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from Local Attorney, Michael H. Wasserman

Wednesday, September 24, 2008

PROPERTY DISCLOSURES

Most Illinois sellers are required to give several different disclosures to prospective home buyers, so that those buyers are made aware of various types of possible (or known) defects. Such property disclosures are required in at least 32 states, some are pretty bare-boned, some are 10 or more pages long.

Locally, we have (a) real property disclosures; (b) lead based paint disclosures; (c) radon disclosures; and in the City of Chicago, (d) heating cost disclosures.

Our real property disclosure covers 21 specifically enumerated types of material defects ranging from unsafe drinking water, to defects in the roof or ceiling, to boundary and lot line disputes.

I just learned of a new one that seems to be an emerging trend in some of our sister states. (Mississippi, Missouri, and South Dakota) now require a seller to disclose whether or not a given property has ever been used as a methamphetamine lab! This disclosure must be made regardless of whether the persons involved in the production were convicted for such production. The issue is (quite understandably, I suppose) the possibilities of toxic / hazardous residues being present.

Shouldn't be too much longer before sellers also have to disclose ghosts, poltergeists or other incidents of the occult.

Thursday, September 11, 2008

COOK COUNTY PROPERTY TAX BILLS - the wait is over?

This just in from the Wasserlaw Department of Unconfirmed Facts and Useless Speculation (DUFUS):

2007 Cook County 2nd Installment Property Tax Bills might possibly be mailed out October 3, 2008. That would make them payable on or before November 3, 2008.

This is sourced to a title company closing officer I worked with yesterday and is attributed to a conference call with one of the "higher ups" at the Treasurer's office. The treasurer's web site seems to substantiate the rumor.

I anticipate a rash of louder, more shrill complaints from City of Chicago property owners and from "tax reformer" types when those bills hit peoples mail boxes. More than the usual moans and groans we hear this time of year. We are confronted with a confluence of troubling factors:

For starters, the property tax system is based in part on triennial re-assessments of property values. Chicago properties were last re-assessed for the 2006 tax year, back when property values were (generally) rocketing upwards. Some Chicago neighborhoods saw assessed valuations increase 40 or 50% or more!. Higher assessed values (again, as a general rule) result in higher tax obligations.

At the same time we are confronting higher energy, food, and other costs of living. Day to day living expenses are eating up more and more of our wages (and gulp..... our savings and credit lines, too). These tax bills are going to be the proverbial straws that are going to break many a taxpayer's back.

To make matters worse, at least in terms of sentiment/psychology, most folks have seen their property values head back in the other direction since they were re-assessed (to say nothing of their stock portfolios and bank account balances).

But you say, Mike - what about that "7% Expanded Homeowners Exemption." Isn't that going to save us from spikes in our tax bills? Well, maybe for some few of us, but probably not for many. Its a pretty convoluted formula, but the Homeowners Exemption acts as a sort of offset that effectively lowers the assessed value of a property, which in turn lowers the tax bill. The "Expanded" exemption seeks to dampen the effect of a property assessment increase by limiting how high the increase can ratchet up in a given tax year. Here is the kicker: The maximum exemption actually decreases in each of the three years in the tax cycle. Not only are (many) property owners going to feel the pain of tax levy increases, they are going to pay those levies based on more accelerated increases in their property values.

Oh, one more thing; those bills are going to be payable on the day before election day ! Feel free to speculate on whether or not we will see change in Washington (or if that change will be tinted red or tinted blue). One this will be certain, as we head into the voting booths, change is going to be all the dough left rattling around in our pocketbooks.

HELP FOR TENANTS LIVING IN FORECLOSURE PROPERTIES

As of July, one in every 583 Illinois households was in foreclosure. According to RealtyTrac, there were 8,915 foreclosure pending statewide, 5,378 in Cook County, alone. The July numbers represent a 9% increase over June and is 61% higher than in July, 2007.

By now, just about every real estate lawyer in the area has faced a transaction that has involved a bank selling a property already lost to foreclosure, a seller with a pending foreclosure, or a pre-foreclosure "short sale." Sadly, I've seen them all.

Most of the time, these properties are (or were) the seller's principal residence. Others however have been investment properties. A couple of those investment deals have been complicated by the fact that a tenant is/was living in the distressed property.

There is much uncertainty about tenant rights in a foreclosure action. Most often, the lender does not know that a tenant is living in the building and the tenant does not know that the landlord is losing the building to the bank.

This is, to say the least, a very stressful and disconcerting situation for effected tenants.

Enter the Lawyers Committee For Better Housing, in Chicago. LCBH has created a new task force to focus on this very issue: tenants' rights in regard to foreclosed property. If you know anyone in this situation, you might want to let them know that they do indeed have rights and can get appropriate guidance from these highly trained and very knowledgable lawyers. The lawyer heading up the Foreclosure interests of LCBH is Mark Swartz. LCBH's telephone number in Chicago is 312-347-7600.

UPDATE: The August numbers from RealtyTrac are not encouraging: 5,980 foreclosures pending in Cook County; that is 1 in 360 households.