Sperity Real Estate Ventures

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Virginia ABC laws changing soon

Bar at Deanna's

*image courtesy of Alan Turkus (http://www.flickr.com/people/aturkus/)

A common complaint in the restaurant industry here in Richmond is about how outdated and difficult (and sometimes just plain nonsensical) the ABC regulations are, especially for start-ups. Well it might finally be time for that to change:

…the state’s Alcohol Beverage Control Board is for the first time in 20 years reviewing and updating all of its regulations in an effort to rewrite or eliminate any antiquated and burdensome restrictions. And they’ve asked the state’s merchants to help, giving them until Oct. 17 to propose changes.

Read more at the Washington Examiner

You heard them, folks. If you have an ABC license, then they want to hear from you! Be a part of the updates in the ABC laws. If you’ve seen what can be done better, now is your chance to speak up.

Where to speak up? I’m not exactly sure. I checked the Virginia ABC website and didn’t see anything specific about the initiative, but calling them directly would be a good place to start. If you do know the reporting process, please leave a comment with the information.

(Thank you to Richmond BizSense for pointing out this article in their morning email. If you’re not receiving it already, then you might want to rectify that.)

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What to do if your landlord doesn’t respond to repair requests?

So you’ve had a roof leak for a while, making the drywall from the ceiling cave in..and who knows, maybe there is mold in there?! You called the landlord or property manager about the problem when you first noticed it, which was 2 months ago, and maybe they sounded like they were going to take care of it (and maybe they didn’t) — but you haven’t heard from them since. What do you do?

This is important. Do not stop paying rent. There is no advantage to be gained legally by withholding rent, even if the place becomes untenable. The courts do not look kindly on a tenant taking that kind of decision into their own hands.

Instead, listen to the advice given in this recent article by Richmond.com, “Don’t Let The Walls (Or Ceiling) Cave In On You“:

  • Be current in your rent
  • Give your landlord written notice of the problem
  • Wait a reasonable amount of time

After a reasonable amount of time has passes, take a copy of the written notice, along with the next months rent, down to the John Marshall general district court at 400 N. Ninth Street. A clerk will help you file a legal assertion.

…

There is a small filing fee of $56 to file assertion. We’ve even tracked down the onlinie form, DC-429, available through Virginia courts here. 

If you stop paying rent, you may still be liable for late fees and other repercussions for being late (i.e., bad marks on your credit or even eviction). You are not alone or powerless against a landlord, but you have to play by the rules that have been set up to protect everyone involved.

Have you been through this process with the courts? I would be grateful if you share your experience below in the comments, so that everyone can learn from it!

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7 key items to keep your corporation or LLC legitimate

No one likes to do paperwork. (well, almost no one — if you find that rare individual, hire them and keep them!)

In order to keep your corporation or LLC compliant, there are things that must be done consistently. These requirements are not onerous, but they are easy to overlook in the hustle of your day-to-day business.

I have seen a number of closing on business deals that are delayed because the corporate books weren’t kept up, or the annual fees weren’t paid and the corporation has to be re-instated. Be sure to set an appointment in your calendar once every 6 months to review all of these items and be sure that there is nothing that you need to catch up on.

Small Business Trends has a great post from this past week about this exact thing (here), so I won’t rehash it all over again. Here are the key points they make:

1. File your initial/annual reports (also known as a “Statement of Information”)

2. Keep up to date with your corporate minutes and resolutions

3. Record any changes for your corporation/LLC by Filing “Articles of Amendment”

4. Make sure you’re legal when conducting business out of state

5. Don’t commingle your personal and business finances

6. File DBAs for any name variations

7. Don’t forget to close an inactive business by dissolving your corporation/LLC

Read the full post for the details behind each of these pointers and consult with your accountant or your attorney, or whoever helps you with your corporate records.

If you are thinking of selling your business, this review should be on your checklist to take care of at the beginning of the selling process.

Take the little bit of time now to stay in compliance and avoid any red tape nightmares later when you find out that you didn’t!

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Pet deposits on residential leases

The issue of a residential tenant deciding to get a pet in the middle of a current lease term doesn’t come up nearly as much as you would expect, but every so often it does. In most cases we do require a pet deposit to cover any damages that the pet may do to the property.

Legal technicalities aside, the landlord has a good practical argument for retaining the whole deposit [until the end of the lease]. The increased deposit was intended to provide coverage for any damage the dog might do. The landlord may not know about any such damage until you move out, even though the dog is long gone.

The above quote is from a post on Inman News in a Q&A column that I thought was worth sharing here (click the link to see the rest of the article).

