Build On This!

The National Association of Realtors® reported recently that existing-home sales declined in July from a record in June, but home prices continue to rise at double-digit rates. According the Association's existing-home sales (EHS) data, total existing-home sales (including single-family, townhomes, condominiums and co-ops) dropped by 2.6 percent in July to a seasonally adjusted annual rate of 7.16 million from a record 7.35 million in June. Despite the small decline, "the level of existing-home sales in July was the third highest on record,” David Lereah, NAR’s chief economist, said. “This is a big number any way you slice it, and housing is continuing to stimulate the overall economy.”

However, some economists have expressed concerns over the U.S. Commerce Department's August 24, 2005 report that noted the median price of new homes fell to $203,800 in July, down 7 percent from June. The report also noted that new-home prices are down 4 percent from a year ago and 14 percent from February's peak sales price of $237,300.

A new bill introduced on September 22, 2005 in the Ohio Senate would make mortgage lenders subject to Ohio Consumer Sales Practices Act (the "Act"). The new bill was the result of increased scrutiny on the mortgage lending industry in Ohio. Two years ago, a Committee was created bythe Ohio General Assembly to study predatory lending and deceptive sales practices in Ohio. As recently reported by the Columbus Dispatch, Ohio and Virginia are the only states that exempt mortgage lending from consumer-protection laws. Consequently,the Ohio Attorney General and consumers could not sue mortgage lenders for deceptive sales practices act. The Ohio Attorney General recently has focused on predatory lending and deceptive sales practices by mortgage lenders. The bill would also extend the Act to small businesses, allowing small businesses to sue other businesses for deceptive acts.

Ohio gambling and tribal property rights are the subjects of a lawsuit filed by the Shawnee Tribe of Oklahoma in the U.S. District Court for the Northern District of Ohio, Western Division. However, the Cleveland Plain Dealer reported earlier this week that Jim Petro, the Ohio Attorney General, filed a motion to dismiss the complaint filed by the Eastern Shawnee Tribe of Oklahoma who claims property rights to 94,000 acres of land in several counties in Ohio. The complaint, filed earlier this summer, named 61 defendants, including Governor Taft and several state agencies, alleging that the Shawnee tribe was forced from the land in the 1830s.

The Shawnee tribe has been the center of a proposal to bring casinos in Ohio, and has announced plans to build casino resorts in Mahoning, Monroe, Logan, Shelby, Stark and Wayne counties.

In its motion to dismiss, the Attorney General’s Office contends that Ohio was not a party to the treaties signed by the Shawnee tribe more than a century ago to surrender their land. Consequently, "it would be inequitable and unconscionable to allow [the tribe] to set aside property interests of those who have no connection to the treaties at issue."

The Attorney General’s motion to dismiss can be viewed here.

The 9th District Court of Appeals struck down a City of Hudson ordinance that limited a resident's political signs to a total of eight square feet. Karen and Alex Arshinkoff placed a 32-square foot Bush/Cheney sign in their yard and were cited by the City for violating the sign ordinance. A lower court upheld the City's limitation, but the Court of Appeals found that the sign ordinance was an unconstitutional infringement on the right to freedom of speech in part because it limited residents' right to express their support for as many candidates as they desired. A copy of the 9th District Court of Appeals decision can be found here.

This case may not be over yet. Yesterday, the City of Hudson filed a Motion to Certify the appeal to the Ohio Supreme Court to resolve an apparent conflict of law between the Sixth District Court of Appeals decision in Village of Ottawa Hills v. Afjeh (Lucas App. No. L-02-1364), 2004-Ohio-7154 and the Ninth District Court of Appeals decision in Davis v. City of Green (1995), 106 Ohio App.3d 223.

Buckingham, Doolittle, & Burroughs, LLP is proud to welcome Heather D. Gregg and Ronald O'Leary to the Real Estate & Construction Practice Group. Ms. Gregg is an Associate resident in the Columbus office. Mr. O'Leary is an Associate resident in the Cleveland office.

Before joining the law firm, Ms. Gregg was an associate at Thompson Hine LLP. She represented clients in the acquisition, disposition, and development of commercial real estate, including drafting and negotiating commercial, industrial and residential purchase agreements, restrictive covenants, easements and related documents, review of surveys and title work, review of closing statements, and closing transactions. Ms. Gregg has also worked with borrowers and lenders in commercial financing transactions, with a particular focus on Freddie Mac multifamily financing transactions, including drafting and negotiating loan documents.

