Saturday, December 30, 2006

Shameless plug...

This is a shameless plug for a great new holiday book by my dad, Take a look, it's a good read for the longtime Chicago/Illinois politicos. He's an old Chicago newspaper guy.

New Safe Homes Act

Take a look at the short synopsis of the new Safe Homes Act below. I think this is ridiculous and just mixing apples and oranges. Domestic violence as a defense to not paying rent? What is a landlord supposed to do? I simply don't see why landlords are getting punished for domestic violence. Police departments' inability to properly enforce Orders of Protection is the real problem.

The Illinois General Assembly passed the Safe Homes Act (Act) in an effort to reduce domestic violence by improving the ability of tenant victims and their families to escape "domestic violence, dating violence, sexual assault, and stalking." In order to achieve the goal, the Act provides tenants with opportunities to escape dangerous homes or to seek increased security within their homes.

Section 15 allows tenants to avoid liability for failure to pay rent when the premises are abandoned due to an occurrence or imminent threat of domestic or sexual assault.
Section 15 of the Act provides tenants with an affirmative defense in actions for breach of lease when tenants feel compelled to leave a residence where they feel endangered. The tenant cannot be held liable for rent for the period after the tenant vacates the premises if the court finds, by preponderance of the evidence, that the tenant or a member of the tenant's family "faced a credible imminent threat of domestic or sexual violence." This protection is also afforded the tenant if the tenant or a member of the tenant's family moved out as a result of a domestic or sexual assault occurring on the property owned or controlled by the landlord.

However, there are limits to this protection. The tenant must have informed the landlord of the reasons for vacating the premises prior to or within three days of vacating. Also, when the tenant leaves the premises because of an occurrence of domestic or sexual assault, the landlord must be informed of the tenant's abandonment of the premises within 60 days of the assault when practicable, and the tenant must provide the landlord with the date of the alleged assault as well as documentation supporting the alleged assault. This Act does not apply in any actions for breach of lease for failure to pay rent before the tenant abandons the premises.

Chicago real estate 2007

Here's an overview type piece from the Sun-Times. Some interesting commentary beyond merely buys/sells...a strong residential rental market and weak condo conversions in the Loop. I thought Bill NcNamee, Illinois Association of Mortgage Brokers, had good comments...first half of '07 is about clearing inventory and second half is about heating up the market again.

Side note, kudos to the Sun-Times, I think their real estate industry coverage has improved greatly of late.

Thursday, December 21, 2006

Subprime mortgage loan foreclosures

Here's an eye-opening report from the Center for Responsible Lending regarding subprime lending. It's gotten some play in the's an article. It predicts foreclosure for 1 in 5 subprime loans.

A side note and related, I just got a call regarding subprime mortgagors who are already "under water" on their loan and just got served with a Summons in a foreclosure lawsuit.

What's the answer? More regulation? To me the problem areas are the mortgage products that allow a mortgagor to owe more than they borrowed, irrespective of property value. We can't control a real estate market collapse, right? I have friend who's trying to sell a deceased parent's home in suburban Detroit and values have just tanked. A person taking out 80% on a 30-year fixed would be in trouble there. But the person with one of these payment option loans where every month you're owing more money and not less is just asking to lose the property.

Wednesday, December 20, 2006

Mary "Zillow" Umberger

Is it just me or does Mary Umberger in the Trib.'s real estate section write about about every other week?

Tuesday, December 19, 2006

Association financial management

Here's a pretty good piece from the Sun-Times regarding the risks associated with buying into a condo conversion. It's actually a decent piece, I usually think their real estate industry coverage is lacking.

My $.02, the first WORST type of real estate to buy is an old property condo conversion. The second WORST type of real estate to buy is a brand new development. That's where 90% of the problems with underfunded associations lie. Your clients might love all the new appliances or whatever, but they're going to pay for them at closing and AFTER closing for years to come (and I don't just mean their monthly mortgage payment).

Don't undervalue the meaning of home ownership...

I read an interesting obituary from the SunTimes today about black Realtor pioneer Charles W. Sullivan. I'd never heard of the gentleman, just clicked on the link to the story. It seems he was a pioneering African-American Realtor who began his career in the mid-20th century when African-Americans were still dealing with a lot of the restrictive covenants on housing and general discrimination from different parts of the housing and lending industry.

