Dunkin' Donuts Opening on The Corner

The first Dunkin' Donuts on UVa' s Corner will open next week. Grand Opening is October 22nd at 1pm. I am usually a huge local food source advocate, but this store is owned by local clients Andy and Randi Rod. There is a rumor they may be giving away free-coffee-for-a-year cups at the Opening...

Did Coca-Cola's Historic Designation Cost Charlottesville Jobs?

Neil Williamson, on the Free Enterprise Forum Blog, suggests so.

Two years ago, the Planning Commission voted in favor of designating the Coca-Cola Building on Preston Avenue a historic property, despite initial objections from a representative of the owner. At the time, I was one of three Commissioners to vote against the designation (the vote included other properties). My reason: the City had never before imposed architectural controls with a historic overlay against the wishes of the property owner.

Last week Coca Cola Bottling announced that its offices in the City of Charlottesville would be closing, resulting in 42 jobs that would be lost or moved to Richmond. Michael Harvie, Executive Director of the Thomas Jefferson Partnership for Economic Development (TJPED) said he got no advance notice from Coca-Cola about the closing and layoffs.

What I find even more disappointing than the demise of another old-line business in the City is the loss of the business presence on Preston Avenue of this building. Preston is one of the only boulevard-looking roads in the City and is a designated Entrance Corridor, allowing for density and mixed use development. It serves as an important connection between the University neighborhood to the north of central Grounds, and Downtown. Yet we seen very little renewal or redevelopment on Preston.

Whether the historic designation was part of Coca-Cola's departure may never be determined. But it's time to start a discussion of whether City zoning regulations, which in some cases require two levels of review (Historic Design Review by the BAR and Entrance Corridor by the Planning Commission) are hindering the vitality and improvement of Preston, High Street, West Main, and other arteries in our City.

How to Make An Easy $500 from A Lender

Under Virginia law, any lender who is secured by a lien against real estate must release that lien within ninety (90) days of the date that the debt is paid off in full. Section 55-66.3(A)(1) of the Code of Virginia (1950, as amended). If they fail to do this, they must pay to the borrower a fee of $500 upon demand.

This rule pertains to any lender, any type of borrower, and any type of real estate. There is no defense that I know of for failure to release. The public policy reason for the law is so that land owners can quickly obtain clear title to their property. If the lender does not pay the $500, they will be liable for court costs and attorneys fees expended to pursue collection of the fee.

The release of a lien is most typically accomplished by the preparation and recording of a Certificate of Satisfaction, which is a one-page form that references the original deed of trust or memo of lien. Sounds pretty simple, but some lenders just don't get around to it.

With interest rates at 50-year lows, many smart borrowers are choosing to refinance their mortgages to take advantage of lower payments. And are paying off old loans.

Just last week, I settled a client's claim against a lender whom I shall call Behemoth Bank. The Bank did not release the lien in the 90 days and refused to cough up the $500 when we sent them a demand letter for it. Even after we filed suit against them in General District Court and reiterated our demand, they proceeded to defend the claim all the way to the day before trial. They ended up paying my client the $500 and significant legal fees incurred to perpetuate their mistake. I have another two claims against Behometh Bank that I am handling for another client who refinanced and did not have their old liens released anywhere near the 90-day period.

If you are paying off a lien for any reason, mark your calendar for 90 days after the lender receives your funds. If there is no release, you can make an easy $500 from your lender. Now, how often does that happen?

UPDATED AUGUST 27, 2010: Today, I settled another two cases against Bank of America based on their failure to release liens against my client's property within the 90 day period after they refinanced.

Court House Recording Costs to Increase $10 on July 1st in Virginia

A $10 increase in court house recordation costs for any type of deed, deed of trust, and certificates of satisfaction (those important documents that release liens of deeds of trust) flew under the radar during this year's Virginia General Assembly session. Although it was part of the original Budget Bill introduced, the increase must have seemed de minimus enough not to warrant discussion compared to other elements of the budget debate in Richmond. Until it was signed in to law in mid- May as part of the large biennial budget, it went largely unnoticed by those who will be most affected by it.

The increase will take effect July 1st for instruments recorded that day forward. Under the new RESPA Rules that went into effect this year, mortgage lenders are already permitted only a small margin of error in estimating closing costs for residential borrowers. For loans originated before July 1st, but recording after, this provides another red herring.

