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Abolishment of Dower in Michigan
REMINDER: Just a reminder that the statutes eliminating dower in Michigan become effective April 6, 2017. After such date, there will no longer be a requirement that the non-titled wife of a married man join in on the execution of a deed or land contract, or join in on a refinance of a mortgage that is not their homestead.
Is it the end of 1031 exchanges? House Ways and Means Committee Chair Kevin Brady (R-TX) spoke publicly for the first time about the potential elimination of Section 1031 like-kind exchanges at the National Association of REALTORS®’ 2017 Federal Policy Conference & FPC Training in Washington, D.C. back in February. The tax reform “blueprint” that House Republicans are working on does not specifically repeal 1031 exchanges, but it would allow owners to deduct 100% of the cost of new business assets including buildings (but not land) in the first year of ownership. This accelerated expensing could substantially decrease the use of a 1031 exchange as an investment incentive.
Chairman Brady has admitted the committee is considering eliminating the provision. Although there have been proposals for many years to eliminate or limit 1031 exchanges, the significance of the public statement to an audience with a vested interest is making the 1031 community uneasy–Section 1031 seems to be officially on the chopping block.
Application to Closing time decreases: Closing times were down in February, falling from 51 days in January to 46 days for all loans last month, according to the latest Ellie Mae Origination Insight Report. Home purchase loans took an average of 45 days to close and refinances took an average of 47 days to close in February.
Mortgage Update: Less Mortgage default and foreclosures: Overall mortgage performance continues to improve, according to the Office of the Comptroller of the Currency’s (OCC) Mortgage Metrics Report for the fourth quarter of 2016. The report showed 94.7 percent of mortgages were current and performing at the end of fourth quarter of 2016, compared with 94.1 percent a year earlier.
In addition, servicers initiated 45,495 new foreclosures in the last quarter of 2016, which was a decrease of 5.1% from 2015’s fourth quarter. Foreclosures have been on a decline for a couple of years, according to the OCC report. The amount of completed foreclosures dropped from 2 years ago by almost 19,000. Newly initiated foreclosures dropped from 75.4 thousand in the last quarter of 2014 to 45.5 thousand at the end of the last quarter of 2016.
Mortgage rates have increased since the November election and are approaching a three-year high on speculation fiscal policies will be adjusted to spur economic growth and as the Federal Reserve raises borrowing costs. Although it fluctuates, the average rate on a 30-year, fixed mortgage climbed to 4.3 percent in the week ending March 16, which was up from 3.54 percent in early November, according to Freddie Mac.
Home Sales Update: Purchases of new homes increased in February to a seven-month high. Sales rose 6.1%, according to recent Commerce Department data. Warmer winter weather may have played a role in boosting demand as purchases in the Midwest surged by the most since October 2012.
The supply of homes declined to 5.4 months from 5.6 months in January. There were 266,000 new houses on the market at the end of February. The median sales price of a new house dropped to $296,200.
Purchases of previously owned home sales eased last month from the highest level in a decade, according to a National Association of Realtors’ report. Sales dropped 3.7% to a 5.48 million annual rate amid the leanest inventory on record for any February. But, these sales still remain above last year’s levels both nationally and in all major regions. The median existing-home price for all housing types in February was $228,400, up 7.7 percent from February 2016.
Sales of newly built, single-family homes continued to expand, rising 6.1%, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, which rise is consistent with builders’ growing confidence in the housing market.
Legal News and Case Law:
Specific Performance: As you know, there are some cases in which there is a binding purchase agreement, but one of the parties fails to perform on the contract. In such cases, the parties have a number of rights as may be governed by the contract itself and/or at law or in equity. In the case of Janes v Cutler, an unpublished Michigan Court of Appeals decision, the Court looked at the issue as to whether a monetary damage award to the Plaintiff would preclude the court from ordering specific performance, thereby mandating that the defaulting party perform under the terms of the contract. In this case, the Plaintiff and Purchaser, Janes, had a binding purchase agreement with Cutler, the Seller and Defendant. The Plaintiff had been trying to find the right house for several years and found the Defendant’s home uniquely suited to her needs and tastes. Before closing, the Seller decided not to sell her home because she determined she had to postpone her plans for retirement. The trial court found that the Plaintiff was entitled to damages, but denied specific performance, because it found that damages were adequate and in this case, only $2,900.00. The Michigan Court of Appeals found that the trial court had applied the wrong standard in determining whether to grant specific performance. It stated that whether money damages are available is irrelevant to granting specific performance. The Court remanded the case back to the trial court to consider two items: that specific performance is not precluded even if the remedy at law is adequate and that the Defendant (Seller) had the burden of proving that specific performance would be inequitable under the applicable case law. Remanded.
Corporate Settlement Solutions has many Michigan branch offices to serve you—Traverse City, Suttons Bay, Elk Rapids, Charlevoix, Bellaire, and Mt. Pleasant in addition to providing services throughout the eastern United States.
Maura A. Snabes, Esq., CES®, CLTP – Sr. Underwriting & Compliance Counsel
Phone: (231) 547-5220×102/802 Bridge St., Charlevoix, MI 49720
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