Archives: Real Estate Investment

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(US) California Nonresidential Building Owners Face New Energy Use Disclosure Requirements In 2014

Effective January 1, 2014, owners of nonresidential buildings of 10,000 square feet or more must disclose energy use information to prospective purchasers, lessees and lenders. Owners of nonresidential buildings 5,000 square feet or more can look forward to the same disclosure obligations beginning July 1, 2014. The new law (AB 1103) establishes a benchmarking system … Continue Reading

(US) Creative Financing-Let the Purchaser Do It

Despite the recent low interest rate environment, some projects just will not support market rate construction loans. What then is the developer to do? Over the last few years developers have begun to turn to the purchaser to finance construction of a project. This technique can be used for both residential and commercial development. Many … Continue Reading

(US) Land Banks: Too Good to Fail

This post was written by Dusty Elias Kirk and Gerald S. Dickinson. Pennsylvania municipalities and potential developers interested in converting vacant, abandoned, tax delinquent or foreclosed properties into productive use should take note of legislation enacted in 2012 that permits a municipality with more than 10,000 residents to create a land bank.1 Land banks are … Continue Reading

(US) First Step in Regulatory Relief for Condominium Developments

Last week, the U.S. House of Representatives voted unanimously to approve H.R. 2600, which, if ultimately passed, would expressly exempt condominium developments from the Interstate Land Sales Full Disclosure Act (“ILSA”). If a developer fails to satisfy ILSA requirements, a contract purchaser may have revocation rights; so an exemption from ILSA would be a welcome … Continue Reading

(US) An Old Lesson Worth Learning Again: If It Is Important to You, Put It In the Contract!

A recent appellate court decision in Illinois emphasizes yet again the need for buyers to include any and all representations and covenants of sellers expressly in the real estate contract – if you expect to be able to rely on them and enforce them against the sellers later. In the case of Siegel Development, LLC … Continue Reading

(US) Cherryland Update: Is Turnabout Fair Play?

Last year in this space we reported on a pair of Michigan court decisions (51382 Gratiot Avenue Holdings, Inc. v. Chesterfield Development Company (Chesterfield) and Wells Fargo Bank, N.A. v. Cherryland Mall (Cherryland), which each held that a CMBS borrower’s insolvency could trigger personal liability on the part of its non-recourse carve-out guarantor. Those decisions … Continue Reading

(US) In re Crane Reversed on Appeal: Illinois Statutory Mortgage Form Held to be Permissive, Not Mandatory; Incorporation by Reference Held to Be Sufficient

This post was written by Daniel Slattery and Ann Pille. The United States District Court for the Central District of Illinois has arguably driven the last nail into the coffin of In re Crane, the much criticized decision of the United States Bankruptcy Court for the Central District of Illinois. The coffin was already set … Continue Reading

(US) Illinois Legislation Rejects In re Crane

This post was also written by Cynthia Jared. Custom and practice in Illinois with respect to mortgages has been to incorporate the note or other debt instrument by reference, rather than to disclose all of the financial terms of a loan transaction in the mortgage. Then, in April 2012 (as previously reported in the Reed … Continue Reading

Illinois Legislation Trumps In re Crane Bankruptcy Court Decision

Since the In re Crane decision was handed down by the Bankruptcy Court for the Central District of Illinois in April 2012, all eyes in the mortgage banking industry have been focused on the appeal of the decision pending in the U.S. District Court, in the hopes that the widely criticized ruling of the Bankruptcy … Continue Reading

Can Public Agencies and Private Developers Work Together to Help Fix Pennsylvania’s Transportation Infrastructure? The Promise of P3 Legislation

Pennsylvania’s transportation infrastructure needs far surpass the Commonwealth’s ability to fund them. According to a 2010 study by the State Transportation Advisory Committee, an additional $3.5 billion a year is needed to fully meet those needs. To close the funding gap and facilitate the development of new transportation facilities throughout the Commonwealth, Pennsylvania, on July … Continue Reading

