14 03 mar kreia newsletter

President’s Letterpage 1

What Landords Should Know About Service

Animals and Petspage 3

Why Title Insurance?

Attorney Harry Borderspage 7

How To Properly Handle Tenant Security Deposits

attorney Hank SchildknechtPage 5

Tax Time Tips!Page 8

Why Use an Attorney for Your Real Estate Closings?

page 9

Mentor Programpage 10

Happy Thunder Day!April 12

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.comDISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

Presidents Message

If you take the time to look around and see what different KREIA members are doing, you’ll be amazed at how many different strategies there are for us to follow to find deals, manage tenants, wholesale and retail. The list never ends!!

Some members chase deals on the MLS (Multiple Listing Service), some use HUD List, some go to the commissioner’s sale, some are agent referrals, some use mailing list, some do short sales, some work from the code violations liens, and Yes, George Foree really does use the computer.

There’s 20 different ways to skin a CAT! They can all be profitable and deals can be found almost anywhere!!

We all do our deals a little differently, but the home runs are usually found where the fewest investors are currently working.

This month you get to ask The Local Experts questions about how they do their business.

This Month’s Topic is:__Single Family VS Multifamily properties__ Buy & Hold VS Buy & Wholesale or sale retail

And we are keeping the speakers a SECRET!!!!

Can’t wait to see you Thursday’s meeting

Your President

Dennis Erhard

P.S. Don’t forget to buy your ticket online and get registered for a door prize.

Quote of the Month: “Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy.”Norman Vincent Peale

Vol 14‐03 Monthly Newsletter for KREIA Members

Dennis Erhard

2Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

Your KREIA Leaders

PresidentDennis Erhard

Vice PresidentFrank Miller

SecretaryChris McCarty

TreasurerMike Grinnan CPA

Treasurer ElectFred Helm

Board of Directors

Mike Butler

GeorgeForee

Eric George

JeanHall

MarkHass

FredButler

TamaraWest

DuffyFord

Dan Jones

RueMcFarland

Wally Kallbreier

ParliamentarianHank Schildknecht

Past PresidentConnie Horsey

Your KREIA Leaders are involved and chair several committees to make KREIA happen every month for you and your fellow KREIA Members.

Get involved with KREIA. You can help with the monthly meetings, L.O.T.S. Program, this newsletter, Saturday Workshops, Government Affairs, Social, Annual Picnic, Marketing, the new KREIA website and more PLUS You Get EXTRA KREIA Points for everything you do!

Get phone and emails of all KREIA members with the new KREIA Online Member Directory.

Reach out and tell them they are doing a great job! (It makes them do more for KREIA!)

KREIA Newsletterpublished monthly and serves both as a newsletter and a reminder notice of your upcoming monthly meeting.KREIA is a member only association focused on education, networking, and resources for today’s investor and to educate real estate investors from the basics to the complex. We are an excellent choice for all levels of investors. Whether you are just starting out in real estate investing, or are working on your hundredth deal, KREIA can help you learn more, earn more, and have more fun doing it.To Subscribe to the KREIA Newsletter is simple and easy. Go to KREIA.com and join the Kentuckiana Real Estate Investors Association.

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The Federal Fair Housing Act, the Americans withDisabilities Act, the Rehabilitation Act Section 504,and the Washington State Law Against Discriminationall require that applicants and tenants with disabilitiesbe provided with “reasonable accommodations”as needed in order for them to have an opportunityfor full use and enjoyment of housing. Allowingtenants and their guests who have disabilities to beaccompanied by their service animals is a reasonableaccommodation to housing policy and practice.

These four regulations seem at first glance to be animposition on landlords and businesses that may, forgood reasons, have policies which do not allow petsand animals on their premises. The good reasons, wealready know – the possibilities of noise, territorialdisputes between animals, clean‐up problems are themost obvious. But the benefits of these rules shouldalso be considered.

There are about 9 million Americans with significantphysical and sensory impairments, but there areonly 10,000‐12,000 assistance dogs, of which 7,000are guide dogs.

