Is a real estate salesperson an independent contractor or an employee?

Tax-wise, the difference is significant.

From Cyquest Business Solutions Inc.

Always on the lookout to protect employees and the US and State’s pocketbooks at the same time, New Jersey often attempts to treat workers generally considered to be independent contractors as employees. Classifying an employee as an independent contractor with no reasonable basis for doing so makes employers liable for employment taxes.

 New Jersey has adopted, with exceptions, the so-called ABC Test to determine if a worker is an independent contractor or an employee.  

Per New Jersey Unemployment Compensation Law, a worker should be considered an employee unless all the following circumstances apply:

 A.    The individual has been and will continue to be free from control or direction over the performance of work performed, both under contract of service and in fact; and

B.     The work is either outside the usual course of the business for which such service is performed, or the work is performed outside of all the places of business of the enterprise for which such service is performed; and

C.     The individual is customarily engaged in an independently established trade, occupation, profession or business.

 A recent New Jersey Appellate Court decision sides with a real estate salesperson who was seeking classification as an employee.  Let’s sale the real estate industry in New Jersey is in a bind.  Here’s an article taken, in full, because it is behind a paywall at the New Jersey Law Journal.

Ruling Could Portend Shake-Up for Independent Contractor Status of Real Estate Salespeople

 The case "does have national implications" because real estate salespeople across the country work under conditions similar to New Jersey's, said Darren Barreiro of Greenbaum, Rowe, Smith & Davis in Woodbridge, representing the New Jersey Association of Realtors. He said the ruling could lead to an end of 50 years of real estate salespeople in New Jersey having independent contractor status.

 July 02, 2021 at 02:53 PM

 By Charles Toutant

 A New Jersey appeals court ruling could open the door to a finding that commissioned real estate salespeople are employees and not independent contractors.

 The appeals court said the so-called ABC Test for deciding a worker’s employment status applies to a dispute between real estate salespeople and Weichert Realty over payroll deductions. The ruling said an Essex County Superior Court judge correctly denied Weichert’s bid to dismiss a class action over the company’s deductions for insurance, marketing and other expenses from the salespeople’s earnings.

 Plaintiff James Kennedy II claimed that the deductions violate New Jersey’s Wage Payment Law, but Weichert and amicus New Jersey Realtors argued that the Wage Payment Law does not cover fully commissioned real estate salespeople. Weichert moved to dismiss the suit on that basis but the trial judge denied the motion, declaring that the real estate salespeople’s status is determined by the ABC Test. That judge cited the Supreme Court’s 2015 decision in Hargrove v. Sleepy’s, which held that the ABC Test governs whether a plaintiff is an employee or independent contractor for purposes of resolving a wage payment or wage-and-hour claim.

 Under the ABC Test, a worker is presumed to be an employee unless the employer can show that A, the employer neither exercised control over the worker nor had the ability to exercise control over how the work is completed; B, the services provided by the worker were either outside the usual course of business or provided outside all the places of business of the enterprise; and C, the individual is customarily engaged in an independently established trade, occupation, profession or business.

 On appeal, Weichert claimed that the ABC Test does not apply to real estate salespeople because the state’s Unemployment Compensation Law expressly excludes them from coverage. But the appeals court panel of Judges Carmen Messano, Mitchel Ostrer and Ronald Susswein rejected that claim, adding that Weichert wrongly held that the Hargrove ruling applies only to truck drivers.

 “We conclude that the UCL’s special treatment of commissioned real estate salespersons does not render the ABC test inappropriate to determine a real estate salesperson’s independent-contractor status under the Wage Payment Law,” Ostrer wrote for the panel.

 The appeals court said the ABC Test applies to the period before enactment of the Brokers Act, a 2018 statute.

 The appeals court said it lacked sufficient information from the record of the case to decide the outcome of an ABC Test focusing on the period before the Brokers Act was enacted, and it could not decide based on the information before it whether the ABC Test applied to the period after enactment of the Brokers Act. The case was sent back to the trial court for those issues to be addressed after the record is augmented.

