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By: Marc B. Bergoffen
Bregman, Berbert, Schwartz & Gilday, LLC
Things certainly have been interesting in the world of real
estate law; and depending on one’s particular area of practice,
the recession has either been a positive or a not-so-positive
thing. Hopefully, the economy will improve along with the summer
weather we are having. In this summer edition, we feature
articles on wind farm leasing, a recent bankruptcy case
affecting real estate, a new statute affecting construction
retainage, as well as others. We hope you enjoy this edition and
if you have a topic of interest, please feel free to submit an
article for the next edition.
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JOHN
J. DELANEY SELECTED AS DISTINGUISHED MARYLAND PRACTITIONER
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John J. Delany of Linowes & Blocher
in Bethesda has been selected as the 2008-2009 recipient of the
Distinguished Maryland Real Property Practitioner. Mr. Delaney
has been practicing in the area of real property and land use
law for over forty years. He is respected as an authority on
zoning and land use law, and is an expert in land use regulation
and regulatory takings. He is an accomplished lecturer and
author in the land use and planning areas. Prior to practicing
law, he served as a lieutenant in the United States Army. Mr.
Delaney’s professional and civic affiliations include the
American Institute of Certified Planners, the American Planning
Association, the National Association of Homebuilders, the Board
of Directors of Gonzaga High School, and the Maryland Smart
Growth Commission. Please join us in extending our warmest
congratulations to Mr. Delaney on this recognition.
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WIND FARM
LEASING
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By: Douglas M. Bregman, Esq.
The increasing use of windpower is not just a lot of hot air.
Obtaining the land on which to place the turbines can be a
clouded undertaking. This article will present some information
which can provide some shelter from the storm.
The installed wind energy capacity was enlarged in 2008 alone by
50% in the United States2. In fact, in the last two years the
quantity of commercially produced wind energy increased to be
more than twice that which was generated in the prior 25 years.
At this point, the United States is the world leader. This
growth has also sparked technological improvements.
Despite these improvements, the rapid increase in wind energy
capacity investment is currently somewhat on the wane. The
reason for this is almost strictly due to the lull in the
availability of financing. Wind energy lenders such as Wachovia,
Lehman Brothers and AIG are now out of business or not lending
in the field.
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THE PICCADILLY
PECCADILLO
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By Morton P. Fisher, Jr.
Florida Department of Revenues
vs. Piccadilly Cafeterias, Inc., 128 S.Ct. 2326 (2008)
Bankruptcy lawyers and real estate lawyers with bankruptcy
background know that under Section 1146(a) of the Bankruptcy
Code there is an exemption from stamp taxes and other
recordation charges for a transfer under a plan confirmed under
Chapter 11 of the Code. 11 U.S.C. § 1146(a) (2000).
In many situations, properties are conveyed prior to final
confirmation of a plan which is eventually confirmed.
Piccadilly, a natural cafeteria chain, requested and received
court approval to sell substantially all of its assets and
sought exemption from stamp taxes. In February, 2004, the
Bankruptcy Court approved the proposed sale at auction and ruled
that the transfer of the property was exempt from stamp taxes
under Section 1146(a) [formerly Section 1146(c)] of the
Bankruptcy Code.
In March, 2004, Piccadilly filed a plan and in July filed an
amended plan. In October, the plan was confirmed but before
final confirmation, Florida filed an objection seeking a
declaration that $39,200 in stamp taxes were not exempt because
the transfer had not been “under a plan confirmed” under the
Bankruptcy Code.
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TDR’S
AND §1031’S |
By David T. Wagner
With the recent release of Private Letter Ruling 200805012 (“PLR”)
on February 1, 2008, the Internal Revenue Service (the “Service”)
has signaled a willingness to treat transferable development
rights (“TDR’s”) as real property for purposes of effecting a
tax-deferred exchange under IRC §1031. While TDR’s also exist in
numerous Counties in Maryland, this article seeks to review the
analysis of the PLR, which was founded upon the underlying state
and county law, and determine whether the application of Maryland
and Montgomery County law would produce the same result.
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NEW LAW LIMITS
AMOUNTS RETAINED UNDER CONSTRUCTION CONTRACTS
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By Lauren M. Lyon-Collis
During construction of a development project, the owner
typically retains a percentage of each progress payment
otherwise payable to the contractor. The retained funds are
usually released upon substantial completion, with the owner
holding back 150% or 200% of the amount necessary to complete
“punch-list” items. The industry standard is to retain 10% of
the amount of the progress payment otherwise payable. The
purpose of this practice is to ensure that if a contractor fails
to complete the work correctly, or at all, the owner may use the
retained funds to do so.
A recently-adopted Maryland law limits those amounts that may be
retained by an owner to guarantee completion of a construction
contract. As of October 1, 2008, owners will only be able to
retain up to 5% of the amount of each progress payment for
certain construction contracts in Maryland. The new law does not
apply to contracts under $250,000 or contacts funded through the
Department of Housing and Community Development. State
regulations presently impose this cap in certain state
construction contracts. The new law also applies to the
retention of funds by a contractor to guarantee a
sub-contractor’s completion of a construction contract.
The new law attempts to balance the interests of contractors and
owners, but, in the end, may be unsuccessful. For example, the
new law immediately benefits contractors who may need to advance
a portion of their own funds to complete the final stage of a
project. The change in the law means that an additional 5% of
the contract value could be available, lessening the financial
impact in those instances when a contractor must pay “out of
pocket” in order to complete a construction contract.
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MSBA
REAL ESTATE DISCUSSION GROUP THE 2008 REAL ESTATE CASE HIT
PARADE
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By David H. Fishman
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
Baltimore, MD
March 17, 2009
This report attempts to gather all reported cases and important
unreported cases decided by the Maryland State and Federal
courts in the past calendar year in the area of “traditional”
real estate law. Detailed treatment is given to cases with
something interesting or amusing to say. Cases in the areas of
zoning, land use, insurance and torts usually are not included.
The year 2008 was marked by several important discussions of
areas which have not been talked about for many years, as well
as a couple of cases of first impression. Of particular note is
the Wildwood Medical Center case, which is a good
discussion of the law of partnership property, and the Gables
on Tuckerman Condominium case, a definitive opinion about
condominium casualty insurance. Both are worthy of close study.
An amusing case was Royal Investment Group in the Court
of Special Appeals, where a prospective purchaser of property
demolished the improvements on the property and built a new
house, but never went to closing.
As might have been expected, foreclosure cases got a lot of
attention in 2008, continuing into early 2009. Most of the
problems mentioned in the cases will be handled by the new
legislation passed by the 2008 session of the General Assembly
and the 2009 changes to the Maryland Rules, which go into effect
on May 1. In 2007, The Baltimore Sun made something of a
crusade out of the case of Mr. Atta Poku, neglecting to recite
most of the facts bearing on the equities in the case. This
vividly illustrates the famous quip by the late A.J. Liebling
that, “Freedom of the press is guaranteed only to he who owns
one.” The case was ended by the Court of Appeals’ decision on
January 10, 2008, which denied Mr. Poku’s claims. And in
February, the Court of Appeals decided in Griffin v. Bierman
that the Maryland notice requirements are constitutional, thus
forestalling what would surely have been hundreds of cases by
foreclosed mortgagors claiming that the notices they received
did not meet constitutional muster.
The new statutes of 2008 would not change the result in the Poku
case, but will have a definite impact on a number of situations
which have been litigated in the past. The requirement for
attempting to get actual notice to the record title owner and to
the occupants of foreclosed properties will be much greater in
the future.
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