Ohio Housing Council Issues Alert That Sales Tax Must Be Listed Separately on Invoices for Taxable Services

Posted on September 24, 2010 by Jesse Lipcius

The Ohio Housing Council (the "Council") recently issued the following alert: "Sales tax must be listed separately on invoices or the buyer may be charged by the State of Ohio for the tax."  According to the Council, the State of Ohio has been assessing sales tax and penalties to contractors and property management companies for tax services they purchased when the invoice did not break out sales tax as a separate line item.  Thus, per the Council, invoices for taxable services, such as landscaping or painting, must contain a separate sales tax line item instead of the simple phrase "sales tax included."  The Council advises contractors and property managers to review all invoices to make certain that property tax is listed separately.

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Sixth Circuit Finds Water Damage Excluded From "All Risk" Coverage

Posted on September 18, 2010 by Jesse Lipcius

Insurance Coverage Update

In TMW Enterprises, Inc. v. Federal Insurance Company, the United States Court of Appeals for the Sixth Circuit held that a “construction defects” exclusion in an “all risk” insurance policy barred coverage for water damage caused by faulty construction, even though the policy covered water damage and the exclusion did not apply to “ensuing losses.” 

The insured in TMW Enterprises, Inc. argued that water infiltration, and not faulty construction, was the true culprit for approximately $3.9 Million in damages to a recently constructed condominium and retail complex. Thus, according to the insured, water damage was an “ensuing loss” of defective construction and, therefore, coverage was in order. 

The insurer, however, convinced the Court that, since water damage naturally flows from faulty construction, to allow coverage for water damage proximately caused by faulty construction, would illogically “undo the exclusion [for construction defects].” The Court consoled the insured, noting that there is a purpose for “ensuing loss” provisions: “[t]he clause means simply that what is not excluded is covered.” “[T]he caveat at the end reminds us that if an exclusion does not apply, then coverage exists.” In other words, “[a]n ensuing loss clause does not cover loss caused by the excluded peril, but rather covers loss caused to other property wholly separate from the defective property, such as a fire started by water leaking into an electric socket when such water is from faulty construction work.”

 

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Sales Tax Alert

Posted on September 18, 2010 by Brad Kaplan

The Ohio Department of Taxation has been enforcing the obligation to pay sales taxes by contractors and property managers for services received when the invoices do not separately identify sales tax as a specific line item.  Look at all of the invoices received for any services contracted for and make sure that sales taxes are separately broken out.  This will avoid an assessment for the unpaid sales tax and related penalties.  Of course the obligation can be shifted to the provider of the service by inserting appropriate language in the contract or invoice.

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Take Control !

Posted on September 13, 2010 by Brad Kaplan

We have made a concerted effort in this Blog to keep on message for the Real Estate, Retail, Finance and Construction industries.  However, periodically we see the need to go off topic. Lately the flow of unwanted email has become so outrageous that I and several of my partners are actively UN SUBSCRIBING from these solicitations.  During the course of writing this post I have received 6 unwanted emails in my inbox from companies selling books, seminars, services, loans, property, you name it.  This unwanted constant distraction is an impediment to getting things done.  I view those who blast out these emails negatively.  Their products and services might be valuable, but the message and method of delivery gets in the way.  I now subscribe to the Seth Godin method of "permission marketing."  Take control of your inbox and take control of your day !

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Retail Trends We See

Posted on September 8, 2010 by Scott Kadish
Toys R Us is leasing a large number of sites on a temporary basis: smaller stores and only for the Christmas season. Temporary leasing might be a trend to capitalize on, especially where you have vacant space in a decent geographic market.  And if you can combine it with a different, complimentary seasonal concept (ice cream or frozen yogurt? tax service?), it might eat up otherwise vacant space.
 
Costco is looking at former department stores for expansion locations. Costco would be a great addition to any center, even upscale ones. It has been shown that the consumer who likes Nordstrom also likes the bargains and experience at Costco. Many upscale centers have prohibitions on discount or club stores. While the prohibition may be outdated, it may nonetheless still apply.
 
Allowances are becoming increasing at risk. tenants are concerned about a Landlord's ability to fund in these challenging economic times and are requiring significant dollars to be paid up front or early in the process. Conversely, Tenants who are having difficulties at other locations are defaulting after receipt of allowance payments but prior to opening and so a Landlord is placed at great risk if it pays any allowance prior to opening.  If  the tenant has off set right for any non-payment, tenant can probably protect itself from a defaulting landlord.  BUT, the tenant needs to preserve this right in any SNDA it executes.  For large allowance amounts, the time to recoup may be unacceptable. In these cases, an escrow at time of delivery and payment upon opening may be better.
 
Book stores have issues. Long considered an ideal anchor for a life style center, the E Reader and low pricing of big box retailers make the book store a difficult retail concept.
 
Outlet centers are really popular. Traditional centers should capitalize and try to include outlets in part. Again, landlords should revisit the prohibited uses in effect at the center.
 
Let us know what are other trends you are seeing ?
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Contractors, Landlords, and Property Managers Must Take Care to Comply with New Lead Paint Regulations

Posted on September 5, 2010 by Jesse Lipcius
Pursuant to a new rule passed by the Environmental Protection Agency, all contractors, landlords, and property managers performing or hiring for painting projects that disturb lead-based paint must now become "lead-safe" certified before performing work on houses built before 1978.  The new requirement also applies to weatherization projects, and to schools, day care facilities, or other commercial properties occupied by children.  "Lead-safe" certification is meant to minimize potential airborne contamination from dust or seepage into surrounding soil form debris. 
 
A "lead-safe" certified professional is required for work that disturbs six square feet or more of painted surfaces indoors, or twenty square feet of painted surfaces outdoors.  The "lead-safe" certified professional must be physically present at the site where the work is taking place, and proof of certification is required to be presented to the home owner or property owner upon request.  "Lead-safe" certification is achieved through demonstrated knowledge of lead-safe procedures, like testing of dust contaminants, and cleaning and disposal of lead-based paint.  Certification typically requires an eight-hour EPA training course. 
 
For more information, visit:  http://www.epa.gov/lead/pubs/renovation.htm
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