AARP Legal Counsel for the Elderly’s (LCE) Alternatives to Landlord/Tenant Court for the Elderly Project (“Alternatives Project”) began in 1999 to prevent eviction of elderly tenants.* The project encourages property managers to refer tenants upon identifying signs of problems (i.e. changes in patterns of rental payments for long-term tenants, decline in housekeeping, accumulation of personal possessions) in lieu of pursuing eviction. Referrals also come from landlord’s and tenants’ attorneys, judges, administrative agencies, neighbors, community social workers, other units within LCE.
The Alternatives Project’s cross-disciplinary team consists of attorney, social work, voluntary bill-payer and de-cluttering services. For tenants already in landlord/tenant court, the project attorney negotiates reasonable accommodations to enable the social worker to link elders with in-house and community services (social workers, rental assistance, health and mental health referrals, home health care services and alternate housing).
The Alternatives Project focuses on correcting the causes of eviction and enabling elders to remain in their apartments in lieu of institutionalization. In turn, landlords benefit by avoiding the cost and time of bringing eviction suits and defending fair housing claims, and the unpleasant experience of evicting an elder. The project also provides meaningful opportunity for volunteer engagement. Youth volunteers are able to assist elders in de-cluttering efforts, and retired volunteers can assist elders as voluntary bill-payers and powers of attorney.
To refer a case to the Alternatives Project, contact the AARP Legal Counsel for the Elderly hotline at (202) 434-2120/2170.
*See Rhonda K. Dahlman, “Alternatives to Eviction of Elderly Tenants: A How-to Manual” (2003), (viewed January 9, 2007).
The New 2006 ALTA Forms - An Overview
By Stuart A. Kruger, Esq.
Stewart Title Guaranty Company
D.C. Metro Commercial Counsel
On June 17, 2006, the American Land Title Association (ALTA) adopted a series of new policy forms and endorsements that will quickly become the industry standard for most real estate transactions. Included in these forms are a new 2006 Owner’s Policy and Loan Policy, new and revised Endorsements, revised Reinsurance Agreements, revised Commitments, and a revised Short Form Residential Loan Policy.
The current plans by the ALTA are that the existing ALTA Loan Policy (10/17/92), ALTA Owner’s Policy (10/17/92), Short Form Loan Policy (10/21/00), and endorsements applicable only to the 1992 Policies will be de-certified as ALTA Forms on June 17, 2007. Thereafter, they may be issued if available in your jurisdiction and if specifically requested by a customer.
However, it is generally agreed that due to the enhancements added to the new 2006 forms, there will be little or no reason why someone would prefer to use the old forms. In almost all instances, the new 2006 forms provide better coverage for the insured.
In this and following articles, we will describe the main substantive changes that were made to the forms. Needless to say, if you try to compare the 1992 Owner’s or Loan Policy to the 2006 versions, you will be convinced that the new forms are totally and completely different from their predecessors. While it is true that significant changes were made, many of these are cosmetic and do not affect the substance of the policies.
Many of the changes that were made relate more to formatting of the policies or wording clarifications. For example, the insuring provisions are now grouped under a heading titled “Covered Risks”. There was no comparable heading in the 1992 policies. Another example is that the section of the policies that was titled “Conditions and Stipulations” is now referred to as “Conditions”.
Another change is in the area of defined terms. All defined terms are now capitalized. The definitions of certain of the defined terms were expanded and clarified while several new defined terms were added to each policy. Again, while some of these changes were substantive, many were more cosmetic in nature.
One major impact of changing the defined terms and policy formatting is that all of the ALTA endorsements had to be revised and reissued so that they now track the language used in the new policy forms. Each of the new endorsements can be identified by the “-06” that was added to the name of the endorsement. This may cause some confusion as we transition to the 2006 forms since we now have two entire sets of ALTA endorsements, one to be used with the 1992 policies and one with the 2006 policies.
In my next article, I will review the major substantive changes that were made to the Owner’s and Loan policies.
Changes to Greater Capital Area Association of REALTORS (GCAAR) Standard Forms
By Arthur F. Konopka, Esq., member of the REHLU Steering Committee and of the Contract and Clause Committee of the Greater Capital Area Association of REALTORS.
Residential Sales
The vast majority of residential real estate sales are conducted with the standard forms promulgated by GCAAR (Greater Capital Area Association of REALTORS) to their members. Those forms are under constant revision to accommodate changes in laws governing such sales and changes in the practice of the industry. Attorneys practicing in the area might be interested in some of changes which have occurred in the past year.
