Continuing Eduction: Real Estate Loan Workouts

The National Business Institute is presenting an 11-part teleconference series on foreclosures, with Part 1 focussing on Real Estate Loan Workouts.

The teleconference for this first issue is scheduled for June 2, 2009, beginning at 1:00 pm EST and will last for 90 minutes.

On the agenda is:

  • Forbearance Agreements and Loan Modifications

  • Deeds in Lieu of Foreclosure

  • Short sales

  • Remedies

  • Lender Liability Issues

  • Rent Attachment and Collection

  • Receivership

  • Pursuit of Guarantors

  • Deficiency Judgment Issues

In addition to Part 1 on Real Estate Loan Workouts, the series topics includes:

  • Foreclosure: Step by Step Through the Procedures (June 16)

  • How Bankruptcy Affects Foreclosure (June 30)

  • Complicated Priority Disputes and Lien Issues (July 14)

  • Tax Consequences of Foreclosure (July 28)

  • Post-Foreclosure Issues (August 11)

  • Hot Topics and Problem Areas in Foreclosure (August 25)

  • Advanced Judicial Challengs in Foreclosures (Sept. 8)

  • Complex Commercial and Industrial Foreclosure Issues (Sept. 22)

  • Ethical Considerations in Foreclosure (Oct 6)

  • Current Issues in Foreclosure (Oct. 20)

Click here to learn more or to register for the teleconference or call 1-800-930-6182. To enroll in the whole series for a discounted rate, call NBI Business Services at 1-866-500-6599.

Continuing Education: Strategies fr Getting Value Out of Commercial Property

The Commercial Real Estate Women, Inc. of Cleveland ("CREW Cleveland") is sponsoring a seminar titled "Damage Control: Strategies for Getting Value Out of Commercial Property in Recessionary Times."

The seminar will be held on Thursday, May 21st from 7:00 am to 12:15 pm at The Club at Key Tower (127 Public Square, Cleveland). CEU and CLE credits for the seminar are pending.

The agenda for the seminar includes the following topics:
  • Seller-Financing: An Alternative to Conventional Bank Financing
  • Land Contract Installment Sales
  • Part Sale/Part Charitable Contribution
  • Tax Considerations When Re-Negotiating Debt
  • Dialing for Dollars: Cell Tower Leasing
  • Squeezing Money Out of Property: Cost Segregation
  • Turning Excess Space into Cash: Subleasing
  • Business Considerations When Dealing With Over-Market Leases

For more information, go to or contact CREW Cleveland at or (440) 36-0887.

CLE Update: Commercial Leases

Sterling Education Services, Inc. (SES) has scheduled 2 seminars in Ohio titled "Negotiating Commercial Leases," the 1st on June 16th in Cleveland (Hilton Garden Inn on Carnegie in dtn Cleveland) and the 2nd on June 23rd in Akron (Hilton Akron Fairlawn).

Attendees would be eligible for 6.75 OH CLE credits, 7.0 OH RE credits, and 6.5 PA CLE credits.

A discount on the registration fee is available if you register by May 11th.

For more information go to or call 715-855-0498.

CLE Update: 1031 RE Exchanges & Eminent Domain

The Ohio State Bar Association is sponsering a continuing education seminar in May on the following topics:

  • morning program--Section 1031 Real Estate Exchanges

  • afternoon program--Eminent Domain


  • May 7, Fairfield, OH

  • May 20, Columbus, OH (live and via webcast)

  • May 27, Cleveland, OH

Each program provides 3.0 CLE hours.

For more information or to register, go to or call (800) 232-7124.

Don’t Take the Money (after service of 3 day notice) and Run, if You Want Your Tenant Out.

Does accepting a rent check or money order, after serving a 3-Day Notice in Ohio, always mean that the Landlord effectively waived that notice (which is a pre-requisite for filing a residential eviction in Ohio)?
The “clear” answer - it depends.