When those people with sight or hearing losses, seizure history, unsteady gait or other health conditions have the ability to enter the rental market on a fair basis with other applicants, the pool of potential renters is increased and creates more choice from landlords. And because service animals permit shopping for goods and services out in the community, local businesses reap the financial benefits of the additional customers, in turn helping the entire economy.

Many landlords who express that although they had reservations at first, these tenants turned out to be the most responsible renters they had experiences and had the lowest turnover rate.

There is a difference between service animals andsocial animals. Social animals are those used toaddress animal assisted therapy goals, and are trainedto be used in a wide variety of settings, including

hospitals, nursing facilities, schools and otherinstitutions.

And while several national organizations provide structural training and certification programs for social animals, most are not recognized as “services animals” under Federal Law. Therefore, social animals are not the subject of this article which addresses only how the laws affect landlords.

Who Needs A Service Animal?Some disabled people require the assistance of ananimal because of their disabling condition. Undermost federal laws, a person is considered to bedisabled if s/he has a sensory, mental or physicalcondition that substantially limits one or more majorlife activities (walking, seeing, etc.)

What Is A Service Animal?The most common service animals are dogs, butsometimes other species are sued (occasionally a cator bird). Service animals may be any breed, size orweight. Some, but not all, wear special collars andharnesses. Some, but not all, are licensed or certifiedand/or have identification papers. However, there isno legal requirement for service animals to be visiblyidentified or to have documentation.

The ADA (Americans with Disabilities Act) definesa service animal as “any animal that is individuallytrained to do work or person tasks for the benefit ofa person with a disability.” The Fair Housing Actconsiders “companion” animals to be a type of serviceanimal; however, they are not always trained toperform tasks.

What’s the difference between a service animal anda pet? Service animals are not considered to be pets.A person with a disability used a service animal as anauxiliary aid – similar to the use of a cane, crutches orwheelchair. For this reason, fair housing laws requirethat housing providers make modifications to “No Pet”policies to permit the use of a service animal by anindividual with a disability. Also, pet fees cannot becharged for service animals. Continued pg 4

What Landlords Should Know About Service Animals

4Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.comDISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

Continued from pg 3

Deposit and FeesAs just mentioned, service animal is not a pet andregardless of whether your property allows pets,the disabled tenant who uses a service animal is notrequired to make a pet deposit or pay a pet relatedmove‐in cleaning fee. You may charge a generalcleaning or damage deposit which is charge to alltenants. The tenant is liable for any damage the animalactually causes.

Pet Rules and “No Pets” RulesIf you allow tenants to have common household petsand you place limitations on the size, weight and typeof pets allowed, these rules do not apply to serviceanimals. Service animals may be any type of animaland any breed, size or weight, and an accommodationmay involve more than one service animal serviceAnimal Accommodation.

Landlords and property managers must review allrequests a disabled tenant makes for reasonableaccommodations, including requests for their serviceanimal. You CAN require the tenant to provide writtenverification from the tenant’s healthcare or mentalhealth provider that the tenant has a disability andneeds the service animal. The provider need not be anM.D., but does need to be a healthcare professional.You CAN require proof that the tenant is disabled, butcannot require the tenant to provide information aboutthe specific disability. You can then provide a writtenresponse to the tenant.

What Do Service Animals Do?Service animals perform many types of services forthose with disabilities:• A guide animal serves as a travel tool by a personwho is legally blind.• A hearing animal alerts a person with significanthearing loss or who is deaf when a sound occurs,such as a door bell; knock on the door, or firealarm.• A service animal helps a person who has a mobilityor health disability. Duties may include carrying,fetching, opening doors, ringing door bells,

activating elevator buttons, steadying a person upafter a fall, etc. A service animal may also be calledan assistance animal.• A seizure response animal assists a person witha seizure disorder. This animal may go for help,stand guard over the person during the seizure, oractivate an alarm to a monitoring service whichwould then send help.

A companion animal or emotional support animal assists people with psychological disabilities. Emotional support animals can help alleviate symptoms suchas anxiety, depression, stress and difficultiesregarding social interactions, allowing tenantsto live independently and fully use their livingenvironment.

What about other tenants who are afraid of orallergic to animals? While some people might havefear of dogs or other animals this fear does notamount to a disability, so a housing provider neednot “accommodate” the fear.

