With the onslaught of foreclosures, and with some investors trying to capitalize on the bargains at a foreclosure sale, some are finding out about the pitfalls of such a purchase. A reminder of one pitfall came recently from the Eighth Appellate District Court of Ohio addressing an appeal out of Cleveland in Sky Bank vs. Joseph A. Mamone, et. al. 2009 Ohio 2265; 2009 Ohio App. LEXIS 1911, May 14, 2009. In this case the successful purchaser at the sale sought to vacate the sale on the basis that it believed that it was buying a building with 39 rental suites within two connected buildings, when in fact only one building with 20 rental suites was included in the sale. The trial court vacated the sale and denied the motion to hold the purchaser in contempt. Even though there was no transcript of the trial court's hearing (which usually precludes appellate review), the appellate court reversed the trial court, saying that there was no justification for the trial court's decision, and held that the trial court abused its discretion by failing to hold the purchaser in contempt. The lesson from this decision is that a thorough due diligence must be performed before purchasing at a foreclosure sale. A purchaser needs to know what is being sold, and cannot hope that a friendly judge will provide relief if things don't turn out as expected.

With the downturn in the residential real estate market, some investors are exploring fracture condo deals. Fracture condos describes a condominium complex where some units have sold, but the bulk of the remaining units remain unsold or are being rented out as rental units. Investors may try to strike a deal with the developer (or lender/owner as the case may be) to purchase at a discount a bulk or the remainder of the unsold units. The deeper the discount, the greater the delight, but, as is true with most things that are too good to be true, these transactions can be fraught with disaster. A thorough due diligence is not just prudent, but mandatory before closing one of these transactions. Structuring the deal properly is important. Often the developer is in trouble with the project, in which case the investors do not want to step into the shoes of the developer, thus taking on the developer's liability. The Declaration and By Laws of the Condominium Association need to be thoroughly analyzed to assure that the investor buyers can do what they intend to do with the units. If the investors intend to rent the units, there may be restrictions or prohibitions on renting. Owning only a portion of the project, the investors will not have total control of their destiny. They will be marrying into the family of the other unit owners, and therefore, the economic feasibility of the project must be analyzed. Often developers have kept the initial homeowners association dues artificially low. The true future expenditures and burden of the project need to be studied. With an understanding of the risks, and care and discerning selection, there is fertile ground for investors in the fractured condo market.

Single-family home builder's confidence in the market improved in the month of May according to the National Association of Home Builders/Wells Fargo (NAHB) Housing Market Index (HMI), released today; and for good reason. Housing affordability jumped ten percent in the first quarter of 2009 to its highest level in 18 years according to the NAHB Housing Opportunity Index (HOI) also released today. Lower home prices, record low interest rates and an $8000 federal tax credit for first time home buyers have contributed to these numbers. Sandusky Ohio topped the list as the most affordable housing market in the country. Indianapolis topped the list as the most affordable major housing market in the country. A number of other Ohio markets were high on the list including Youngstown, Warren, Akron, Mansfield, Springfield and Canton-Massillon. See complete list-> http://bit.ly/ff3Of

According to the Mortgage Bankers Association 2009 Quarterly Survey, commercial and multifamily mortgage loan originations is 70% lower the first quarter of 2009 compared to the previous year. Lower borrower demand and constrained lender supply has equated to lower originations says Jamie Woodwell, Vice President of Commercial Real Estate Research at the Mortgage Bankers Association. Conduit loans decreased 96%; an 80% decrease in commercial bank portfolios; a 66% decrease in loans for life insurance companies; and a 26% decrease of the dollar volume of loans for Fannie Mae and Freddie Mac. To see the report go---> http://bit.ly/CVqZ2

A hidden haven for wildlife and birds in the midst of an industrial landscape is about to be transformed into an Audubon Center. With ground breaking occurring in May 2008, Grange Insurance Audubon Center is near completion in 2009. This nature-based learning center is one of the first to be built close to the core of a major American city; it is in an area called the Whittier Peninsula along the Scioto River and is less than a 10-minute walk from downtown of Ohio's capital, Columbus, Ohio, and a stone's throw away from Joseph & Joseph's offices (perhaps stone throwing is a poor choice of words when referring to an Audubon Center). A unique partnership among the City of Columbus Recreation & Parks Department, Metro Parks and Audubon Ohio is involved in the restoration of the Whittier Peninsula. To See more-> http://bit.ly/wpBMG

