A critical investment tool which has been central to the rebuilding of our American economy – especially in diverse communities – is at serious risk as a provision in the $1.8 trillion American Families Plan is under consideration in Washington, DC.
The proposed cap on 1031 exchanges at $500,000 included in the plan is shortsighted and counterproductive. A cap on 1031 exchanges right now would severely restrict the ability and willingness to reinvest in commercial real estate and redevelop properties at a time in our nation’s economy when eager, courageous, and committed investors are needed more than ever.
IRC 1031 like-kind exchanges have allowed investors to defer taxes on the sale of a property if the proceeds are reinvested in a new property. 1031 exchanges have always been a cornerstone of a healthy and vibrant commercial real estate market. An academic study by Professors Ling and Petrova confirmed that investors who leveraged 1031 exchanges made appreciably greater capital investment into their properties than those without an exchange.
Strategic reinvestments to redevelop underperforming properties have generated immediate economic benefits – including jobs, labor income, property taxes and Federal taxes – far in excess of the Federal taxes deferred.
Without 1031 exchanges, many of my (Lippitt) clients would do nothing. Currently, investors large and small can defer taxes, add capital, and buy property that wouldn’t be possible without 1031. Some use it to upsize, others to downsize. Either way, the taxes are paid in full at upon sale.
Needed Capital for in Underserved Communities
More recently, the Black American community has increased its share of the commercial real estate investment market through the prudent use of 1031 like-kind exchanges, making a critical reinvestment in their communities while building personal wealth.
Disputes between landlords and tenants over the condition of the property can get ugly quickly. If you only hear the landlord’s side of the story, you get the impression that the tenant stopped paying rent and started making all kinds of unreasonable demands. If you only hear the tenant’s side, the landlord left the apartment in squalid conditions and refused to make repairs or respond to communication from the tenant. Just how bad does the apartment have to be before the lease becomes invalid, and what efforts do both parties have to make before taking their dispute to court? If you are involved in a dispute over the warranty of habitability of a rental property, contact the Denver real estate lawyers at the Law Offices of Eric Nesbitt, P.C.
What Makes a Rental Unit Uninhabitable?
Rental agreements come with an implied warranty of habitability, a promise by the landlord to keep the rental property in safe condition. Tenants have the right to be released from their obligations to pay rent if the landlord breaches the warranty of habitability. Colorado law considers the landlord to be in breach of the warranty of habitability if the condition of the rental property presents a threat to the health or safety of the tenant. These are just some of the conditions that make a rental property habitable:
● Heating, wiring, and plumbing that comply with legal regulations
● Working appliances, including refrigerators, stoves, and ovens, if the landlord promised to provide these in the rental agreement
● Pest control services and timely responses to infestations of insects or rodents
● Hot water in kitchen and bathroom faucets
If the required repairs are extensive enough to require the tenant to vacate the premises while the repair work is going on, the landlord must provide alternative accommodations. This could mean moving the tenant to a different apartment in the same building at no additional cost to the tenant. It might also mean paying for the tenant’s lodging in a hotel for several nights. Landlords also have a responsibility to notify the tenant within one business day if the landlord’s contact information changes. If the landlord sells the property or changes property management companies, it must provide tenants with the contact information of the new landlord or new manager within one business day.
Repairing a Breach of the Warranty of Habitability
Most rental agreements contain provisions about how tenants should contact landlords to request repairs and about the deadline by which the landlord must make the requested repairs. Tenants should present the landlord with formal notice of a breach of the warranty of habitability if the landlord has failed or refused to make the requested repairs. If the landlord does not repair the breach by making the repairs, tenants should contact a lawyer before taking additional steps such as withholding rent or vacating the premises.
If you suspect an issue you are dealing with falls within the realm of warranty of habitability, contact the Law Offices of Eric L. Nesbitt, P.C. at (303)741-2354 or via email to email@example.com.
Attorney Eric L. Nesbitt was recently interviewed by FOX31 Problem Solvers about what obligations landlords have to provide a level of security as we see crime on the rise as warmer months approach.
DENVER (KDVR) — The Denver Police Department tells the FOX31 Problem Solvers crime tends to increase during the warm weather months.
The Colorado Bureau of Investigation reports there were more than 200 robberies in the Denver area this year alone.
Forty percent involved firearms. Apartment garages can be a common target for thieves, police say it’s important to secure your belongings.
Charlene tells the FOX31 Problem Solvers she is afraid to walk through her apartment garage after having her car broken into.
“I knew that somebody had been here and I didn’t know when,” she said.
Tenants’ rights attorney Eric Nesbitt tells the Problem Solvers while residents are entitled to live in a safe environment, how much security a landlord provides can depend on the location of the property.
“If the premises are in an area where it’s been unsafe or crime ridden there might be a greater duty for the landlord to provide some level of security,” he said.
Denver Police Division Chief Ron Thomas tells FOX31 it is important to monitor who enters shared garages and residents must be aware of their surroundings at all times.