 Kennedy and the putative class were represented by Ravi Sattiraju of Sattiraju & Tharney in East Windsor. Sattiraju said the ruling could result in a finding that realtors are employees, rather than independent contractors, but he said he would “take it a step at a time.” Sattiraju added that he was “pleased with the ruling. We’re going to continue to litigate the case.”

 Weichert was represented by John Birmingham and Jennifer Keas of Foley & Lardner, with Thomas Ryan of Laddey, Clark & Ryan in Sparta as local counsel. They did not respond to calls about the ruling.

 Darren Barreiro of Greenbaum, Rowe, Smith & Davis in Woodbridge, representing the New Jersey Association of Realtors, said the ruling could lead to the end of 50 years of real estate salespeople in New Jersey having independent contractor status. Most of the sales agents want to maintain their independent contractor status, he said.

 Barreiro said his group was hoping to see an appeal of the ruling before the Supreme Court in conjunction with another case already pending there, Walfish v. Northwestern Mutual Life Insurance, which raises similar issues as they pertain to insurance salespeople.

 “We think the Appellate Division was hamstrung by Hargrove. We’re urging the Supreme Court to clarify the ruling in Hargrove so the exemption will apply,” Barreiro said. He added that the case “does have national implications” because real estate salespeople across the country work under conditions similar to New Jersey’s.

 [End]

 We in the title insurance industry will be keeping an eye on this case as the New Jersey attempts to tax our independent contractors - title searchers - as employees.

Disclaimer:

The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Vested Land Services LLC and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided.

 

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Condominium vs. Co-operative: What’s the Difference?

 Being a homeowner can be irksome and can take the fun out of homeownership itself.  If that’s the case, it might be time to make a move to either a condominium (condo) or co-operative (co-op).

 Condos and co-ops offer the benefit of not having to handle all of the routine upkeep you get in a house, but, as with everything in life, there a pros and cons to both.

 What is a co-op?

 First, please understand that co-ops are unique as far as ownership is concerned. Co-ops are different from condominiums and other residential arrangements because they aren’t considered “real property.” They are “interests in real property.” When you buy into a co-op you are buying shares in a corporation which owns the land and building.  You ownership in the co-op corporation entitles you to an apartment or unit usually embodied in a proprietary lease. But that’s not the only difference between a co-op and condo.

 The basic differences:

 Ownership

 Condo: Buying a condo means you own the real estate, including an interest in common areas.  Those common areas can be lawns, the swimming pool, or the parking garage.  There is no approval process when you buy your condo, and you don’t get a chance to pick your neighbors.

 Co-op: When you buy into a co-op apartment, you’re buying shares that entitle you to a portion of the building. A co-op board will have to approve you in as a new owner.  Proceedings, in the vast majority of cases are not subject review.  When you sell your co-op, the buyer has to go through the same procedures you did when you bought.

 Fees and expenses

 Condo: Condos charge maintenance fees, usually on a monthly basis. This covers maintenance costs for the building’s common areas.  They can include expenses ranging from lawn maintenance, pool upkeep, snow removal and certain routine maintenance that all buildings need.  See below about real estate taxes and mortgages.

 Co-op: Co-ops will also charge fees, but they are often higher in a co-op and sometimes include items like utilities. They will include a proportionate share of the building’s mortgage and real estate taxes.  See below.

 Keep in mind maintenance fees for condos and co-ops may increase over time.

 Cost

 Condo: Condos usually cost more to buy than a co-op, but you have more flexibility with your investment. It’s usually easier to sell or lease out a condo.

 Co-op: While co-ops will have higher fees, the initial cost of buying into a co-op is usually cheaper than a condo. However, it is almost impossible to rent out your co-op apartment.

 Property taxes

 Condo: Condos are individually owned, so owners are taxed separately just as they would be in a single-family home.

 Co-op: Co-ops are considered a single property, with a single property tax assessment that is split among the owners and usually included in the maintenance fee. Property taxes are typically lower on co-ops than on condos.

 Tax deductions

 Condo: If you own a condo, the mortgage interest and property/real estate taxes are deductible – just like a home.

