As we begin the new Bar year, I would like to thank our Past Chair, Tracey Skinner, as well as the members of the Section Council, for all of their hard work and efforts in making this past year a success. As a result of the contributions of this group, as well as the involvement of many of our members, we have been able to broaden the focus of our Section by providing additional programs and resources for the use and benefit of our members. I would like to express my gratitude and recognize the commitment of these individuals, and acknowledge their role in creating and maintaining meaningful and successful components of our organization. It is my hope and desire to continue the efforts of this distinguished group.
For the upcoming year it is our goal to continue the many successful programs of the Section, as well as to expand many of our new initiatives. For example, we will continue our involvement with MICPEL by presenting the Advanced Real Property Institute scheduled for October 17, 2007, in Baltimore. We have planned what we believe will be a very informative program, and hope that many of you will be able to attend what promises to be an excellent event. Additionally, as part of our on-going presentation of the Commercial Real Estate Discussion Group Lunches, it is our intention to improve upon the production of our web-casts of these meeting. By upgrading our technology, and providing improved access to the materials presented on-site, in addition to making other revisions in response to feedback received from many members, we hope to establish a user-friendly and time-saving resource, especially for those whose proximity to these sessions makes attendance problematic. Additionally, in response to the request of many of our members, we have created a new Construction Law Committee that we expect to be of interest and benefit to many of our members, and we look forward to supporting its growth.
We will keep you posted with respect to the above matters, as well as other on-going matters of the Section in the upcoming months. For now, I look forward to a rewarding year and the continued growth of our Section. Thank you for your support.
Ronald S. Deutsch
This year has been a great year for the Real Property
Section. New committees have been formed and our publication
Ground Rules has continued to grow. I am proud to report that we
regularly publish and that numerous authors have stepped forward
in the submission of articles. These authors have not only
contributed to the success of the publication but to the
enhanced knowledge of the Section’s members. On behalf of the
publication, I’d like to thank you and I am greatly encouraged
by the continued willingness of so many of our members in
contributing their time and expertise in furthering our goals. I
hope everyone has a great summer.
We are now accepting articles for our next edition. Please feel
free to submit potential articles.
BEWARE OF BURIED
LIENS: IMPROVEMENT LIENS AND ASSESSMENTS
William J. Thomas, MBA
Pinnacle Title & Escrow Inc.
Improvement liens and assessments can create many title issues
and complications. Practitioners must be vigilant in reviewing
all matters appearing of record and in carefully reading the
title documents. Additionally, proper exceptions must be
included in title insurance binders and policies, so that the
title company does not end up paying assessment costs for the
Most think that utility liens and assessments are easily found
in title searches by obtaining a lien certificate. This
assumption might be true if the subject property is served by
public water and sewer where the assessment is made by the
County or local jurisdiction. However, if the property is
subject to a private utility assessment, the charge and
obligation to pay the assessment may not be so easily
identified. [view article in it's entirety]
EXTINGUISHED JUNIOR LIENS
Ronald S. Deutsch
Cohn, Goldberg & Deutsch, LLC
Claude Pepper once said, “Life is like a bicycle. You don’t
fall off until you stop peddling”. In a few reported decisions,
borrowers attempting to save their homes by purchasing them at a
foreclosure sale or by re-purchasing them from a lender who
completed its foreclosure – directly or indirectly, through a
family member being used as a straw purchaser – may have
unwittingly fallen off their bicycles.
Under theories of equitable re-attachment, liens thought to have
been extinguished can be potentially revived when a foreclosed
borrower repurchases his property. Although there are only a few
reported cases dealing with this issue, the theory may be
applicable in many states.
In one New Jersey case, Old Republic Insurance Co. v. Currie,
665 A.2d 1153; 284 NJ Super. 571 (Ch. Div. 1995), a husband and
wife owned a property subject to a first mortgage. Sometime
later, they executed a second mortgage, which was recorded among
the land records. As the years progressed, the borrowers faced
increasing financial difficulty. The borrowers tried various
plans to turn their situation around and retain their home, none
of which worked. Finally, after attempting to save their home by
filing a bankruptcy petition, and after relief from the
automatic stay was granted to the lender, their first mortgage
company foreclosed. For whatever reason, presumably because of
the property’s value, the second mortgage company elected not to
bid at the foreclosure sale held by the first mortgage company.
