CHAPMAN LAW GROUP P.C.
Foreign Investment, Real Estate and Business Law
for the Mountain Communities of Colorado
FOREIGN INVESTMENT LAW
People from all over the World travel to the Rocky Mountains of Colorado for its legendary snow and laid back mountain resorts. Many of these people decide to acquire real estate here. Many of them also decide to invest in businesses here.
In addition to the typical real estate and business issues, it is essential that these foreign clients structure these investments in a manner that addresses their unique tax issues. I work with their domestic tax advisors and a select set of U.S. international tax advisors to implement those structures.
Unfortunately, often the professionals working with these clients either do not recognize that these clients need specialized advice or they provide inappropriate advice . Hopefully the foreign client receives the appropriate advice at the time the investment is made but often that is not the case.
A growing segment of my practice deals with restructuring the ownership structure of prior transactions. often this involves older transactions. For example, the patriarch matriarch of the family bought a vacation home in his or her individual name. Now that person is in his or her 70's or 80's and has become aware that owning the property in his or her own name can have disastrous economic consequences for the family after he or she dies since the U.S. levies a tax of approximately 40% of the value of the real estate at the time of death. This is not calculated on the profit or gain but on the value at time of death. Fortunately, in most instances, it is possible to restructure the ownership to avoid such consequences. However, it is usually significantly more difficult and expensive than to have structured the ownership correctly in the first place. Nevertheless, given the potential tax liability if the ownership is not restructured, there is little question that the restructuring must be done.
When it comes to the sale of U.S. real estate by foreign owners, there are special rules that must be followed as well.
Fortunately, the issues relating to the ownership and sale of U.S. real estate by foreign clients can be effectively dealt with provided the client has timely competent advice.
REAL ESTATE LAW
In the laid back Rocky Mountain resorts, real estate prices are no longer laid back. The purchase of a home whether it be a vacation home or permanent residence involves the expenditure of significant sums. Often these purchasers or sellers are extremely busy individuals who do not have the time to deal with the details of such a significant real estate transaction or do not have the legal experience to conduct the due diligence that is appropriate for such an investment. Having an attorney who knows the issues, the law, the lenders, the real estate brokers, the building contractors, the real estate closing companies and most importantly, what is important in this local and what is not, can help to ensure a smooth stress free purchase.
The following is a brief summary of the typical real estate services I perform:
·· Negotiate and draft contracts for purchase and sale of real estate.
·· Review and resolve real estate title issues.
··· Review and resolve real estate boundary issue.
·· Coordinate with client’s tax advisors and local counsel, if applicable.
·· Provide advice regarding Section 1031 Tax Deferred Exchanges.
·· Form a limited liability company, corporation or other entity for holding real estate.
·· Negotiate and draft real estate construction contracts for contractors and owners.
·· Negotiate and draft contracts between owners and architects, engineers and other construction professionals.
·· Review and negotiate loan documents on behalf of borrowers.
·· Represent lenders in regard to collection matters, including Public Trustee foreclosures.
·· Negotiate and draft commercial leases on behalf of landlords or tenants.
·· Negotiate and draft cotenancy or joint tenancy agreements between joint property owners.
BUSINESS LAW
The foreign investment and real estate law areas of my practice often are complemented by the business law portion. For example, typically a foreign real estate or business client will utilize some type of business entity such as a limited liability company, corporation or partnership.
The following is a brief list of the typical business law services I provide:
·· Formation and organization of Colorado limited liability companies, corporations and partnerships. The companies are typically formed in regard to purchase of real estate by both U.S. and foreign real estate purchasers or start up of local business by both U.S. and foreign clients.
·· Coordinate the formation of companies in various foreign countries.
·· Negotiate and prepare company or asset sale and purchase agreements.
·· Employment and guaranteed payment agreements.
·· Covenants not to compete.
·· Provide ongoing representation for companies such as contracts, leases, and dispute resolution.
COMPANY OFFICE
·· Given the fact that a large number of our clients are foreign, we have found it helpful to those clients to offer various ongoing services .
·· For example our office is often the legal and mailing address for various entities that we form for these clients. We are the local point of contact for them. One example is that due to international mail timeframes, we receive and forward to the client by email Eagle County real estate tax notices and tax bills so as to insure they are received and paid by the client in a timely manner.
·· Another part of these services is the continuing maintenance of the various entities we have formed for these clients. This includes the preparation and filing of required annual Colorado and Federal governmental reports regarding the Colorado entities and any associated foreign entities. We also prepare the required company minutes for the Colorado entities.
·· We work in conjunction with the foreign client's U.S. and foreign tax preparers to ensure they have the appropriate documentation that they need in regard to the client's transactions in regard to preparation of their tax returns.
Client's situations are not constant and when there are changes, we are there to handle those changes.
·· Finally we are often a resource for the foreign client when they are looking for direction in regard to a U.S matter unrelated to our past legal representation.