Nice blog Fran...

Here's the new blogger star Fran Bailey's blog...good stuff; nice video usage.

Must homebuilders give buyers an express home warranty?

Hey gang, this might be informative for you...it's an occassional nugget from the ISBA Bar Journal for new lawyers...

Is a seller of new construction (builder) required by law to provide the buyer with an express warranty (full or limited)? I know that the implied warranty exists under Illinois law, but is an express warranty required?

SCOTT A. NOLAN, CRYSTAL LAKE. An express warranty is not required. The purpose of the express warranty is to limit the liability otherwise imposed by the much broader common law general warranty of habitability. Builders may grumble that they are having to "give" something to buyers, but the builders' attorneys know that the builders are "taking away" some of the buyers' protection established by the warranty of habitability.

BOB PARK, ROCK ISLAND. No, Illinois law does not require a new builder-home seller to provide an express warranty. Like other market decisions, the buyer is free to buy from a builder who offers an express warrant or one who does not. There may also be third-party warranties available for purchase. Years ago, when a builder-seller refused to stand behind his product, the supreme court created an implied warranty of habitability. Now that we have that implied warranty, there is little incentive for the General Assembly to pass a law requiring an express warranty.

T. J. THURSTON, HUNTLEY. Bob put it very well. I would add that most reputable builders/sellers include an express warranty on new construction, typically for different lengths depending on the item (e.g., one year for labor, ten years for materials). In today's competitive market for new construction, it is an incentive to get the buyer to close on the house because it is easier to rely upon an express warranty than it is to sue under an implied warranty. Just as there is no law that any product must include an express warranty, there is no law requiring such on new construction housing.

Real estate conference

A little nugget that came into my inbox (no guarantees from the management)...

Our advanced two-day conference on today’s Real Estate Purchases & Sales, Mar. 19 & 20, in Chicago, IL, will discuss the structure, negotiation and documentation of commercial purchase and sale agreements in a real world context. Program co-chairs Walter D. Cupkovic, Esq., FagelHaber LLC and Robert F. Messerly, Esq., Sonnenschein Nath & Rosenthal LLP lead a distinguished faculty of real estate professionals to address:

Identifying the complexities and drafting to meet them
Trends in sale of entity interests rather than fee interests
Factors to consider when acquiring industrial properties
Section 1031 and other income tax issues
Condo conversion and liability of original developer
Real estate tax incentives from local governments
Transfer taxes
New EPA standards and environmental developments
Development contingencies and traps
New 2006 ALTA policy forms and endorsements

And more! Sign up soon. You can register here

What: Real Estate Purchases & Sales

When: March 19 & 20, 2007

Where: Chicago, IL (The Gleacher Center)

Details: Real Estate Purchases & Sales Conference or call us at (800) 854-8009

The old "Merger Doctrine"...

Interesting case that just came down from the 4th District Appellate Court here.

Facts were that the parties just had a plain, old vanilla real estate closing with a 105% real estate tax credit given to Buyers by Sellers at closing. The 105% was computed off the most recent full year's ascertainable tax bill. It turned out that the credit was computed based on a PARTIAL year's bill...this was critical. As we recall from first year property class, normally, you can't bring breach of contract actions post-closing because the contract "merges" into the deed.

However, here the parties had relied on mistaken information...i.e. that the tax bill was not for a the most FULL year. So, the mutual mistake of fact pleading ruled. Case remanded to trial court.

Look at your contract proration language...it does typically say "full year."

Chicago real estate sales & blogging...

Did you all see Mary "Zillow" Umberger's piece from the Trib. earlier this week? Nothing new to those of us pretty active in the blogsphere. I know there are a good number of agents reading this blog from some of the e-mail and comments I get.

What's your experience?

This sounds nice...

How different is this blurb from the typical sentiment we see in the national media:

'06 HOME SALES SIZZLED

AUSTIN, TX (Austin American-Statesman) – December’s Multiple Listing Service report from the Austin Board of Realtors shows single-family home sales were higher than during the same period in 2005, capping another record year for the area housing market.

Single-family home sales for the month were up 3 percent from last year, totaling almost 2,000, with the year-end total sold at almost 27,000, a 10 percent increase from 2005.
The December single-family median price rose 4 percent to $177,500, and the year-end median price rose 6 percent to $174,500.

Average days-on-market was 63 days, the lowest time span in four years. The number of active listings declined by 4 percent to just over 7,800, marking the lowest number since 2001.

So if you like Texas...but seriously, stories about the national real estate market are about as useful as national presidential polls. On politics, we have this electoral college whereby each state's vote matters for presidential races. On real estate, your local market is important, not nationally. The national economic climate is relevant.

