Last year, in Mapcor Corporation v. J.P. Morgan Chase Bank, N.A., 938 N.E.2d 1181 (2d Dist. 2010), J.P. Morgan Chase Bank lost on appeal after it claimed that it should not have to pay the amount the jury awarded to the plaintiff at trial because the plaintiff had purchased the property from J.P. Morgan Chase AS-IS.
The court, however, disagreed, based on the following background: The bank was aware that the roof of the property needed to be torn off and completely replaced. However, because the cost to do this was high, the bank hired a contractor to put a new roof over the original roof -- against the broker's and the contractor's advice. The bank fired the original broker and hired a new broker, and then falsely represented that the roof was torn off and replaced with a new roof.
Relying in part on this representation, plaintiff purchased the property in 1996. Over the next decade, the plaintiff had constant problems with the roof and eventually discvered that the original roof had not been torn off. The plaintiff sued on grounds of fraud and won. At that point, the bank appealed, arguing that the plaintiff had purchased the property AS-IS and was therefore not entitled to relief.
The appellate court stated that the jury and the trail court were correct in stating that the bank had intentionally, knowingly, or with reckless disregard for the truth made a false statement of material fact. Furthermore, the court stated that had the plaintiff known the truth about the roof, the plaintiff may have offered far less money for the property.
Moral of the story -- Just because a Buyer purchases something AS-IS, the Seller should not attempt to commit fraud against him!
Wednesday, June 22, 2011
Wednesday, June 15, 2011
What is a Common Interest Community?
Most people know what a condominium is. You may even know what a co-op is. But do you know what a common interest community association is?
Last year, the Illinois legislature passed the Common Interest Community Association Act. The act defines a "common interest community” as follows: Real estate other than a condominium or cooperative with respect to which any person by virtue of his or her ownership of a partial interest or a unit therein is obligated to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration which is administered by an association. "Common interest community" may include, but not be limited to, an attached or detached townhome, villa, or single-family home, or master association.
What does this mean in plain English? It means that if you live in a subdivision or neighborood where there is some common area managed or administered by a common group, such as an association, then you are in a common interest community. Usually this means that you are paying some sort of fee (whether monthly, quarterly, or annually) for the maintenance of the common area. Some large neighborhoods have only a common retention pond, for example, and every homeowner pays just a few bucks every year to maintain it. Regardless, that makes the neighborhood part of a common interest community association.
If you are buying or selling a home in such a neighborhood, make sure you review the Common Interest Community Association Act to learn what obligations and rights you have, and what disclosure requirements are applicable. If you are buying a foreclosed home in a common interest community association, you should be particularly careful, as you could end up liable for past due assessments and other fees.
Last year, the Illinois legislature passed the Common Interest Community Association Act. The act defines a "common interest community” as follows: Real estate other than a condominium or cooperative with respect to which any person by virtue of his or her ownership of a partial interest or a unit therein is obligated to pay for the maintenance, improvement, insurance premiums or real estate taxes of common areas described in a declaration which is administered by an association. "Common interest community" may include, but not be limited to, an attached or detached townhome, villa, or single-family home, or master association.
What does this mean in plain English? It means that if you live in a subdivision or neighborood where there is some common area managed or administered by a common group, such as an association, then you are in a common interest community. Usually this means that you are paying some sort of fee (whether monthly, quarterly, or annually) for the maintenance of the common area. Some large neighborhoods have only a common retention pond, for example, and every homeowner pays just a few bucks every year to maintain it. Regardless, that makes the neighborhood part of a common interest community association.
If you are buying or selling a home in such a neighborhood, make sure you review the Common Interest Community Association Act to learn what obligations and rights you have, and what disclosure requirements are applicable. If you are buying a foreclosed home in a common interest community association, you should be particularly careful, as you could end up liable for past due assessments and other fees.
Thursday, June 9, 2011
How is the Cook County Foreclosure Mediation Program Doing?
