/earner dichotomy remains the norm. That being said, at divorce, the nester is entitled to one-half of the marital assets and, depending on the length of the marriage, to the maintenance of lifestyle at the level enjoyed during the marriage.

So, let’s get to the point. Depending on the length of the marriage, the nester may have a number of spousal support arrangements available. Bridge-the-gap alimony is typically awarded in cases involving marriage of a short duration, less than seven years, to assist with legitimate short term needs over the maximum period of two years following divorce. Rehabilitative alimony may be awarded to assist with educational needs over a set period of time upon a showing of a specific and defined rehabilitative plan. Durational alimony may be awarded to provide economic assistance for a set period of time following a marriage of short duration, less than seven years, or moderate duration, between seven and seventeen years. Finally, the dreaded permanent alimony is typically awarded following marriages of long duration, in excess of seventeen years, or upon a showing of exceptional circumstances if the marriage is of a short or moderate duration. Alimony is awarded in addition to, not in lieu of, any property distribution. It seems pretty cut and dry, but the court considers many factors in determining a final award of alimony.

A good divorce attorney can help you ensure that the court has access to all such factors. At the law firm of David P. Grigaltchik, P.A., we will help see you from matrimony to alimony. If you don’t want to pay alimony, get a pre-nup. Better yet, don’t get divorced. If that doesn’t work, call us at (904) 738-8398, and be grateful that you don’t live in California (don’t take my word for it; google: palimony).

Contracts for Business

Business Agreement by handshake

Contracts are like business people. Some work smart and deliver; others are doomed to fail from the start because they lack that certain essential element. So, what makes a good contract? Aside from legally trained professionals and the certifiably insane, few decent folk take the time to contemplate this question. But if such decent folk are also business people, they may be remiss not to.

In free societies, men are not bound by enforceable obligations toward one another, except to abstain from causing harm. A contract is an instrument that allows two parties to artificially create rights and obligations between themselves in the name of some mutually beneficial end. In this article, we will discuss the elements of a solid standard contract before turning to specific types of contracts that may and should be used in the context of business.

Contract Law 101:

A binding and enforceable contract consists of three essential elements: offer, acceptance, and consideration. Offer and acceptance may seem obvious concepts to some, but the law is a fickle mistress. Consider Toby and Bobby. Toby offers to give Bobby an apple in exchange for $1. Bobby replies that he will trade his $1 only for an apple and a half. When Toby refuses, Bobby states ‘alright then, I’ll take your initial offer’. Is this a valid contract? The answer is no. Bobby’s counter-offer was rejected by Toby, and Toby has not made another offer for Bobby to accept. Bobby’s agreement to exchange his $1 for Toby’s apple may constitute an offer, but such offer is now subject to acceptance by Toby before a valid contract is created.

It gets even more complicated from here on out. In a nutshell, consideration is the value of goods and/or services being exchanged. In the example above, if Bobby had immediately agreed to Toby’s offer, the exchange of the value of the apple for the value of the $1 would serve as consideration. If Toby had instead offered to give his apple to Bobby for free, and Bobby accepted, Bobby could not force Toby to make good on his promise in a court of law. Such a contract would be void for lack of consideration.

Finally, contracts must be voluntary. If Toby put a gun to Bobby’s head, gave Bobby the apple, and forced Bobby to promise to give him his $1, and Bobby agreed because he didn’t want a hole in his head, such agreement would not be enforceable in a court of law even though all three requirements of a valid contract have been met. Duress and fraud are natural defenses to the enforcement of contractual obligations.

Specific Types of Contracts

Now that you are aware of the glories and pitfalls of basic contracting, you may be ready to rush out into the world, buy stuff, start companies, hire employees, wheel and deal with the best of them. Not so fast. While most contracts pertain to transactions, business contracts typically govern relationships. The underlying relationship typically serves as sufficient consideration for most business contracts. Because business relationships can be unstable and dysfunctional, business contracts tend to address specific issues of security of business interests and proprietary ideas. So, let’s take a look at some common business contracts.

An Operating Agreement

An operating agreement or its equivalent is a contract that sets forth the terms of your business venture, the manner of operation of the business, the percentages of interests owned by individual partners, your obligation to your partners, the distribution of profits and losses, and much more. In undertaking any business venture, an operating agreement or its equivalent is most likely essential, and not simply for the reasons listed above. Consider the fact that there is no magical database out there that lists you as the owner of any interest in your business. Your interest in your company may exist in the pages of its operating agreement and nowhere else.

A Buy-Sell Agreement

A buy-sell agreement or its equivalent is another business contract that will be essential in most instances where a business is owned and operated by more than one individual. A buy-sell agreement may be incorporated into the operating agreement of your company, or drafted as a stand-alone instrument. This type of contract sets forth specific mechanisms for the transfer of interests in the company upon the death, disability, divorce, or bankruptcy of you or your business partners. In general terms, a buy-sell agreement may be used to keep your company from falling into untrustworthy or hostile hands, or to prevent hostile partner buy-outs of your interest in your company. So, when Toby’s business partner Bobby dies, and Bobby’s wife, Cruella, inherits everything, including Bobby’s business interest, Toby may rely on a carefully drafted buy-sell agreement to allow him to buy out Bobby’s interest at a reasonable price over any objection by Cruella. In addition to preventing the likes of Cruella from getting a piece of your company, a buy-sell agreement may also govern the induction of new members into your company.

