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Annapolis Real Estate and Business Litigation Law Blog

Understanding the basics of a business divorce

If you thought starting a business was difficult, try ending one. There are a many reasons a business partnership might end and just as many ways to do it, but before you close the doors for good, there are some important proceedings you need to understand to avoid unintentional fraud, tax evasion or other tricky legal situations. In general, any time a business partnership ends, or divorces, it can be grouped into one of two categories: real or technical termination. Once you see which fits your circumstances, you can make an appropriate plan and move on to the next phase of your life.

Real termination

In a real termination, no aspect of the business will remain. Every branch of the business will completely close and not simply change ownership. In order to completely dissolve a partnership, a handful of steps need to be taken:

Millennials prefer city life to suburban sprawl

Commercial and residential real estate prices in Maryland and around the country tend to reflect societal trends. Suburban areas were quite popular in the 1950s and 1960s as couples sought a quieter life and more space to raise their children, but urban centers have been becoming more popular in recent years among Millennials who enjoy the entertainment options and cultural amenities offered by big cities. Residential real estate prices in urban centers are now outpacing suburban values according to the real estate company Zillow.

This trend has led to a shift in commercial real estate development away from suburban strip malls and office parks and toward mixed use developments in city centers. However, developers should be aware that the character of a neighborhood can have a significant impact on the type of commercial tenants that it will attract. While big box retailers may thrive in suburban areas, stores and restaurants in bohemian neighborhoods tend to be more eclectic and cosmopolitan.

Maryland and distressed home sales

In February, Maryland posted the largest percentage of distressed home sales of any state in the country at 19.9 percent, with the Baltimore-Columbia-Towson metropolitan area also posting the largest at 19.8 percent. Distressed sales include short sales and real-estate owned properties. Nationwide, distressed sales accounted for 11.1 percent of all homes that were sold.

The peak for distressed home sales in the United States was in Janaury 2009 when they comprised nearly 33 percent of all home sales. According to Core Logic, the company that issued the report detailing February 2016 transactions, distressed sales help to clear the market of housing stock. Since the prices are at a large discount for distressed or foreclosed properties, however, the reduced prices can pull down the prices of all homes on the market, including those that are not distressed.

Maryland commercial property values may be stagnant

According to the Green Street Commercial Property Price Index, U.S. commercial property appreciation remained unchanged in April and, the advisory firm said that values have ground to a halt. This is after many years of property appreciation that reached almost double digits annually. However, property values are still 7 percent higher than they were at the same time last year and 23 percent higher than they were in August 2007.

In a statement from Green Street, it was noted that "grade B" properties were probably worth less than they were at the start of 2016. However, the firm said that properties in quality locations were probably holding their values. The Sony Building and a building on Fifth Avenue were sold for $1.3 billion and $525 million respectively, which is seen as good news for landlords of so-called trophy properties located in Manhattan.

How to determine if starting a franchise is right for you

For those who are interested in opening a business involving minimum risk, entering into a franchise agreement may be an option worth considering. However, a franchise includes a process many consider complex due to the legal considerations. It is important to remember that opening a franchise doesn't guarantee that your business will be a success, and there is still some degree of risk involved. When making your decision, it's important to consider the possible pros and cons of starting a franchise in order to determine if it's the right venture for you.

You must do your market research

As with any business, a franchise is susceptible to how the market changes, fluctuates and reacts. Your market research must include knowing where other franchise business owners are located, knowing your area's demographic, having a firm grasp of economic trends and understanding why market fluctuations occur. As your business grows, your market research will continue to evolve and be on-going. So, be prepared to continue these efforts moving forward. Your research should not be a "one and done" undertaking.

Planned Maryland solar farm running into zoning hurdles

A proposed 300-acre solar farm is running into hurdles in Kent County from the Kent Conservation and Preservation Alliance and the county's commissioners. The Virginia-based company behind the project, Apex Clean Energy, is scheduled to have a motions hearing concerning the issues the county commissioners raised.

The company had originally planned a wind farm using the same land but met with heavy opposition. It then changed the plan to a solar farm instead, but it is still receiving heavy opposition to that plan as well. The county commissioners are arguing that the zoning ordinances for Kent County limit any proposed solar farm on agricultural land to parcels of 5 acres or less.

A short sale poses risks for the unwary buyer

Many real estate agents have seen the joy their buyers feel at finally finding the home of their dreams quickly change when they are told the property is a short sale. There are homeowners throughout Maryland who are selling property for less than the amount owed on the mortgage. As in other parts of the country, real estate professionals refer to these types of real estate transactions as short sales.

Declining home values that followed years of homeowners pulling equity out of their properties through mortgage refinancing offered by lenders have resulted in homes being offered for sale at prices that leave the homeowner with the inability to repay their debt. A short sale can be an alternative to foreclosure, but the lien holder must agree to accept less than the full amount that is owed in order for the property to be sold. Although the price of a home sold as a short sale might appear to a bargain, buyers must be wary of what problems these types of real estate transactions might present.

Superintendents may be prevented from making personal appeals

Each year, Maryland school superintendents travel to the state capital in order to make personal appeals for needed funds for school construction projects. The annual event, colloquially known as the "beg-a-thon", has been criticized by some as being overly politicized by members of the Board of Public Works for their own agendas.

Gov. Hogan indicated that among a list of bills he would not be signing this year is the capital budget proposal. Within it, there is language included in an amendment that would end the annual day for superintendents to make their appeals for funds that are not included in the capital budget for construction projects.

Contract for Purple Line signed by Maryland officials

On April 6, Maryland officials approved a contract allowing Purple Line Transit Partners to build its Purple Line, a light-rail system that will run through Prince George's and Montgomery counties. Total expenditures will be in the billions of dollars.

The rail system will run between New Carrolton and Bethesda and will connect to multiple other rail systems in the area. The new line will help people who work in Bethesda and other locations by providing them with a direct connection, making commuting easier. There will be several stops near or on the College Park campus of the University of Maryland, and rides will be free for students there.

Property market might benefit from MetLife's new status

U.S. insurer MetLife plays a significant role in commercial real estate lending, and according to experts, the firm's redesignation by a district court could see it becoming even more involved. As part of the 2010 Dodd-Frank Act, MetLife was deemed a systemically important financial institution, or SIFI, along with companies like GE and AIG. In the spring of 2016, courts decided that the company is no longer important enough to qualify as an SIFI under the too-big-to-fail legislation. Maryland developers could see their chances at receiving financing increase as a result.

News sources say that losing the designation frees the company of requirements that it maintain certain levels of capital in reserve. The change could also make MetLife less strictly bound by regulatory oversight. Although experts say the government's Financial Stability Oversight Council might appeal the decision, they predict the ruling will eventually leave the company with more available funds to lend.