It has been a little more than a year since Cook County announced its new Foreclosure Mediation Program in April of 2010. The purpose of the program was to help homeowners with free legal advice, and also to assist then in reaching a resolution with their lenders.
As of April of 2011, more than 27,000 homeowners had asked for advice. Of those 27,000 homeowners, 1,820 were referred to mediation. Of those 1,820 referrals, 627 homeowners had completed their mediations. Of those 627 completed mediation, 216 homeowners received loan modification and will continue to stay in their homes. The remaining 411 homeowners have either left their homes already or are still in the foreclosure process.
The Foreclosure Mediation Program started with a budget of $3.5 million, and has received another $3 million to keep it running until November 2011. While mediation can be slow, the program has helped many homeowners. With any luck, the program will continue to assist Cook County homeowners facing foreclosure!
As of April of 2011, more than 27,000 homeowners had asked for advice. Of those 27,000 homeowners, 1,820 were referred to mediation. Of those 1,820 referrals, 627 homeowners had completed their mediations. Of those 627 completed mediation, 216 homeowners received loan modification and will continue to stay in their homes. The remaining 411 homeowners have either left their homes already or are still in the foreclosure process.
The Foreclosure Mediation Program started with a budget of $3.5 million, and has received another $3 million to keep it running until November 2011. While mediation can be slow, the program has helped many homeowners. With any luck, the program will continue to assist Cook County homeowners facing foreclosure!
Monday, May 23, 2011
Beware Fraudulent Liens on Foreclosed Properties!
As you probably know, an empty home can be a target for all sorts of crime. Every once in a while you might read a news story about an empty home that was broken into, damaged, or used by a gang for criminal activity. However, empty homes are targets for less violent forms of crime also. Specifically, it is easy to commit fraud when no one is checking up.
Foreclosed homes, in particular, are a target. No one is looking out for them. The banks are too far away and much too busy to know what is going on with each of their properties. As a result, some individuals and/or companies have developed a new scam -- they will claim that they have completed repairs on a property and file a mechanic's lien, even if they have not actually done any work at all. When the property is ready to close, the bank will be forced to pay the lien if they do not want to delay the closing or risk losing the buyer.
Recently, after allowing a transaction to close when a lien popped up at the last minute, the Federal National Mortgage Association (FNMA) found such a scam. Upon investigation, it was determined that the lien was fraudulent; moreover, the same person had filed a similar lien on a number of other FNMA properties.
Moral of the story -- If a mechanic's lien appears on the title report of a foreclosed property, make sure you investigate to see if the work was actually performed before paying it!
Foreclosed homes, in particular, are a target. No one is looking out for them. The banks are too far away and much too busy to know what is going on with each of their properties. As a result, some individuals and/or companies have developed a new scam -- they will claim that they have completed repairs on a property and file a mechanic's lien, even if they have not actually done any work at all. When the property is ready to close, the bank will be forced to pay the lien if they do not want to delay the closing or risk losing the buyer.
Recently, after allowing a transaction to close when a lien popped up at the last minute, the Federal National Mortgage Association (FNMA) found such a scam. Upon investigation, it was determined that the lien was fraudulent; moreover, the same person had filed a similar lien on a number of other FNMA properties.
Moral of the story -- If a mechanic's lien appears on the title report of a foreclosed property, make sure you investigate to see if the work was actually performed before paying it!
Monday, May 16, 2011
Second Lien Modification Program -- Get Your Home Equity Line Modified
Many homeowners are in a situation where they have two mortgages on their primary residence -- a first mortgage and a home equity line (or another type of second mortgage). In these tough times it can be hard to make either or both payments. There are many federal programs in place to assist with your first loan, such as HAMP, HAFA, or HARP.
The good news is, there is also a program to assist with your home equity line or second mortgage. This is called the Second Lien Modification Program (2MP). If, and only if, your first loan is modified under HAMP, you may qualify for a home equity modification under 2MP.