Other Agreements

In addition to operating and buy-sell agreements, you may protect yourself and your business interest through a variety of clauses or stand-alone agreements tailored for specific purposes. One very common business contract is a confidentiality agreement, which can protect your trade secrets from unwanted dissemination. This type of contract can be useful even before you start your business, and you can have prospective investors or partners sign confidentiality agreements prior to pitching your business ideas to them. Other valuable business contracts include non-compete and non-solicitation agreements. The former may prevent your former partners or employees from working for the competition for a period of time after they’ve left your company; the latter, from drawing away your customers. Such agreements cannot remain in effect indefinitely, but reasonable terms are typically enforced.

Business owners face many challenges on a daily basis. Security of business interests and proprietary ideas should be tackled early on. Fear not. Whatever your security issue, chances are there’s a contract for that.

By Grigaltchik & Galustov, P.A., 6144 Gazebo Park Place South, Suite 215, Jacksonville, FL 32257 — Tel: (904) 738-8398

Appealing Homelessness

Newspaper with Foreclosure visible, Foreclosure crisis

Someone once said that the greatest thing about the U.S. of A. is our endless appeals system. Typically, the system of appeals enters the public consciousness where it relates to criminal matters, when life or liberty is on the line. A fellow facing the electric chair walks away scot-free when he is exonerated via DNA evidence on appeal. Unfortunately, no one seems to think of the appeals process when facing a traumatic event just short of execution: foreclosure. Right up there among the most basic American values is the pursuit of happiness. With life or liberty at stake, defendants fight tooth and nail on the criminal law stage, but many foreclosure defendants are too ill-informed to do a modicum of the same to save their homes.


Currently, homeowners find themselves in a dire situation in Florida’s foreclosure courts. On the trial level, the judiciary is overburdened, still sifting through cases from five or more years ago that the banks have neglected to pursue diligently. Now, the banks are being called to the principal’s office, forced to gather their evidence, prosecute and foreclose on the quick. One would think that this would result in droves of dismissed foreclosure cases. Not so. In fact, the trial courts, in apparent recognition of the difficulty on the part of banks in properly prosecuting old cases, have gotten into the habit of overlooking important legal caveats, to help the banks collect on their complaints.


For example, in order for a bank to sue a homeowner for foreclosure, the bank must have “standing”, a legal term that basically means the right to sue. The bank sues the homeowner on January 1st, but the mortgage and note being sued upon is not assigned to the bank until January 10th. This means that the bank only obtained standing to sue on the 10th, and did not have standing to sue on the 1st. The law is clear that defective standing cannot be cured. The case must be dismissed. However, on the trial level, this very important legal concept is being eroded, ignored, for the sake of judicial economy, all to the detriment of homeowners.


Luckily, the appellate courts are much more serious about the law. After all, they wrote it. It is to them that the homeowner must appeal decisions of the trial court where the trial court has misapplied the law. The homeowner will not be able to introduce new evidence in the appeal, but will have to argue issues of law only. Time is a major factor in filing a successful appeal. The appeal must be filed within thirty days of the trial court’s judgment, and there are many other deadlines to meet during the course of the appeal.


Unlike other lawyers, who may usher their clients into bankruptcy in an attempt to delay the inevitable homelessness, the attorneys at the law firm of Grigaltchik & Galustov, P.A., are experienced in defending the homeowner all the way through the appellate process, from start to finish, all in the name of your right to pursue your happiness. Call us at (904) 738-8398.

“It was the best of times, it was the worst of times.”

Depending on one’s station within society, the last few years might aptly fit the infamous opening to Dickens’ classic, A Tale of Two Cities: “It was the best of times, it was the worst of times.” The common man or woman, like many times throughout history, continue to carry the brunt of persecution and suffering. While those connected to the government continue to increase their wealth and inherent power at an alarming clip. Few can justifiably label economic success a wrong when it is earned through ingenuity, personal risk, or hard work, but many can justifiably label economic success wrong when it is derived through the oppression of another man or woman’s rights.


Up to the last few years, the US judiciary was one of the few remaining bastions of government that vigilantly sought to protect the common man or woman from the oppressive nature of our government and those connected to it. Unfortunately, the erosion of this protection is escalating at an alarming rate. The World Justice Project ranked the US 17th overall as far as the strength of its legal system goes, behind most of the first world, but ahead of most of Latin America and Africa . . . for now.


This corruption, for lack of a better word, is evident in the legal system’s failure to adequately deal with the foreclosure crisis of the last few years. Forced to deal with thousands, if not millions, of individuals and families, our state court system has almost buckled under the sheer volume of cases spawned by the economic disaster. The result has been the wholesale abrogation of laws designed to protect the common man or woman, all for the stated purpose of trying to promote judicial efficiency. The results however evidence another (un)intended, and possibly nefarious purpose: assisting banks in maintaining a profitable balance sheet at the expense of us lay-folk.


Alas, there may be some last vestige of hope for those that have been left suffering. The bankruptcy court (originally tasked with managing debt problems) has finally stepped up to the plate. A new modification mediation program has become available in many of the Federal District’s bankruptcy courts over the last year or so. The program is specifically designed to help homeowners obtain a loan modification through mediation.


In the absence of “better” alternatives, banks are finally being forced to sit down and listen to their customers. However, the court’s motivations aren’t entirely free of economic motivation . . . If an individual or family obtains a modification, the transaction will make additional funds available to the remaining, unsecured, creditors. At the end of the day, the restructuring should make it easier for the U.S. judiciary to execute the duties it was intended to perform: Defending the rights of common man or woman from government infringement.


The attorneys at the Law Firm of Grigaltchik & Galustov, P.A., help the common man or woman on a daily basis by providing debt relief services, including bankruptcy services. We will be able to answer all your questions and help you to understand your rights. Call today: (904) 738-8398.