The Listing Agreement: Commission Due Upon Settlement not Procurement
The contract entered upon by a Seller and a Real Estate Broker for the marketing of real property is customarily called a Listing Agreement. The Listing Agreement, GCAAR Form #910, was significantly modified during the last year and the current form now bears the notation 8/2006 to show the month and year it was introduced into usage. Attorneys reviewing “standard forms” should always check the number and issue date of those forms, as some offices are reluctant to throw good paper (containing bad law) away.
Traditionally, and in particular in the version of the form which the new listing form replaced, a broker earned a commission upon procuring a ‘ready, willing and able buyer.’ Settlement of the sale was not a requirement for earning the commission, and in instances where buyers and sellers decided between themselves to cancel the deal, they could find themselves confronted with a demand for payment of the agreed upon commission.
The Listing Agreement lays the basis for the obligation of the Seller to pay, and the Sales Contract refers specifically to the obligation of the Seller with the language, “Seller irrevocably instructs the Settlement Agent to pay the Broker compensation (“Broker’s Fee”) at Settlement as set forth in the listing agreement….” See ¶ 22 of the Regional Sales Contract GCAAR Form # 1301 (9/2006).
It was the practice, however, of many brokers to waive their commission under these circumstances. A practice supported by the broker realization of a sense of fairness and by the broker’s desire to preserve good will with present, and potentially, future clients. Furthermore, the vast majority of Sellers and Purchasers did not focus on the exact language of the Listing Agreement and of the Sales Contract as it affected commissions. Most believed that they would owe a commission only if and when the settlement occurred.
In a response to the changing practice and obvious expectations of the clients, the standard for payment of a commission has been changed so that it is now predicated on settlement of the sale.
The new language of the Listing Agreement states: “Seller acknowledges that Broker’s Fee shall be earned and payable in the event that: Seller enters into a sales contract during the listing period with any buyer procured by seller, listing broker, or his sales associates, or other brokers or their sales associates, or any other buyer, provided the buyer performs and settles on said contract. ….” See Listing Agreement ¶6 A (1).
Many attorneys asked to review listing agreements on behalf of potential Sellers used to modify the standard forms to reach this end, however the standard form now recognizes what had become, over time, the expectation and perception of the client population.
Attorneys counseling on Listing Agreements should also note that in another context, both the Listing Agreement and the Sales Contract speak to the disposition of the Purchaser’s Deposit in the event of a default by Purchaser saying “…Seller agrees to pay the Broker one-half of the Deposit in lieu of the Broker’s Fee….” Under this provision of the contract, the broker could still be entitled to a fee, even without settlement occurring. In the event that a Purchaser and Seller decide to cancel their deal, or if a Purchaser just decides to walk away, abandoning their deposit, the Seller might still find a deduction taken from the deposit, unless the contract is suitably amended. See ¶ 6 (D) Listing Agreement and ¶ 26 of the Regional Sales Contract GCAAR Form # 1301 (9/2006).
Regional Sales Contract
The basic contract for the sale of residential in the District of Columbia is the GCAAR Form # 1301 (9/06). This form contract is used throughout the region, including the District of Columbia, Maryland, Virginia, and sometimes beyond. Each local jurisdiction augments the Regional Sales Contract with a Jurisdictional Addendum. Attention by reviewing attorneys should be closely paid both to making sure the Jurisdictional Addendum is utilized and attached, and then to its details.
One particular change to the Regional Sales Contract was the treatment of the financing contingency. These issues now appear in ¶ 10 of the contract under the title “Conventional Financing Terms.” There are three distinct subdivisions of this paragraph, and each addresses a different matter and those are: Seller Subsidy, Appraisal, and Financing.
¶10 A, SELLER SUBSIDY. This section indicates if and how much a Seller will pay as a concession towards the Purchaser’s settlement costs. The amount is to be indicated in a blank space provided. Good practice would be to insert “zero” or some such indicator in the blank so as to avoid any confusion or unauthorized alteration of the contract.
¶10 B, APPRAISAL. This section forces a choice as to whether or not the contract is contingent on the Purchaser receiving an appraisal which is no less than the Sales Price. If the contract is to be contingent upon an appraisal, then a separate form, the Addendum of Clauses, GCAAR Form #1332 (10/2005), must be utilized to specify the details of the contingency. ¶10 of the Addendum of Clauses addresses this issue. Essentially, this contingency allows for the Purchaser and Seller to agree if they wish, upon a reduced purchase price if the appraisal is low Failing such an agreement, the Purchaser may buy the property at full price or opt to cancel the contract. The Appraisal Contingency is not new, but its inclusion in the main contract is, so counselors are compelled to address the issue as to how it might affect the interests and rights of their respective clients.