For most people with allergies, the presence of an animal will cause only minor discomfort, such as sneezing or sniffling and there are many over the counter remedies for this. Rarely, a tenant’s allergy is so severe that animal contact may cause respiratory distress; in these cases, the allergic tenant may also request accommodation (for example, to keep the animal in a separate area of the building.)

Animal Care And SupervisionThe tenant/handler has the responsibility to care forand supervise the animal.

The tenant must retain full control of the animal at all times. This generally means that while the animal is in common areas, it is on a leash, in a carrier, or otherwise in the direct control of the animal owner/handler. When in the presence of others, the animal is expected to be well behaved, not jumping on or nipping at people, not snarling or barking.

Continued on page 6

What Landlords Should Know About Service Animals

5Copyright MMXIV Kentuckiana Real Estate Investors Association•PO17592 • Louisville, KY• (502) 509‐2216 www.KREIA.comDISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

Unfortunately, over the years I have seen a number of mistakes that greatly reduce an investor’s cash flow. Most all problems can be avoided by a working understanding of the Kentucky Landlord Tenant Act.

One of the common errors is the failure to promptly send out a properly worded 7 day letter notifying the tenant that if their payment default is not cured within 7 days, the landlord will terminate the lease. This notice must be hand-delivered or sent certified mail.

The second mistake relates to the handling of damage deposits. This is specifically addressed by KRS 383.580 of the Landlord Tenant Act. The statute provides, among other things, that:

All security deposits must be kept in a separate bank account used only for that purpose.

The landlord shall inform the tenant of the location of the bank where the money is being held and the account number.

The landlord must provide the tenant with a walkthrough inspection of the unit showing any existing damage to the property which must be signed by both the tenant and the landlord prior to the tenant taking possession of the unit.

When the tenant vacates the property, the landlord shall conduct an exit walkthrough inspection of the premises which shall be signed by both the landlord and the tenant. That inspection should note the cost to repair any damage.

The statute provides the landlord cannot keep any portion of the damage deposit if the landlord did not comply with the statutory requirements regarding the handling of deposits.

A great number of cases in district court deal with landlord tenant issues.

Many of those cases begin with the landlord bringing an action to collect back rent, late charges,

eviction costs and damages to the leased property.

Some begin in small claims court with the tenant bringing an action to recover the security deposit that was paid to the landlord.

When these cases come before the court for trial, the first questions from the bench are about the damage deposit and walkthrough inspections.

The Judge will presume you are the professional landlord and are knowledgeable about the law.

After all, you are the one with the property and the one who prepared the lease.

You are not the party that is going to receive any sympathy from the court.

You are the rich landlord.

You have probably suffered great damage at the hands of the non-paying tenant that skipped out in the middle of the night. However, if you have not complied with the landlord tenant act and properly handled the deposit and walkthrough inspection, you are going to have great difficulty proving your case and recovering a judgment.

I will be available to discuss walkthrough inspections and security deposits at your next KREIA meeting. It is vital to your success as a landlord and to secure your cash flow to know the law.

I can assure you that the lawyers at Legal Aid do.

Henry Schildknecht

Attorney at Law

How To Properly Handle Tenant Security Deposits

Have A SAFE and FANTASTIC Derby Season!


No Member Spotlights were submittedPlease submit yourself or a fellow member

http://kreia.com/submit-member-spotlight

Welcome New Members!Sean Williams Dan PringleHector Torres Kim MowderRenee Dixon Michael TranDaniel Wolf Shantil Newton

Continued from page 4You may require that the service animal is in good health, free of internal and external parasites, and fully vaccinated against common disease; for instance for dog rabies, distemper and parvovirus and wear a current rabies tag. You may request that immunization records be on file with you. The service animal may be required to wear owner ID tags. Clean‐up is the sole responsibility of the owner/handler and you may require that the service animal not defecate in community areas or that it be restricted to a particular area, to be scooped up immediately.

