Federal Borrower Protections Limit Seller Financing Choices

written by Attorney Kirk G. Siegel

As of January 10, 2014, banks face new federal regulations requiring them to assess the borrower’s ability to repay most residential mortgage loans, intended in part to protect the public from overreaching lenders. An unintended consequence, however, is that many new (but not existing) seller-financing arrangements will become illegal; and, even if sellers are exempt, they may need to become licensed mortgage loan originators. Seller-financed and privately financed mortgages (and potentially land installment contracts) are implicated. Vacant land, commercial property and multiple units (5 or more) are not included in the rule, meaning there are no restrictions on seller financing for these types of properties. The rules are being implemented by the Consumer Financial Protection Bureau (“CFPB”) under the Dodd-Frank act. Continue reading

Legislative Update: Maine Tree Growth Tax Law and Open Space Tax Law


Owners of Maine forest land should be aware of recent changes to the Maine Tree Growth Tax Law and Open Space Tax Law recently enacted by the 125th Maine Legislature.


LD 1138 (Public Law, Chapter 618) – An Act to Amend the Maine Tree Growth Tax Law and Open Space Tax Law

Beginning August 1, 2012, landowners in the Maine Tree Growth Tax Law program will have to attest at the time of enrollment and at each update of the forest management and harvest plan that the primary use of the enrolled property is commercial timber harvesting or other permissible purposes.For parcels of land that contain structures with minimum lot size requirements, the owner must exclude from the Tree Growth schedule at least 1/2 acre containing the structure. In a shoreland area, the excluded parcel must include 100 feet of shoreland frontage or the minimum shoreland frontage required by applicable law.

The law creates a multiple-step process for notification and imposing penalties when a landowner fails to comply with the requirement to update the forest management and harvest plan every 10 years. It allows the assessor to impose a $500 fine if the landowner misses the initial deadline and subsequent $500 penalty if the landowner has not met the requirement within 6 months. If the landowner has not complied with the requirement to update the plan or transferred the land to open space classification within an additional 6 months, the land will be withdrawn from the Maine Tree Growth Tax Law program and a penalty assessed.

One option created by the new law is a new category under the alternative valuation method in the Farm and Open Space Tax Law providing for an additional reduction of 10% for a landowner who provides and complies with a forest management and harvest plan. A landowner who fails to comply with the plan required under the Farm and Open Space Tax Law, however, loses the additional percentage reduction for 10 years. Also, if the landowner switches from Tree Growth to Open Space classification and then removes the property from current use tax programs entirely, the tree growth withdrawal penalty rather than the open space withdrawal penalty applies for the first 10 years after transfer.

Click here for the full text of the enacted legislation.


Synopsis by Kirk G. Siegel, Esq.  This communication is not intended as a substitute for legal or tax advice, and should not be relied on as such.  Competent legal or tax counsel should be retained for any particular situation, as each is fact-specific.