Month to month tenant must give 30 days notice
Q. In 2003, I signed a one year lease to rent a small commercial space. Since then, the owner has bumped my rent every year about 3 percent but other than that, nothing else has changed. I have never signed another lease.
I am now thinking of leaving for a larger space and told the owner so yesterday. He told me that I am obligated under the lease until our anniversary date, which is Aug. 1. Is this true?
A. Probably not. As you describe your facts, once the initial lease ran and you continued your tenancy, the lease evolved into a month to month tenancy. Either party can terminate a month to month tenancy upon 30 days written notice to the other party. The 30-day notice must, however, be effective on the day of the month (usually the 1st) that each new month's tenancy commences.
In other words, if your rent is due on the 1st of each month, to terminate your tenancy on Nov. 30, written notice must be served on the owner on or before Oct. 30.
Q. About 10 years ago, I sold an apartment building I owned and purchased some vacant land. This was done through a 1031 Starker exchange.
The land has appreciated greatly and I now wish to sell the property. Can I do another Starker exchange? If I do, will I have to pay capital gains taxes on my first sale, the apartment building? If I don't do the Starker exchange, what will be my tax liability for both deals?
A. In answer to your first question, Section 1031 of the Internal Revenue Code, which authorizes Starker exchanges, contains no limit on the number of times property can be sold to defer capital gains taxes. Accordingly, one could exchange property A for property B, then exchange property B for property C, and go on indefinitely. In each transaction, presuming the qualifications of Section 1031 are met, capital gains on the current transaction as well as all prior transactions would be deferred.
The ultimate tax avoidance tool is to exchange property until the death of the owner, at which time the heirs or legatees would obtain the property at a basis equal to the fair market value of the property at the time of death. The property could then be sold and little or no taxes would be due, again, subject to the qualifications of Section 1031. Great deal for the heirs, not so great for the guy that did all the work.
As to your tax liability in the event you choose not to exchange the second property, I suggest you speak to a tax professional.
Q. I hired a contractor to do some remodeling work at my home and about halfway through the job, I fired him because the work was terrible. I received a letter from a lawyer yesterday and he is now threatening to sue me for the cost of the entire job. I paid him for some of the work, which will have to be corrected by whoever I hire to finish the job. The only thing we have in writing, which is not signed by me, is a statement that he will remodel three bathrooms and the total cost would be $9,500. I have had two contractors here since I fired him and they both agree his work was terrible. Any suggestions?
A. Take a look at the Home Repair and Remodeling Act, 815 ILCS 513 et seq. For jobs in excess of $1,000, the Act requires, among other things, the contractor to furnish the following:
A written contract, specifying the cost of materials and parts and the total cost of the work, which must be signed by the consumer; and the pamphlet entitled "Home Repair: Know Your Consumer Rights". It is unlawful for the contractor to proceed with the work without complying with the above provisions of the Act.
I would suggest contacting an attorney familiar with these types of matters. A strongly worded letter to the contractor's attorney would probably put this matter to rest.