Real Estate

U.S. Department of the Treasury Releases Updated Rules Regarding Opportunity Zones

The U.S. Department of the Treasury on Wednesday released its second set of proposed regulations regarding the Opportunity Zones tax incentive, The New York Times reports. Introduced in the 2017 Tax Cuts and Jobs Act, the initiative is intended to encourage development in economically distressed communities by allowing investors to defer, reduce or eliminate taxes on some capital gains when the investments are held for at least 10 years. Critics argue that the incentives, as introduced, would benefit real estate developers, not small businesses, and speed up the displacement of low-income residents in gentrifying areas. The new rules seek to quell some of these concerns, also allowing long-vacant properties to immediately qualify for the tax breaks and provides investors incentives even if the business focuses on exported goods or services to markets outside of the zone, pending the money is reinvested in another qualifying business or asset.

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NYC Imposes Regulations on Greenhouse Gas Emitted by Buildings

New York City is taking a new step in its effort to combat climate change by imposing stricter limits on greenhouse gasses emitted by buildings, The New York Times reports. The plan is staunchly opposed by real estate executives because of associated costs for compliance, with estimates exceeding $4 billion. Some buildings will be exempted from the caps, including apartment complexes with rent-controlled units, places of worship and affordable housing communities, however, those buildings will still be required to take other energy-saving measures. This legislation is part of a group of bills passed yesterday known as the Climate Mobilization Act, which seeks a 40% decrease in emissions by the year 2030.

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Study Finds Same-Sex Couples Encounter More Denials, Higher Interest Rates for Mortgages

A just-released study from the Proceedings of the National Academy of Sciences shows that mortgage lenders are more likely to deny loans, or charge more on approved loans for same-sex couples, the Washington Post reports. National mortgage data from 1990 to 2015 shows that these couples were 73 percent more likely to be denied, and on average paid 0.2 percent more in interest and fees than heterosexual couples with comparable financial standing. Since mortgage applicants cannot be asked about sexual orientation, the study identified same-sex couples as co-applicants of the same gender in its model. The researchers involved cite the probe as evidence that sexual orientation should be added a protected class under federal lending laws.

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Documentary Addresses Housing Problems Faced by Low-Income Residents of Memphis

Two Memphis-based documentarians on Monday presented the first chapter in a series of films highlighting housing concerns in the city, The Commercial Appeal reports. Jordan Danelz and Benjamin Rednour created the documentary to address common problems faced by Memphis’ low-income residents. The films will look at predatory lending, foreclosures, inability to afford necessary home repairs, absentee landlords and lack of transit. The series was created with assistance from Neighborhood Preservation Inc., an organization founded by Memphis community leaders who seek to promote revitalization of blighted parcels in the city and clear legal hurdles regarding development of these properties.

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New York Considers Tax on Second Homes

Lawmakers in New York are considering a singular solution to funding future NYC projects — a tax hike on multi-million-dollar second homes, The New York Times reports. The so-called “pied-à-terre tax” would institute an annual tariff on homes worth $5 million or more that do not serve as the buyer’s primary residence. The proposed hike would feature a sliding scale, with properties valued between $5 million and $6 million subject to a 0.5 percent surcharge on any valuation over $5 million, incrementally topping out at four percent for homes valued at over $25 million. Though unclear how much money the tax would raise, the New York City Comptroller's office estimated the tax would bring in a minimum of $650 million annually if enacted today and could raise $9 billion in state bonds based on expected revenue.

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Trailer Parks are Booming Business for Some Investors

A Smyrna trailer park recently made headlines because of its association with a controversial billion-dollar real estate empire, drawing attention to the practice of private-equity funding of affordable housing communities. The Washington Post featured a story last month on the Florence Commons community, comprised of about 300 mobile homes and owned by private-equity firm Stockbridge Capital. While the company has raked in tens of millions in profits for investors, residents claim it is at their expense — through increased rents, lack of maintenance and draconian fees. The paper alludes to a 2016 decision by Fannie Mae that may have emboldened the practice by providing loans to investors for the development of mobile home communities, without limiting rent hikes for the mostly low-income residents, often with poor credit, who reside in them. 

