Real Estate, Zoning & Land Use

For many years, Pennsylvania has been one of the few states that did not recognize like-kind exchanges (also known as 1031 exchanges or land swaps).  Now, with the passing of Act 53 of 2022 by Governor Wolf, Pennsylvania finally has adopted 1031 exchanges. This change may lower your tax burden on real estate transactions and even encourage more investment in the state.

What is a Like-Kind Exchange?

A like-kind exchange is a strategy under the Internal Revenue Code to exchange property of the “same nature, character, or class” without paying federal income tax. The type of property usually doesn’t matter as all real estate is considered like-kind to each other so long as it’s located in the United States of America. For example, an investor may want to sell her residential rental to purchase an apartment building or an office building.

Continue Reading Like-Kind Exchanges Better in Pennsylvania

Mark Twain was right – no one is making any new land.  He probably had no idea there would be a shortage of developable land around the historically rural Lancaster County.  Two recent programs of the Lancaster County Commercial and Industrial Real Estate Council (Lancaster C&I) highlighted this problem and showed one possible solution to the shortage of available developable land: changing how you use the land you already have.

Continue Reading Leveraging Our Land: Promote Innovation, not Acquisition Says Lancaster C&I

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

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

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

On October 29, 2020, Governor Wolf signed House Bill 2438, Expanding Broadband Access with Existing Infrastructure, into law.  This new bill will make it easier for rural residents of Pennsylvania to access high-speed broadband internet by changing the rules for easements.
Continue Reading Easing into Easements: PA Expands Access to Broadband Internet

**UPDATE 5/9/2020**  Governor Wolf ordered all foreclosures and evictions delayed until July 10, 2020.  If a mortgage company, landlord or manufactured home park owner has already sent out the required paperwork to start a foreclosure or eviction (Act 6 or 91 Notice, Notice to Quit, MHCRA Notice, etc.), they have to start all of the

Are you thinking about investing in Pennsylvania real estate? If so, forming a Pennsylvania limited liability company (LLC) has numerous benefits that will save you time and money in the future.

Here are the top five reasons why the LLC has become the entity of choice for investment real estate ownership in Pennsylvania:

  1. Realty transfer tax implications and timing

If you plan on owning real estate in an LLC, timing is critical to avoid paying Pennsylvania’s realty transfer tax more than once. Realty transfer tax in Pennsylvania is 2% of the value of the real estate.

You should form the LLC prior to signing the agreement of sale, and the party entering into the agreement of sale should be the LLC, not one or more of the individuals’ names. The reason for this is that Pennsylvania’s realty transfer tax law provides that a taxable event includes an assignment of an agreement of sale, which would trigger transfer tax twice.

Further, if you buy the real estate in your individual name and later wish to transfer the property into an LLC that is owned by you, you would also be required to pay realty transfer tax on that transfer.

Creating an LLC from the outset would avoid paying more tax than you are legally required to pay under the above two common scenarios.

  1. Limited liability protection for owners of the LLC

The owners (known as members) of an LLC enjoy limited liability for the debts and obligations of the LLC and the negligent acts of other members. A member’s liability is limited to the amount of his or her investment in the LLC, and their personal assets would be protected in the event causing liability.
Continue Reading Why (and When) You Should Consider an LLC for Real Estate Investments