Archives: Real Estate Litigation & Dispute Resolution

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(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) A View to a Hill? Beachfront Homeowners Wary Over Dune-Rebuilding Easements

The Garden State is forging ahead with rebuilding efforts after Superstorm Sandy devastated the Jersey Shore last October. One of the largest proposed projects is a $3 billion dune-replenishment project set to start May 1. This proposed coastal protection system would create 22-foot-tall dunes along the coast, forming a natural barrier against storms to protect … Continue Reading

(US) Two More Courts ‘Just Say No’ to Transfer Taxes for Fannie and Freddie

Last week, two more federal district courts dismissed suits seeking to collect transfer real estate taxes from Fannie Mae, Freddie Mac, and their conservator, the Federal Housing Finance Agency. Counties in New Jersey and Maryland had brought class action suits, arguing the government-backed mortgage guarantors failed to pay state and local real estate transfer taxes … 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) Court Rules Ben Franklin Wrong: Transfer Taxes are not a Certainty for Fannie or Freddie in Pennsylvania

With cash-strapped states and counties feeling increasing budgetary pressure, lawsuits seeking to collect real estate transfer taxes from Fannie Mae and Freddie Mac are popping up all over the nation. In the wake of the economic downturn, Fannie Mae and Freddie Mac have acquired vast portfolios of properties. It’s no wonder states have their eyes … Continue Reading

(US) New York High Court Rules that Statutory Interest Not Included with Liquidated Damages – Unless You Say So

A recent opinion by New York’s highest court (J. D’Addario & Co. v. Embassy Indus., Inc. Slip Op 07850, Court of Appeals) held that a seller’s "sole remedy" of retaining the purchaser’s deposit as "liquidated damages" means just that – that’s all you get (i.e., no court-imposed interest unless you expressly say so). In the … Continue Reading

(US) Federal Courts Continue Expansion of Applicability of Interstate Land Sales Act: Entities Engaging in Advertising or Marketing Activities Held to be “Developers” Under Act

This post was written by Meredith Hartley and Robert Diamond. On January 14, 2013, the Fourth Circuit Court of Appeals held that liability under the anti-fraud provisions of the Interstate Land Sales Full Disclosure Act (“ILSA”) extends to an entity that engaged in advertising or marketing activities in the course of a transaction covered by … 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

Animal, Vegetable or Mineral, What is Marcellus Shale?

Title to Oil and Gas in PA Threatened In 1882, the Supreme Court of Pennsylvania pronounced what would be known as the Rule in Dunham’s Case. In Dunham and Shortt v. Kirkpatrick, the Pennsylvania Supreme Court held that a grant or reservation of "all minerals" does not include oil or gas, despite the fact that … Continue Reading

Marcellus Shale Uncertainty: Pennsylvania Municipal Zoning Ordinances Held to Trump Statewide Uniformity

On July 26, 2012, in a decision of major significance to the Marcellus Shale industry, the Pennsylvania Commonwealth Court in the case of Robinson Township et al. v. Commonwealth of Pennsylvania Public Utility Commission et al., No. 284 M.D. 2012 (Pa. Commw. Ct. 2012), declared Section 3304 of Act 13 of Pennsylvania’s Oil and Gas … Continue Reading

New Lawsuit May Derail Fiber-Optics Installations in Western PA

A class-action complaint, filed this July in the U.S. District Court for the Western District of Pennsylvania, seeks millions of dollars in damages from four telecom companies, alleging a deliberate failure to obtain the permission of hundreds of Beaver County property owners before burying fiber-optic cables on their lands. According to the plaintiffs in Lake … Continue Reading

New Michigan Nonrecourse Mortgage Act Seeks to Restore Protections for Borrowers

Michigan Gov. Rick Snyder recently signed into law the Nonrecourse Mortgage Loan Act, MCL Sec. 445.1591, et seq., the purpose of which was to overturn the effect of two Michigan court decisions that interpreted and applied certain special purpose entity (SPE) and nonrecourse "carve-out" loan provisions in a way that seemed to favor lenders, and … 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

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
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