 Co-op: Co-op residents can deduct their share of property taxes and mortgage interest.

 Disclaimer:

The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Vested Land Services LLC and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. 

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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What Are the Duties of a Title Agent?

By Stephen M. Flatow, Counsel, Vested Land Services, LLC

 

Title agents such as Vested Land Services LLC play several important roles in real estate transactions- whether residential or commercial. Title agents generally act as the agent of the title insurance company.  Its job is to examine and review title, facilitate the closing, record documents in the appropriate county office, and issue insurance policies to the buyer and the lender.

 Title Examination and Review

A Title agent should be using experienced title searchers and be staffed by examiners with years of experience in the industry.  After receiving the title report from the searcher, the examiner, or reader as she is sometimes called, reviews the search to determine the status and condition of title to the subject property. Title agents generally provide this information in the form of a Commitment to Insure Title.

 Some Title agents also provide title information for the purpose of foreclosure actions, and estate planning and disposition of real property.  A Commitment is not issued.  Instead, a letter report is used.

 The Settlement Agent for Real Estate Transactions

 Title agent are very frequently the settlement agents for real estate transactions. As settlement agent, the title agent works with the buyer’s and seller’s attorney, as well as the mortgage lender to bring the transaction to closing.  The Title agent obtains signatures on all of the closing documents, and the title company also receives and distributes payments related to the conveyance transaction. After the parties have signed all the documents, the title company will record documents that need to be recorded, such as deeds and mortgages, in the local county land records office.

 Title Insurance Issuer

 Vested Land Services LLC, is a policy writing agent for three national title insurance companies.  As such, we issue policies of title insurance on their behalf.  We earn our income via a commission for issuing the title insurance policy and are licensed by the State of New Jersey.

 Well, there you have it.  Short, sweet and to the point.

 Any questions? Give us a call!  We’re here to serve.

 We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

 

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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New Jersey's tax sale law; city wins; property owner cannot get back his property

Tax foreclosure causes owner to lose title to real estate.

Municipalities earn most of their income through the collection of real estate taxes. In New Jersey, when taxes aren't paid, the municipality has the right, indeed the obligation, to collect those taxes by selling the lien representing those unpaid taxes. If the lien is not sold, the municipality becomes its owner. (The lien is represented by a tax sale certificate that is recorded in the land records.) If the lien remains unpaid, then the municipality has the ability to foreclose on that lien, take title to the property, and then sell it n order to recoup the unpaid taxes.

Sometimes, after the title has been acquired by the municipality, the owner "wakes up" and tries to reclaim the property. In a recent case involving Newark, New Jersey property, the former property owner gets it in the neck for a) not paying the taxes, and b) trying to bamboozle the court into reopening the case after title was acquired by foreclosure.

As discussed in the Court's Opinion involving an investment property, none of the foreclosed owner's arguments were persuasive and the Court would not set aside the foreclosure.

Our office deals with tax liens on a daily basis. Our advice, pay taxes when they are due!

We deal with municipal tax liens on a daily basis and over the past 40+ years.  If you think we can help you, or if you have a question regarding unpaid municipal liens in New Jersey, let us know.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

Medicaid liens in New Jersey

If your parent owns a home in New Jersey and is a Medicaid recipient, you may be surprised to learn that the State of New Jersey has a lien on the home after your parent passes. 

Per the state's information page:

Under federal and New Jersey law, the Division of Medical Assistance and Health Services (DMAHS) is required to recover funds from the estates of certain deceased Medicaid beneficiaries, or former Medicaid beneficiaries, for all payments provided through the Medicaid program for services received on or after age 55.

This is done via a lien that comes into being after the death of the recipient. 

An interesting discussion can be found on the website of elder law attorney Donald D. Vanarelli, Esq. You can read it here.

We recommend that an attorney be consulted as a parent ages in order to take advantage of estate planning that may reduce the impact of the Medicaid lien, and, if your parent may have been receiving Medicaid, that you consult an attorney before you probate a Will or apply for administration. 

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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