Blago halts predatory lender law

Are u guys following this South/Southwest side predatory lender law fight? Interesting politics. Here's a brief story. You'll recall that this legislation required Buyers in various zip codes on the South and Southwest sides to get credit counseling if they had low credit scores. I think it had slowed real estate transactions a bit. I know the title companies had to change policies quite a bit when these properties were at issue. The alleged purpose for the legislation was to provide greater oversight on transactions because many of these neighborhoods were heavy fraud areas.

Why have all the players do all the learning and policy changes if Blago's going to stop it like 4 months into implementation? One meeting with Jesse Jackson and he caves.

Rich Miller has an interesting op-ed in the Sun-Times today about how PISSED Speaker Madigan is about this...it's his district down there.

Subprime market tightening...

Interesting story from the Times here regarding various failures of subprime mortgage providers. An interesting side note to the housing slowdown story.

How good are we as real estate professionals (in whatever role...lawyer, agent, broker, mortgage broker) in essentially telling a potential client, no, you either can't afford this home or these mortgage terms are a bad deal and you shouldn't do it? I know I generally take a passive role in the mortage process, mainly just pushing a Buyer to get approved in a timely fashion and watching the contingency date. Perhaps I'm the one (lawyer usually) who needs to just say no? I have no financial interest in closing.

Chicago security deposit interest rate set

All you residential landlords out there subject to the Residential Landlord and Tenant Ordinance note, the comptroller has set the interest rate on security deposits in 2007 at 1.68%.

Recall, interest is payable within 30-days after the end of each 12-month rental period, even if the lease extends for more than one year.

Market sentiment

Just a couple off-the-cuff thoughts...

I think we've gotten more signed contracts into our office this past week than about the last 1-2 months combined so that's good news.

Also, a number of the home builder indexes have been rising in terms of homebuilder confidence. I hear a lot of bullish recommendations on home builder stocks too.

Seinfeld stiff's real estate agent

Did everyone see this story about Jerry Seinfeld's litigation with his real estate agent concerning her commission? Sort of an interesting case...I haven't litigated one of these. The story suggests that the agent had worked for the Seinfeld's but she did not show them the actual property which they ended up purchasing.

Condos for rent...

Here's a piece from the Times looking a condo gluts in certain east coast cities such as D.C. and Boston. Seems that many condo developments are going the rental apartment route.

One hear's about the strong Chicago rental market, but I haven't sensed the same weakness in the condominium market.

When to pay off your mortgage?

Short but interesting piece here about the proper analysis to consider when deciding whether or not to payoff a mortgage.

50 year mortgages in IL?

I saw my first local Chicago area real estate contract today where the Buyer is using a 50 year mortgage. I knew of the 50 year loans but didn't realize they'd made there way to IL yet. I'll keep my fingers crossed that the deal gets closed and then I'll know the lender.

Asian central banks and your mortgage rate...

Sort of an interesting piece here from the Times regarding the recent downturn in mortgage rates and its relationship with Asian central banks and hedge funds investing in U.S. Treasury notes. 30-year mortgage rates sit at 6.04%. For what it's worth, our real estate group has seen a noticeable increase in client calls regarding pending real estate transactions.

The state boys golf tourney leaves and now this...

Short bit in the Sun-Times about the local board of Realtors in Danville, IL dropping out of the National Association of Realtors' price reporting surveys. Seems that Danville was often the lowest ranked metropolitan area in the Realtors' national surveys. I'll take a home for $65,200.

I love this perception in homes and securities where people love to tout high prices...isn't the idea to get the best deal possible? I.e. buy when prices are low?

Mortgage insurance tax deductible in '07

I almost missed this small but important nugget from the 109th Congress as it was headed out the door (shed a tear for ole Denny Hastert). Mortgage insurance will be tax deductible in 2007.

The change applies to mortgages closed in 2007. And there's an income limit of $100,000. UNLESS CONGRESS ACTS TO RENEW, THIS IS ONLY EFFECTIVE IN 2007!!

So run the numbers, larger loan with mortgage insurance versus the old 80/20 piggyback.

Should you pay mortgage points to lower your rate?

A recent study says mortgage borrowers tend to purchase too many points when selecting a mortgage and end up paying more than they would with no points. Here's a link to Penn State's press release on the study (one of the co-author's is a PSU prof). For the life of me I can't find the full study posted anywhere...don't these people know about the power of the blogsphere?

The critical finding seemed to be that most people sold or refinanced their mortgages too quickly to take advantage of the initial interest rate buy-down.

Convenient senior centers

Look here for some interesting information regarding the City of Chicago placing senior centers within private senior apartment buildings. I think it's a great idea...leave the old buses filled with seniors behind. Instead, it's all in your building.