Removal Of A Service AnimalIf a service animal is unruly or disruptive, aggressivelyjumping on people, nipping, or engaging in otherharmful behavior, the landlord or property managermay ask the tenant/handler to remove the animal from the immediate area if the animal’s improper behavior happens repeatedly, the manager may tell the tenant not to bring the animal into any common area until significant steps have been taken to mitigate the behavior. Mitigation can include refresher training for both the animal and the tenant.

Areas Off‐Limits To Service AnimalsManagement may designate certain areas off limits to service animals, such as swimming in the pool or inside the sauna room. Such designations should not infringe upon the right of a person with disabilities to full enjoyment of the amenities of the community since other persons may be of assistance in the pool or sauna. The service animal may be at poolside and immediately outside the sauna door.

Verification of Disability & Need For Service Animal The tenant must provide written verification that they have a disability and that the accommodation is necessary to give the tenant equal opportunity to use and enjoy the community.

The tenant should obtain a signed letter on professional letterhead from his or her own healthcare or mental health provider to the housing provider answering the following questions:

1.) Is the person disabled as defined by the fairhousing laws? And…

2.) In the healthcare provider’s professional opinion,does the person need the requested use of theservice animal to have the same opportunity as anon‐disabled person to use and enjoy the housingcommunity?


There are two different kinds of title insurance policies: lender’s and owner’s. Almost every lender in a consumer transaction will require the purchaser buy a lender’s title insurance policy to protect the lender against title defects from the past. But lenders do not require that purchasers buy title insurance to protect their own interest in the property.

Over the years, we have seen hundreds if not thousands of title defects. We firmly believe that purchasing property without an owner’s title insurance policy is a foolish decision.

So why do you need title insurance for yourself if a title examination has been conducted? The title examination is performed for the benefit of the mortgage company and it only protects the lender against defects (mortgages, liens, delinquent tax bills, etc) that are actually discovered in the exam. There are many potential defects in a title whichmight not actually appear in the exam, or whichmight be missedin the exam.

The owner’s title insurance policy will cover legal fees as well as your equity in the property, up to the policy limits (which is usually your purchase price) for covered defects that occurred prior to your ownership of the property but which are discovered after you buy the house.

These are but a few of the many potential title defects that might affect the property you are purchasing, and without an owner’s title insurance policy, you won’t be protected against:• Forged deeds, mortgages, releases of mortgages and

other instruments.• False impersonation of the true owner of the land.• Deeds executed under fabricated or expired power

of attorney.• Deeds apparently valid but actually delivered after

death of the grantor or grantee, or without consent of grantor.

• Deeds by persons of unsound mind.• Deeds by minors.• Descriptions of properties apparently but not

actually adequate.• Duress in execution of deed.• Defective notary acknowledgments.• Deeds by persons apparently single but actually

married.• Undisclosed divorce of spouse who conveys as

sole owner.• Undisclosed heirs.• Misinterpretation of wills, deeds and other

instruments.• Birth or adoption of children after date of will.• Children living at date of will but not mentioned

therein.• Discovery of will of someone thought to have died

without a will.• Discovery of later will after probate of first will.• Administration of estates and probates of wills of

person who murdered the decedent.• Deeds to or from corporations before incorporated

or after surrender of forfeiture of charter.• Undisclosed mechanics liens.• Mistakes in recording legal documents. (i.e. incorrect

indexing, errors and omissions in transcribing and failure to preserve original instruments.)

• Failure to include necessary parties in judicial proceedings.

• Errors in tax record. (i.e. listing payment against wrong property)

• Erroneous reports furnished by tax officials, but not binding on municipality.

• Lack of capacity of foreign personal representatives and trustees to act.

• Deeds from nonexistent entities.• Deeds in lieu of foreclosure set aside as being given

under duress.

Feel free to contact any of our attorneys if you would like to discuss title insurance in more detail.

Harry BordersBorders and Borders Attorneys920 Dupont Rd.Louisville, KY 40207502‐894‐9200

Many taxpayers find the ability to carry back a net operating loss (NOL) one of the most business‐friendly provisions in the Tax Code. This is often true for new businesses. In times of economic difficulty, Congress has even relaxed the NOL carryback rules. However, there may be times when it is tax‐advantaged not to carry back an NOL.

