In the Dirt: A Real Estate Legal Update

A seemingly small win for birds could potentially have big implications for builders. A recent court of appeals decision may impact commercial buildings and construction.

Developer beware! In Wisconsin, assessors may use an “anticipated” vacancy in making assessments.

The City of Milwaukee (and various other municipalities) has sent its Biennial Property Tax Exemption Report and Filing Fee Notices. Owners of tax-exempt real property in Wisconsin must file a Form PC-220 Tax Exemption Report (the “Report”) by March 31, 2024, to ensure their property is properly classified and continues to be recognized as tax-exempt. The Report must be filed with the clerk of the town, village, or city in which the property is located biennially of each even numbered year.

On February 7, 2024 FinCEN issued a Notice of Proposed Rulemaking that FinCEN issued a Notice of Proposed Rulemaking that would require certain professionals involved in real estate closings and settlements to report information to FinCEN about non-financed transfers of residential real estate to legal entities or trusts. FinCEN’s proposal targets residential real estate transfers considered high-risk for money laundering.

On October 10, 2023, the Indiana Supreme Court denied a landowner’s petition to transfer filed  in the matter of State of Indiana v. The Market Place at State Road 37, LLC, et al., 22A-PL-2765 (May 17, 2023), and as a result, did not consider certain novel issues presented by the owner’s chain of title. The Market Place at State Road 37, which owns property near the intersection of State Road 37, now I-69, and Fairview Road in Greenwood, Indiana, sought to introduce evidence at trial of damages associated with the elimination of that intersection, which was located approximately 350 feet from the owner’s Fairview Road access.

As digital currency grows in use and acceptability, digital currency has entered into many traditional investment markets. Commercial real estate is no exception. The conversion of real estate assets to digital tokens using blockchain technology (“tokenization”) is continuing to grow, with a market size of approximately $200 million, real estate tokens account for nearly 40% of the digital securities market.

Property owners (“Owners”) interested in engaging in short-term leases should carefully consider the structure of their contracts (“Leases”). Anticipating potential disputes and consequences is essential for avoiding future litigation. A well-written Lease can serve to facilitate friendly, productive, and profitable landlord/tenant relationships. A good Lease can also help insulate Owners from liability and unnecessary expenses related to the short-term rental of their property.

Short-term rentals have become a complex topic for many municipalities, which in turn affects homeowners or Homeowner Associations interested in the issue. Various objectives of the governing body in regard to regulating short-term rentals may affect their treatment of this issue. While one municipality may want to revitalize its vibrant downtown by encouraging short-term rentals, another may prefer to crack down on short-term rentals altogether to preserve neighborhoods with single-family homeowners. The interests of property owners who wish to earn extra income from short-term rentals must be weighed against their neighbors who desire calm and predictable surroundings. Here's what municipalities making decisions regarding short-term rentals must also consider.

Homeowners may wish to engage in backyard event rentals to earn supplemental income. For example, some homeowners may rent out their pool and backyard space for parties. While this might seem like a clever opportunity for homeowners to make an extra buck, such backyard event rentals will likely cause tension between homeowners and their HOA or community management entity.

Owners and managers of multifamily rental properties are facing a growing number of challenges. The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) reported more than 1,900 formal complaints were filed, and there were more than 6,000 contacts to their hotline, related to landlord/tenant disputes last year making it the number one category of complaints, and a massive increase since 2018 when there were 1,188 complaints. Clearly landlord/tenant conflicts are escalating and will continue to rise if some pending proposals are enacted.

Short-term rentals of property, including, rentals for as short of time as on an hourly basis, are increasing in frequency around the country. The character of a community can be dramatically altered by such rentals and cause concerns for homeowners related to property values, security, and peace of mind.

Solar panels may be a source of controversy in residential neighborhoods. On one side of the debate are homeowners wishing to invest in renewable energy and take advantage of any available federal tax credits. On the other side are homeowners who purchased their homes in reliance upon the protection that a homeowner’s association (“HOA”) would offer by maintaining preferred aesthetics, abating nuisances, and preserving property value. As a result, HOAs need to know whether they are permitted to regulate the use of solar panels by their residents.

Municipalities adopt zoning ordinances in order to regulate the use of land within their boundaries and to provide for future growth without over-taxing their infrastructure and other resources. 