Our Real Estate Department has just posted a new article about Real Estate Appraisers: The Violations; The Complaint Process; The Disciplinary Action; The Decision. See---> http://www.josephandjoseph.com/article16.html

Our Domestic Relations Department has just posted a new article about Modification of Spousal Support and Child Support. See---> http://www.josephandjoseph.com/article17.html

St. Croix is one of three major islands in the Caribbean constituting the United States Virgin Islands. St. Croix is the largest of the U. S. Virgin Islands. Just as beautiful as the other islands, St. Croix has much less tourism, and is not as densely populated as St. Thomas. These elements make it perfect for those who own homes on the Island. The Island has not seen the fall of real estate prices like the main land of the United States. As a matter of fact, 2008 saw the highest average sales price over the prior five year period. Although 2008 saw the lowest number of sales over the same period, there were fewer properties on the market in 2008. Responding to potential buyers, who submitted multiple offers without understanding why sellers were reluctant to reduce their price, a Re/Max realtor exclaimed, "This is not the US market!" The realtor points out that most St. Croix sellers do not have to sell, and the St. Croix housing market continues to be the most undervalued bargain in the entire Caribbean. See---> .http://bit.ly/bbhoB

Aha Trio bridges the gap between young/old, classical/modern music. Three Julliard trained sisters took the stage at the Southern Theatre and captivated the audience at the 30th anniversary performance of the ProMusica Chamber Orchestra. See who they are on YOUTUBE http://bit.ly/18JRT2

With all the press on the subprime residential foreclosures, the commercial market has not received as much press. Commercial delinquencies are at an 11 year high. The problem relates to the tightening of credit. Loans are maturing and access to refinancing credit is nearly non-existent. Securitized Commercial Lending helped push property values up over the last decade. With the shut down of this lending, property values dropped. Some Investors overleveraged their property, which spelled disaster with the dropping values. These commercial investors are finding themselves in similar circumstances as the subprime residential buyers, with the exception that their loans are actually ballooning in one of the worst refinancing markets. See More about on commercial delinquencies ---> http://bit.ly/ZxQrM

A Purchase Money Deposit is Always Best in Escrow with a Third Party, even if there is a well known or trusted developer's name on the project. It is typical in a Residential Real Estate Contract involving an existing home that the Purchase Money Deposit is held in the trust account of the realtor or the title company. However, this is not necessarily the case in a contract directly with the developer of a project. Often these contracts place the deposit directly with the developer who wants full access and ability to use the deposit. The problem is, if things go bad or the developer goes down, the buyer can very easily find out that not only is the dream of their purchase gone, but so is the deposit. That is the lesson that a number of buyers are learning in a project in Baja Mexico. The project was advertised as TRUMP Ocean Resort Baja Mexico. However, it turns out that Donald Trump merely licensed his name to the project. As the facts go for most lawsuits, the project was abandoned, people lost money, and suit was filed in Los Angeles County Superior Court. Now the fight for the buyers' attorneys is whether they can reach the deep pockets of the Trump organization to recoup the buyers' money. To learn more about this suit ---> http://tinyurl.com/dzpsdu

It is time to buy! If you subscribe to this theory, you are in good company. Yale professor, Robert Shiller, who predicted the market's collapse, recommends that it is time to buy stocks and real estate. A drop in the number of properties on the market and the rise of pending sales usually equate to better real estate prices in the future. As in other recessions, cash is king. Buy low, but only if you can hold on to the asset for a long enough time for the market to turn around. If you aren't about to retire, you can continue to contribute to your 401k with predicted substantial gains 10, 20, 30 years from now when you need the funds. Let's face it; if things haven't turned around by then, we are all in real trouble. The one area of real estate that has seen continued vitality in many areas is residential rental. Couple this fact with lower prices in the real estate market, no wonder many developers are converting their inventory into rentals. Others with the means and the ability are buying low for the primary purpose of renting. For more on Shiller's predictions see---> http://tinyurl.com/crcgyb