NOLsAn NOL arises when allowed deductions exceed a taxpayer's gross income for a tax year. An NOL can be generated from business activity losses as a sole proprietor or partner in a partnership, among other activities. The rules for NOLs differ for different types of business structures. Generally, taxpayers can carry back an NOL for two years and then carry it forward for 20 years.

The decision not to carry back an NOL can be influenced by a variety of factors. These include the tax rates that may have been applicable to the years in which the NOL would be carried back. Taxpayers also need to consider the impact that an NOL would have on deductions, exemptions and credits. Taxpayers may also need to weigh the benefits of carrying back an NOL against the benefits of carryovers for other deductions.

ElectionThe election not to carry back an NOL is made by attaching a statement to a timely filed (including extensions) return for the year in which the NOL arose.

The election must state that it is made under Code Sec. 172 and provide sufficient information to identify the election, the period to which it applies and the taxpayer's basis or entitlement for the election.

The tax rules do not allow taxpayers to relinquish a portion of an NOL.

The election must be to forgo the entire NOL. However, in certain limited cases, such as farming losses, there is some flexibility in the rules. The election also must relinquish the entire carryback period.

Once made, the election to relinquish an NOL carryback cannot be revoked without the permission of the IRS. However, there have been exceptions such as under the Worker, Homeownership and Business Assistance Act of 2009, which allowed taxpayers to revoke a previously made election not to carryback an NOL in order to take advantage of an extended carryback period under that law.

J. Michael Grinnan CPA9900 Corporate Campus Dr.Suite 3000Louisville, KY 40203

Office: 502‐657‐6333

[email protected]


How Do I Elect NOT To Carry Back A NOL?

Tax Time Tips J. Michael Grinnan CPA

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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In Kentucky, anyone can handle a real estate transaction. No license is required and no state or local agencies oversee the closing process. In fact, Kentucky requires more training and licensing for cutting hair than for handling millions of dollars in escrows for closings. We believe that it is critical to have attorneys involved in the sale and purchase of real estate because many legal issues do, or should, arise that require the education and experience of an attorney.

If issues arise as to survey defects, title defects, terms of mortgages, or the manner in which purchasers should hold title to real estate, only a licensed attorney is qualified to handle those issues. Rather

than having to hire an attorney for each party, these issues can arise and be handled from the closing when you have an attorney present. And if separate, individual representation is advised, our attorneys are also qualified and trained to refer you to another attorney.

Finally, as attorneys, we are required to treat all parties with honesty and fair dealing; a non-licensed closing agent does not have that requirement. At Borders & Borders, at least one attorney is involved with every transaction. When you choose Borders & Borders for your closing needs, you’ll see the difference an attorney makes

- Attorney Harry Borders

Why Use An Attorney for Your Real Estate Closings?

Rick Wardlow, Joe Gribbins, Allee Harmon, Bill

Dollinger, Frank Miller Call 502‐489‐5515http://wardlowauc.com

10Copyright MMXIII Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

KREIA’s Brand New

MENTOR PROGRAM10 Online Mentoring Sessions!Enroll Anytime – Access 24‐7

1. Why Real Estate? Rue McFarland

2. Online Local Government Resources – Tamara West

3. Closings 101 – Harry Borders4. How to Buy – Dan Jones5. Wholesaling – Duffy Ford

6. Energy Efficiency – Eric George7. S.W.A.T. Rehabs – Pete Youngs8. Landlording – Mike Butler

9. Landlord Tenant Law – Hank Schildknecht10. Tax Concerns – Mike Grinnan CPA

MembersNon‐members $595

Enroll Now! http://kreia.com/mentor

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12Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.


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.com

PO Box 91225Louisville, KY 40291Return Service Requested

KREIA’s Monthly Meeting! Thursday Mar 27th

5:30 PRE MEETING “HOW TO PROPERLY HANDLE STUFF LEFT INHOUSE AFTER YOU BUY IT” attorney Michele Rawn

MAIN MEETING

SINGLE FAMILY VS. MULTI-FAMILYBUY AND HOLD VS. WHOLESALE AND RETAIL

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14 03 mar kreia newsletter