¶10 C, FINANCING. This section forces a choice as to whether or not the contract is contingent on the Purchaser’s obtaining financing in a certain amount. The details and the amount of the financing sought will have been entered in ¶¶ 2 and 3 of the contract, but section 10 C now deals at far greater length and detail with the extent of the contingency, and such further issues as --how notices are to be given as to when a loan has been procured, or when financing has been denied thereby releasing the Purchaser from the contract. This section does not, as the Appraisal Contingency does, provide for a negotiation between Purchaser and Seller if a loan in the stated amount is not obtained, but nothing prevents the parties from amending their contract.
Interestingly, the financial contingencies, with all of their dates and deadlines, do not contain the magic words, “time is of the essence.” There is speculation that the precise identification of dates and deadlines, taken as a whole, actually achieve “time is of the essence.” but to date, we are unaware of any cases which have tested that issue. There is also some discussion that one of the other forms will be modified to create a default mode in which time-is-of-the essence where specific day or time frames are specified, no such modification has yet been made. Attorneys counseling their clients in these matters should be prepared to explain the seriousness of agreeing to deadlines, as the new contract, with its many admonitions as to set dates for performance and the threat of default if the dates are not met, may well be enforceable as written.
Vacant Properties
By Robert McKeon, Esq.
D.C. Office of Taxation and Revenue*
The Council of the District of Columbia recently enacted the Nuisance Properties Abatement Reform and Real Property Classification Emergency Amendment Act of 2006 (DC Act 16-586) that dramatically changes the processes surrounding vacant property and Class 3 Property tax classification. More particularly, this legislation caps the number of times a property may be excepted out of vacant status (and the resulting Class 3 Property tax rate) to a three-year maximum. The law is applicable beginning with tax year 2007 (October 1, 2006).
It should be easily agreed upon that vacant properties blight neighborhoods. Vacant properties result in significant increases in costs to society, including increased stress on police and fire resources, deterioration of historic structures, and decreased tax revenue due to diminished values of neighboring properties and the vacant property itself. In historic neighborhoods, properties that should be preserved for the future are allowed to deteriorate and become so dilapidated that even their own structures can pose safety hazards. For reasons not necessarily limited to the foregoing, the Class 3 Property tax rate is 5% of a vacant property’s value.
It has been argued that the Class 3 Property tax rate does not provide any incentive to owners to put vacant properties back into productive use. Given the significant appreciation in property values, the cost of rehabilitation of most properties is no longer an obstacle. Also, the tax sale is no longer ineffective. In 2001, the tax sale was revamped and now may be one of the most efficient and well-attended tax sales in the nation. Most importantly, the tax sale allows for the discounted sale of properties that have become upside-down, where the taxes are discounted to the amount of the highest bid. This discount sale was first used in 2004, whereby properties that habitually returned to the tax sale year-after-year were sold. If the properties were not redeemed, new owners with clean slates were awarded ownership to the properties.
Under the former vacant property and Class 3 Property classification law, the DC Department of Consumer and Regulatory Affairs (“DCRA”) would determine whether an improved real property was vacant under its own criteria. If DCRA determined that the property was vacant, it certified same to the Office of Tax and Revenue (“OTR”). OTR would then evaluate whether the property was vacant under OTR’s own set of criteria which were more expansive that those of DCRA. The end result was that DCRA had a large list of properties that were vacant, and OTR’s list was a subset thereof; the two agencies were not working with the same criteria, and there was an inefficient duplication of effort. Only when a property was not vacant under OTR’s list could it be taxed at the Class 3 Property tax rate. The owner of a property could appeal OTR’s determination of vacant status to the Board of Real Property Assessments and Appeals (“BRPAA”).