New Developments in Real Estate Construction Loans in Pennsylvania

This posting was also written by Curt Heffler. Construction Ahead: In a recent Pennsylvania Superior Court case (Commerce Bank v. Kessler), the court held that an open-end mortgage recorded after commencement of construction on the mortgaged property does not have statutory priority over a subsequently recorded mechanic’s lien unless all of the proceeds of the loan … Continue Reading

Bankruptcy Court Decision In Illinois Holds That Mortgage Can Be Avoided Because of Failure To Include Loan Terms In Mortgage Document

In In re Crane, the Bankruptcy Court for the Central District of Illinois recently held that a mortgage can be avoided in bankruptcy if it fails to include the maturity date and the interest rate of the underlying debt within the mortgage document. The court found that failing to include these loan terms on the … Continue Reading

Michigan Court Denies Transfer Tax Exemption to Fannie Mae & Freddie Mac: A Sweet Result for Michigan That Could Cost the Feds Millions

While those with a sweet tooth may think of Fannie May as the Chicago-based chocolate company, Fannie Mae has only brought heartburn to Michigan as Fannie and Freddie Mac claimed a federal exemption from the Michigan real estate transfer tax as to the sale of foreclosed properties – costing Michigan millions of dollars in lost … Continue Reading

Chicago Wins the Latest Round: In a Longstanding Battle, Court Upholds Chicago Landmarks Ordinance Against Constitutional-Vagueness Challenge by Property Owners

The City of Chicago has prevailed in the latest round of a "no holds barred" battle with local property owners over the constitutionality of The Chicago Landmarks Ordinance. In a decision dated May 2, 2012 by the Circuit Court of Cook County, the property owners' claims that the Landmarks Ordinance was unconstitutionally vague and violated due process were rejected, and the court upheld the Ordinance. Hanna and Mrowka v. City of Chicago. No. 06 CH 19422. The landowners had previously won a highly favorable ruling at the appellate court level (in 2009), which raised the prospect of the invalidation of the Ordinance (as reported in a previous Reed Smith Client Alert) - a result that would have sent shockwaves through the historic preservation community nationwide. With the case remanded to it for decision, the trial court considered the due process vagueness issue in detail, including as to the clarity of the Ordinance's criteria for landmark status; but it was not persuaded by the property owners' arguments, and found that they did not meet their burden of rebutting the presumption of the constitutionality of the legislation, thus upholding the Ordinance.… Continue Reading

The Non-Recourse CMBS Loan: Apparently Not All It’s Carved Out To Be

In the world of securitized commercial mortgages, non-recourse carveout guaranties have long been a matter of standard practice. For CMBS lenders, they offer a critical backstop against fiscal mischief by borrowers, and for responsible borrowers they provide access to real estate financing without fear of personal ruin. Nevertheless, two recent court decisions have thrown the … Continue Reading

Financing Contingencies and Earnest Money Deposits: If I Can’t Get My Loan, I Get My Deposit Back, Right?

Real estate purchasers whose contract permits the return of the earnest money deposit if financing cannot be obtained must be extremely careful in how this contingency is worded in the purchase contract, or a purchaser may get an unwelcome surprise, and be forced to forfeit the earnest money when financing cannot be obtained. Typically, when … Continue Reading

Chicago’s Vacant Building Ordinance Addresses Some Serious Problems – and Creates Some of Its Own, Too

Chicago's Vacant Building Ordinance, which imposes substantial and unprecedented duties on mortgagees of residential real estate located in the city of Chicago, continues to generate controversy - and lawsuits.… Continue Reading

SEC Targets Key Mortgage REITs Exemption

SEC Action Threatens Already Shaky Housing Market Mortgage real estate investment trusts (“MREITs”), which provide much needed liquidity to a capital starved real estate market, are at risk of losing a key exemption under the Investment Company Act of 1940 (the “Act”). MREITs are currently exempt from the Act and its limits of the amount of … Continue Reading
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