A recent Maine Supreme Judicial Court (also known as the Law Court) case should be of interest to any land trust volunteers or staff conducting land transaction negotiations. In McClare v. Rocha, 2014 ME 4, the Law Court held that a series of e-mails between parties or their attorneys may constitute a signed writing and can establish a binding contract for the sale of real property. In this case, attorneys for each party exchanged e-mails that established a purchase price for a particular parcel of land, and the words “offer” and “acceptance” were used.
To be clear, e-mails will not always establish a contract. Much depends on the details such as the intent of parties, whether there was an offer and acceptance, and whether all of the material terms of the deal were included. But as a result of this case, negotiators should be aware that they could inadvertently establish a contract even without signing anything on paper.
Most land trusts make it a standard practice to consider a contract created only upon the signing of a formal purchase and sale agreement, and this is almost always the best approach to avoid any confusion or misunderstanding. In order to preclude any claim that e-mails (or any other document short of a signed purchase and sale agreement) should be interpreted as a contract, it is best to be clear with a landowner from the outset about this organizational practice.
Speaking of the Law Court, it will hear Oral Arguments in the property tax exemption case of Francis Small Heritage Trust v. Town of Limington on Thursday, May 15 at 9:00 a.m. Any member of the public is welcome to attend the proceedings, which are held in Portland at the state courthouse on Newbury Street. If you cannot make it in person, but would like to listen (either live or later), you can stream it from the Law Court’s web page at http://www.courts.state.me.us/maine_courts/supreme/oral_arguments.shtml. The Oral Argument process typically lasts about one half hour. A decision from the court is expected several months after the argument.
In early April, the Maine Legislature passed (and the Governor did not veto!) a bill that simplifies the Maine Charitable Solicitations Act. L.D. 1799, passed into law as 2013 P.L. c. 539, streamlines the Act in three principal ways:
(1) The bill eliminates all filing requirements for “professional fund-raising counsel” such as independent consultants hired by charitable organizations to assist with capital campaigns or other fundraising programs. Eliminating this category from the statute will significantly reduce paperwork for both the consultants and the charities that hire them. At the same time, charities will have slightly more responsibility to make sure they are hiring a reputable and proficient consultant, as they can no longer look to see whether someone has been licensed or disciplined by the Maine Department of Professional and Financial Regulation. Note that “professional solicitors,” i.e., those who solicit contributions from the public on behalf of a charitable organization, must still be licensed.
(2) The bill eliminates the annual filing requirement for organizations that qualify as exempt from the annual registration requirement. The most common exemptions for land trusts are if solicitations are conducted primarily within their membership or if contributions from the public (not including foundation or government grants) are $35,000 or below or from 35 persons or fewer during a calendar year. (Note that these exemption thresholds were raised by the Maine Legislature in 2013, up from $10,000 and 10 persons.) Instead of filing an annual exemption statement, the organization now must only file once to establish its exemption, and then only has to file anything again if it no qualifies as exempt. The small downside of eliminating the annual exemption filing is that an organization should have an internal way of tracking contributions to confirm that it remains exempt from one year to the next, or else a growing organization could find itself out of compliance if it exceeds the $35,000/35 person threshold or no longer solicits primarily within its membership.
(3) The bill eliminates the requirement that charitable organizations submit an IRS determination letter along with their initial registration application. Due to the time delays from the IRS in issuing determination letters, many new organizations were tripped up by this requirement. It was also a problem for certain 501(c)(4) social welfare organizations that were never required to obtain an IRS determination letter.
Coming on top of 2013 amendments to the Charitable Solicitations Act, this bill further streamlines and simplifies the statute. Although L.D. 1799 as originally submitted would have eliminated all filing requirements for charitable organizations and not just for fund-raising counsel, the Legislature backed off that sweeping change and instead went for more these more limited, but still helpful, amendments.
CIRCULAR 230 DISCLOSURE: Any federal tax advice contained in this communication or attachment is not to be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing or recommending any transaction or matter addressed in this communication.
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