It's important to keep stories like this in mind. Hopefully we're beyond some of stuff that Mr. Sullivan dealt with some 50 years later. Although, I still see the studies coming from various fair housing groups regarding real estate agents' differing treatment of various minority groups versus whites. But even more, we're not selling cars here. Homeownership can still be a huge life step for those new immigrants or the new divorcee starting life anew or the young couple out on their own for their first time.

So lets not just go through the motions on all these transactions, home ownership is significant and lets treat it as such!

Monday, December 18, 2006

How not to scare off buyers...

A good piece from the Times here regarding the above.

Beware of "Helicopter" Sellers who are always hovering around when prospective Buyers are around. And of course, "grandstanding or lackadaisical lawyers."

Thursday, December 14, 2006

VA-owned homes

Anyone ever buy from here: Decent listing of properties...especially downstate.

Web-base mortgage option

Anyone used Just saw a bit on it...supposedly it permits borrowers to make side-by-side comparisons of various loan products similar to searching for plane tickets or rental cars.

Only available in CA and CO as yet.

Another example of bad lawyering...

This isn't a first-hand situation I'm in, but I'm consulting with one of the lawyers involved.

Where the case sits now is that a Buyer of real estate is suing a Seller twice removed for issues regarding property taxes. The long and short of this situation is that this twice removed Seller was a senior citizen and had the senior citizen property tax exemption while she lived there. The person she sold it too only owned for a few months. Then the next (and current) Buyer gets the property and did a traditional 105% real estate tax proration at closing and now he's gotten slammed with the property tax bill and is looking for someone to recoup some $$ from. I don't think he has a leg to stand on in terms of going after the initial twice removed privity of contract, right? Buyer should be looking in the mirror in terms of who to blame or frankly, he may want to look at his lawyer (I don't know whether or not he had counsel during the transaction).

The teaching point is: when you're representing a Buyer, you better pull the property's tax bill to see what the status of the exemptions are. Then you negotiate the property tax proration properly rather than just doing the old 105%/110%...that's not always appropriate.

Tuesday, December 12, 2006

Federal Housing Enterprise Oversight numbers

Here's FHEO's quarterly house price index. It's a must read, it doesn't have all the "fluff" you get from any of the National Association of Realtors stuff. Illinois's still at a 6.95% appreciation rate year over year. Nationally things looks good too...just avoid Michigan.

Thursday, December 07, 2006

Earnest money return

Another interesting real-life scenario, this one actually involving our office.

A number of months back we represented a purchaser of real estate. They'd deposited $1,000 earnest money with Seller's real estate agent. During attorney modification, Seller rejects some of our modification requests, so contract is dead (everything's a counteroffer, right?). For the sake of argument, there's dispute over who cancelled the contract.

Putting that aside, the unit sold if I recall for more than the asking price to another Buyer within a couple weeks of our contract being broken. Seller's agent still hasn't returned our client's earnest money. What's a possible basis for agent to continue to hold the earnest money? Assume the worst from buyer's standpoint, buyer breached. Earnest money is not a remedy for buyer's breach, right?

I know my various lawsuit options but really don't find it cost-effective to sue. Any other good way to hit this Realtor where it hurts? Local board of realtors? State licensing agency? Go after the brokerage themselves?

Interesting question to ponder...condo parking space issue

I've been speaking with a lawyer friend about the following...I don't know the answer. Does anyone?

Client wants to sell a parking space he owns in a condominium association. Just by way of an explanation, condo parking spaces are typically either deeded or they're limited common elements owned by the association. I'm not talking about the common element scenario here.

So how does he sell just a parking space? In my experience, when there's deeded parking, the parking spot is either going to be shown as a "unit" that's part of the legal description for the condo unit itself OR there's a separate legal description/deed for the parking spot. Also, typically the parking spot will have it's own Permanent Index Number from the county treasurer. The problem seems to be if the parking unit is part of the same deed as the condo unit, then the property's mortgage is secured by the do we release just the parking space so it can be sold free from the mortgage? Will a mortgage company allow this? Not likely I'd think. If there is a separate deed, then likely it's not too tough.

Something to keep in mind though before just throwing the parking legal and PIN on the same deed as the unit. If the parking spot is going to be sold separately, you may want to keep it unencumbered from any mortgages for ease of transfer.

Just don't close the My Thai...

Interesting article here about Presidential Towers being on the selling block. I don't really work in this segment of the market, but an expert in the piece says the downtown multifamily market is "white hot."

My main concern, the My Thai in the Presidential Towers concourse is my second most visited restaurant.