Build On This!

On September 8, 2005, the Department of Justice's Antitrust Division filed a lawsuit against the National Association of Realtors (NAR), challenging a policy that obstructs real estate brokers who use innovative Internet-based tools to offer better services and lower costs to consumers. The Department said that NAR's policy prevents consumers from receiving the full benefits of competition and threatens to lock in outmoded business models and discourage discounting. The DOJ's press release can be found here. A copy of the Complaint filed by the DOJ can be found here.

There's an interesting story in the Real Estate Journal today discussing blogs and real estate marketing. Tara Siegel Bernard reports (Dow Jones Newswire) that more sellers are using blogs to market their homes.

Commerical Real Estate blog reported today that CoStar Group (the largest data provider for real estate) and Google are in talks about integrating building information with Google's Earth mapping service. The deal is Google's initial foray into the realm of commercial real estate.

Google Earth "puts a planet's worth of imagery and other geographic information right on your desktop." The software is free. There is also a more robust version of the software that is available for a yearly charge. As Google states:

Google Earth allows architecture, engineering, and construction (AEC) firms to gain a new perspective on their projects. From site location feasibility studies, to land use impact analysis AEC firms rely on a plethora of geospatial data in planning and marketing projects. Google Earth provides the most efficient way to distribute that data to your project decision makers.

What is interesting is that many developers and land use professionals are beginning to use Google Earth in their projects. Because many Ohio counties have GIS (Geographic Information Systems) data programs available to the public, Google Earth's mapping program can be very useful because it permits you to integrate GIS data into its maps.

The Real Estate & Construction Practice Group at BDB often uses advanced GIS data for presentations for large commercial development projects as well as for zoning and land use hearings and trial. The CoStar and Google venture may provide even greater details for orthophotograhic and topographic displays for all different types of applications.

You can read about it in more detail here.

The Bankruptcy Abuse Prevention and Consumer Protection Act (the “Act”) became effective on October 17, 2005. So how does the Act affect the real estate industry? One way involves the time limits for a debtor to assume or reject non-residential real property leases. Specifically, Section 404 of the Act makes changes to the rules governing the time a debtor has to assume or reject an unexpired commercial lease. Because a commercial landlord is often the largest unsecured creditor in a Chapter 11 bankruptcy, revisions to the rules governing the assumption or rejection of leases will have a big impact on landlords as well as debtor-in-possession lenders.

Before the Act, a Chapter 11 debtor who was a tenant under one or more commercial leases was required to assume or reject those leases within 60 days of filing bankruptcy. However, the Bankruptcy Code permitted a debtor to obtain extensions from the Court to make this decision even if the landlord objected. These extensions have, in the past, been liberally granted. Moreover, debtors would often obtain serial extensions, permitted them to defer the decision to assume or reject the commercial lease until it was time to confirm the plan of reorganization (so long as the debtor was current on post-petition rent).

Now, in all Chapter 11 bankruptcies that are filed on or after October 17, 2005, the debtor will have 120 days after the filing of its petition to assume or reject any commercial leases. The debtor may only obtain a single 90 day extension of that deadline, and only if the extension is obtained during the pendency of the initial 120 day period. Extensions beyond the combined maximum 210 days period are available to the debtor only with the prior written consent of the landlord. Unless the lease is assumed or such extensions are obtained, the lease is deemed rejected as a matter of law, and the debtor is required to vacate the premises.

It was just announced this morning that Robert Triozzi was appointed as the new Law Director for the City of Cleveland Department of Law. Robert Triozzi recently resigned his seat as a Judge for the Cleveland Municipal Court this year to run for Mayor of the City of Cleveland. Mr. Triozzi had some interesting points during the mayorial race on blight, housing and development in Cleveland. Here's an excerpt of his statements made on the Triozzi For Mayor Blog:

"We can solve the problems of boards-up and blight in our neighborhoods . . . I applaud the initiative of Neighborhood Progress Inc. in commissioning a study on the subject, and agree with its recommendations. But we must go further.