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Nashville Mayor Briley Expected to Announce Major Public Housing Initiative

Nashville Mayor David Briley is expected to announce plans later this month for the allocation of millions in city funds to support redevelopment of aged public housing, The Tennessean reports. If approved, Briley’s plan will take a three-pronged approach —a ten-year commitment to pay for redevelopment projects, city-funded infrastructure at those sites and earmarks for the Barnes Fund for Affordable Housing Innovation, which provides grants to affordable housing developers. The city recently took ownership of its public housing stock from the federal government, to facilitate private borrowing for new construction and upgrades.

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Don't Blame Looming Recession on Slump in Residential Real Estate

The threat of a looming recession is not the fault of a sluggish real estate market, despite conflation by many economists, The New York Times reports. Though the United States has experienced 11 recessions since World War II, only two were precipitated by housing market decline. The sector often receives the brunt of the blame as it is more volatile than others, however, residential real estate accounts for only about 3 percent of economic output during recessions. Though the buying slump is a reality, this is likely a byproduct more than a driving factor — owing much to rising prices of existing homes in most markets, with the construction of new dwellings grinding to a screeching halt.

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Legislation Affecting Real Estate Practice

As the legislative session progresses, many bills of interest to dirt lawyers are on the move. Here is a list of notable legislation which has the potential to affect your practice area:
 
Rights of survivorship. Allows creation of a joint tenancy with right of survivorship and requires any share of a descended tenant to go to the surviving one.  

Taxation of residential property based on tree density. Requires that tree density is considered as a factor in determining residential property value and the respective taxation in Davidson and Shelby Counties.

Requires landlords provide email addresses. Requires a landlord to provide certain local governmental agencies responsible for enforcing building codes the landlord's email address, in addition to name, telephone number, and physical address. 

Notice landlord regarding change of tenant's email address. Requires a tenant to notify the landlord within ten days of a change of email address. 

Addresses tenant and landlord email notification. Allows a tenant to rescind the use of an email address provided in the rental agreement by written notice to the landlord. Broadly captioned.

Requires register of deeds send written notice to the property owner before recording a lien. Requires the register of deeds to send written notice to the property owner prior to recording a lien.

Removes certain state provisions regarding property tax. Eliminates certify valuation to local officials, authority to place liens, and issue distress warrants for state property tax.

Payment rights of contractors and subcontractors. Prohibits a written contract to have a condition precedent for payment clause where the prime contractor is not required to pay the remote contractor due to contract, or until they are paid by the construction owner. 

Requires baby changing station in new buildings. Adds at least one baby diaper changing station that is accessible to both men and women for new public bathrooms in any public building that is owned or operated by a public entity. 

Certification for electrical inspects contracted by local or state government. Requires electrical inspectors employed by a local or state government to be certified by the state fire marshal and for this certification to be completed every three years. 

Creates a registry of tenants evicted through writs of possession. Directs the housing development agency to create a registry of tenants who have been evicted through the execution of a writ of possession, which will be accessible to landlords in this state. 

The requirement of notice from the delinquent tax attorney relative to property tax. Requires the delinquent tax attorney to pose a copy of the proceeding and send a copy by first-class mail addressed to “occupant” at the last known municipal address of the parcel. 

Authority to impose a monitoring inspection fee on each manufactured home. Removes the authority to impose a monitoring inspection fee on each manufactured home produced in Tennessee from the commissioner of commerce and insurance.

An increase of the homestead exemption. Creates a homestead exemption for agricultural land, increases aggregate value of real property homestead exemptions while establishing that, in 3-year intervals, the fiscal review committee will recommend to the general assembly increases in the homestead exemption.

Service of process. Adds a private process server to the list of individuals authorized to personally serve a copy of a warrant or summons on behalf of a landlord in an action for forcible entry and detainer to regain possession of such landlord's real property.

Time-share and vacation club property. Classifies time-share and vacation club property that includes an interest in real property as residential property. 

Increases time allotted for a home seller to refund a buyer. Increases from 10 days to 15 days the time frame which a buyer is required to refund payments to the buyer when a home solicitation sale has been canceled or an offer to purchase was revoked.
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Why All Apartment Buildings in America Look the Same

Wood-framed balloon structures have become a ubiquitous part of our cityscapes, seemingly popping up overnight and changing the face of urban and suburban areas across America. No matter where you are, the buildings are ostensibly homogenous — blocky, colorful and three to seven stories tall. Bloomberg News examines the rise and controversy surrounding these ’stick framed’ structures, including why some municipalities seek to curb construction of the buildings in densely populated areas altogether.

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