The new law amends mainly D.C. Official Code, Title 42, Chapter 31A, Subchapter II and § 47-813 to provide that:
a) DCRA is the sole agency to determine whether an improved property is vacant and therefore to be taxed as Class 3 Property;
b) OTR will continue to determine the vacant status of vacant land for Class 3 Property tax purposes;
c) The exceptions from vacant status for improved property under the jurisdiction of DCRA are as follows:
i) the property is US-owned;
ii) the property is owned by a foreign government;
iii) the property is under active construction or undergoing active rehabilitation, renovation, or repair and there is a valid building permit to make the building fit for occupancy that was issued, renewed or extended within 12 months of the required registration date;
iv) the property is actively for sale or rent for no more than 8 months;
v) the property has been excepted by the Mayor (administrative discretion);
vi) the property is presently unoccupied due to a casualty such as fire or flood within the past 12 months;
vii) the property is the subject of a probate proceeding or the title is the subject of litigation (excluding Title 47, Chapter 13A tax sale foreclosures) for no more than 2 years;
viii) the property is the subject of a development approval process before the Board of Zoning Adjustment, the Zoning Commission, the Commission on Fine Arts, the Historic Preservation Review Board, the Mayor’s Agent for Historic Preservation, or the National Capital Planning Commission; or
ix) the property is owned by a qualifying non-profit housing organization under D.C. Official Code § 47-3505(a).
d) The exceptions from vacant status for vacant land under the jurisdiction of OTR remains largely the same and are as follows:
i) the property is actively for sale or rent as of September 30 of the preceding tax year or March 31 of the tax year subject to an 8-month limitation;
ii) a valid building permit to construct a building to be occupied has been issued and construction is actively pursued as of September 30 of the preceding tax year or March 31 of the tax year;
iii) the property is encumbered by a deed of trust within the past 12 months and a building permit to construct a building to be occupied has issued;
iv) the property is owned by a qualifying non-profit housing organization under D.C. Official Code § 47-3505(a);
v) zoning does not permit the building of a structure on the property as a matter of right;
vi) the unimproved air rights lot appertains to improved Class 1 or Class 2 property; or
vii) property used as a parking lot is classified the same as any lot to which is appertains so long that all permits for such use have been obtained;
viii) abutting property with common ownership to the parent lot will be classified the same as the parent lot;
ix) vacant land separated from the parent lot by a public alley less than 30 feet wide shall be classified the same as the parent lot if the property is less than 1000 square feet, zoning does not permit construction and there is common ownership; or
x) the vacant land is in Northeast No. 1/Eckington Yards Special Treatment Area and the Buzzard Point/Near Southeast Development Opportunity Area (provided the owner is engaged in predevelopment activities).
e) Beginning with tax year 2008, no property under the same or related ownership that benefited from an exception for 3 or more years may continue to avoid the Class 3 Property tax rate. The exceptions to this rule are c(i), c(ii) c(v), and d(v) through d(x).
f) Properties currently benefiting from an exception will continue to so benefit through the end of tax year 2007, so long that any time restriction has not expired.
g) DCRA mails a notice of denial or revocation of registration to the property owner, or a notice that the property is a non-registered vacant property. The owner has 15 days to appeal to DCRA. DCRA must issue a final determination within 30 days of the petition date. Thereafter, the owner has 45 days to appeal to BRPAA.
h) Semiannually, DCRA must transmit a list of vacant, improved properties to OTR for which the administrative appeals have been exhausted. OTR will thereafter re-classify the properties from the half tax year during which either the owner first notified DCRA that the property is vacant or the owner received a notice of final determination from DCRA. Penalty and interest to the half tax year can only be assessed beginning 30 days after the real property tax bill issues.
i) The owner must notify DCRA when a change in vacant status occurs. If the change is approved, the new classification will be effective during the half tax year when DCRA was notified by the owner.
j) With vacant land and parking lots (OTR jurisdiction), OTR mails to the owner a reclassification notice giving the owner “new owner-type” appeal rights. The owner may only appeal under such provisions, and a Class 3 designation may not be appealed with the annual assessment notice. The owner has a duty to notify OTR within 30 days when the property changes classification. Classification changes are retroactive to the half tax year when the change occurred (subject to a 3-year statute of limitation such as with omitted properties). Penalty and interest can only be assessed beginning 30 days after the real property tax bill issues after any administrative hearing have been exhausted.
A hearing on the permanent version of this law should be coming shortly.
*The views expressed herein are not necessarily those of OTR.
April 5, 2007
12-2:00 P.M.
Topic: 1031 Exchanges
Luncheon Seminar
Will cover tenant-in-common exchanges, reverse and improvement exchanges, and triple net leased investments.
May 15, 2007
12-2:00 P.M.
Topic: Tenant Opportunity to Purchase Act (TOPA)
Luncheon Seminar
Will cover changes in the legislation for the rights of tenants during condo conversions.
June 15, 2007
12-2:00 P.M.
Topic: "New Rent Control Act"
Luncheon Seminar
June 26, 2007
12-2:00 P.M.
Topic: "D.C. Tax Sale Seminar"
Luncheon Seminar