We must have a goal of eliminating housing board-ups by getting to the causes. Not only must the mortgage companies and banks that own foreclosed properties be held accountable for their condition – as I outlined weeks ago in my neighborhoods platform – but we have to get those properties back onto our inventory of solid, affordable housing. Reselling good houses is as important as building new ones. In fact, for residents who cannot afford $100,000-and-up new homes, it’s essential.

We need to get at the root of the problem with a concerted effort to clear title to such homes so neighborhood housing groups can put them back on the market – and those houses cease being a drag on the neighborhood. My plan is to get law firms, banks, mortgage companies, realty agents and others to work with Cleveland’s Housing Court and neighborhood housing groups to speed the process. It can be done.

More important, we must prevent blight before it starts through a comprehensive code-enforcement strategy. Our current complaint-based system of getting building inspectors out to neighborhoods is ineffective and antiquated. We need to begin systematic code enforcement that concentrates on rental properties."

Attorney Erin Wojno presented an update of recent case law to the Columbus Bar Association Real Property Committee. The cases include recent decisions on groundwater rights, a mobile home park's failure to provide safe drinking water, the application of landlord-tenant law to a campsite owner, and the zoning classification of a senior daycare. Click here to view a summary of these cases.

Environmental law attorneys William L. Caplan and David J. Hrina present the following case law update:

On June 19, 2006, in Rapanos v. United States, U.S. No. 04-1034 (“Rapanos”), a majority of the United States Supreme Court failed to agree on the extent of the U.S. Government’s jurisdiction over wetlands under the Clean Water Act (the “Act”). Rather, the Rapanos Court vacated judgments against two separate developers who had challenged the U.S. Government’s jurisdiction over certain wetlands in Michigan, and remanded the cases back to the U.S. Sixth Circuit Court of Appeals for a factual determination of whether the wetlands in question are “waters of the United States” as defined in the Act.

By way of background, the Act gives the U.S. Army Corps of Engineers (the “Corps”) jurisdiction over wetlands to the extent that the wetlands can be classified as “waters of the United States,” as defined by the Act. In United States v. Rapanos, 376 F.3d 629 (6th Cir. 2004), John and Judith Rapanos desired to develop various parcels of their property in Michigan. Prior to developing the properties, various consultants and state regulators informed the Rapanos that the parcels contained “regulated” wetlands and that permits would be required prior to conducting any dredge of fill activities on the parcels. The Rapanos ignored the advice and proceeded to conduct dredge and fill activities without the permits, despite having received several administrative compliance orders from the U.S. Government. The Corps subsequently filed civil proceedings against the Rapanos in federal court alleging violations of the Act. Both the U.S. District Court and the U.S. Court of Appeals for the Sixth Circuit upheld the Corps’ jurisdiction over the wetlands based on the wetlands’ hydrologic connections and physical adjacency to navigable waters. The Rapanos then appealed to the U.S. Supreme Court.

In JRC Holdings, Inc. v. Samsel Servs. Co., 166 Ohio App. 3d 328, the court of appeals clarified that it is the substance of the complaint, not the form, that dictates the appropriate statute of limitations. In this case, the property owner, JRC, sued Samsel, an environmental remediation firm, for contaminating its property while conducting environmental testing and drilling monitoring wells. JRC brought suit more than four years after the contamination was discovered. The court held that the claim for contamination of the property was barred by the four year statute of limitations on claims for damage to real property in R.C. 2305.09(D). Even though JRC stated its claims in part as breach of contract, which has a 15 year statute of limitations, the court found that the essence of the claim was damage to real property and therefore the four year limit was applicable. JRC's claim for failure of one of the monitoring wells, which was made within the four year period, was not barred.

Congratulations to attorney John Slagter, who was named one of the Best Lawyers in America for 2007 in the area of Real Estate Law.

The Akron Beacon Journal reports that Stark County will be the first Ohio county to offer electronic recording of deeds. About 20 title companies are currently participating in the service.