Not only is the post a good primer on the ins-and-outs of security deposits, but also on the general nature of leases and how changes to an existing lease should be handled. This is important information to understand for both landlords and tenants. Basically, lease terms can’t just be changed at the whim of one party (duh!) — while that seems like it should be taken for granted, you would be surprised how often we have to explain that in the normal  course of business.

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How to make zoning easier to understand

Government regulations are typically so complicated that not only can the lay-person not understand what they mean, but they are written in such a way that even people that think they know what is meant are left arguing completely different interpretations.  Zoning regulations are no exception.

In fact, in NYC the zoning regulations are so convoluted that “In a recent case, a judge said the word “development,” which appears at least 2,500 times in the [zoning] resolution, did not mean what the city said.” (source: New York Times article — we’ll see more about that article in just a minute)

The Planning Commissioner for NYC, Amanda Burden, is attempting to make the zoning regulations a little more accessible to the general public by issuing a new city handbook with plain explanations and cartoon drawings that illustrate what particular zoning designations look like and what they mean.  Check out the coverage in the New York Times about what she has been doing to bridge that gap.

While this may not be the right approach for every locality, the idea is one that every local government should take to heart:  Start building tools that puts control of the government back into the hands of the people.  Sure, we elect officials to represent us and we should not be ruled by mob mentality (see: California), but the people also need to be able to understand what is being done — especially when we are expected to interpret these rules and abide by them.

I have seen far too many business and property owners try to follow the rules that have been laid out, only to find a health inspector or building inspector come in with a totally different understanding and cost the owner thousands of dollars in hard cost and lost business because the rules were not clear enough.

What do you think, Richmond? Have you had any issues with the local zoning regulations (city or county)? What would you suggest could be done to make the rules more clear?

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Don’t let them catch you dancing!

Everyone can now rest easy, dancing will no longer be tolerated in the City of Richmond! (Well, when I say “everyone can now rest easy”, I really mean everyone except for those pesky dancers.)  From what I hear, dancing brings about all sorts of immorality so I am relieved that we won’t have dirty dancers parading around making light of the city’s laws. (My research really is confined to movies from the first half of certain movies from the 80’s)

I’m actually a little confused because visitors or transplants to the city are always complaining about how there aren’t many dance clubs here anyways.

Style Weekly has plenty of information in this week’s edition here, including a Q&A follow up session with a representative from the Mayor’s office.

As a tribute to the new City ordinance, here’s a video of some scenes from the movie Footloose:
[youtube=http://www.youtube.com/watch?v=wROSYW25vhc]

Actually, this ordinance is nothing new here in the Richmond metro area.  Chesterfield and Henrico have been issuing permits (or NOT issuing permits, depending on who you talk to) for a couple of years now.

Here are a few links about the stink from last year about Chesterfield and dance permits:

(thanks to Richmond Good Life’s time-capsule archives for those links!)

Henrico has the same type of ordinance and dance club permits, but I recently had a tenant that had to apply for one and it wasn’t a huge ordeal.

If you’ve run against any of these dance ordinances or know of how it’s handled in other areas, I’d love to hear about your experiences.  Leave a comment!

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Breakin’ the law! Or not… (new real estate laws)

July 1st each year is when most of the new legislation that was passed by the State of Virginia takes effect. This year (as every year), there are a number of changes that will directly impact the real estate business.  — Side note: Thank you to the Virginia Association of Realtors, RPAC, and the local associations for all of their hard work in getting these laws proposed and lobbying to get them passed!

VARbuzz has a great summary, so be sure to go there for the full list.

Here, I want to highlight a few of the new laws/updates that I found particularly interesting and/or encouraging:

* Brokers who do the right thing won’t be punished (amnesty for honesty). A real estate broker who discovers, either through a self-audit or through a third party retained by the broker, that the firm or a member of the firm has violated a law or regulation will no longer be penalized if the broker satisfies certain requirements:The broker must notify VREB within 30 days of the discovery of any noncompliance, and he must submit a written plan explaining how the issue will be fixed. This may include entry into a voluntary compliance program. Any voluntary compliance or other remediation must be completed not more than 90 days after the date the plan is submitted to the VREB, and must be certified by the broker or a third party in order to create immunity from enforcement. *Note that bill does not protect the broker if the noncompliance was intentional or the result of gross negligence.*

* Landlord and tenant laws changed. A number of changes were made to landlord and tenant laws this year. Some key revisions:For leases governed by the Virginia Residential Landlord Tenant Act:

