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2015 Fall Newsletter

2015 Fall Newsletter

August 21, 2015 Posted by admin
“Making You Look Good is Our #1 Priority ”

What’s New:

As our summer begins to wind down, the real estate market does not seem to be following in step. It has been a very productive and busy summer and typically late August and early September follow suit. Interest rates continue help fuel the home buying and selling processes and well as keeping our lenders busy with refinances.

Market News:

Two months ago, it appeared that the days of 30-year fixed rate mortgages at less than 4 percent had fallen by the wayside permanently. But recent economic uncertainty has sent those rates tumbling.

According to the latest data released August 14th by Freddie Mac, the 30-year fixed-rate average fell to 3.91% with an average 0.6 point. The week prior to that it was 3.98%.

The 15-year fixed-rate average decreased to 3.13 percent with an average 0.6 point and a 5-year ARM remained at 2.95% with an average 0.4 point. This is down substantially from a year ago when it was 3.27%. The one-year ARM average rose slightly to 2.54% with an average 0.3 point.

The anticipated negative employment report helped drive down the rates by driving down Treasury yields. This in turn caused an increase in mortgage applications, according to the latest data from the Mortgage Bankers Association. Total loan application volume increase 4.7% from the prior week, while the refinance index climbed 6% and the purchase index rose 3%.

How long does it take to build a home?  Well, although the time can vary depending on numerous factors, according to the 2014 Survey of Construction (SOC) from the Census Bureau,  the average completion time of a single-family house is around 7 months, which typically includes approximately 25 days from authorization to start and another 6 months to finish the construction.  Houses built for sale took the shortest time (6 months to completion after obtaining building permits), houses built by licensed contractors hired by an owner took around 8 months from permit to completion and homes built by owners required the longest time (11.5 months).

Save 1031 Exchanges. 1031 Activity is up! However, so are the calls for tax reform. 1031 has been on the table for repeal or limitation for some time. In turn, the Federation of Exchange Accommodators (“FEA”) of which Corporate Exchange Services is a member, continues to advocate in Washington DC and beyond for the preservation of Section 1031 of the IRC. You can learn more about three new studies quantifying how Section 1031 drives job creation and economic growth in the US by going to:

  1. Ling-Petrova Microeconomic Study Overview;
  2. Ernst & Young Macroeconomic Study Overview;
  3. National Association of Realtors® (NAR) “Like-Kind Exchanges: Real Estate Market Perspectives 2015”;

You can also learn more about the FEA’s efforts to preserve like-kind exchanges at www.1031taxreform.com.

Legal News and Case Law:

Association Liens. In Great Lakes Shores, Inc. v Bartley, the Michigan Court of Appeals reversed the trial court’s ruling and held that an association was entitled to its attorney fees in an action to enforce a lien against a property owner for unpaid dues and assessments. The plaintiff was designated to administer a summer resort. “Lot owners are required to pay yearly dues and assessments, which are used to maintain the resort property and to pay for taxes and insurance.” Defendant had paid dues and assessments in the past, but after 2009 failed to pay. Plaintiff then recorded a lien for the unpaid dues and assessments, and it later filed suit. The trial court granted plaintiff summary disposition because defendant did not provide any evidentiary materials to contradict plaintiff’s evidence showing that she had received the invoices. However, it declined to award plaintiff attorney fees and later denied plaintiff’s motion for reconsideration. The appellate court concluded that it was “clear that defendant, as a lot owner in the resort, was a shareholder” in the plaintiff and that the “bylaws of a corporation constitute a contract between a corporation and its shareholders.” The bylaws in the case at hand stated that all “annual dues and/or special assessments levied against any or all members not paid by August 31st each year shall become a lien upon the property of the delinquent member and such delinquencies may be enforced by Court action. All costs of such action shall be assessed to the member and become part of said lien, including by [sic] not limited to actual attorney fees.” While defendant argued below that attorney fees were only recoverable if plaintiff foreclosed its lien, the provision clearly contemplated “permitting both a lien and a separate action to collect delinquent dues.”

Corporate Settlement Solutions has many Michigan branch offices to serve you—Traverse City, Suttons Bay, Elk Rapids, Charlevoix, Bellaire, Mt. Pleasant, and Big Rapids in addition to providing services throughout the eastern United States.

Maura A. Snabes, Esq., CES®, CLTP – Sr. Underwriting & Compliance Counsel

Phone: (231) 547-5220×102/802 Bridge St., Charlevoix, MI 49720

e-mail: msnabes@visitcss.com.

This Newsletter may be construed as an advertisement as defined in Public Law 108-187. A recipient of this Newsletter may decline to receive future messages by making such a request to the above e-mailed address.


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