However, three years after the foreclosure, the second mortgage
company discovered that one of the mortgagors reacquired the
property. It was then that the second mortgage company attempted
to assert its equitable rights based on reviving the lien, by
re-recording its mortgage that was presumably extinguished at
the earlier foreclosure sale. [view article in it's entirety]
THE ALTA 2006 POLICIES AND ENDORSEMENTS
J. Paul Rieger, Jr.
Maryland State Counsel
LandAmerica Commonwealth Land Title Insurance Company
After several years of discussion and drafting, ALTA
released its 2006 Owners and Loan Policy forms on June 17, 2006.
The 2006 forms will ultimately supersede and replace the 1992
forms as the “standard” ALTA Policy forms. ALTA has provided a
one-year window during which the new forms can be implemented;
ALTA will then formally “decertify” the 1992 forms on June 17,
2007. Secondary mortgage market participants are expected to
require the 2006 policy format for approved mortgage loans.
FreddieMac recently announced that it will accept only loan
policies written on the ALTA 2006 Loan Policy form for mortgages
originated on or after June 17, 2007. (See FreddieMac Bulletin
2007-2 at the following link:
The 2006 policy forms do not represent a radical change in
coverage. Most of the changes are for clarification purposes,
i.e., certain coverages, believed to have been provided under
the 1992 policy forms, have now been expressly provided for in
the 2006 policy forms. However, there are a few noteworthy
improvements in coverage that make the 2006 ALTA forms clearly
superior to their 1992 counterparts. The discussion that follows
focuses on the most significant differences between the 1992 and
2006 ALTA forms.
[view article in it's entirety]
AND RECORDATION TAXES
Robert J. Strupp, Esq.
Director of Research and Policy
In the 2007 General Assembly, both
the House and Senate considered proposals to impose recordation
and transfer tax obligations on the transfer of controlling
interests in certain entities owning real property
(corporations, partnerships, limited liability companies,
limited liability partnerships and certain other unincorporated
businesses). The only practical difference between HB 475 and SB
616 was the threshold value of real property held by the
transferor entity to be subject to the taxes. The House version
was to apply to property valued in excess of $1,000,000.00 and
the Senate version to property exceeding $500,000.00 in value.
Similar bills have been introduced in recent years with a
variety of proposal to use the newly generated funds for
educational purposes and land preservation.
As a practical matter, under current law, real property can be
transferred without payment of transfer and recordation taxes,
or documented recordation in the land records, by transferring
the ownership (controlling) interest in the title owner of the
property. Studies by the Maryland Department of Legislative
Services (2005 Session HB1) suggests that, at the threshold of 1
million dollars, the State would collect in excess of 13 million
dollars a year and the counties and municipalities would collect
in excess of 45 million dollars in additional transfer and
recordation taxes. In the current climate of budget deficits and
proposed tax increases, to paraphrase the late US Senator
Everett Dirksen, this is “real money”.
The so-called “llc loophole” does more than enable the sale of
high rise office towers of Baltimore City, the shopping centers
of suburbia and apartment complexes around the State to escape
transfer and recordation taxes, it enables investors who buy and
sell single family residential property through limited
liability entities to not only escape the transfer and
recordation taxes, but to escape the detection of land records.
Consider the following:
1. A owns 123 Maple Street
2. A creates a limited liability company wholly owned by A –
known as 123 Maple, LLC and records a deed from A to 123 Maple,
LLC. This transaction, under current law may be exempt from
transfer and recordation taxes.
3. A sells his membership interest in 123 Maple, LLC to B for
$20,000.00 cash. B now effectively owns 123 Maple Street.
Because this was a transfer of the LLC and not the property,
there are no transfer or recordation taxes and no deed
reflecting the sale.
4. B, a “wholesaler” real estate investor sells the membership
interest in 123 LLC to C, a rehabber for $40,000.00. Once again
there is no change in the title (123 Maple LLC retains
ownership) and no transfer or recordation taxes are collected.
5. C fixes the property, and thereafter 123 Maple, LLC deeds the
property to D for $100,000.00. Only in this last transaction is
a deed filed and transfer and recordation taxes collected.
What does the chain to title look like. A to 123 Maple, LLC to
D. What was lost in revenues in state and local transfer and
recordation taxes? Assuming the combined transfer tax to be 2
percent, $1,200.00 was not collected. Assuming a $5.00 per
$500.00 recordation tax, another $600.00 was lost, for a total
of $1,800.00. Suppose B and C have 10 transactions like this per
year, $18,000.00 in revenue, failed to be captured. If there
were merely 100 such transactions made statewide in a year,
$1,800,000.00 was lost by tax collectors.
As you can sense, the existing law results in the loss of
millions of dollars in possible tax collections when real
property is transferred by conveying it under the guise of a
membership interest or other entity interest. The critical
question is whether conveyance taxes are beneficial to State and
local governments and their citizens?
