new developments in alabama real estate law€¦ · 23/08/2016 · commercial real estate law...
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Developments in Alabama
Commercial Real Estate Law
Survey of New Alabama Case
Law and Statutory Developments
August 18, 2016
Duane A. Graham
Partner, Armbrecht Jackson LLPMr. Graham's practice areas include oil and gas law, real estate, and trusts and estates. In the oil and
gas area, Mr. Graham has represented numerous oil and gas producing companies in matters ranging
from title evaluation, regulation by the State Oil and Gas Board, and litigation, especially litigation
concerning royalty disputes and coalbed methane issues. He has particular expertise concerning
severance taxes due on the production of oil and gas and has litigated numerous assessment and
refund claims in this area. In the real estate area, Mr. Graham has significant experience in title
evaluation, commercial leasing, and eminent domain proceedings. In the trusts and estates area, Mr.
Graham advises clients on estate and tax planning issues, including the drafting of wills, trusts, and
powers of attorney. He also represents clients in connection with the administration of trusts,
decedent's estates, and conservatorships, including probate court litigation. Mr. Graham currently
serves as a temporary judge of probate for the Probate Court of Mobile County.
Thomas P. Oldweiler
Partner, Armbrecht Jackson LLPProfessional Bio: Thomas P. Oldweiler has a transactional, regulatory and general business practice. He handles sales and acquisitions of businesses of all sizes from small firms to publicly traded companies. His transactional practice includes a diverse array of real estate, licensing, buy/sell, leasing, franchising, purchase, marketing, employment, option, confidentiality and sales contracts. He also handles the financing issues associated with those transactions and the other capital needs of businesses, whether through loans, venture capital, equity or hybrid instruments and for buyers, sellers and financial intermediaries. For financial institutions, he has a regional practice in regulatory, lending, syndication, commercial, compliance and acquisition matters. In recent years, his work for banks has included significant collection and restructuring matters involving foreclosures, bankruptcy, and workouts. For his business clients, he is often in the general business areas of formation of business entities, raising capital, agency regulation, recapitalizations, employment, director oversight and duties, succession planning and non-competition covenants.
In connection with his real estate practice, Mr. Oldweiler serves as an Adjunct Professor of Real Estate at the University of South Alabama's Mitchell College of Business.
For several years, he has been listed in the Best Lawyers in America in the areas of:
> Banking and Finance Law (Closely-Held Businesses, Finance, Mergers & Acquisitions, New Bank Formations, Regulatory, Securities and Transactions)
> Financial Services Regulation Law
> Litigation - Banking & Finance
When Mr. Oldweiler achieved the top peer rating level in Martindale-Hubbell Law Directory in 1996, he was believed to be the youngest lawyer in Alabama rated at the highest level.
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Disclaimers• I’m not your lawyer
• You’re not a lawyer just because you attended this class
• All examples are hypothetical
• Opinions expressed are solely those of the presenters and not USA, MCOB, the Real Estate Center, or Armbrecht Jackson LLP
• All concepts are purely academic - this is not legal advice; All rights reserved to later express contrary opinions
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SOURCES OF ALABAMA REAL
ESTATE LAW
• English Common Law
• Alabama Case Law
• Alabama Statutory Law
• Federal Law
CASE LAW DEVELOPMENTS
• DISTINGUISH BETWEEN FEE AND EASEMENT INTERESTS IN CONVEYANCING
• Practical Point – Be aware that there is a significant distinction between easements and fee interests and the desired interest depends heavily on the deed language used.
CONSENTS TO LEASE
ASSIGNMENTS
• Practical Points:
• A lessor can retain the right to consent to lease assignments by the lessee.
• In the absence of specific language in the lease, a lessee may assign the lease freely.
• If the lease provides that the lessor has the right to consent to lease assignments without addressing the standard that is applicable, the lessor must evaluate a proposed assignment based on the standard of commercial reasonableness, and consent may not be unreasonably withheld.
• Dissatisfaction with the lease terms is not sufficient grounds to refuse consent to a lease assignment.
