Aaron S. Marines

Subscribe to Aaron S. Marines

Every year, the Lancaster Commercial and Industrial Real Estate Council hosts High Real Estate‘s review of the local commercial and industrial real estate market. High always presents an extensive, well-researched and thought-out presentation. In addition to just showing charts and graphs, the speakers from High really understand the Central Pennsylvania market and are willing to share their thoughts on what the numbers mean.

When I go to this presentation each year, I ask myself, “What would I tell a client who was not here to watch the presentation?”  This year, the ideas that stuck with me are:

1. If I could invest in any real estate, I’d want to own existing apartments or warehouses in places like Lancaster County.

One of the speakers mentioned that pre-COVID, the average daily work commute was around 30 minutes.  Today, it is an hour.  He explained that as more people are spending fewer days in the office and working more from home, some people do not mind making a longer commute a few days a week.
…
Continue Reading New Trends in Lancaster’s Commercial and Industrial Real Estate

It has been about half a year since the terrible collapse of Champlain Tower South in Surfside, Florida.  Because of this tragedy, condominium and homeowners’ association boards and owners have been concerned about the structural safety of their buildings. And now Associations are facing hard questions from mortgage companies concerning both maintenance and capital reserve balances.

Role of Fannie and Freddie in Mortgage Lending

Fannie Mae and Freddie Mac are two governmental entities that guarantee mortgage loans for residential properties, like condominiums and homeowners’ associations.  They put out guidelines – requirements for association budgets, documents and practices – that a community needs to meet for Freddie Mac or Fannie Mae to back a mortgage.
…
Continue Reading Surfside Towers Collapse Causes Tighter Maintenance and Capital Reserve Requirements for Associations

At the November meeting of the Lancaster Commercial and Industrial Real Estate Council, Rich Weeber of Regal Abstract warned of the problems that the “Foreign Investment in Real Property Tax Act” or FIRPTA could cause in real estate transactions. In a room full of real estate professionals, we discovered that some people had no idea what FIRPTA was, and the rest of us only worked through it when we had to. It didn’t seem like anyone felt 100% comfortable with what to do if it came up.

This post will explain what FIRPTA is, what to do if it applies in a real estate transaction, and the dangers of not paying attention to it.

What is FIRPTA?

Congress enacted FIRPTA in 1980 to manage foreign investment in U. S. real estate. (I remembered it as a reaction to Japanese investors buying American property, such as Pebble Beach Golf Course, Rockefeller Center and lots of other Manhattan properties in the 1980’s, but it turns out the law was passed before those things happened.) The goal of FIRPTA is to capture income when a “Foreign Person” sells “U. S. Real Estate.”
…
Continue Reading What is FIRPTA, and What Do I Need to Know About It?

This post was originally published on December 3, 2020 and updated on December 6, 2021.

This time of the year, our thoughts turn to family and friends.  Maybe we reflect on the past year or look forward to the next.  For association boards and property managers, these happy thoughts are interrupted by questions about snow removal. When do we call snowplows? What kinds of deicers should we use? And does our association have any liability for slips and falls?
…
Continue Reading HOA Snow Removal: Your Questions Answered

In Part 4 of this series, I discussed how the Automatic Stay stops collection efforts against Unit Owners. In this entry, I want to go through a typical timeline for a Chapter 13 Bankruptcy case — mostly from the Association’s perspective. I do not intend this to be an exact breakdown of the Bankruptcy Court’s filing deadlines and procedures. Rather, this is more of a general, “what to expect” timeline.

Before I do so, remember that when a Unit Owner files for Bankruptcy, they usually have debts that they cannot pay without that help. In our situation, it usually means that they are far behind on their mortgage and/or assessments. Very often, a Unit Owner files for Bankruptcy to stop a foreclosure by the Bank or the Association. When a Unit Owner files for Bankruptcy, they often owe thousands or tens of thousands of dollars to the Association and hundreds of thousands of dollars to the mortgage company.
…
Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: The Lifecycle of a Chapter 13 Bankruptcy

Due to increased property foreclosures, Lancaster County has developed a new Residential Mortgage Foreclosure Diversion Program (RMFD).  The Program gives a separate pathway that residential mortgage foreclosures need to follow.  Hopefully, the RMFD will allow homeowners to work out mortgage defaults without losing their homes through foreclosure.  If so, the RMFD has the added bonus of taking some foreclosure cases out of the Court’s schedule.

Eligibility

A homeowner with a mortgage in default is eligible for the program if the home:

  • is owner-occupied
  • is the owner’s primary residence
  • is part of a building with four or fewer residential units
  • has a remaining balance on the Mortgage of $400,000 or less
  • is not part of any bankruptcy, divorce or estate proceedings

…
Continue Reading New Foreclosure Process in Lancaster County

We all know someone with a story like this these days:  You find the house of your dreams.  It is in a good neighborhood with a good school district.  You are preapproved for a mortgage, and you tell your realtor to put in an offer for the full asking price.  The next day, your realtor tells you that there were five all-cash offers all over the asking price.  So you lose out on the home.  For some, this scenario has played out over and over again in the past 18 months.

From the outside, today’s housing market looks a lot like the one in 2006.  Buyers are racing to make offers on existing homes.  Developers are overpaying for vacant land, hoping to sell at a high enough price to cover their debt.  People much, much more qualified than me — like Nobel Prize-winning economists and professors — are trying to figure out why housing prices are increasing so rapidly.  And more importantly, they are trying to figure out what is coming next.

Is this a housing bubble?  Is the market going to crash again like it did in 2008?
…
Continue Reading Will Housing Prices Ever Come Down? Comparing the Housing Bubble of the 2000s to Today

In the last installment of the series, I went through some of the terms that Associations need to know when a Unit Owner files for Bankruptcy.  This edition will talk about the “Automatic Stay” and how it affects Creditors like an Association. The first thing to remember is that Bankruptcy is a way to allow people who have debts to get a fresh start.  The Automatic Stay gives Debtors some cooling off time.  It is a period where Debtors do not have to worry about anyone trying to collect against them.

How Does an Automatic Stay Limit Collections?

When someone files for Bankruptcy, they automatically get protected by an Automatic Stay.  Basically, the Automatic Stay stops all actions against the Debtor. The Automatic Stay prohibits anyone from starting or continuing any kind of legal action against a Debtor that does any of the following:
…
Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: The Automatic Stay

Has your Board, especially if it has a financial professional on it, ever looked with dismay at the low interest that a Capital Reserve Fund is earning?  They may think that if they could get a better return on that Reserve Fund, then they could do more projects.  Or they could reduce assessments.

This is when they ask about investing the Reserve Funds. Some of the questions that I get the most are:

  • How can an Association invest their capital reserve funds?
  • Does the Association need to keep its money in CDs?
  • Can it invest in the market to get a better return?

…
Continue Reading Can an Association Invest Its Capital Reserve Funds?

In the last installment of this series, I explained that Bankruptcy is a federal law designed to help people who owe money get a fresh start.  In this part, I want to explain some terms that are helpful to remember.

These are going to be the way that I think of the terms – in plain English.  If you want to see the definitions in the official United States Bankruptcy Code, you can look here.
…
Continue Reading Condominiums, Homeowners’ Associations and Bankruptcy: What is an “Automatic Stay” and Other Terms You Need to Know