| In This Issue: Monday, January 9, 2006 | |||||
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INDUSTRY NEWS AND EVENTS |
Inform Staff and Clients about Tenants-in-Common |
| The RCA has created a brochure with information addressing issues surrounding tenants-in- common (TIC). This new investment vehicle, frequently used to complete 1031 exchanges does hold risks and rewards, so it’s best to be informed up front. The brochure provides answers to questions on the business of a TIC transaction. How to talk to clients to help them evaluate elements of the TIC investment and the ethical considerations and risk management issues that apply when working with a client who wishes to acquire a TIC interest are also discussed. Order the brochure with valuable information for real estate professionals from the REALTOR store. For a more comprehensive look at the issue, download the RCA’s “Hot Topic” Report on Tenants-In-Common here. |
Get Ready for the First Online Convention for Commercial Real Estate |
| Commercial Source.com is the on-line convention and trade show from the RCA. The free one week convention, June 6-12th, is your opportunity to visit virtual exhibitor booths of commercial real estate products and services. Commercial Source.com is a unique and comprehensive site for the commercial real estate professional. Find what you need to support your practice. Attend seminars, hear speakers, network with colleagues and vendors. Registration will open next month, plan on attending this ground breaking event. |
2006 Calendar of Events in Commercial Real Estate Industry |
| The 2006 calendar is available from the RCA web site. Browse the calendar and visit the web sites of industry organizations to evaluate events around the country. Make your plans to learn, network with peers and influence policy from the over 50 events sponsored by a variety of interest groups. |
PUBLIC POLICY UPDATES |
Congress Passes, and President Signs, Legislation Extending the Terrorism Risk Insurance Program |
| Over the past month, the House and Senate reached agreement on the extension of the federal terrorism re-insurance backstop program for an additional two years. The house passed a modified S.467 on December 17th that more closely tracks the senate version passed on November 18th. The legislation, which the President signed on December 23rd, extends the terrorism risk insurance program for another two years, increases the point at which federal backstop assistance to insurers kicks in from $5 million this year to $50 million in 2006 and $100 million in 2007, and mandates the President's Working Group on Financial Markets (which include the treasury secretary and chairmen of the Fed and SEC) to develop a long term solution that diminishes reliance on federal support. NAR supported the extension of this program to ensure the availability and affordability of terrorism coverage -- a vital component of the financing of commercial properties. Read more on the impact to REALTORS®. |
Patriot Act Conference Report would Increase Safeguards for Business Records |
The House approved the conference report, while the Senate did not, prompting both houses to pass a five week extension of the expiring provisions of the Patriot Act so that remaining issues can be resolved.
In September, NAR, along with several other business interest groups, signed a letter to conferees urging them to consider placing checks on the government's ability to seize business records with out having to provide much in the way of justification.
The draft conference report contains provisions that require the government to:
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A Closer Look Called for Commercial MortgagesT |
| The top accounting firms requested that Financial Accounting Standards Board (FASB) review its rules governing commercial mortgages securitized through qualified special purpose entities -- a common vehicle for the securitization of commercial mortgages. The accounting firms are concerned that servicers of commercial loans may have too much flexibility under current FASB rules to modify or reposition their property. The accounting firms are looking to FASB to define how much flexibility should be permissible. If FASB takes a narrow view, property owners with securitized loans would have less flexibility to reposition property, and borrowers would become less likely to have their financing securitized. NAR is working with Capital Consortium members to develop a response that would quantify the market impact of a narrow interpretation of these FASB rules. Read more about FASB and the status and outlook. |
15 Year Leasehold Depreciation on hold Until Next Year |
| In 2004, as part of a larger tax package, Congress changed the depreciation schedule for leasehold improvements from 39 years to 15 years for one year only. The reduced depreciation schedule expired on December 31, 2005. The extension of that provision was part of a larger tax reconciliation package that failed to get enacted before the end of the year. Tax reconciliation is expected to be a top priority early next year, and NAR will fight for extension of the 15 year depreciation schedule provision. |
RESEARCH, RESOURCES, LEGAL |
BRAC Presents Opportunities for Commercial Practitioners |
| Now that the Department of Defense has finalized the list of military bases to be closed in 2006, prepare yourself to participate in community re-development and property disposition opportunities in the affected areas. Gain a better understanding of the issues involved in the militaryBase Realignment and Closure (BRAC) process from the NAR Field Guide to BRAC. The Guide contains the list of bases to be closed, useful reports, articles, and documents including case studies, and tips for buying land on closing bases. |
No Commission for Broker in Personal Transaction |
| California court rejects commission claims, as brokerage services are only provided when real estate professional is representing a third party. A California court has considered whether a broker could collect a commission as damages from a personal real estate purchase contract when the seller breached the contract. The definition for a real estate broker is an individual “who, for a compensation…negotiates to do [certain specified] acts for another or others.” Since the Broker was acting on his own behalf in this transaction and not on behalf of any third parties, the court ruled that he was not offering brokerage services and therefore the Broker was not entitled to receive any compensation from the transaction. Read more about the case in Letter of the Law |
The Latest from NAR Research for Commercial Practitioners |
| The impact of hurricanes is affecting many local commercial real estate markets, but job creation and increased trade are shaping the overall market, according to the Commercial Real Estate Spotlight from NAR Research and the RCA. Get ready, the forecast is for another record year for investment sales. The Spotlight is available in an abbreviated version to non-registered users of realtor.org, be sure to register at the realtors.org web site to access the full version of the Spotlight than includes sector forecasts. |
Supreme Court Rules in Favor of Property Manager |
| The Supreme Court of the United States has considered whether a company, who managed a multi-unit apartment building, properly removed a case to federal court. The case involves tenants who discovered toxic mold in their apartment. The Tenants moved out of their apartment, leaving their possessions in the care of property manager, that’s when things got complicated. Read more in Letter of the Law. |
AFFILIATE NEWS |
Build Knowledge About Real Estate Management Via IREMFIRST |
| If you’re a commercial REALTOR seeking to build or expand your knowledge about real estate management, turn to IREMFIRST (F,or Information, Resources, Solutions and Training), IREM’s one-stop, readily accessible, online information resource. Reached at www.IREMFIRST.org, this innovative knowledge management initiative will quickly connect you to all kinds of industry information including articles on a particular topic, the latest research, a glossary of real estate management terms, a forms database, marketing and leasing tools, and much more. |
Report compiled by Carolyn Schwaar, cschwaar@realtors.org, 312/329-8874. |
| QUESTIONS on this report? Visit the INS FAQ and online feedback area on REALTOR.org. CLICK HERE. |
