Congratulations to Kayla Ashley daughter of Jennette Ashley, one of our real estate paralegals, for the recognition of her work on behalf of the Ronald McDonald House near Cincinnati Children's Hospital. The local Fox TV affiliate Channel 19 recognized Kayla's volunteer work during their Pass the Cash spot.  Click on the link to watch.

This should be a reminder to all of us in the real estate industry that even in tough times we all need to look for opportunities to give back to the communities which support our efforts.  A little bit of kindness and consideration will go a long way ! 

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The typical co-tenancy clause provides that if occupancy at a shopping center falls below a certain level and/or certain other key tenants close, the tenant gets rent relief and at some point the right to terminate its lease. In the current retail environment, all sophisticated tenants demand some sort of co-tenancy protection.  Landlords have generally accepted the fact that they must agree to some sort of co-tenancy if they are to get the tenants they desire.

However, mortgage lenders need to carefully consider the co-tenancy provisions also because they affect the value of their collateral, and of course if they are foreclosing it is likely that there is a co-tenancy failure. Obviously, a lender prefers no co-tenancy clauses in the leases. However, the challenge is that without them, there is no project in the first instance. But, the lender should carefully review all co-tenancy clauses so at least it knows the risk involved before taking any action.

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Ulmer & Berne LLP Real Estate Practice Ranked 1st in Ohio; 7th in the Midwest by Midwest Real Estate News Magazine

Ulmer & Berne LLP announced today that Midwest Real Estate News magazine named the Firm seventh on its list of 2010 Best of the Best Midwest Real Estate Law Firms. Ulmer & Berne was also ranked first in the state of Ohio.  Midwest Real Estate News is one of the region’s leaders in commercial real estate coverage. According to the publication, each year hundreds of surveys are submitted by law firms from across the Midwest (a 14-state region) to the magazine for consideration. Rankings are determined by the number of real estate transactions in the previous year and the dollar amount related with those transactions above $5 million. In the 14-state region alone, Ulmer & Berne completed over 550 transactions with over 70 of those transactions valued at above $5 million in 2009. Areas of transaction included commercial, industrial, shopping centers, land, office buildings and multifamily housing. 

Ulmer & Berne, established in 1908, is one of Ohio’s largest law firms. A full service firm with approximately 175 attorneys in Cleveland, Columbus, Cincinnati and Chicago, Ulmer & Berne represents publicly traded and privately held companies, financial institutions, pharmaceutical companies, family businesses, international joint ventures and affiliations, investor groups, start-ups and emerging businesses, public bodies, and nonprofit organizations. 

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Since early 2009, Housing prices have stabilized and valuations and affordability of homes have improved. This stabilization is primarily attributed to government housing policies, such as the home buyer tax credit, the federal government’s purchase of mortgage-based securities, and temporary mortgage modifications through the Home Affordable Mortgage Program. However, many economists believe that the housing market will experience another down turn in 2010 and into 2011 because of excess supply, increasing mortgage delinquencies, and the expiration of the temporary government housing policies which provided the housing market with a much needed boost.

The average listing price for homes in Cincinnati is down for the first week in June but not significantly. The median sales price in Cincinnati is up 2.3% over last year and the number of home sales increased 5.1%.

In my neighborhood, many homes are currently listed. While this is to be expected during the busy summer months, there is an excess supply of available homes, which is contributing to the depressed valuations. There is movement, however. The market appears to have picked up. Homes are selling. Some of them are selling quickly and at close to asking price (although asking price is still much lower than the peaks we experienced in the first half of 2006). Other homes, however, are languishing on the market for months in spite of aggressive reductions in price.

It is still a buyer’s market. Sellers are expected to have their homes updated, in top condition, and staged if they want to sell. Sellers often provide incentives to buyers such as home warranties and the payment of closing costs to further entice buyers. It is likely to remain a buyer’s market for quite some time.