• If the lease specifically provides that the lessor may withhold consent for any reason in the sole discretion of the lessor, such provision is valid.
WHO CAN FORECLOSE A
MORTGAGE IN DEFAULT
• Practical Points: Standing to foreclose a
mortgage is determined at the time of the
foreclosure sale. Only the holder of the
mortgage and associated debt has
standing to foreclose.
ISSUES CONCERNING
REDEMPTION OF MORTGAGE
FORECLOSURES
• Practical Points: Assertion of a disputed
charge can make it procedurally easier for
the landowner to redeem.
SUBCONTRACTOR LIABILITY
ISSUES
• Practical Points: Subcontractors will
generally not be liable to subsequent
owners of the property on which the
improvements was constructed.
PROPERTY TAX APPEAL
TECHNICALITIES
• Practical Points: Failure to comply
literally and fully with procedural
requirements for appealing from property
tax assessment can be fatal..
LANDLORD LIABILITY ISSUES
• Practical Points: While some exceptions
have been found, a landlord is generally
not liable for actions of tenants.
TIMELINESS OF LIEN
STATEMENTS
• Practical Points: Time requirements for
lien statements must be complied with
literally and should be conservatively
calculated.
TIME FOR MORTGAGE
REDEMPTIONS
• Practical Points:
-only 180 days to redeem from foreclosure of
homestead property
-must give personal notice in foreclosure of
homestead property
COMMON-LAW MARRIAGE
• Practical Points:
-abolished prospectively effective January 1,
2017
-prior marriages remain valid
LANDLORD-TENANT ACT
AMENDMENTS
• Practical Points: Residential leases in Alabama are now governed by the Landlord-Tenant Act. Several lease provisions are prohibited under this Act and penalties may attend the inclusion of such provisions in a lease.
• Time limits applicable to issues concerning the security deposit upon lease termination have been modified.
ABANDONED MOBILE HOMES
• Practical Points: There is now a specific
and relatively quick statutory procedure
whereby a property owner on whose land
an abandoned manufactured home not
owned by the property owner can be sold
and removed from the property.
VACATION OF STREETS
• Practical Points: Governmental bodies
having jurisdiction to approve requests for
vacation of streets now have time
limitations within which to process the
request.
LEASING TOPIC: ECOMMERCE
• Applies to percentage rent calculations in
commercial retail
• Seeks to capture sales “made from” the
premises:
– On-premises terminal ordering
– Internet ordering with retail pickup
• Most be tailored to tenant’s other channels
• Sample clause in paper
ALABAMA COMMERCIAL REAL
ESTATE LAW
MISCONCEPTIONS AND TRAPS
Minors cannot convey real property, but can
receive title. Ala. Code § 35-4-1.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
All conveyances are presumed to be in fee
simple unless otherwise indicated. Ala.
Code § 35-4-2.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
Joint ownership does NOT carry a right of
survivorship unless this intent is expressly
stated in the deed. Ala. Code § 35-4-7.
Absent such an express statement, joint
ownership is as tenants in common.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
The present title holder is the legal owner
of all deeds and other instruments
pertaining to title to the property in
question. Ala. Code § 35-4-9.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
Deed or other instrument conveying
homestead property must be signed and
acknowledged by both the title holder(s)
and any spouse. Ala. Code § 6-10-3.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
It is unnecessary for a deed to recite
consideration. Ala. Code § 35-4-34.
There may be some reasons to do so,
however.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
With some exceptions, options to
purchase real property cannot last for
longer than 20 years, and if no time limit is
stated they last for 2 years. Ala. Code §
35-4-76.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
Title to real property passes to the heirs at law or testamentary devisees of a deceased person automatically as of the date of death (even if the will hasn’t been probated yet). However, if the will is not probated within one year the heirs at law are presumed to own for bona fide purchasers.
ALABAMA COMMERCIAL REAL
ESTATE LAW MISCONCEPTIONS
AND TRAPS
When a mortgage fails to contain information establishing when the debt must be paid, the mortgage will be presumed satisfied after 20 years.
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