With a number of states having already legalised medicinal marijuana, the demand for cannabis continues to be on the rise. With an increase in demand for the product comes an increase in the need for production facilities, including indoor marijuana cultivation space. Real estate investors have jumped on this market; however, while the resulting real estate boom is undoubtedly a positive for the real estate industry, it does not come without legal and operational risks.
The Court of Appeals recently affirmed a lower court's decision to dismiss a plaintiff's complaint that an amendment to Rockville's 'light industrial' municipal zoning ordinance was unconstitutional as it violated the due process and equal protection guarantees of the 14th Amendment to the Constitution. The ordinance made it impossible for Siena Corporation to build on its property a large self-storage facility within 250 feet of a public school.
In an unusual case, the US Court of Appeals for the 10th Circuit reversed the district court's decision that recently enacted Wyoming laws impose civil and criminal liability on any persons who "cross private land to access adjacent or proximate land where he [or she] collects resource data". The court concluded that the statutes regulate protected speech under the First Amendment and are not shielded from constitutional scrutiny merely because they touch on access to private property.
Balancing the interests of the federal government as owner of thousands of acres surrounding Crooked Lake and the rights of private owners, the US Court of Appeals for the Sixth Circuit recently ruled that the US Forest Service exceeded its authority when issuing rules restricting recreational use of the lake. According to the court, relevant Michigan law grants owners of property surrounding the lake the right to reasonable use of the lake.
The US Supreme Court denied certiorari in California Building Industry Association v City of San Jose and left standing a unanimous decision by the California Supreme Court upholding the city of San Jose's affordable housing ordinance. The denial of certiorari leaves in place similar 'inclusionary' affordable housing programmes that have been adopted in more than 170 California municipalities.
Recent developments in California are affecting the funding of urban redevelopment and the creation of affordable housing. These include the new Community Revitalisation and Investment Authority Law, which once again allows for local governments to establish redevelopment authorities to fund improvements to infrastructure, promote economic revitalisation and address shortages in needed housing.
A recent amendment to the Illinois Mechanics Lien Act that permits owners, lenders and other lien claimants to substitute a bond in lieu of the real property itself is a powerful new tool for selling or refinancing a property that is subject to a disputed mechanics lien claim. However, a 175% bond requirement and concerns over accruing interest and attorneys' fee provisions will likely make applicants consider alternatives before turning to this new mechanism.
The US Supreme Court recently extended the scope of claims under the Fair Housing Act to consider more than discriminatory intent. A plaintiff can demonstrate a violation of the act by establishing discriminatory effects of a policy rather than proving that a policy is motivated by discriminatory intent. Disparate impact claims typically invite statistical evidence to demonstrate objective, disproportionate impacts on a protected class.
A recent California appellate court decision reaffirms the longstanding principle that a senior lienholder's acceptance of a grant deed in lieu of foreclosure does not merge the lien into title. The strong and effective drafting of a grant deed is fundamental to a lender's ability to avoid the consequences of merger and take advantage of the benefits of accepting a deed in lieu of foreclosure.
The Internal Revenue Service has permitted Windstream to to spin off certain telecommunications network assets into an independent publicly traded real estate investment trust (REIT) whose primary activity will be to lease the use of the assets back to Windstream. The transaction is estimated to generate up to a $650 million annual overall reduction in taxable income between Windstream and the REIT.
Low interest rates, a weakened currency and depressed values are making the US real estate market attractive to foreign investors. However, the tax consequences of owning US real property individually or through an entity are substantially different, and foreign investors should consider the tax implications of investing in US real property before signing on the dotted line.
California law provides that an integrated written lease may not be varied by extrinsic evidence to alter or add to the terms of the writing. An established exception to the rule allows a party to present extrinsic evidence to show that the lease was procured by fraud. Landlords must be wary of assertions made in the course of pre-lease negotiations following a recent California Court of Appeal decision.
The US District Court for the Central District of Illinois recently overturned a Bankruptcy Court decision, providing real estate mortgage lenders with certainty that a mortgage encumbering Illinois real estate need not explicitly state the interest rate and the maturity date on its face in order to provide constructive notice under Illinois law. A statutory amendment has since been made to the Conveyances Act.
Applicable law may often require the seller of residential real property to disclose known material defects to prospective buyers. Recently the Pennsylvania Superior Court considered whether the psychological damage to a residential property caused by the past occurrence of an in-home murder-suicide in the property was considered to be a material defect that should have been disclosed by the seller to the buyer.
California has implemented a new requirement that owners or operators of non-residential buildings disclose a building's past energy use data to prospective buyers, lessees or lenders of the building before the sale, lease, financing or refinancing of the property. Recently adopted regulations set down the schedule according to which building owners must begin making such disclosures.
Following a mortgage loan default, many lenders will not engage in workout discussions with a borrower unless the borrower first executes a pre-negotiation agreement. In a recent decision the US District Court for the Southern District of New York upheld the enforceability of pre-negotiation agreements.
A recent court decision held that a foreclosure in Massachusetts that a clear chain of title must be established to show that the party foreclosing is the valid holder of the mortgage. Although the decision is binding only in Massachusetts, the case illustrates the importance for lenders and securitisation trustees of understanding state foreclosure laws and hold all relevant documents before entering foreclosure proceedings.
Two recent decisions confirm that under Illinois law, a mortgagee has the right to be placed in possession of a mortgage property prior to entry of a judgment of foreclosure where it can show that the mortgage authorises possession and is likely to prevail on a final hearing, and that the mortgagor has not established any good cause to remain in possession of the property.
A New Jersey appellate court recently addressed the enforceability of a non-recourse carve-out provision in a guaranty of the senior loan which imposed full recourse liability upon principals of the borrower in the event that the borrower permitted the encumbrance of a commercial real estate asset by a second mortgage without the prior written consent of the first mortgage lender.
Cribbin v The City of Chicago illustrates that developers are at risk that the land use intended at the time of land acquisition may subsequently not be permitted by virtue of a zoning change. However, in this case the appeal court applied an exception on the grounds of the level of expenditure undertaken by the property developer before the zoning classifications were changed.