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Merry Christmas


From our Families to Yours, here's wishing you all the very best this holiday season.

Zealous Representation of Criminal Defendants
Positive Outcome in DUI case

Our chief litigator, Kathleen DeLacy, Esquire recently negotiated a successful outcome for a client charged with 6 separate moving violations stemming from two separate occurrences, including a DUI. The client agreed to enter a First Offender Program for the DUI and the court dropped all of the other charges against the prosecutor's recommendations. As a result of our efforts, and after sucessful completion of the First Offender Program the client will have no convictions on his criminal record.

Meeting the Needs of Small Business
Aiding in Passing On Family Business

We recently completed a multi-faceted representation of a local family owned small business. We were able to help the client restructure some corporate debt, and transition some of the assets from father to son. As part of the representation we drafted original mortgage and lease agreements, formed a new limited liabilty company, and conducted a real estate closing.

More Accolades from Lenders
Praise for our performance in a recent closing

"It was my pleasure to work with you in the Mortgage Financing for [recent client]. I work with many attorney's offices and I have rarely found anyone as professional and personable as yourself."

"I would be delighted to work with you again for any future buyers who may require mortgage financing..."

Thank You again
Mortgage Development Officer
Sovreign Bank

Delaware Supreme Court Ruling
Attorneys must disburse funds from Real Estate closings

Last month the Delaware Supreme Court handed down an Order, approving a report of the Board on Professional Responsibility addressing a complaint brought against a Delaware Real Estate Attorney by the Office of Disciplinary Counsel relating to circumstances surrounding a real estate closing, and specifically how funds were disbursed.

In Delaware all real estate closings need to be conducted by licensed attorneys. This is not a statutory requirement, and for many years was primarily a matter of tradition. However the Delaware Supreme Court decided in a case called Mid-Atlantic, that conducting a real estate settlement constituted the practice of law, and ever since anyone other than a Delaware attorney conducting a real estate closing has been practicing law without a license, which effectively prohibits the practice.

Factually what happened is the title company in the closing was also a settlement company that conducted closings in Pennsylvania, called Advance. To conduct a closing in Delaware Advance used a Delaware attorney to conduct the settlement, but received all the funds and made all the disbursements themselves like they would in a PA closing. This practice is sometimes referred to as a witness only closing. An employee at Advance criminally conspired to steal the settlement proceeds and emptied and closed the account before all the checks were cashed. This caused some of the checks issued at settlement to pay certain creditors to bounce.

The Delaware Supreme Court held that one of the reasons real estate closings are conducted by attorneys in Delaware is to protect the public and provide a level of oversight and security to these transactions. If the client had had the benefit of the protections provided to clients? funds under the Delaware Lawyer?s Rules of Professional Conduct this unfortunate circumstance would not have occurred (or in the case of misappropriation by an attorney she would have better avenues of redress). Therefore what this means is that the receipt of loan proceeds and the disbursement of funds in accordance with the closing documents and settlement sheet constitute the practice of law, and can not be conducted by third parties.

This decision and the sound policy behind it of protecting real estate clients both demonstrates the need for licensed in state professionals to conduct real estate closings and reinforces the importance of the controls on attorney client trust accounts and the good funds requirements discussed in a separate article.

"Good Funds" for Delaware Real Estate Settlements
What You Should Know

Many buyers have questions regarding the funds they must bring to settlement, and what form those funds must be in (cashier?s check, certified check, etc?). The following is offered to help explain the legal requirements by which we must abide, and clarify the different forms of payment which are acceptable.

A Delaware attorney is bound by Rule 1.15 of the Delaware Lawyer?s Rules of Professional Conduct to not disburse any funds from their attorney trust account until the funds deposited into the account are ?good funds?, as described hereafter. In practical terms it means we can not disburse funds to the Seller, or any other party for that matter, until all of the funds from the Buyer (or other party as applicable), are either in our account or in a form guaranteed to be honored by our bank. The following are the types of funds that satisfy this requirement:

1. Cash. If a buyer brings cash to settlement, we will accept it for deposit and be able to disburse. Note however, that there are additional forms that must be submitted to the IRS, Department of Treasury, and Department Homeland Security for cash real estate transactions greater than $10,000.

2. Electronic Fund Transfer (?wire?). A wire represents money that our bank has already acknowledged has been credited to our account. Note, many buyers are under a misunderstanding that wires are instantaneous, in fact they can take several hours, and occasionally up to 24 hrs (The sending bank must transmit the wire request to the Federal Reserve who must process the request and transmit it to the receiving bank). If a Buyer is utilizing funds from the sale of their prior home and has a closing on their prior home the same day as settlement on their new home, a wire transfer would not be a good choice to ensure the funds arrive in time for the second closing.

3. Certified Check. This is the form we prefer buyers when possible. A certified check is one where the bank has certified that the signature is genuine and funds equal to the amount of the check have been set aside and will only be used to pay the check.

4. Bank Cashier?s Check or Treasurer?s Check. These are drawn on the bank?s own account, signed by an officer or employee of the bank, and are a direct obligation of the bank. Credit Unions occasionally cause a problem here, as not all Credit Unions are considered ?banks? under the law. If a buyer wishes to use a cashier?s check from a Credit Union, we will need to verify that it is federally insured in order for the draft to satisfy this requirement. Please inform our office as soon as practicable if you intend to use a cashier?s check issued by your Credit Union so that we will have ample time to verify the Credit Union is federally insured.

5. US Treasury or Delaware Treasury check. These funds are backed by the full faith and credit of the federal or state government, and are sufficient to satisfy the requirement.

