Long before the real estate market crashed, developer Kimball Hill signed an agreement with the City of Elgin to develop land. Kimball Hill was to improve the land at its expense, and Elgin would then annex the land into the City of Elgin. Kimball Hill obtained bonds from two separate insurance companies to guarantee its performance of the Annexation Agreement it had signed with Elgin. Back in 2003, when all of this was done, the real estate market was booming. Unfortunately, by the time the property was developed, the economy had crashed; Kimball Hill filed bankruptcy in 2008. A company called TRG purchased the property out of bankruptcy, and subsequently refused to make the improvements Kimball Hill had promised to make in the Annexation Agreement. As a result, in 2012 Elgin sued TRG and both insurance companies that had issued bonds. Eventually, the case was appealed, and in City of… read more →
The SBA 504 program is a refinancing program for owner-occupied commercial real estate. It will be available starting in mid-2016, and will likely be a popular choice amongst small-business owners who also own their own real estate. If you’re looking to refinance your commercial property, it might be worth looking into the SBA 504 program. To qualify, your commercial property must be owner-occupied, and the project cost cannot exceed $15,000,000. Moreover, you need to be able to put 10% down. If you qualify for financing under SBA 504, you will get a fixed-interest rate (presumably lower than conventional financing, although that remains to be seen). You will essentially have two mortgage liens on your real estate. The first lien will be for 50% of the total project cost. The second lien will cover an additional 40% of the project cost, but it will be 100% guaranteed by the SBA. The… read more →
Condominium associations can generally determine whether or not they want to allow renters. If they choose to allow renters, they can then decide to what extent renters are allowed. They can limit the term of the lease, the total units available for rent, and require tenants to submit to background checks. But whatever they do, they have to go about it the right way. A recent decision by the appellate court, Stobe v. 842-848 West Bradley Place Condominium Association, 2016 Il App (1st) 141427 (Feb 3, 2016) Cook Co., 3rd Div., proves just that. In Stobe, the association’s condominium declaration allowed owners to rent their units. The condominium association’s board, however, had adopted rules that limited how many units could be leased at a time. The plaintiff argued that this conflicted with the condominium declaration. Clearly, the intent was to allow owners to lease their units, and it was wrong… read more →
As you may know, if you are facing foreclosure, under the Homeowner Protection Act, the bank is required to notify you that you have a 30-day grace period before they will file a foreclosure suit. During those 30 days, the bank cannot file suit against you. Moreover, the bank needs to maintain proof that they sent you notice of the 30-day grace period. In Bank of America, N.A. v. Adeyiga, 2014 IL App (1st) 131252 (September 30, 2014) Cook Co., 5th Div., the lender found this out the hard way. The lender foreclosed the Adeyigas and completed a judicial sale of the property. The Adeyigas filed suit, claiming, among other things, that the bank breached the Homeowner Protection Act by failing to provide the mandatory 30-day grace period. The lender was unable to produce evidence that it had, in fact, sent a grace-period notice, or when it was sent. The… read more →
What if you buy a condominium, relying on the disclosure information the condominium association board or management company provided you, only to find out that they didn’t give you everything they should have? What if you would never have bought the condominium if the association had disclosed all of the information they were supposed to? Well, you’re out of luck. In a recent case, D’Attomo v. Baumbeck, 2015 IL App (2d) 140865, this very issue was decided by the Illinois Appellate Court in favor of the condominium association. In that case, the contract purchaser of the unit sued the condominium association board, stating that they had breached their fiduciary duty by not providing the buyer with a copy of the amendment to the condominium declaration which prohibited leasing. The court held that the condominium association has no fiduciary duty to a contract buyer. Their duty is only to existing owners… read more →
Although it may not seem like it, banks abandon foreclosures all the time. And to help guide them through this process, the Federal Deposit Insurance Corporation (the FDIC) issued guidelines last week to clarify its expectations for lenders canceling a foreclosure. The FDIC encouraged lenders to work with borrowers to come up with an alternative that would allow borrowers to stay in their homes, which would make it more likely that homes would remain well-maintained and care form. The FDIC stated that when abandoning a foreclosure, banks should: Comply with state and local laws. Notify state and local governments and other relevant authorities of their decision to abandon the foreclosure. Notify the borrower that they are abandoning the foreclosure. Notify the borrower that they have the right to remain in the property for the time being, until the property is sold or transferred in some other way. Notify the borrower… read more →
RealtyTrac determined that 11.5% of homes nationwide were “seriously underwater” on their mortgages; in other words, they own at least a quarter more than their home is actually worth. RealtyTrac tracked one hundred U.S. cities, and only five of them had a higher percentage of homes underwater than the nationwide average. Chicago, unfortunately, is one of those cities. 21.5% of mortgaged Chicago-area homes are seriously underwater. As of December of 2015, that amounted to approximately 516,000 homeowners. Incidentally, that’s an improvement from December of 2014, when about 521,000 Chicago-area were underwater. The highest percentage of underwater homes were in Las Vegas, where 27.7% of homeowners with mortgages owe at least a quarter more than the value of their homes. Despite all of this, according to Black Knight Financial Services, while 1.09 million homes nationwide were at least 90-days past due on their mortgage payments (though not yet in foreclosure) at… read more →
If you are selling your home and looking at offers, you have so many things to think about. Are you getting the price you want? Can you be moved out in time for closing? What kind of repairs will you have to make? Will the buyer be looking for a credit? How much are your closing costs? Is the buyer going to get a loan? Is the buyer putting down enough money? Is the buyer getting an FHA loan? What does that mean for me? And at the end of the day, is this going to close? That’s what it all comes down to: Is it going to close? As a Seller, are you going with the right offer – the one that’s most likely to close and still give you the price you want? You already know you need to make sure the buyer either has the cash or… read more →
If you have your heart set on buying a home, but you can’t afford to put down a large downpayment and don’t have the greatest credit, an FHA loan might be the right option for you. FHA loans only requires a minimum downpayment of 3.5% of the purchase price. This makes them an affordable option for a lot more people. FHA loans also allow a higher debt to income ratio than conventional financing. You can spend up to 57% of your income on debt. Conventional loans typically cap that around 45% or less. What’s the downside? Well, you have pay an upfront mortgage insurance premium. That’s a pretty hefty amount, usually 1.75% of your purchase price. On top of that, you’re still paying PMI (private mortgage insurance) on a monthly basis. FHA PMI is typically higher than regular PMI. Despite all that, if conventional financing is not an option, then… read more →
According to JLL, the total sales value of apartment building sales in 2015 was almost $139 billion. This was a 31% increase over 2014, when apartment building sales were at $106 billion. The last quarter of 2015 boasts the strongest gains of any quarter ever analyzed and recorded. Moreover, JLL predicts there will be even more growth in apartment building sales in 2016, though at a more moderate rate between 5% and 10%. As rents are going up and interest rates on commercial loans remain reasonable, the increase in apartment building sales does seem likely. Personally, I did see a large increase in apartment building sales in 2015, particularly in Chicago – everything from 2-flats and up were flying off the shelves, so to speak! It also seemed to be a bit easier to get financing for apartment buildings last year than it has been in the past (although that… read more →