Ms. Gregg earned her J.D., summa cum laude, in May 2001 from Capital University Law School. In addition, she received her B.A. in Criminology from The Ohio State University in 1997. Ms. Gregg is a member of the Ohio and Columbus Bar Associations. She is also a committee member of the Commercial Real Estate Women.

Mr. O'Leary's practice is focused on representing clients in State and Federal courts and in arbitration, mediation and administrative proceedings involving construction matters and business disputes. Prior to joining the Firm, Mr. O'Leary was the Chief Assistant Director of Law where he managed a number of attorneys in the enforcement of the City's Building and Housing Code. He also recently served as a judge for the Cleveland Municipal Court.

Mr. O'Leary earned his J.D. from Case Western Reserve University School of Law. In addition, he received his B.A. in Diplomacy and Foreign Affairs and a Master's Degree in Political Science from Miami University.

The December 2005 edition of "Build On This", the print publication of the Real Estate & Construction Practice Group is available on the web here. If you would like to receive a copy of "Build On This" or electronic alerts or seminar information regarding real estate, construction, or other areas of law, please click here.

A seminar for everyone involved in the real estate and construction industry.

THURSDAY, FEBRUARY 23, 2006
2:30 - 6:00 p.m.
Seminar and Reception

Hilton Inn West
3180 W. Market St.
Akron, OH 44333

ABOUT THE PRESENTATION

This seminar is designed for everyone involved in the real estate and construction industry. Presentation topics include: "Recent Developments in Land Use and Eminent Domain," "Section 1031 - Deferring Tax on Real Estate Sales," "Wealth Planning: Protecting Your Real Estate Assets," and "AIA Construction Contracts: Pros, Cons and the Path Forward." This seminar is approved by the State of Ohio, Division of Real Estate, for 2 hours of CE Credit.

REGISTER FOR THIS FREE SEMINAR

Attorney David Lindner attended the ALI-ABA seminar entitled "Drafting Documents for Condominiums, Planned Communities, and New Urbanism Developments" from March 2-4 in San Antonio, Texas. The seminar focused on new developments and techniques for structuring condominium associations, homeowners' associations, New Urbanism projects and other mixed-use planned developments.

In a case of first impression, the Second District Court of Appeals, in In re Estate of Scott (2005), 164 Ohio App. 3d 464, has held that a transfer-on-death deed under R.C. Section 5302.22 is invalid if it is executed, but not recorded prior to the grantor's death. Thus, the real estate that the decedent intended to transfer to a particular child upon her death instead passed to her estate, of which all four of her children were beneficiaries.

Land use and zoning attorney John P. Slagter reports that on March 28, 2006, the Ohio Supreme Court determined in the case of Bakies v. Perrysburg (2006), 108 Ohio St.3d. 361, that a municipality has no duty to continue to supply water to extraterritorial customers (customers outside of the city). The Court also held that it was legal for the City to require annexation to the City as a condition to either begin or continue the supply of City services. The Court found that requiring extraterritorial customers to agree to annexation in exchange for continuation of services is a valid exercise of police power and bears a rational relationship to the health, safety and welfare of the municipality’s citizens.

Real estate attorney David J. Lindner reports that the Ohio Supreme Court has held that seller financing does not affect the true value for tax purposes of real property that is sold in an arm's length transaction. In Lakota Local School Dist. Bd. of Edn. V. Butler Cty. Bd. of Revision (2006), 108 Ohio St. 3d 310, the Board of Education appealed a reduction in the taxable value of certain commercial property. The property was previously valued at $1,878,740, but the property owner presented evidence to the Board of Revision that it had purchased the property in an arm's length transaction for $1,134,000. The Board of Revision found that $1,134,000 was the true value of the property and the Board of Education appealed. On appeal, the Board of Tax Appeals found that the property owner had not presented sufficient evidence to merit the reduction. The Supreme Court, however, reversed the Board of Tax Appeals, holding that the burden of proof was on the Board of Education to come forward with evidence showing that the sale was not an arm's length transaction. The mere fact that the sale was seller financed was not, as the Board of Education had suggested, evidence that the sale was not at arm's length. Absent such evidence, the Board of Revision was correct in reducing the tax value of the property to the sale price.

