NAHB Logo.gifBuilder confidence in the mature-housing market remained weak, according to 2010 first-quarter data from the National Association of Home Builders’ 55+ Housing Market Index (55+ HMI) – a quarterly survey of the association’s builder members engaged in the production of mature-market housing.   

“The 55+ segment of the market is still stalled in most regions,” said NAHB’s Chief Economist, David Crowe. “Since the builders’ potential buyers are having difficulty selling their existing property, they are unable to move to a more appropriate home.” Noting that a large share of prospective buyers for active adult housing are still in the workforce, and expect to remain so, Crowe added that “many buyers and renters are concerned about their current job security, and may be holding off on any decision to move until the economy becomes more predictable.”

Read the entire report here.

Recently the Colorado legislature passed, and Governor Ritter signed, the Commercial Real Estate Brokers Commission Security Act (HB 10-1288), which allows a Colorado real estate broker to obtain a lien on commercial property if the broker earns a commission from the leasing (but not the sale) of such property under a written agreement with the owner or the owner’s agent and the commission is not paid.  To obtain and maintain the lien, the broker additionally must:

1. deliver to the owner written notice of intent to file the lien;

2. make good faith efforts to mediate the dispute with the owner during the following 30 days;

3. record a notice of lien in the county records no sooner than 30 days after delivery of the notice of intent to the owner and no later than 90 days after the later of (a) the date the tenant takes possession, and (b) the date the commission is due;

4. deliver to the owner a copy of the notice of lien within 10 days after recording; and

5. within 6 months after recording the notice of lien, start an action to foreclose the lien and record a notice of that action.

A lien arising under the law attaches to the property at the time the notice of lien is recorded; it does not relate back to the date of the listing agreement or the date services are rendered by the broker. The broker’s lien is subordinate to any unrecorded agreements of which the broker had knowledge and all prior recorded instruments. Also, the broker cannot assert a lien for a lease renewal commission if (a) the property has been sold to a party for value and without knowledge of the renewal commission obligation, and (b) a notice of the broker’s lien has not been recorded by the time the deed is recorded.

The new broker lien law applies to broker agreements entered into on or after August 11, 2010. Significantly, the act contemplates that brokers may give prospective waivers of their rights under this law if there is mutually acceptable consideration for the waiver. Real estate owners and property managers should consider including such waivers in listing agreements entered into on or after August 11, 2010.

Read more: Governor signs broker lien law – Denver Business Journal

A recent Wall Street Journal blog post  reports that New York courts are allowing more residential real estate buyers to rescind contracts pursuant to the Interstate Land Sales Full Disclosure Act (ILSFDA).  As noted in the post, and as we are also seeing here, many buyers are trying to get out of their contracts.  Those buyers with large earnest money deposits at stake have real incentive to find legal arguments that will allow them to both keep their earnest money and cancel the contract.  While this may not be surprising, some developers are shocked to learn that they may have unwittingly given buyers an easy way out of their contracts under ILSFDA.  

ILSFDA applies to the sale of real estate and is generally modeled after securities laws.  It requires that a real estate developer register its projects, unless the project qualifies under an exemption.  Rather than going through the elaborate (and lengthy) registration process, many developers choose to rely upon an exemption.  The exemptions are self-determining, meaning that there is no government sign-off on a developer’s compliance for a particular project.  This is where many developers get tripped up as compliance with exemption requirements can be very tricky.  If buyers successfully argue that a project was not registered and did not meet the requirements for a particular exemption, the buyers can rescind the contract for a two-year period, starting on the date of the buyer’s execution of the contract. 

This rescission right is a powerful tool and drives home the point that developers need to (a) carefully consider ILSFDA’s requirements, and (b) evaluate whether any of the pending sales contracts are at risk for rescission rights under ILSFDA.  In today’s market it is also important to consider the impact this could have on lenders.  As lenders deal with distressed development loans and negotiate loan workouts, they should make a serious assessment of whether any pending sales contracts are at risk of rescission under ILSFDA.  A representation of compliance with ILSFDA in a loan agreement given by a now nearly bankrupt development entity is really of no help in this context. 

We can all hope that this litigation will help developers and lenders more fully understand the magnitude of the risk of noncompliance with ILSFDA and will help real estate lawyers better counsel their clients on compliance issues.  Time will tell.

ChambersUSA.jpgOtten Johnson Robinson Neff + Ragonetti has once again been ranked as the leading real estate law firm in Colorado.  Chambers USA annually ranks law firms and lawyers by areas of practice in each state.  Otten Johnson has been ranked in the top “band” every year since Chambers began ranking law firms in the United States in 2003.  No other firm in Colorado has been ranked in the top band for real estate during that entire period or has as many individual lawyers ranked in the category in 2010.

Here’s what Chambers had to say about Otten Johnson in 2010:

“Otten Johnson’s well-regarded practice covers acquisitions and real estate development and workouts.  The firm has a strong reputation for land use and condemnation work throughout Colorado, particularly in relation to the mountain and resort communities.  Clients include Simpson Housing, bank consortium Sturm Financial Group and mixed-use, large-scale projects developer Continuum Partners.”

Read other client comments about the firm and its lawyers here. 

Retirement Communities are vulnerable to civil penalties and bad press if they don’t carefully adhere to Fair Housing Act regulations and recordkeeping, as this complex with 2,600 units found out last month:

“After three years of investigation, the U.S. Department of Housing and Urban Development last week filed a complaint against Colorado’s oldest retirement community, claiming it was in violation of the Fair Housing Act.

HUD alleges Denver’s Windsor Gardens, at 595 S. Clinton St. in southeast Denver, violated the act by advertising itself as a community for people 50 and older from which residents under age 17 were prohibited. The complaint also claims the community’s homeowners association did not properly verify the ages of its residents.”  (Denver Post)

Read the rest of the article.