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Annapolis Real Estate Law Blog

Declining prices for real estate in the Hamptons

Maryland residents who are looking to purchase real estate in the Hamptons area of Long Island may be pleased to learn that the median sales price for homes in the area is declining. Since 2014, there has been a 6.5 percent drop in the median sales price of a home in the Hamptons. The median sales price for a Hamptons home is now at $849,000.

Fewer residential real estate sales are taking place in the Hamptons this year than they did last year. At the same time last year, there had already been 700 homes purchased in the Hamptons during 2014. So far in 2015, only 590 homes have been sold in the Hamptons. Although the median sales price is lower for 2015, the average selling price for a home in the area rose by 2.5 percent since 2014.

Experts predict 2015-16 real estate market trends

Real estate investors and developers in Maryland and around the country often make their decisions after analyzing market trends and carefully considering the forecasts made by experts in the field. A Chicago-based group of advisers called the Counselors of Real Estate assess trends in the commercial and residential property markets each year, and it released its forecasts for the year ahead on June 24. According to the CRE, the behavior of two demographic groups will have the biggest impact on the U.S. real estate market in the coming year.

Baby boomers are retiring in ever greater numbers, and the CRE believes that this will likely continue to drive property prices up in popular retirement destinations like Arizona and Florida. The number of commercial property developments involving retirement homes or assisted living facilities is also expected to increase.

Short sales as a solution to an unmanageable mortgage

Maryland residents may be familiar with the high level of foreclosure activity in recent years. The idea of being underwater on one's mortgage can be frustrating, especially if there might be a need to relocate. In other cases, mortgage payments have become unmanageable because of lost jobs, household emergencies or other issues related to the local and national economy. Although the government has worked to provide solutions to keep people in their homes in the midst of financial difficulties, there are times that the programs don't resolve the situations.

There may be programs available through one's financial institution for resolving a past-due mortgage. However, some of these require bringing a loan current, which can be difficult if more than just one or two months' payments have been missed. Long-term forbearance may be an option if a serious household emergency such as a severe injury has prevented participation in gainful employment activity. When all options appear to have been exhausted, a short sale may be the only alternative to allowing one's home to go into foreclosure.

Supreme Court makes decision on housing discrimination

Maryland residents who have been victimized by housing discrimination may gain some relief following a narrow decision by the U.S. Supreme Court. The June 2015 ruling upheld the applicability of the federal Fair Housing Act to a case in which the Texas Department of Housing and Community Affairs. In this case, Dallas officials had applied federal vouchers more predominantly in low-income neighborhoods, and the court ruled that such action could have a disparate impact on minorities and thus be subject to the FHA even if it wasn't intentional.

The Fair Housing Act, enacted in 1968, forbids housing, renting and lending discrimination based on certain factors such as race, religion, gender and disability. The concept of disparate impact, which involves a finding that certain zoning, lending and sales practices have more of an effect on certain groups of people, is not specifically addressed in the legislation.

Darden begins commercial property spinoff with new REIT

A new real estate investment trust will soon offer the opportunity for returns to Maryland investors. The REIT is a planned product by Darden Restaurants best known for its Longhorn Steakhouse and Olive Garden brands. The corporation is unloading hundreds of properties into the REIT in a bid to reduce debt and maintain credit standing. The REIT is then expected to diversify and take on an identity besides solely leasing commercial real estate back to Darden.

The technique has been used several times in recent years, most notably in the $2.5 billion Sears commercial property spinoff. The market gave a goodwill gesture with a 5 percent bump to DRI on the news. This followed an upward trend that started in October of 2014. Over a 12-month period, the share price has increased 54 percent compared to the S&P's 8 percent.

Crowding commercial property now available to all investors

People in Maryland who would like to invest in commercial real estate may now be able to do so for very little money. On June 19, the U.S. Securities and Exchange Commission is expected to issue new rules about crowdfunding investments that will open up these investment opportunities to people without a lot of capital.

With the popularity of crowdfunding platforms, an increasing number of commercial real estate developers are using this tool to fund their projects. Crowdfunding platforms like CityFunders and Fundrise have allowed small time investors to back projects such as 3 World Trade Center and a rental tower on Long Island. Crowdfunding commercial property shares usually require a minimum investment of between $5,000 and $25,000.

Couple says realtor did not tell them home had snakes

A couple in Maryland is suing their real estate agent and other parties after they discovered that the home they purchased was infested with snakes. The husband and wife, who have a 9-month-old daughter and 4-year-old son, bought the Annapolis home for $410,000 in December 2014 and moved into it in January 2015. As the weather got warmer, the couple discovered snakes were living in the home.

The couple is pursuing a damage award of $2 million in the real estate purchase dispute. According to the couple, the real estate agent that they purchased the home from was aware of the snake problem before selling the house to them. Former tenants who lived the home before the couple bought it told them that the snakes were an ongoing problem.

Commercial real estate investments

People in Maryland may want to consider owning commercial real estate as a long-term investment. Unlike the stock market, commercial real estate tends to be a more stable investment that is not subject to frequent price fluctuations. While commercial real estate investors can make money through appreciation of their properties, they can also generate a steady stream of income by collecting rent from tenants.

According to a study that was recently conducted by the Urban Land Institute and PricewaterhouseCoopers, the real estate market is expected to have strong growth in the next couple years. Researchers found that the commercial real estate market in certain cities, including Austin, San Francisco and Denver, would be especially lucrative territory for investors.

Expiration of SBA loan program a challenge for small businesses

Commercial real estate loans valued at more than $300 million are scheduled to mature before 2017, and some of these loans are likely held by small business owners in North Carolina. While the economy continues to improve in the wake of the 2008 financial meltdown and subsequent recession, many business owners will find it difficult to secure the loans necessary to refinance this maturing debt due to the more stringent lending criteria introduced following the crisis.

Business owners able to qualify for a commercial real estate loan will likely benefit from low interest rates, but many others will be unhappy with the decision not to extend certain provisions of the 504 loan program offered by the U.S. Small Business Administration. The program enhancements were introduced in the wake of the financial crisis, and they were designed to assist small business owners by providing them with access to capital on favorable terms. The provisions expired in 2012.

Children of former partner sue Vikings co-owner

Maryland football fans may be interested to learn about a lawsuit that was recently filed in New Jersey against a co-owner of the Minnesota Vikings, Zygi Wilf and his father, Joseph Wilf. The lawsuit was filed by the children of Meyer Gold, a former partner of Zygi Wilf in a real estate development project.

According to the complaint, Mr. Gold, who is now deceased, held a one-third interest in the development through a company called Amchu. Mr. Wilf and his father allegedly set up another company called Fairfield Woodcrest in order to divert the money earned by the development, thus depriving Mr. Gold of his interest.