Settlement agents closing for first time homebuyers who close before the June 30th deadline for the tax credit (see post on this blog dated April 1, 2010) but who don't get to the court house to record by the end of June may be dinged for this additional $10 on July 1st.

More Power to Ya: Virginia Adopts Uniform Power of Attorney Act

If you have ever given a power of attorney to someone or have been named as an attorney-in-fact for someone in Virginia, you should know about Virginia’s new Uniform Power of Attorney Act which is effective July 1st.

The new law applies not only to new powers of attorney granted after July 1st, but also those granted prior to July 1st, so it is retroactive and governs all existing powers.

Under the new law, all powers of attorney are deemed to be durable, which means they continue to be effective, unless they expire by date or upon an event specified in the power of attorney.

No longer do hard or original copies of powers of attorney need to be retained or produced; now, electronic and photo copies are deemed to have the same effect as an original. Powers of attorney also do not have to be delivered to the agent to become effective.

The new law permits a principal to grant powers to the agent in the power of attorney by simply incorporating by reference certain Sections of the Code of Virginia. For the first time ever in Virginia, where powers of attorney have been strictly construed, the powers of an agent will be deemed to include other incidental powers necessary to carry out general duties. Duties and standards of care are also now codified by the Act.

The law permits an agent to personally benefit from an act or transaction that he enters into on behalf of the principal. Agents are exonerated from liability for their actions unless they act dishonestly, with improper motive, or are recklessly indifferent to their powers. This means that the threshold for holding that an agent has breached their duties to the principal is set very high.

The General Assembly declined to include in the Act a statutory Power of Attorney form. However, there is a new Certification form whereby an agent can certify the validity of the power of attorney and their authority under it.

BuilderFish: Construction to Your Scale

My friend Todd Hawkins and his business partner Jonathan Fishbeck may not be the first Class A contractor to find themselves focusing on retrofitting and modernizing homes in the current market, where virtually no new home starts are happening. But there is something original and refreshing about their approach to business, as demonstrated by their motto, "Recycle Your House." Their angle: many homes are in need of weatherization and energy efficiency upgrades that will not only improve functionality, but show up as huge true savings in energy costs. Todd is the "Director of Client Happiness" and Jonathan is "Captain of Construction," titles that show the refreshing BuilderFish approach to their business, as does their irresistible logo above. Find out more about BuilderFish at www.builderfish.com.

Governor Signs 4 Major Real Property Bills Into Law

Last week, Governor McDonnell signed into law four (4) significant pieces of legislation affecting real property laws in Virginia:

Mechanics Lien laws (SB 105): Mechanics Lien Agents (MLA's) no longer need to consent to being designated as such. In addition, the law clarifies the requirements for the Notice required to be given to the MLA when a contractor or sub begins to perform labor or adds materials to the project. Notice now just needs to go to the MLA posted on the building permit when the contractor begins work, not, as the law previously required, the MLA noted when the building permit was originally issued. The law also allows building permits to be freely amended to add MLA's later on, bringing the law into conformity with the realities of construction work, where building permit are often pulled without an MLA named, or the MLA is changed at a later time.

Residential Landlord-Tenant Act (HB 407): Several new provisions are beneficial to landlords, but the two most important, in my view, are: 1) clarifying the ability of a landlord to place damage or renter's insurance and then bill the tenant for that premium as part of the rent cost; and 2) allowing the landlord to withhold returning the security deposit until the final utility bills are received, instead of being required to return the deposit or portion thereof to the tenant 45 days after the lease term ends, as the law currently requires.

Exchange Facilitators (HB 417): The "Exchange Facilitators Act." I call this the "Post-LandAmerica Debacle Statute." For the first time, any person or entity who serves as a qualified intermediary in a Section 1031 Deferred Like Kind Exchange will be regulated. Exchange Facilitators will be required to maintain the escrowed funds in separately identified accounts or in a qualified escrow or qualified trust; they will be required to maintain errors and omissions insurance; amounts escrowed with them will be deemed to be held in trust and must be deposited in a financial institution, with interest accruing to the parties or otherwise invested per a written agreement; they will be required to have a cash deposit or letters of credit equal to at least $250,000; they must account for all moneys and property; and they shall not commingle escrowed funds with other accounts nor lend such monies out. Sadly, this law codifies the code of conduct that some of us thought was always expected of qualified intermediaries, but which was violated by LandAmerica Exchange Services which essentially embezzled from their own exchange customers prior to filing bankruptcy. (See prior post on this Blog dated May 15. 2009.)