* Landlords are now allowed to provide information about tenants to a commissioner of the revenue and, in the case of a military tenant, to his commanding officer.
* A landlord may withhold a reasonable portion of the security deposit to satisfy unpaid water and sewer bills.
* Interest rates on security deposits are updated for 2010.
* Utility charges are treated as rent.
* The definitions of “commencement date” and “effective date” of leases are added to the Act.
* Several other things were clarified as to landlord-tenant law generally:
o the bifurcated rent and possession practice in some courts
o what property managers and Realtors® can do in court without a lawyer
o that interest runs on all judgment amounts

* Vested rights are better protected. If a local government issues a permit (other than a building permit) for a property improvement, it can’t change its mind and later declare those improvements to be illegal (although it can find them to be nonconforming).The law also clarifies that a property owner may replace an on-site sewage system for an existing building in the same general location, even if a new sewage system would no longer be permitted in that location. However, if access to a sanitary sewer system is available the property owner must connect to it.

*If a rental property occupied by a tenant is foreclosed upon, the landlord must transfer any security deposit to the new owner of the property, and the new owner, on termination of the lease, must return any security deposit and any interest owed to the tenant in accordance with the provisions of the lease. Interpleader actions limited to disposition of an earnest money deposit may be brought in district court even in cases where the amount of the deposit exceeds the ordinary jurisdictional limits of district court cases.

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What if the last owner lost their ABC license?

Every once in a while a potential restaurant buyer will ask me about how any past ABC violations may affect the ABC licensing of a new establishment.  Here’s a fairly extreme case, but an important lesson to learn (from a RTD article last week, “Former Velvet strip club site can’t sell alcohol“):

Under state law, the ABC Board may refuse to allow a hearing on a license request if a license for that location has been refused or revoked within 12 months.

….

“It is enforcement’s position that without a significant period of time separating the Velvet reputation and clientele from that location, the reopening of a similar establishment will contribute to the reoccurrence of the same issues dealt with in the Velvet hearing,” said Francis J. Monahan, director of the law-enforcement bureau.

Oh…what’s the lesson you say?  Don’t mess with the Virginia ABC board! You may not agree with them and it may suck sometimes, but you have no choice but to play by their rules if you want to remain in business.

(I wrote about Sam Moore’s ongoing ABC issues a couple of years ago, too:  “Poor, poor, strip club owner…“)

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Waitstaff in DC accused of stealing credit card numbers

This is a sad story about people taking advantage of trust given to them by the general public.  No, it's not about the government or big-business (this time), but about the trust that we put in the waitstaff at our favorite restaurants.

Six servers at high-end restaurants in Washington, DC, were accused of stealing credit card numbers from customers and selling them to criminals who used the numbers to create counterfeit cards and charge $750K worth of items at local stores. (See the full article from the Washington Examiner here.)

Secret Service investigators cracked the Washington-area scheme
after customers began complaining to their banks of unauthorized
charges on their cards, Secret Service Special Agent Philip Soto wrote
in a sworn statement filed in Alexandria’s federal court. Soto
discovered patterns in the charges that led him to the restaurants,
where managers helped him trace the stolen information back to specific
servers.

“Every employee has a unique
number they put into the register before ringing up a charge,” Clyde’s
of Gallery Place manager Paul Walker told The Examiner. “With that
system in place, we can point back to an employee very quickly. …
It’s very traceable.”

A few lessons to be learned and points to be made in light of this story:

  1. Watch your credit & bank accounts for odd activity. You can't catch what you don't see.
  2. Regardless of the poor example these servers have give, most servers are wonderful and extremely trustworthy.  Don't let a few bad apples make you disrespectful.
  3. As an industry, retailers and restaurateurs need to use systems to make the detective work easier (at least) and stealing private data harder (even better).

It's a shame that these stories happen at all, and with a bad economy people become even more desperate.  The best that we can do is show that this type of behavior will be recognized and punished, without over-reacting and only seeing the negative.

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Why There Are No Bars in Virginia

No, really — there is no such thing as a bar in Virginia.  As a very deliberate result of the Virginia ABC Board’s regulations on the food/alcohol ratio, there are only restaurants that happen to serve food.

At the end of every year, restaurants must file
a mixed beverage annual report that details alcohol sales and shows the
ratio of food to liquor. ABC stipulates that each restaurant must sell
enough food and soda to account for at least 45 percent of liquor and
non-liquor sales, beer and wine excluded

A recent Food Fight article (which is the source of the previous quote) in Brick [EDITOR’S NOTE, 7/2/16: The Brick Weekly website is gone, so the links have been removed] gives a good overview of the impact this has on local business owners, and views from both sides.  Mostly, it is a government regulation, and just like anything else with the Health Board or the ABC Board, as a restaurant owner it is better to just learn to live with the rules and jump through their hoops and just get back to making money.