In a 2nd District Ohio Court of Appeals case reported this week (Wingate at Belle Meadows v Higgenbotham, 179 Ohio App. 3d 645, 2008-Ohio 6229), the Landlord’s assistant manager physically accepted a money order for August, 2007 rent, 32 days after it was due, and 30 days after a 3-Day Notice was served. The Trial Court held that since the rent was accepted after the Notice, the Notice was effectively waived, and Tenant’s eviction was dismissed.

The Appellate Court in Wingate reversed the Trial Court’s decision based on two important facts: 1) the money order was never cashed; and 2) it was returned the next day to the Tenant by the Landlord’s manager (who had a few words for the assistant manager who took the money order).

The Wingate Court followed a 1949 Ohio Appellate Court decision on similar facts (Pace v. Buck, 186 Ohio App. 25; 85 N.E.2nd 401 [1949]). The Court in Pace ruled that if a Landlord retains rent money after a 3-day notice, for reasons other than payment (such as keeping it, without cashing it for evidence), it must notify the tenant why it is keeping it, and return it to the tenant on or before the eviction hearing, or it will be deemed to have accepted it for payment, and have effectively waived its 3-Day Notice. In Wingate, the Landlord returned the money order three weeks before the hearing, and the day after it was accepted.

Translating these decisions, the best “legal” course of action for a landlord is to not take the payment, if it truly wants the tenant out (though with tenants hard to come by these days, this is rarely the best “business” answer). If the check or money order is taken, cashing it will waive the 3-Day Notice. If taken and not cashed, the return of same must happen on or before the eviction hearing.

Distinguished from these facts, is the situation where the tenant is behind in rent by more than the advance payment of rent that is past due. Accepting back rent, or, in other words, payment for a liability already incurred, does not constitute a waiver of the right to give notice to vacate, and should be accepted by the landlord from a business perspective. In such a situation, the landlord should notify the tenant that it has “accepted tenant’s payment of $_______, for the back rent of $________ due”. On the other hand, if the tenant tenders a check for back rent together with rent for the next month, then acceptance of the combined payment could be construed as a waiver of the right to give notice (See White, Ohio Landlord Tenant Law, Section T 7.03 and cases cited therein [2nd Ed.Banks-Baldwin1990]). In addition to the Ohio Landlord Tenant Law treatise, Chapters 1923 (Forcible Entry and Detainer) and 5321 (Landlords and Tenants [Residential]) of the Ohio Revised Code should be consulted in order to gain a better understanding of this specific area of law. Of course, if there is any doubt about what to do in specific situations, contacting a lawyer who specializes in real estate law is advised.

HB 525 – Reminder- Don’t Forget to Mind Your Margins and Fonts

This new standardization of forms law will go into effect on July 1st, 2009. It will set the following guidelines for documents recorded in Ohio county recorders’ offices:

• Computer font size of at least ten;
• Minimum Paper size - 81/2 x 11, Maximum paper size 81/2 x 14
• Black or blue ink only;
• No use of highlighting;
• Margins of 1 inch on each side of the page and on the bottom
• 3 inch margin on the top of the first page, reserved for recorder;
• 1 1/2” margin on the top of each of the remaining pages

The recorder will accept a non-confirming document for recording but can collect the following additional fees: $10.00 for the recorder’s services and $10.00 for the housing trust fund.
This law does not apply to the following:

• Any document from any court or taxing authority;
• Plats;
• DD214’s;
• Any state or federal document;
• Any document executed before the effective date of HB 525.

Commercial Brokers: Don’t Forget to “Lien” On the Law

Commercial real estate brokers work hard, and are an important part of the team of real estate professionals (Lawyers, Brokers, Architects, Construction Managers/General Contractors, Surveyors, Environmental Consultants and Title Companies) that should be consulted in real estate transactions. Brokers bring far more to the table than listing a property for sale or lease. Most possess marketing, advertising, negotiating (business terms), financing and space planning expertise. Some brokers and property owners may be surprised to know that there has been a statute in Ohio, since 1977 (Ohio Revised Code Sec. 1311.86 - 1311.93) that helps secure payment for real estate broker services, much like contractors or materialmen protect themselves by filing a “Mechanic’s Lien”. The “Broker Lien” in Ohio pertains to services provided by a broker pursuant to a written agreement for the sale, lease, or conveyance of an interest in “commercial real estate.”

