When we began posting about the possible use of eminent domain to acquire underwater mortgages in August 2012, we pointed out that “The Chicago City Council’s resolution calling for a hearing on the use of eminent domain to condemn underwater mortgages noted that officials in three states, including Florida, are ‘being persuaded to
It took a while, but the Florida Supreme Court recently upheld a 2011 5th District Court of Appeals’ decision invalidating a city ordinance that gave priority to code enforcement liens over prior-recorded mortgages. City of Palm Bay v. Wells Fargo Bank, N.A., Case No. SC11-830 (May 16, 2013). Palm Bay’s ordinance had attempted to
Would you be surprised to discover that the property you would like to purchase, which is subject to a foreclosure suit, has an invalid assignment of bid rights?
Improper Assignment of Bid Rights
As a transactional real estate attorney, I am surprised at the frequency I am discovering improper assignments of bid rights filed
Code enforcement liens that were granted “superpriority” status by a local government ordinance were held to lack priority to a prior-recorded mortgage in a recent Florida appellate court decision. City of Palm Bay v. Wells Fargo Bank, N.A., 36 Fla. L. Weekly D161 (Fla. 5th DCA January 21, 2011).
The City of Palm Bay enacted an ordinance creating its Code Enforcement Board in 1997. Under the ordinance, liens on real property created by the Board would be co-equal with state and local tax liens, and would be “superior in dignity to all other liens, titles and claims.”
Continue Reading Code Enforcement Liens Lack Priority Over Prior-Recorded Mortgages
It is commonly known that a buyer should perform due diligence before purchasing property. If the buyer fails to perform due diligence (obtaining a building inspection, phase I environmental report, mold inspection, Chinese Drywall inspection, survey, etc.) the buyer may incur significant unanticipated post-closing costs and liabilities.
When purchasing property at a foreclosure sale or a property that has recently been foreclosed, a buyer must be even more diligent in his or her inspection of the property and title to the property since the buyer, in most cases, is purchasing the property “as is.”
In any type of purchase, a buyer must be concerned with the title to the property. This is especially important in today’s market since so many properties are in foreclosure. What if the foreclosure suit named the wrong lender as the plaintiff? What if a junior lien holder was not named in the foreclosure suit? These situations and many other situations can leave a buyer with title to a property that is not insurable and can cost the buyer thousands and sometimes tens of thousands of dollars to correct.
Most title companies do not understand the complexity of legal matters involved in a foreclosure suit. Further, a title company does not represent either the buyer or the seller in a real estate transaction and cannot provide legal advice to either party.
Continue Reading Avoiding Costly Mistakes When Purchasing Property in Today's Market
The long recession from which we are emerging has caused numerous borrowers to default on the loans for their commercial projects including loans for residential developments, shopping centers, office buildings and industrial/warehouse/flex space. Many residential developers have seen their sales of completed units or lots stop or slow to a trickle over the past few years, while the interest on their loans continue to accrue. This may result in the debt on the projects being significantly greater than the value of the projects. Many developers of commercial projects have either been unable to lease space or have had to lease it at rates that are significantly lower than anticipated rental rates. Compounding the problems of commercial developers, many tenants have defaulted on their leases as their revenues have declined, leaving such space unoccupied or re-let at greatly reduced rental rates. Meanwhile interest has continued accruing on the developers’ loans.
Although these projects have been disappointments for the original developers and lenders financing the projects, financially troubled projects can present excellent investment opportunities for new investors/developers provided they have the capital to acquire the projects based on current market valuations and the project lender is willing to discount the existing loan balance to make the purchase and completion of the project feasible.