Illinois Real Estate Law Blog

Monday, April 21, 2014

Double Digit Increase in Residential Constrution Spending in 2013

The National Association of Homebuilders recently reported that residential construction increased in 2013.  Overall, there was an 18.3% increase in residential construction spending over 2012.  Specifically, construction of single-family homes was up 20%, and remodeling was up 14%.  Multi-family saw the greatest increase, at nearly 35%.

Increased construction shows the economy is looking up!  Let's hope it stays that way.

Thursday, April 10, 2014

New Phase 1 Environmental Standards in Effect

In November of 2013, the American Society for Testing and Materials (ASTM) approved a new standard for Phase 1 environmental studies.  Here are some of the new requirements

1.   The environmental consultant must look into the possibility of hazardous vapors migrating onto the property.

2.  If neighboring properties are in public regulatory databases, the environmental consultant must conduct a review of those regulatory files.

3.  The environmental consultant must identify recognized environmental conditions even if they have been resolved.

When negotiating a contract where environmental studies will be required, keep in mind that the additional requirements may take additional time, so plan your due diligence accordingly.

Wednesday, April 2, 2014

Environmental Due Diligence: The Phase 1 and Phase 2

When buying commercial property, especially if it's vacant land and oftentimes even when it's not, you have to know the condition of the real estate, and that involves an environmental study.

The first step is to get the Phase 1.  The Phase 1 is an environmental study designed to identify harmful environmental conditions that are affecting or may affect the property.  It is essentially the first step in your environmental due diligence, and it can often determine whether or not you even proceed.  The person conducting the Phase 1 will typically make a site visit, look into public records, check out the area where the Property is located, and review maps and images of the Property.  Based on that, he will determine if the subject Property might have any environmental issues.  For example, it might be a problem if there is a gas station next door.  Or, from public records, he might figure out that while there is no gas station in the area now, there used to be a gas station next door, and there were gas tanks actually on the subject Property.  Or there might be a dry cleaner on or near the Property, either now or in the past, using harsh chemicals.  Or there might be some sort of automotive repair shop next door, which could be an issue.  All of the above examples have actually happened to my clients, but there are other plenty of other possibilities as well.  

Of course, you might luck out, and the Property will get a clean bill of health.  But, in the event your Phase 1 reveals some potential issues, it's time to move on to the next step: the Phase 2.

What's the Phase 2?  Well, it's another environmental study, this time more invasive.  The purpose of the Phase 2 is to either corroborate or deny the possibilities set forth in the Phase 1.  The Phase 2 often involves soil tests, groundwater sampling, and surface water sampling.  These items are then chemically analyzed to determine if there is, in fact, any environmental threat.  If there is, then the buyer and seller need to determine how to proceed.  Does the buyer still want the property?  Can the property be cleaned up to make it compliant?  How much will it cost?  How long will it take?  Who's going to pay for it?    

If all goes well, you will be able to inexpensively rule out environmental hazards.  But if it turns out that there are issues that would limit your use of the property, it's better to know now than after you close!

Wednesday, March 26, 2014

Fannie Mae and Freddie Mac Buying Sketchy Loans?

According to a report released by the Federal Housing Finance Agency (FHFA) last month, mortgage giants Fannie Mae and Freddie Mac have continued to buy questionable mortgages despite notice that there are issues with property appraisals.

Apparently at some point during the process of buying the loans, the FHFA evaluates them.  Between the summer of 2012 and early fall of 2013, the FHFA alerted Fannie Mae and Freddie Mac to appraisal issues on $107 billion in mortgage loans.  Despite that, Fannie Mae and Freddie Mac went ahead and bought those loans anyway.

Thursday, March 20, 2014

What is a Senior Freeze?

If you qualify for a Senior Exemption on your real estate taxes, you might also qualify for a senior freeze.  A senior freeze is a great way to keep your taxes down, because it will essentially freeze the assessed value of your property to whatever the assessed value is the year you qualified.  You won't be subject to annual increases in the assessed valuation of the property, as long as you continue to qualify.
To qualify for the 2013 senior freeze:
1)  You must be born in 1948 or earlier.
2)  You must own the property you are applying for, and it must be your principal place of residence.  If you do not own it, but you have a lease that states that you are responsible for the payment of real estate taxes, that is sufficient.  But you must have owned the property or had a leasehold interest in the property on both the first day of 2012 and the first day of 2013. 
3)  You also must have been the responsible party for payment of both 2011 and 2012 property taxes.
4) In 2012, your total household annual income must be $55,000 or less.
If you qualify, act quickly!  Contact your local assessor's office for the senior freeze application!

Thursday, March 13, 2014

Senior Exemption for Real Estate Taxes in Illinois

If you are a senior and you own a home in Illinois, you could qualify for a senior exemption on last year's real estate taxes.  While the first installment of 2013 taxes has already been paid, the second installment won't be due for month, and you can still get the benefit of the senior exemption if you qualify.  To get a senior exemption for 2013:

1)   You must have been at least 65 years old during 2013.
2)   You must own your residence.  If you do not own, you may still qualify for the senior exemption if your lease states that you are responsible for real estate taxes.
3)   If you moved during the tax year, you can apply for and receive a prorated senior exemption.  Make sure you submit your HUD or settlement statement, proof of age, proof of residency, and a copy of a recent real estate tax bill.

Contact your county assessor to get the application, and get it done quickly.  Applications will be due soon!

Wednesday, March 5, 2014

Foreclosure Filings Increased Nationwide in January 2014

Are things really getting better?  RealtyTrac recently released it's Foreclosure Market Report for January of 2014.  Unfortunately, foreclosure filings increased 8 percent since December 2013 nationwide.  Perhaps the large increase is just because less foreclosures might have been filed over the holidays?  Who knows.  What we do know is that according to RealtyTrac, there were nearly 125,000 new foreclosure filings nationwide in January.

What's more, Illinois had one of the highest rates of foreclosure filings in January.  Only Florida, Nevada and Maryland has more.  The top five were rounded out by New Jersey. 

On the bright side, to the extent you're looking for a home, there might be some more inventory out there in the near future as a result of all of these foreclosures.