Overall, the economic recovery appears to be moderating. The US economy faces several challenges in 2010 and 2011: weakness in labor and high unemployment, fiscal challenges at the state and local levels, vacant homes and unused industrial capacity, limited credit, uncertainty from the European crisis, slower growth, and further declines in housing prices. We have a way to go before things will improve.  If you are a buyer the market remains favorable; if you are a seller be flexible and open minded as your first offer might be your best offer !

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Thank you to our friend Drew Stacey of First Place Bank for reminding us of the extension of the The First-Time Homebuyer Credit for the benefit of Military families for an additional year through May 1, 2011.  According to the IRS:

No credit is allowed for a home bought after April 30, 2010 (after June 30, 2010, if you entered into a written binding contract before May 1, 2010). However, if you (or your spouse) are on qualified official extended duty outside the United States for at least 90 days after 2008 and before May 1, 2010, you have an extra year to buy a home and claim the credit. In other words, you must buy the home before May 1, 2011 (before July 1, 2011, if you entered into a written binding contract before May 1, 2011)."

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In the much-publicized "Kenwood Towne Place" litigation in Cincinnati, which involves over $40MM in lien claims, presiding Judge Beth Myers issued a Decision and Entry that disposed of subcontractor claims against the Port Authority of Greater Cincinnati (the Public Authority involved with the project).  The Court dismissed the subcontractors’ claims for takings and negligence. 

One aspect of Judge Myers' decision makes it glaringly important for contractors of all shapes and sizes to perform independent assessments of front-end protection on a public project: the Court determined that the requirement of a performance and payment bond (or lack thereof in this case) was a matter of discretion for the Port Authority and, consequently, not mandatory under Ohio law.

To reach its Decision, the Court focused on Sections 4582.31 (specific to port authorities) and 153.54 (applies to public projects) of the Ohio Revised Code.  The Court determined that Section 4582.31 gives the Port Authority discretion whether to require competitive bidding and whether to require security--"As a matter of law, it had no duty to require a performance or payment bond."  The subcontractor claimants relied on Section 153.54, which requires performance bonds in competitive bidding, and the competitive bidding provision of 4582.31.  But the Court found that the Kenwood Towne Place litigation is governed by the discretionary provisions granted to port authorities because the project was funded exclusively from bond proceeds and special funds (bond discretionary) instead of general revenue funds or funds raised through taxation (bond mandatory). 

Among other things, the Court summarily dismissed the subcontractors' common law claims for negligence because, under Ohio law, when a statute imposes a duty upon a public entity which is intended for the public good, the failure to adequately perform the duty does not permit a private right of redress for injuries caused by that failure. The Court's ruling may come as a surprise to many contractors in the public sector.  Notwithstanding, Judge Myers' decision should be a lesson to all that significant diligence for adequate assurance of payment should not be delegated or accepted at face value.  The current economic climate places that duty at an all-time high for those contracting for work in the public arena. 

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According to FEMA the National Flood Insurance Program is no longer in effect.  See the post from the FEMA website below and on this link:

"The NFIP will not be reauthorized by Congress by midnight of May 31, 2010. Therefore, the Program will experience a hiatus – a period without authority to:

• issue new policies for which application and premium payment dates are on or after June 1, 2010, or
• issue increased coverage on existing policies for which endorsement and premium payment dates are on or after June 1, 2010, or
• issue renewal policies for which the renewal premium is received by the company on or after June 1, 2010, and after the end of the 30-day renewal grace period, until Congress reauthorizes the Program.

While awaiting Congressional reauthorization, FEMA is issuing the guidance contained in the attached bulletin (PDF 92KB, TXT 21KB). Within this bulletin, is a set of Frequently Asked Questions concerning NFIP authorization to help you in communicating with your insurance agents and policyholders.

The hiatus period is expected to end soon. We will inform you when the NFIP is again authorized to sell new policies, issue increase coverage on existing policies, or issue renewal policies."

If you currently own real property in or around an insurable flood zone you should contact your insurance carrier to determine what sort of coverage you now have, especially in light of the fact that hurricane season is about to commence !

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I often think of an African proverb shared by Kip Reader, Managing Partner of Ulmer & Berne:

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