Monday, June 30, 2008

"Redfin" Mary

Mary Umberger touted Redfin's entry into the Chicago market in this week's column.

That would be Redfin, the maverick start-up that operates mostly online and refunds two-thirds of its portion of the commission to its clients. Chicago is its eighth market.

Unfair "Combine" Criticism

I saw this little nugget recently that combines a couple of my favorite subjects, Illinois' "Political Combine" and the practice of real estate law. The piece touched on a lawyer close to DuPage County Board Chairman Robert Schillerstrom makin' some money off of the O'Hare expansion.

A former law firm associate of DuPage County Board Chairman Bob Schillerstrom has been paid more than $112,000 representing Chicago in routine real estate transactions related to the proposed expansion of O'Hare International Airport.

William Thomas made $112,623 between April 2005 and April 22 of this year, according to records obtained by the Tribune. Thomas was hired by the city just months after Schillerstrom closed his law office and began working as a partner in a local office of the Indianapolis-based law firm Ice Miller.

But lets be fair Tribsters...his rates ain't exactly out-of-this-world. If I charged at those levels I'd be out of business:

Thomas made $350 for each real estate closing and $150 an hour for other real estate-related legal work, according to city records obtained by the Tribune.

Friday, June 27, 2008

Tenant Friendly Courts

I wanted to share an experience from life on the circuit earlier this week that speaks to the above.

I was in court ostensibly just to get a continuance and issue an Alias Summons. My client/landlord is in the process of suing two defendants, a landlord and a personal guarantor, for money and possession of a rental unit. It's a commercial property.

A money judgment and Order for Possession had been entered at the first court date against the tenant/entity. I was in court this week because we hadn't yet gotten proper service on the individual guarantor.

So I step up on my case and summarize the above to the court and say I just want a continuance and an Alias Summons to issue...should have been a 5 minute court date. Instead I virtually had to retry the case against the first defendant (different judge from first court date). The court wanted to see all the orders, questioned the rent and demanded the rent ledger that provided the basis for the judgment. I thought my Order for Possession was going to get vacated and I was the only person in court (no defendant). Just a tale to beware.

I hear many of the pro bono tenant groups out there talking about how terrible tenants have it in the forcible courts but that's not my experience.

Wednesday, June 25, 2008

Touble in "Condo-ville"

Saw this sobering article entitled Collateral Damage for Condo Owners. It's a sad tale of the impact that foreclosures are having on unit owners who haven't had financial difficulty themselves when their fates are tied to others due to the shared responsibility that is condo living.

Barbara Sanz has never missed a mortgage payment, but the plunge in real estate is punishing condominium owners like her anyway.

Four years ago, she bought her first condo in a glassy new Miami tower when the building was filling up. Now nearly one in six residents in the 43-story building is battling foreclosure and their contributions to the building association are shrinking. Each of the remaining owners has had to chip in an extra $1,000 assessment and $50 more a month for cable and Internet. That is on top of Ms. Sanz’s $450 monthly maintenance fee.

Even though she pays more, her building has broken washers and dryers and unusable exercise equipment, and her hallway is spotted with mold.

The question I'm asking myself is how does one protect themselves hypothetically from buying into a building where there are a high number of foreclosures? The 22.1 disclosures required by the Condo Property Act can be helpful but I can envision scenarios where the 22.1 "snapshot" wouldn't tell the full picture. I suppose the level of reserves or association savings is even more important now with the foreclosure concerns. If the condo association is small enough you could do a quick look at the recorders office to see if there are any lis pendens notices on any properties but that's not a fail safe. And that's probably not realistic if it's a 300 unit high rise or something.

Any ideas?

680--the New 620

I'm not a lender but I do know that generally higher is better when it comes to credit scores. This was a recent syndicated column from Lew Sichelman regarding the increased importance of high credit scores.

Just a few months ago, a credit score of 620 would garner the best mortgage rates and terms. But many lenders now require a minimum of 680 for a prime loan. And some won't lend to anyone whose score is below that.

The full piece has some nice, legitimate overview information regarding steps to increase your credit score.

680--the New 620

I'm not a lender but I do know that generally higher is better when it comes to credit scores. This was a recent syndicated column from Lew Sichelman regarding the increased importance of high credit scores.

Just a few months ago, a credit score of 620 would garner the best mortgage rates and terms. But many lenders now require a minimum of 680 for a prime loan. And some won't lend to anyone whose score is below that.

The full piece has some nice, legitimate overview information regarding steps to increase your credit score.

Monday, June 23, 2008

Neumann Homes 1 Day Auction

Get yourself a deal from the misfortune of poor Neumann Homes:

Twenty-six new homes and 23 partially completed homes are slated to be sold in an upcoming auction for a bankrupt home-building company.

The auction will be at 1:30 p.m. June 28 at the Westin Hotel, 400 Park Blvd. in Itasca. Registration begins at 11:30 a.m. The incomplete homes are all under roof, sheathed, and at trim stage or beyond...The properties may be reviewed at the auctioneer's Web site,

Friday, June 20, 2008

The Rule Against Perpetuities

I had to post a little something about this case...I mean how often does "The Rule" ever come up anymore? Ah that was fun learning early in my law school career.

The rule against perpetuities at common law provided "that an interest sought to be
devised to be good must vest, if at all, not later than twenty-one years and nine months after
some life or lives in being at the creation of the interest." Johnston v. Cosby, 374 Ill. 407,
410, 29 N.E.2d 608, 610 (1940).