CONSTRUCTION LAW COMMITTEE”
By Jeffrey Regner
Ober, Kaler, Grimes & Shriver
Many of my colleagues will remember the Construction Cases
Committee of the MSBA organized in the days before construction
mediation became ubiquitous, public design/build became
accepted, and demand in China drove sheet metal and copper
prices. During the years since, there has always been a
“construction bar” organized loosely, if at all, and
distinguished by its expertise and professionalism. Now, under
the organization of the Real Property Section, I am pleased to
announce that we have a proper home
It is not by accident, that we reorganize under the Real
Property Section instead of the Litigation Section, like the old
Construction Cases Committee. The new Committee’s focus will
shift from being claims-centered, to providing a forum for both
the litigator/arbitrator and the transactional construction
practitioner. I would expect many of our own practices have
moved more toward helping owners, developers, contractors and
others proceed successfully from design concept to occupancy
with an eye toward dispute avoidance.
Join me in building a strong and valuable Construction
Committee. Contact me directly at
(410) 347-7337 to get involved. Also, keep any eye out for
announcements of our upcoming meetings.
The Elements of Influence, Alan Kelly, Penguin Group, 2006. 304
pp. Illustrations, appendix, glossary, index. ISBN
Reviewed for Ground Rules Newsletter by:
Nancy P. Regelin, Esquire
Shulman, Rogers, Gandal, Pordy & Ecker, P.A.
Land use attorneys need a wide ranging set of skills and tools
to help them effectively influence the outcome of a development
application. In the face of sophisticated opposition, lack of
political support, or unpopularity of a specific project, the
land use practitioner needs a play book of moves and
countermoves to manage opposition, reputation, and buzz. Alan
Kelly has written such a playbook.
Kelly has created a system or “periodic chart” that clearly
defines 25 moves for outmaneuvering the opposition, protecting a
reputation, advancing ideas, controlling public discussions, and
moving a proposition forward. The book is targeted to business
leaders, marketers, politicians, and public relations experts,
but is also an applicable guide for land use practitioners. In a
clear, illustrated format, Kelly outlines precisely how to
recognize, implement, counter, and master the ploys, plays and
plans of all the players in the game.
As an example, have you ever used a “Label” to reshape the
public’s perception? A Label can be a suggestive nickname or a
well crafted sound bite that simplifies a complicated issue.
Think “Slick Willy” vs. “The Comeback Kid” (Clinton) or “Intel
Inside” (Intel chips).
How do you counter when a Label is used against your project?
Alan Kelly provides a bevy of options to choose from.
When the opposition calls for historic designation to prevent
redevelopment and labels a building that had previously been
voted the ugliest building in town as “The Pink Bank,” try
countering with: 1) a new Label – “The Future Site of Our New
Town Center”; 2) expose the hypocrisy by running a “Mirror” –
“Why are they calling it Pink? There is nothing pink about that
building.”; 3) run a “Bait” – ridicule the made up Label –“It’s
an act of desperation to call it The Pink Bank because they
otherwise have no valid justifications for historic designation”
; 4) recast the Label as a bridge back to your position – “We
may have fond memories of the Pink Bank but we knew then and we
know now that it has no significant historical or architectural
value”; or 5) run a “Bear Hug” – embrace the opposition’s point
and use the opportunity and platform to good naturedly reinforce
your position – “We support historic preservation but it
undermines the value of other historic resources to designate
marginal or inappropriate properties”.
The book provides invaluable ideas for times of strategic
planning and for periods of crisis management.
The Elements of Influence decodes the plays that land use
practitioners use, and opposition to projects use against
everyday. The book outlines how to use the plays, how to
recognize a play being used against you, and also importantly,
which are the most effective moves to counter opposing plays.
The information in this book will serve as a resource in your
land use practice for years to come.
It is a great honor to become a member of the American College
of Real Estate Lawyers. The Section would like to recognize the
achievement of the following Maryland members:
Thomas C. Barbuti
Douglas M. Bregman
Priscilla K. Carroll
Timothy D. A. Chriss
Ronald P. Fish
Morton P. Fisher, Jr.
David H. Fishman
Jan K. Guben
William M. Harvey
John P. Healy
James A. Kenney, III
David M. Kochanski
Arnold J. Kohn
Harry W. Kerch
Edward J. Levin
James C. Oliver
Russell R. Reno, Jr.
J. Paul Rieger, Jr.
Linda D. Schwartz
Kevin L. Shepherd
Lawrence A. Shulman
John W. Steele, III
Raymond G. Truitt
Roger D. Winston
Fred Wolf, III
James D. Wright