God help anyone that can help change the system and these arbitrary limits, but it’s not worth trying to make waves until you are firmly established and can work from the inside.

I still don’t feel like I have a grasp on why this rule is in place, except for the typically cynical view that Richmond is behind the times and too much under the influence of the “Moral” Minority.  The reasons that I have heard so far just ring hollow.  (i.e., This law is not necessary for keeping bars from popping up on every corner.  There are building codes and regulations on usage that can handle that.)

Something just feels wrong about my gut reaction against the regulation, so if someone can explain it, then please do.  I’m all ears (or eyes, in the case of reading responses).

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New Minimum Wage in VA

If approved, there will be a new minimum wage rate mandated by state law here in Virginia — with none of this tiered nonsense like the new federally updated rates.

The current rate (which is the same on the Federal level and for Virginia) is $5.15/hour.   Effective 7/1/07, the Virginia minimum wage rate will be $6.50/hour.

Once the Federal rate hits $6.55/hour in mid-2008, the Virginia rate will mirror the Federal rate — and of course, the same is true when the Federal rate bumps up to $7.25/hour in mid-2009.

I jumped at this when I first read the article, thinking that it had already passed, but of course there are several levels that the legislation must go through.  And there was this caveat from the RTD:

A subcommittee of the House of Delegates Commerce in Labor Committee,
however, rejected a handful of bills aimed at increasing the state
minimum wage last week, and the full committee refused to consider
them. That leaves the outcome of Colgan’s bill in doubt, because, even
if it passes the full Senate, it must go to the House for its
consideration.

Maybe it’s not such a sure thing after all.  I’ll keep my eyes open for any follow ups saying whether this bill passes, or is killed.  If any of you hear anything, please keep us posted via the comments!

(More info at "Minimum wage bill advances" at the RTD)

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New Minimum Wage Rate

Last Wednesday, the US House of Representatives passed a bill raising the federal minimum wage to $7.25 over the next 26 months.

$5.15  current federal minimum wage
$5.85  60 days after the bill becomes law
$6.55  1 year after the initial hike
$7.25  2 years after the initial hike

This is the first update to the federal minimum wage in a decade, although some states have enacted their own minimum wage rates that were higher than the current federal rate.

(Source:  House votes to raise U.S. minimum wage from Nations Restaurant News)

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Loan Sharks or Saviors?

There has been quite a bit of noise lately about payday lenders and their very high (some would say "predatory") interest rates.  Last Tuesday, 12/5/06, House Bill 619 was defeated in the Virginia House of Delegates.  The purpose of the bill was to repeal the Virginia Payday Loan Act of 2002, which had exempted these payday loans from the maximum interest rate of 36%.

Anyone with a checking account, an ID, and evidence of a job can borrow against their next paycheck, with a "payday loan".  The concept is simple enough, and sounds like it does the job exactly as the payday lenders proponents say it does.  They say that these loans help people in real financial distress dig themselves out of a hole.

The problem is that the interest rates and the policies are set up such that cause these individuals who borrow this way end up in a downward spiral that is very difficult to break.  The opponents of payday lenders say that other options exist for individuals that need to borrow, and that the payday lenders are taking advantage of people that have no choice.  Every state around Virginia, has agreed and banned payday lenders with similar legislation — Maryland, North Carolina, and West Virginia.

I am a big believer in allowing market forces to decide what is necessary and what is an unsustainable business model.  BUT, there are situations where the public needs to be protected from themselves — and this might be just such a situation.

What does everyone else think about this?

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Copyrights and Blogging

Be careful when you copy/quote content for your blogs!  It is a common concern and as well it should be.

Many blogs (including this one) quote content and use stories posted elsewhere as a source for their own content.  The main point to keep in mind is to only quote as much as is necessary, and paraphrase when possible.  Good blog etiquette tells us to linkback to the source whenever possible.

I definitely run into this issue (being more of a news blog), and have gotten better about it over the course of my blog.  If I don’t have any commentary to add to an article, then I try not to post it.  I do hope, however, that if anyone feels that I have overstepped my bounds, that they will contact me to say so and I will certainly take care of the offending post.

For an excellent article on the do’s and don’t’s of quoting outside sources:  LEADING EDGE LAW: Tips to deal with copyrights of others if you’re blogging

And in case that link ever goes dead, here is the author’s information:

John Farmer is a lawyer with
the Leading-Edge Law Group PLC, which specializes in intellectual
property and e-commerce law. He can be reached at (804) 343-3221 or via
www.leadingedgelaw.com. 2006 Leading-Edge Law Group, PLC.

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