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Showing posts from March, 2008

Should the Conducter Drive the Train?

Trulia has an interesting feature called Trulia Voices. Real Estate professionals and consumers can pose questions to each other about nearly every aspect of buying and selling property. I've been following the Chicago-centric discussions for the last couple of months and I am enjoying alot of what I am reading. Buyers and Sellers ask for "free advice." Agents self-promote. "Expert" real estate investors pontificate. Good Stuff.

This site is not without its problems. As always, the relative anonymity of the internet affords people who do not really know the answers or even understand the questions opportunity to give answers with an appearance of authority. Hapless consumers are at risk of getting some really bad, even dangerous advice. Its caveat emptor for anyone who uses the web site that is supposed to help them navigate the wacky caveat emptor world of real estate deals.

I am seeing a lot of agents trying to answer legal questions. Some are from out of stat…

GOTCHA! sellers closing costs go up (again)

Well that didn't take long.

Chicago's City Council reconsidered yesterday, and by a 49-0 vote, passed a revised ordinance on the municipal transfer tax increase passing it off from buyers to sellers.

The new seller-paid $3/$1,000 transfer tax can be added on to increased recording fees, and water department full payment certification fees.

And, based on recent history anyway, stand by for title companies fee increases which seem to hit every spring....

On Talking Clients Off the Ledge

It stands to reason that most all of the professionals involved in a real estate transaction have a vested interest in seeing the deal through to a closing. From a distance, we lawyers "could" be included in this camp, understandably so. My buyers hire me (and many real estate agents refer them to me) because they want to buy. Sellers hire me because they want to sell. No one wants the deal to collapse.

But the truth runs a bit deeper, as my first loyalties run to my client, and a large part of my job is to try to keep my clients out of trouble. From time to time, my review of a contract leads me to an unfortunate, but inevitable conclusion: the deal stinks. In those instances, I try hard to talk my clients out of going forward on their contracts; "off the ledge," if you will. Some listen, some don't. At least I try.

I was reminded of all this earlier this week while reading about the problems at the Sterling Private Residences. Turns out that there is a rampant…

CHICAGO TRANSFER TAX - let the games begin!

As of yesterday, it looks as though the City Council's Department of Finance did a 180 degree turn and is now going to lay off the $3.00 transfer tax increase on sellers and not buyers.

The tax increase goes into effect on April 1.

So it was to be expected that Buyers would rush their deals forward and try to close on March 28th or on the 31st to beat the increase.

Turns out that might not work out as planned. See, the tax gets paid when Deeds are filed with the Cook County Recorder of Deeds. Its usually the title company's job to handle the recording of documents and since they have to record so many, they do not always get recorded the same day as your closing. Sometimes it can take days or weeks (or months) to get done. Title company's dont want to be left holding the bag for the fee increase. As a precaution many will start collecting additional funds to cover the tax increase as early as March 25th or 26th.

So all those end of month closings we took pains to schedule? Gu…

Lawyering - Its Not Always as Easy as It Looks!

Nothing should be simpler than a real estate transaction. The buyer giver the seller some money. The seller gives the buyer a deed and some keys. Everyone shakes hands and goes home. Seldom is life so simple. Take for example what is going on with my clients Brigham and Leslie, and how careful lawyering will save them from near disaster.

This delightful couple is trying to buy a one million dollar home from a bank. The bank, sorry to say, owns the house because it foreclosed the former owner’s mortgage. After weeks and weeks of negotiations and preparation, we are supposed to close this week, tomorrow, actually. Only we won’t. Not yet anyway.

In foreclosure cases, the Banks tend to call all of the shots. They require buyers to sign special contract riders that limit the Bank’s liabilities. Buyers take these properties “as is.” The Banks refuse to pay certain customary seller charges. They impose penalties on Buyers who are not ready to close on the appointed date, and then more often th…

TAX RELIEF ON THE SALE OF (SOME) VACATION HOMES

A lot of attention these days is being focused on the struggles many, many people are enduring selling real estate at a loss, whether the result of mortgage woes or declining market prices, or both. Deservedly so. This is a big problem. This is reflected in a significant number of the contracts I am working on right now; short sales, properties in foreclosure; post-foreclosure bank sales; sellers paying money at closing to cover liabilities in order to sell. I am helping clients on all sides of these types of deals. Not a happy time at all for these sellers.

But still and all, many sellers are profiting handsomely when their deals close. And when they profit, the tax man takes interest. Fortunately, the Internal Revenue Code provides two very powerful protections for sellers. And now, as of March 10, there will be a significant expansion of one, to benefit some vacation property owners.

The Section 121, Principal Residence Exclusion, shelters up to $500,000 of capital gains on a Prima…

More New Pending Legislation for Property Owners

I guess that there just is no limit to what lawmakers can think up - or to their collective genius, to wit:

HB5160 would amend the Mortgage Act to make anyone (buyer or mortgage lender) who is required to deliver funds to complete a real estate closing do so at the closing. (Seems obvious right?) A person who fails to make any required payment at closing would be liable to any party involved in the closing who incurs a loss or expense because of the delay, plus costs and reasonable attorney's fees.

HB5189 would amend the Condominium Property Act to prohibit Condominium Associations and other "common interest communities" from barring unit owners from leasing up to one fifth of the units. Sure hope you dont mind if your neighbor wants to rent his unit out....

HB5896 would amend the Code of Civil Procedure to add one more hoop for mortgage lenders to jump through (one more "safeguard" for borrowers behind on their mortgage payments) before they can start a foreclos…