Under the Statute, “commercial real estate” is defined as any real estate in Ohio, other than that containing one to four residential units. Certain property owned by a public authority is also excluded.

A lien is created and effective once a written contract for broker services is signed by the broker or the broker’s agent, and the owner or owner’s agent. Only the broker named in the agreement has the lien (not any employee or independent contractor of such broker). The lien is for the amount due to the broker prior to or upon conveyance; and the lien only attaches to the interest that is the subject of the agreement.

The lien can be perfected, but only after: (a) the broker is entitled to the fee under the agreement; and (2) the broker files a lien affidavit in the county where the real estate is located. The affidavit must contain the name of the broker and the owner; the applicable property’s legal description; the amount for which the lien is claimed; the date and a summary of the written brokerage agreement; the real estate license number of the broker; a statement that the information contained in the affidavit is true and accurate; and the verified signature of the broker (or his agent).

In the cases of a sale, the lien must be recorded prior to conveyance of the property. For leases, the affidavit must be recorded the earlier of (i) 30 days after the first rental payment is due; or (ii) if owner notifies broker of the intended lease execution date, prior to such date (but owner must have given broker at least 10 days written notice of such date). The broker must serve copies of the lien affidavit on the property owner and the transferee if the transferee is known.

The lien can be enforced by filing a complaint in the applicable county common pleas court within one year following the affidavit filing date, and if not, the lien is extinguished. An owner may demand, by written notice (personal delivery or certified mail), that the broker commence suit within 28 days from receipt of such notice, and barring the commencement of such suit, the lien is extinguished.

The Statute also creates procedures for recording a release or satisfaction of the lien, and also for closing on a property subject to a lien, without a release, by establishing an escrow account to pay off the lien, and upon payoff, the lien becomes extinguished by law.

The only drawback from the broker’s perspective is that “contractors come first”. All valid mechanic’s liens (and all prior recorded liens and mortgages) have priority over a perfected broker’s lien, perfected pursuant to ORC Sec. 1311.87.

Contracting Out Services 101

The March 2009 edition of Buildings magazine features an article by Jenna M. Aker titled "Get the Best Service Contract in 4 Steps." Outsourcing certain services for building operation and/or maintenance is a good option for not only for saving money, but to access better expertise in a specific area that a building owner might not have in-house.

In her article, Ms. Aker states that once decision has been made to outsource a specific service and a list of achievable objectives has been prepared, there are several steps a building owner can take to get the best possible contract for that service.

1. Know your vendor. Do your homework to determine that the contractors you are considering are qualified for the service you need. Not all companies are created equal, and you need to know who you're hiring. The lowest price is not always the best choice.

2. Ask questions. It may be the most burdensome part of the process but a thorough list of questions are worth their weight in gold. For sample screening documents, etc related to contracting out building maintenance and operations,
click here.

3. Be Specific. The agreement with the service vendor should reflect a meeting of the minds between the building owner and vendor. It should be specific to the needs of both parties. A pre-printed form provided by the vendor will likely address the vendor's concerns, but not the building owner's. The more vague and ambiguous the terms are in the agreement, the more opportunity remains for misunderstandings and disputes.

4. Negotiate. Don't settle for the canned language in a contract if it does not meet your needs.

An agreement, besides needing to accurately represents the business deal that the parties agreed to, should provide a clear mechanism for measuring performance (not anything vague and subjective). The obligations of each party needs to be clearly spelled out, the vendor should be required to carry adequate insurance coverage, and there needs to be a dispute mechanism that is workable for both sides and sufficiently detailed as to how it will operate. There also needs to be clear 'outs' for a party to terminate the agreement when the other is not performing as agreed.

Case-Shiller Home Price Index Numbers

The S&P/Case-Shiller home-price index is a closely watched gauge of home prices in the United States. In its most recent press release regarding the state of home prices S&P stated:

"Data through January 2009, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus January 2008. "

Click here to access of copy of the full S&P 3-31-2009 press release regarding the Case-Shiller Home Price Indices.