Real Estate Law Blog

Beyond the Commercials: Understanding Reverse Mortgages

You have likely seen the commercials for reverse mortgages. While the advertisements urge viewers to “call now to secure you reverse mortgage today” and make them seem risk-free, obtaining a mortgage of this type is a serious decision that should not be made without fully understanding its pros and cons. More >

Bonding off a Private Mechanic’s Lien In Kentucky

In my previous post, I discussed the basics of filing a private mechanic’s lien in Kentucky. Today, the subject will turn to the release of a private mechanic’s lien by execution of a bond. Execution of a bond for release of lien (the “Bond”) provides the owner of property against which a mechanic’s lien has been asserted, or the contractor who contracted with the owner for the provision of labor and/or materials for improvement of the property, an avenue of relief whereby the owner or contractor can have a mechanic’s lien filed against the property released. Utilization of a Bond is particularly helpful when a dispute arises regarding the validity of an asserted mechanic’s lien. More >

Development in Areas Prone to Flooding

Development in flood prone areas is regulated by a combination of federal, state and local regulations to reduce the possibility of loss of life and property, and to reduce the cost associated with development and rebuilding in these areas. The Federal Emergency Management Agency (“FEMA”) publishes flood maps that identify the regulatory floodplain. Congress has enacted various changes to existing legislation to discourage development in special hazard areas and to facilitate the purchase of flood insurance in by property owners in flood prone areas. Under current laws, communities that want to make national flood insurance available to its residents must participate in the National Flood Insurance Program. This required communities to adopt certain minimum standards that regulate development in areas that are prone to flooding, including standards that prohibit new development in special hazard areas. More >

Seller Financing After Dodd-Frank

The provisions of Dodd-Frank have been in place just under a year and a half, having come into effect on January 10, 2014, and the provisions of the law that concern seller financing of real estate made significant changes as to how investors use seller financing in these transactions. Now that the rules have been in place for a while and the dust has settled, basic rules concerning private loans from sellers warrant a brief review. At the outset, it is worth noting that these regulations apply to sales only to owner occupants, not sales of commercial or investment properties. The new regulations treat anyone who performs the activities related to the origination of a residential mortgage loan as a “mortgage originator” by default. What this means is that sellers who finance their real estate transactions must be a licensed mortgage originator or include a licensed mortgage originator in the transaction. Financing sellers can be exempt from these rules, however, if certain criteria are met. First, the seller must provide financing for the sale of three or fewer properties in a 12-month period, and the property must have been owned by the seller and used as security for the loan. Second, the seller must not have constructed the residence or acted as a contractor in the construction as part of the ordinary course of their business. Finally, the loan must be fully paid off after a set duration (no balloon payments) and have a fixed interest rate or an adjustable rate that remains fixed for at least five years, and the seller must determine in good faith that the borrower will be able to pay the loan. If the rate does adjust, it must be tied to a widely-available index such as LIBOR or U.S. Treasury securities. Under these rules, a person, trust or business entity can act as a financing seller. If the seller only finances one property in a year and is a natural person, an estate or a trust, the seller does not have to determine and document the borrower’s ability to pay, although the loan requirements remain the same. If the seller finances more than three properties, the mortgage originator provisions apply, as well as the specific limitations on the loan. Another important distinction to note is that, while the ability-to-pay provisions of Regulation Z[1] apply only to “creditors” as defined by that regulation – those who finance more than five “transactions secured by a dwelling”[2] in a year, Dodd-Frank applies the same provisions to those who finance three or more transactions to owner-occupants in a year. In other words, financing sellers who conduct only four transactions a year are exempt from the ability-to-pay portions of Regulation Z, but not from Dodd-Frank. Negotiating any seller-financing deal is tricky, but the provisions of Dodd-Frank add a new layer of complexity to the process. Let the attorneys of McBrayer PLLC make the process less difficult by providing guidance and assistance in the transaction.

Services may be performed by others.

This article does not constitute legal advice.

[1] 12 C.F.R. § 1026.43 [2] 12 C.F.R. § 1026.2 (a)(17)(v)

Infill and Adaptive Reuse – Is It Right For My Project?

Fewer words in the context of land use planning come with as negative a connotation as “sprawl.” There’s a good reason for this, as the term denotes a move outwards from the heart of a city, pushing communities further apart into low density suburbs while the core of the area falls into decay. Sprawl has been cited as the cause for everything from environmental damage to community segregation, with inherently negative consequences for cities that fail to plan for sustainable growth. To combat sprawl, however, communities have turned to creative and innovative revitalization efforts such as infill and adaptive reuse as a way to slow the outward push and revitalize existing residential, commercial and even industrial spaces. More >

The Basics of Commercial Real Estate Transactions: Important Contract Contingencies

Prior posts have discussed initial considerations in the purchase of commercial real estate and conducting due diligence prior to closing the deal. Today’s focus will now turn to contingencies often found in commercial real estate contracts. More >

The Dangerous Path of Property through Intestacy: The Need for Estate Planning with Respect to Real Estate

Winding up an estate is a difficult task, one that can take a toll on a group of the decedent’s family and loved ones. This process, however, is exponentially more challenging when a person dies intestate. Real property is particularly difficult to distribute without a definitive statement of intent on the part of the deceased. The various methods of descent in intestacy create tangled estates as families grow in complexity, and so many conflicts might be resolved otherwise through the careful act of creating an estate plan. More >

Why Your Property Management Business Needs a Lawyer

A wise move when performing regular commercial transactions with members of the public is to organize or incorporate that business to limit one’s personal liability in the event problems occur. This is especially true in the area of rental property, where transactions and adverse actions can be emotionally charged. What landlords and property managers may not know is that they cannot, by law, represent their own business interests in court in Kentucky if the business is organized or incorporated as a separate entity. More >

The Basics of Filing a Private Mechanic’s Lien in Kentucky

A mechanic’s lien is an invaluable tool for contractors and others who supply labor or materials for improvements to real property. In its most basic sense, a mechanic’s lien provides security for these groups so that they are not left at the mercy of a defaulting contractor or property owner. The discussion set forth herein only addresses the requirements for filing and perfecting a mechanic’s lien against a privately owned parcel of real property. The requirements for filing and perfecting a public improvement lien differ from those discussed below. More >

Subdividing Land

When we think of subdivisions, we generally think of large housing estates with a house on each lot, but technically the subdivision of land means the creation of saleable lots by splitting a tract into smaller parcels. In communities that have adopted land use regulations, the subdivision of property is typically handled by submitting a subdivision plat to the planning commission in the jurisdiction where the property is located. The subdivision of land is considered a ministerial matter. This means that if the proposal meets the minimum requirements of the zone in which it is located, the planning commission must approve it. Unlike rezoning of property, which requires notice to surrounding property owners and a full due process hearing, a subdivision plat does not trigger notice and hearing procedures. Typically all that is required is submission of a subdivision plat that meets the minimum requirements set out in the zoning ordinance and land subdivision regulations as well as the payment of a processing fee. Under Kentucky law, the planning jurisdiction has the power to assign the review and approval of subdivision plats to a staff person. After a plat is approved, it is recorded in the county clerks’ office. A recorded subdivision plat creates the new lots. No new lot can be sold until after the subdivision plat is recorded. More >