In Cook v. Wilson (2006), 165 Ohio App. 3d 202, the Tenth District Court of Appeals found that the buyer of real property had no claim against the seller after the buyer had accepted the deed to the property. Citing the well-established doctrine of merger, the Court held that the buyer's claims for breach of the purchase contract did not survive the acceptance of the deed. While the doctrine of merger is an ancient one, this case serves as a reminder that it can still alter purchase agreements in ways the parties may not have intended. Special care must be taken if the terms of a real estate purchase agreement are meant to survive beyond the transfer of the deed.

Buckingham, Doolittle & Burroughs, LLP is pleased to announce that David J. Lindner, an Associate resident in the Cleveland office, has been recognized as a rising star in his areas of practice, Real Estate Transactions and Real Estate Litigation. He is listed in the 2006 edition of Super Lawyers Rising Stars®. Click here for full press release.

The real estate and construction practice group of Buckingham, Doolittle & Burroughs, LLP welcomes Jodi Diewald. Ms. Diewald most recently served as Associate General Counsel and Vice President of Global Structuring and Distribution for a global real estate company involved in the syndication of federal and state tax credits. Her real estate practice emphasizes investment, acquisition, financing, development, management and operations of multi-family housing properties and other real estate developments. Her business practice emphasizes business and corporations law, partnerships and limited liability companies law, complex business and commercial transactions, business entity selection and formation and drafting, negotiating, and structuring capital investments.

Ms. Diewald is a 1999 graduate of Capital University Law School and earned a B.S. in Business Adminstration from The Ohio State University, Fisher College of Business.

The Columbus Dispatch reports that Ohio's new law enacting an expidited procedure for foreclosure of abandoned properties requires anyone owning rental property to register with the county auditor where the property is located. The law requires the owner to provide the owner's name and phone number as well as contact information for the property manager.

The Plain Dealer reports that the Ohio Supreme Court has overturned a Cleveland law aimed at curbing predatory lending. The Court found that the law was unconstitutional because it prohibited loans that would be permitted by Ohio law in other cities. The state has its own, less restrictive, lending regulations.

The Cleveland Plain Dealer reports that 59 defendants were indicted on charges of racketeering, forgery and theft in connection with supplying false information to obtain home loans. The scheme involved properties in Cleveland, East Cleveland, and Garfield Heights. More indictments are expected.

The Cleveland Plain Dealer reports that Ohio remains a contender for the top spot when it comes to foreclosures. A recent report lists Cleveland, with one foreclosure for every 40 households, as having the 14th highest foreclosure rate out of the 100 largest American metropolitan areas. Akron was ranked 16th nationally with one foreclosure for every 43 households. That same report ranked Ohio eighth nationally with one foreclosure for every 59 households.

It appears from these new rankings that Ohio is improving its foreclosure rate; however, that may be an illusion. Previously, the Mortgage Bankers Association (“MBA”) gave Ohio the top spot when it comes to foreclosures. However, the methodology the MBA used was different from this recent survey.

Regardless, under this most recent survey, Cleveland, Akron, and Ohio’s foreclosure rates are drastically higher than the national average of one foreclosure for every 92 households. And there is no sign of these rates going down according to Cuyahoga County Treasurer Jim Rokakis.

In Strongsville Board of Education v. Cuyahoga County Board of Revision (2007), 112 Ohio St. 3d 309, the Supreme Court affirmed the Board of Tax Appeals’ (BTA) decision to use an appraisal, as opposed to a recent sale lease-back transaction, to determine the subject property’s tax value. Typically, a recent sale transaction will determine the property’s value for tax purposes, unless the sale is not at arms’ length. Where it is shown that a recent sale was not an arm’s length sale, appraisal evidence can be used to establish the property’s value.

The Cleveland Plain Dealer reports that state representative Mike Foley has introduced legislation that would require the county sheriff to file a deed following a foreclosure sale to alleviate concerns that some banks intentionally delay filing a deed in order to conceal their ownership of the property. The legislation would also require out-of-town lenders to name a local contact for concerns regarding the property.

Cleveland City Council is likely to renew the current residential tax abatement program, rejecting Mayor Jackson's proposal to limit the term of the abatements, reports the Plain Dealer. The Mayor favors reducing most abatements to seven years from 15, with 12 year abatements for environmentally-friendly design. Many developers believe the abatement program is essential to building new housing in Cleveland.