What are the criteria for determining whether or not you are eligible for a 2MP modification? First and foremost, you must be eligible under HAMP, and your loan must have been modified under HAMP. Additionally, you must meet the following requirements:
1. You must have a balance of $5,000 or more on your second mortgage.
2. Your monthly second mortgage payment must be at least $100.
3. You cannot have missed three consecutive payments on the loan you modified under HAMP, after the modification.
4. In the last ten years, you have not been convicted of a crime such as fraud, forgery, felony larceny, theft, tax evasion or money laundering with respect to any mortgage or real estate transaction.
Not all banks are participating in 2MP, but if your bank is participating, you should check to see if you qualify. If you do qualify, your secondary lender will be offered incentives to reduce your obligation under the second mortgage.
The good news is, there is also a program to assist with your home equity line or second mortgage. This is called the Second Lien Modification Program (2MP). If, and only if, your first loan is modified under HAMP, you may qualify for a home equity modification under 2MP.
What are the criteria for determining whether or not you are eligible for a 2MP modification? First and foremost, you must be eligible under HAMP, and your loan must have been modified under HAMP. Additionally, you must meet the following requirements:
1. You must have a balance of $5,000 or more on your second mortgage.
2. Your monthly second mortgage payment must be at least $100.
3. You cannot have missed three consecutive payments on the loan you modified under HAMP, after the modification.
4. In the last ten years, you have not been convicted of a crime such as fraud, forgery, felony larceny, theft, tax evasion or money laundering with respect to any mortgage or real estate transaction.
Not all banks are participating in 2MP, but if your bank is participating, you should check to see if you qualify. If you do qualify, your secondary lender will be offered incentives to reduce your obligation under the second mortgage.
Monday, May 9, 2011
Congress Repeals Reporting Requirement for Small Landlords
Last year, Congress buried a small provision in two lenghty pieces of legislation (the Patient Protection and Affordable Care Act of 2010 and the Small Business Jobs Act) that suddenly imposed "business-like" restrictions on people who were renting out so much as one small condominium. Owners of such property were suddenly required to track all work done on their property that cost more than $600. Moreover, owners then had to obtain particulars from the contractors who had performed such work, prepare 1099 forms for them, and then distribute the 1099 forms.
Given that many landlords simply own one unit or rent out their own residences, second homes, or homes they've inherited, the requirement to prepare and distribute 1099 forms seemed particularly onerous. Most likely, many landlords would not even know about the new requirement and could later face penalties as a result.
Apparently, Congress now realizes this. Last month Congress passed legislation to repeal the provisions requiring landlords to prepare and distribute 1099 forms. While this is a victory for the many small landlords out there, most of them do not even know about it!
Given that many landlords simply own one unit or rent out their own residences, second homes, or homes they've inherited, the requirement to prepare and distribute 1099 forms seemed particularly onerous. Most likely, many landlords would not even know about the new requirement and could later face penalties as a result.
Apparently, Congress now realizes this. Last month Congress passed legislation to repeal the provisions requiring landlords to prepare and distribute 1099 forms. While this is a victory for the many small landlords out there, most of them do not even know about it!
Monday, May 2, 2011
Americans with Disabilities Act Will Now Apply to Timeshares and Hotel Condominiums
Effective December 2011, the Americans with Disabilities Act (the ADA) will apply to new or renovated timeshares and hotel condominium units (i.e. hotel condominiums that are rented out like typical hotel units)units). The ADA previously did not cover these types of properties.
Any remodeling completed to these properties after December 2011 will have to take into account ADA standards, such as wheelchair accessibility through doors and corridors, grab bars in bathrooms, carpeting that is not too plush (i.e. a wheelchair or motorized device should be able to traverse the floor comfortably), accessibility to towel racks and paper towels in bathrooms, etc.
Any remodeling completed to these properties after December 2011 will have to take into account ADA standards, such as wheelchair accessibility through doors and corridors, grab bars in bathrooms, carpeting that is not too plush (i.e. a wheelchair or motorized device should be able to traverse the floor comfortably), accessibility to towel racks and paper towels in bathrooms, etc.
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