Expanding "Vested Rights" in Virginia (HB 1250): Virginia's "Vested Rights" Statute establishes when a landowner can know for sure that a decision of government affecting their land will "vest" certain rights in the property which cannot be altered by a subsequent governmental action. This new law expands the definition of a "significant affirmative governmental act" by adding written orders, decisions or determinations of a zoning or other administrative officer to the list. Previously, only the decision of a governing body, such as the Boards of Supervisors, Board of Zoning Appeals, or Planning Commission, could be considered to "vest" rights. Because so many government decisions are delegated to staff such as zoning administrators and planning managers, landowners had not previously been able to rely on the guidance or decisions of these powerful local government officers, whose decisions carry a lot of weight. Now they can. Critics of this legislation say that it is now possible that emails and casual correspondence with landowners may be deemed to be a governmental action. In my opinion, this legislation is very good law.

18 Years Ago Today: Hawes Spencer Saves the Movie Palace, now the Jefferson Theater

Eighteen years ago today, Hook Editor in Chief Hawes Spencer was the successful purchaser at the foreclosure of what was then the Movie Palace, now The Jefferson Theater, here in Charlottesville. A very young Spencer emerged with the winning bid of $310,000, outbidding several local developers including Gabe Silverman who already owned several properties on the still-dormant Downtown Mall. Spencer's attorney wore a Mickey Mouse watch.

Homebuyer Stimulus Tax Credits: Andele! Andele!

Under the extension of the first time homebuyer tax credit program, first time homebuyers are eligible for a tax credit (not just a tax deduction) if they are under contract by April 30th, 2010, and close on their purchase no later than June 30, 2010.

The tax credit is equal to ten percent (10%) of the purchase price for the home, with a maximum of $8,000.00.A first time homebuyer is defined as someone who has not owned a home within the last three (3) years, so the definition is fairly liberal.

The program was extended before its initial sunset date last fall. When it was extended, Congress added an additional tax credit for current homeowners who “move up.” Owners who already own a residence and buy a new home within the same time constraints may be eligible for a $6,500 tax credit, provided that they owned their current home for five (5) consecutive years during the last eight (8) years.

The bonus factor on the tax deduction is that it is not a “standard” deduction, but a dollar-for-dollar credit. If the taxpayer cannot use the entire credit, it is refundable, which means the taxpayer will receive a refund from the IRS for the unused portion of the credit. Now, that’s a nice bonus to spend at Lowe’s. Or better yet, at your neighborhood hardware or landscaping supply store!

The tax credit applies fully to taxpayers who earn $125,000 and below per year. Taxpayers who earn more than that but below $145,000 are eligible for a partial credit. For joint filers, the tax credit applies fully to a couple who earn $225,000 in combined income, with a partial credit up to a maximum of $245,000 in joint earnings.

The maximum purchase price that this credit can be used towards is $800,000.

But April 30th is coming soon.

Andelé! Andelé!

Bishop Gets Rooked: Catholic Diocese May Have to Pay Real Estate Commission Even Without Written Contract

In a recent Virginia Supreme Court case styled C. Porter Vaughan Inc. v. The Most Reverend Francis S. DiLorenzo, Bishop of the Catholic Diocese of Virginia, Inc. (Record No. 090110) (Va. 2010) and decided February 25, 2010, a real estate company sued to recover $242,000 in commissions from the Catholic Diocese of Richmond. The real estate firm claimed that, despite not having a written real estate brokerage agreement, the Diocese was still liable for commissions due on the sale of property which was ultimately conveyed to Virginia Commonwealth University.

The Supreme Court reversed the trial court’s decision to throw out the real estate firm’s claim based on the Diocese’s argument that the claim was barred by the Statute of Frauds. The Statute of Frauds is a venerable common law principal which says that certain types of contracts must be reduced to writing to be enforceable. In its decision, the Court stated that the real estate contract which was entered into between the Diocese and VCU, naming the realtor from C. Porter Vaughan as the Bishop’s agent, was a sufficient written agreement to evidence the existence of an agreement to pay commissions.

CLewis N.B.: While it will never be good practice for realtors to fail to obtain their clients’ consent to a brokerage agreement, this case certainly signals the Court’s willingness to find an agreement through other writings and agreements, so that equity can be done where a realtor was clearly the “procuring cause.”