There are several situations in which a property seller may enter into two separate sales contracts at the same time. It is important to understand why a seller would do this and what rights both sellers and buyers have in these scenarios. With the help of an experienced real estate lawyer, most sellers and buyers can avoid many of the headaches that can be caused by multi-contract situations.
Second Contract Prior to First Signing
The first, and perhaps most straightforward example, would be a situation where the seller receives a better offer after receiving an initial offer but before executing or signing the contract. In this situation, it is clear that the seller can reject the initial contract and accept the second.
Another common practice is to accept a contingent contract. In this scenario, the seller agrees to sell to one buyer (usually the one with the better offer), but also accepts a second offer, contingent upon the first one failing. In other words, if the first buyer falls through, does not get financing, wants to cancel due to a negative item in the inspection, or for any other reason chooses to back out of the deal, the seller has a backup offer they can accept. These contingent contracts are binding on the buyer if and when accepted. They only become enforceable upon the seller notifying the buyer that the first buyer has fallen through and the seller is acting on the contingent deal.
True Two Contract Scenarios
Finally, there are situations in which a seller truly signs two contracts, attempting to hedge his or her bets and ensure that a deal is made. This is not generally appropriate and can wind up in litigation. In many cases, nothing bad will happen. One buyer backs out, and the second buys. However, one must consider what happens if both buyers have active and valid contracts to buy the same property, but the owner chooses one and breaches the contract with the other. This can put the parties at odds with each other and lead to court battles.
Colorado Real Estate Law
Many people, including realtors and experienced investors alike, choose to use pre-generated real estate contracts and forms. And for many simple transactions, these may do fine. Colorado even has some pre-approved forms that can be used for residential contracts. However, none of these can take into consideration the various unique issues that can arise in a commercial context. This is especially true when you are entering into multiple contingent contracts or have time-limited purchase options.
Colorado Real Estate Lawyer
One of the easiest ways to prevent these mistakes, whether accidental or intentional, is to hire an experienced real estate attorney. At the Law Offices of Eric L. Nesbitt, P.C., our team devotes considerable time and resources to making sure we remain up-to-date on the latest in real estate law and trends in the market. We serve clients throughout Colorado from three convenient locations. So if you need experienced guidance through a complex commercial contract, or just need help on your next residential real estate deal, give us a call today.
Cold temperatures can cause a range of problems for those who rent homes and apartments.
If your heat goes out, or a pipe bursts, what do you do?
It can be tempting to just withhold rent from a landlord that isn’t making needed repairs, but legal experts say that’s the last thing you should do unless you follow proper legal procedures.Watch attorney Eric Nesbitt’s legal advice and comments with Shaul Turner of Fox 31 Problem Solvers here:
When commiting to a commercial real estate transaction, you want to make sure that all the disclosures are accurate. Disclosures are statements or affirmations regarding the state of the property at the time of sale. While no seller can fully contemplate all contingencies and issues that are likely to arise after the sale, there are some obvious things that must be disclosed to a would-be buyer. For those who are considering a large-scale investment — whether as the buyer or the seller — making sure the disclosures are right is a big part of the deal. For help with your next real estate investment, call the Law Offices of Eric Nesbitt, P.C.
What are Disclosures?
A disclosure in a real estate contract is merely the seller’s statement as to what may be wrong with the property. Not everything must be disclosed to potential buyers. The key to deciding what to include in your disclosures is to identify latent defects and those items that may be material defects. This can be a bit challenging because what one person considers “material” or “latent” may differ from what someone else considers a latent or material defect.
Latent vs. Patent Defects
A patent defect is a condition that is readily visible to a potential buyer upon inspection. So, if there are cracking walls in a room of the property, then it is reasonable to assume that the buyer will be able to see those with the naked eye and inspect further to figure out what is wrong. This allows the buyer to make an educated determination about whether to purchase the property or not.
On the other hand, a latent defect is one that is not readily visible or identifiable upon typical inspection. If there is a condition that one would not expect a buyer to notice without performing a much more in-depth inspection, then this may be considered a latent or “hidden” defect. Examples may potentially include:
Leaks in the roof
Faulty HVAC equipment
Hiding a Known Problem
While most latent defects must be disclosed, there are naturally times when even the seller has no idea a problem exists. This is not necessarily an indication that the seller is doing something fraudulent; it could just mean they are unaware of the underlying condition of the property. On the other hand, if a seller intentionally conceals problems that could materially affect the condition and value of the property, this could be grounds for rescinding the contract. Further, Colorado law views this type of concealment as potential fraud, and such false representation can give the other party the right to back out of the deal or pursue civil penalties.
For more help with your next commercial investment, call an experienced real estate attorney near you to make sure you do not leave yourself exposed to liability. Call the Law Offices of Eric L. Nesbitt, P.C. today. Nothing compares to the experience and training of a seasoned real estate attorney when negotiating a commercial investment. So, do not take chances and leave yourself open to losing a lucrative deal ever again.