6. Check drawn on the trust account of a Delaware attorney. Any check from another Delaware attorney is considered under the law to be ?good funds? to all other attorneys as the issuing attorney had to comply with these rules as well. This is the preferred method for Buyers who are bringing funds from the sale of their prior home the same day as the closing on their new home. Note, the issuing attorney must be a Delaware attorney; checks from out of state attorneys will not satisfy this requirement. In the case of a Buyer needing to bring funds from an out of state closing the same day as the closing on their new home, they may need to take whatever check they receive and take it to their bank first to receive either a certified check or cashier?s check.

7. Check of an insurance company authorized by the Insurance Commissioner of Delaware to do business in Delaware. Regulation of the insurance company industry provides security that these funds meet the requirement.

8. Any check for $10,000 or less. This allows for the buyer needing to bring a small amount of funds, usually in addition to the funds they have borrowed from a mortgage company, to bring a personal check. We strongly disfavor this practice, as there is virtually no guarantee the check will be honored. Many Delaware attorneys will not accept more than $2,500 via a personal check, since that was the Rule prior to a recent revision, due to the high amount of personal risk born by the attorney should any of the funds disbursed at closing not be honored. We typically do not accept more than $1,500 in this manner due to some unfortunate prior experiences. This practice is strongly discouraged; you must call our office in advance of closing to confirm whether we will accept ANY personal check from you for your settlement.

9. Any check for greater than $10,000 which has been actually collected. This provision allows a buyer to provide their funds via a personal check in any amount, but the check must actually clear and the funds be deposited into our account prior to closing. Due to the unpredictable nature of the check approval and clearing process, and the fact that often the exact amount of funds needed are not known until relatively close to settlement, this practice is rarely used. It can not be used the day of settlement, from a practical stand point, we would need your check at least 10 days prior to settlement. A cashier?s or certified check is just simpler.

10. Check drawn on an escrow account of a real estate broker licensed by the State of Delaware up to $25,000. These funds are guaranteed under statutes that regulate real estate brokers, up to this amount. It is not uncommon for the Buyer?s deposit to be provided in this manner where such deposit was escrowed by the real estate broker.

The foregoing was provided strictly for informational purposes. If you have any specific questions regarding your settlement please feel free to call or e-mail us, and we will gladly assist you.

Recent Litigation Success
Representing Small Business

Prior to September, 2004, our firm was retained by a small business owner to represent him in a Trademark Infringement action in the Court of Chancery after the sale of his auto repair and gas station business. Approximately 16 months after the sale of his business, our client opened a related business near the former business. Before the client retained this Firm he had represented himself in a hearing where his buyer was seeking a temporary restraining order to preclude our client from doing business under his current business name.

In May, 2006, after a Stipulation resolving the dispute was signed by both parties, Plaintiffs filed an action in Superior Court to assess damages as a result of the agreed infringement. Our associate, Kathleen DeLacy, Esquire was able to prove minimal damages and we received a very favorable arbitrator?s decision on behalf of the client.

Lacy E. Holly, III, Esq. Appears Before Zoning and Planning Commission
Major Subdivision Gets Approved

In August of 2006, Lacy E. Holly, III was retained by a real estate developer who was trying to get the Town of Smyrna Zoning and Planning Commission to vote on and favorably recommend to the Town Council, a proposed major land development plan. There were community and political objections to the plan even though it complied with Smyrna?s Comprehensive Development Plan and the proposed development was permitted under all applicable building and development codes.

Before the client had retained Mr. Holly, the client had represented himself and the Commission had tabled the plan and refused to take a vote on the plan. At the scheduled public hearing in August, Mr. Holly was able to persuade the Board to vote on the plan. The plan was passed 3 to 1 and was recommended to the Town of Smyrna Council for approval. At the monthly Council meeting held in September, again amid community and political objection, Mr. Holly was also able to convince the Town of Smyrna Council to vote on and ultimately conditionally approve the major subdivision plan.

Adapting to Client Needs
Short Notice 1031 Exchange

On August 1, 2006 we were contacted by a client wondering if we could do a 1031 Exchange real estate closing. Time was of the essence, the deadline for the transaction was no later than August 9, 2006. We were able to obtain a search and survey in an expedited manner allowing us to perform the closing on August 3, 2006, well before the deadline, and on two days notice. Often times we receive communications from clients thanking us for the professional manner in which their real estate transaction was conducted.

Success In The Courtroom
Victory in Defense of Home Seller

This summer, 2006, Lacy E. Holly, III was retained by a married couple who had sold an investment property the year prior who were being sued by the buyer of that property in a Breach of Contract suit alleging misrepresentation on the Seller?s Disclosure. Our associate, Kathleen DeLacy, Esquire tried the case in the Justice of the Peace Court and received a favorable decision saving our clients in excess of $12,000.

Client Testimonial
Upon Discharge of Bankruptcy...

First of all, I would like to say ?thank you for all you have done, and continue to do for me.? As you well know, I was in a pretty bad situation. Mr. Holly, you and your staff (Kristine Hamberger) have taken me from the deep jungles, and lead me to the clearing. People don?t realize how bad it feels to think you have no way out, and you keep falling and falling, but you came into my life and made a complete turn around.

You have given me and my family another chance at happiness and we thank you so very much. You are real people, doing big things for real people, and also, man to man, I consider you a true friend and that?s big in my book.

Mr. Holly and firm, you are a class act and very professional.

Thank you

Praise from the Lending Industry
Building Relationships with Lenders and Brokers

Finally, someone I can trust and I just love working with. I have been in this business for over 15 years and I know first hand customer service is key and that keeps my borrower's coming back to me. I highly recommend using Evelyn at Lacy Holly's office to my borrowers. They have been a pleasure to work with and Evelyn especially is always there to see the loan through to the end.