Here's the case:

Robinson v. North Pond Hunting Club, No. 5-06-0436 . Because second land trust agreement for hunt club contains no revocation clause, it violates rule against perpetuities and is void. Further, deed purporting to transfer plaintiff's 40 acres to second land trust is nullity because grantee is non existent entity. Therefore, first trust agreement, to which plaintiff is not a party is still valid; and plaintiff still owns his 40 acres. Case is remanded to circuit court to determine issues with regards to equitable mortgage resulting from construction on plaintiff's acreage.

I mean it doesn't get much better than a discussion of "The Rule," land trusts, and partition for the real estate lawyer.

Saturday, June 14, 2008

"Notice" Provisions Matter

Often times people get too casual regarding Notice provisions contained in contracts and it can be costly. Notice of course is simply how a party to a contract must communicate contractual issues to another contract's whether you can fax an attorney modification letter or lease termination notice to another party. And quite frequently before things get contentious Notice formalities get ignored and nobody cares. But if things ever get to the litigation stage, Notice formalities can be everything so do Notice right all the time.

Here's the recent case (Genesco v. 33 North LaSalle Partners, No. 1-07-2782) where simply a tenant didn't follow the lease's Notice provisions and therefore the tenant DID NOT properly terminate the lease. The case gets a bit complex with various equitable arguments but the basic fact was simple: tenant sent lease termination to the wrong address. So instead of a $30k lease termination fee they're on the hook for the rest of an approx. $1 million lease (high-end Loop property).

Friday, June 13, 2008

No Change in FHA Loan Max in Chicago Area

I hadn't been following the issue that closely but saw this today regarding FHA loan maximums being increased around the country in several high priced markets but not in good old Chicago. We're still at $417K. The move was part of the Economic Stimulus Act of 2008 passed by Congress in February. There's a lot of crying by real estate agents in the piece but the statistical basis put forth by the federal government seems legit.

HUD officials say the decision to exclude Chicago and most of the Midwest was simply about numbers.

They calculated the high-cost areas by looking at the median home costs for metropolitan statistical areas and smaller "micropolitan" areas outside them. Then they broke it down to the county level and took the highest median home price, multiplying it by 125 percent. If that number came out to more than $417,000, they raised the jumbo loan limit...

In Chicago, HUD looked at the 14 counties that make up the Chicago metropolitan statistical area and found that in 2007 DuPage County had the highest median cost, at $328,000. So they multiplied that by 125 percent and it came to $410,000, less than the old limit of $417,000.

I didn't hear any worries from the poor Realtors about government liability on loans that people default on and the resulting impact on taxpayers.

Tuesday, June 10, 2008

The "One Voice" Rule

Of course the originator of the "One Voice" Rule is the Big Tuna, Bill Parcells, of pro football fame. Wherever he's been head coach only he is allowed to communicate with the media. Other members of the coaching staff cannot. To some degree I suppose you can't argue with his success.

I think the Rule can be analogous to lawyers in residential real estate transactions or their lack of involvement depending on the situation. I represented a guy selling his home a couple weeks back and the buyers did not have an attorney. The day of closing did not sound pleasant for the buyers and it was mainly because they didn't have "One Voice" to listen to. The delays were fairly standard things...the lender was running behind. Closing had initially been set for 9am and around 4pm the day preceding I could see where things were headed so we pushed it back to 12pm. But even this turned out to be too early and I just kept in touch with the title company and lender regarding receipt of the loan package, ect., ect...worked on things at home. Unfortunately the buyers didn't know who to listen to. So all morning their frustration is growing because they don't know what was going on and one of them apparently was going to be leaving the area for a month and they had to close that particular day. I even communicated with them a bit trying to describe who they should be listening to but by that point they weren't really able to listen to anyone. I even offered to draft a property power of attorney for them if the wife indeed wouldn't be able to be present after the closing day. But they listed to the lender and got the closing shortly before noon.

Personally I ended up timing it just about right on...showed up about 1:45pm and was in and out in about an hour and got my checks the next day. The deal funded just before 5pm.

This probably isn't reason #1 to use a lawyer in a residential real estate transaction but it should be considered. Someone who knows what they're talking about and has only your best interests in mind. These guys wasted a day for what should have been one hour at a title company.

Mortgage Foreclosure Videos

Our friends over at Illinois Legal Aid Online have produced a nice series of videos giving an overview of the mortgage foreclosure process in IL.

Monday, June 09, 2008

It Works with Used Cars, Why Not Your Home

I'm speaking of ZipRealty's new "24-Point Inspected and Certified" sales program for their listed properties. Here's the news:

ZipRealty's sellers can opt to have their home inspected by a state-licensed home inspector and offer the buyer a home warranty for a combined fee ranging from $500 to $560, depending on the state. The inspection includes 24 specific areas of the home, including the attic, foundation, windows, doors, fireplace, kitchen, electrical and plumbing systems. Homes that meet the inspection standard in each category will receive the "24-Point Inspected & Certified" designation. Potential buyers searching for homes in good condition will see the "24-Point Inspected & Certified" designation on both and, as well as on home flyers and signs at the property.

Cutting through the BS, they're asking you to pay them $500-$600 for a home inspection and 1-year home warranty. In this current market climate nearly every seller should be including those two items regardless. Pay for the warranty at closing and have an inspection report available to every buyer coming to view the property and deal with repair issues raised. Particularly on the inspection, why use Zip's "conflicted" person instead of your own independent professional?