Short-term rentals have become a popular way for homeowners to earn extra income when they are away from their property. Websites like Airbnb and Vrbo have made short-term rentals easy and accessible. For homeowner associations (“HOAs”), management companies, and other community members; however, these short-term rentals present various problems.

Solar panels are increasing in popularity for both residential and commercial properties. Some property owners may consider installing solar panels to meet their own energy needs; others may consider installing them to generate income or to provide energy for public use. Given the high-value status of property assets, the long-term impact of solar panels is an important consideration.

Homeowner associations (HOAs) across the country should be aware of the bounds of their authority for regulating installation of solar panel systems on members’ homes. Mastering this delicate balance will help HOAs maintain both aesthetics and property value while, to some degree, honoring the individualized wishes of their residents.

A new Missouri law may be a new cause of concern for homeowners. The new law, which restricts the ability of local government to regulate home occupations with zoning ordinances or other regulations, may allow noxious businesses to become new neighbors. The law, created in response to people working from home during COVID-19, has likewise caused concern for municipalities across the state as they scramble to satisfy concerned homeowners. This law may go beyond its original intention of allowing work from home as became necessary during the pandemic, and it is especially troublesome for homeowners in dense housing urban areas who may be more likely to experience disturbances from home businesses.

Tis the season to be jolly! Homeowner Associations (HOA’s) usually have some control over regulating holiday decorations but the line between what homeowners consider gorgeous or garish can be as thin as twice-used wrapping paper. HOA’s are faced with a tricky question: how can decorative displays be regulated without taking the “festive" out of “festival?”

We are all familiar with commercials and ads warning real estate owners (“Owners”) of title theft. What is described as title theft occurs when a fraudster forges an Owner’s name on a deed transferring real estate to themselves, later mortgaging or selling it to acquire money.

In a Solar Panel Purchase Agreement (“PPA”), a developer (“Developer”) finances and installs solar panels on an owner’s (“Owner’s”) property and stipulates that the Owner use the electricity generated which is often cheaper than the rate charged by utility companies. PPAs often serve as opportunities for Owners to save money on energy.

It is increasingly common for landowners and building owners (“Owners”) to be approached by a developer (“Developer”) interested in executing a “solar land lease” (“Solar Lease”) or a “solar power purchase agreement” (“Solar Power Purchase Agreement”). Solar Leases allow for a Developer to install solar panel systems on an Owner’s property in exchange for payment.  Conversely, in a Solar Agreement, the Developer finances and installs solar panels on an Owner’s property and stipulates that the Owner use the electricity generated which is often cheaper than the rate charged by utility companies.

The right to use solar energy has long been considered a property right in Missouri. See Section 442.012 RSMo. Even though the right to use solar energy is a property right, it may be subject to restrictive covenants, just like any other property right.

It’s May in Indiana, which means flowers are blooming, the Indianapolis 500 is here, and the spring installment of Indiana property taxes are due. Property taxes in Indiana are paid twice a year, with payments generally due on May 10 and November 10. However, the spring installment is most significant as it relates to the sale of land for unpaid taxes. This makes May the perfect time for a refresher on Indiana tax sales.

Can improvements to real estate, such as buildings, be owned separately from the land beneath them? This is not usual, although permissible, such as in a ground lease situation; however, a recent decision from the Indiana Court of Appeals has gone a step farther by recognizing separate real estate tax parcel numbers to improvements sold separately from the underlying real estate. The following case presents a cautionary tale for Indiana landowners in a ground lease scenario, and for any lender secured by land subject to a ground lease.

Part one of this series article addressed whether homeowners associations are required to allow support dogs in common areas where dogs may otherwise be prohibited. This article will address whether homeowners and condominium associations are required to make reasonable accommodations for “assistance animals”  which may otherwise be prohibited by the association’s rules and regulations.  Assistance animals, as defined by the Fair Housing Act (FHA), include more than just service dogs as defined by the ADA.

Service animals or service dogs in common areas of a homeowners association or condominium association have ADA considerations. 

Most residential homeowners and condominium associations have restrictive covenants or rules regulating the size, number or types of pets owners may keep in their residences. Some associations may prohibit pets in the common areas or amenities. Associations regularly enforce these restrictions by issuing notice to owners who are in violation requiring the owners to take some kind of corrective action. Sometimes owners respond that the animal is a service animal and therefore the owners are not required to comply with applicable restrictions, rules or regulations.