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Overseas Investors Lift Florida Real Estate Market

Overseas investors are eying Florida real estate as the depressed prices and weak dollar make investments attractive. Could an inflow of international investors lift Florida’s real estate market out of decline? foreign investor eye waterfront property in Flirida

International property investors are increasingly interested in buying real estate in Florida with foreclosed apartments at the top of their list.

Although local buyers are entering the market again it is foreign investors who want a holiday home or to invest in the long term that are pushing the market forward, according to a report from Gerson Lehman Group.

International buyers regard the Florida market as ‘desirable, profitable and secure,’ the report says.

It is buyers from the UK that are most interested, says Howard Liggett, author of the report and president of Distressed Real Estate Consulting Services. They have always been keen on the sunshine state and figures from the National Association of Realtors and Florida Association of Realtors which show that Britons account for 21% of international property buyers, with 25% coming from Canada and a further 21% from the rest of Western Europe.

Analysts say that south Florida’s depressed real estate market is still about six months from rock bottom, but as bargain hunters are out in force prices could start rising again.

Several brokers are noticing that distressed properties are starting to sell, and buyers, especially foreign buyers, are already eyeing the market to make sure they don’t miss a feeding frenzy for cheap real estate.

‘While many factors have contributed to the decline in home sales in Florida, an increase in foreign home buyers has help to decrease the amount of damage. Foreign buyers recognize US real estate as a desirable, profitable and secure investment. Also, the weak US dollar has made US, and particularly Florida, real estate investments even more attractive,’ the report adds.

However, those buying foreclosed property are advised to have extra checks carried out so they do not suddenly face unexpected extra costs. US real estate firm Findire.com said that such homes have no guarantees from sellers about their quality or amenities, so it is important to appoint an appraiser to check that the utilities are in working order.

U.S. Supreme Court Strikes Blow Against Beachfront Property Owners’ Rights

The U.S. Supreme Court has just released its long-awaited decision in a landmark Florida case concerning ownership rights along Florida’s beaches. The decision styled Stop The Beach Renourishment, Inc. v. Florida Department of Environmental Protection upholds a determination by the Florida Supreme Court that when a state authorized beach renourishment project adds sand waterward of privately owned uplands, the newly created beach is publicly owned, and the upland property owner is not entitled to damages as a consequence of its loss of some common law riparian rights due to the separation of the upland property from the waters’ edge.

While under the challenged State Statute (Section 161.191, Florida Statutes) regarding beach renourishment, beach front owners would retain common law riparian rights such as the right of access and unobstructed view to the Gulf or ocean waters, the upland owners would no longer have the riparian right to expand their property ownership due to the slow and imperceptible addition of sand, known as accretion.

Beachfront property owners in the City of Destin and Walton County, in Florida’s panhandle, had challenged a proposed beach renourishment project on the grounds that the resultant improvement, under the provisions of relevant State Statutes, would deprive the owners of the valuable riparian right of accretion, without just compensation.

The U.S. Supreme Court upheld the determination of the Florida Supreme Court that beach front property owners do not have a protected property right to be able to maintain contact with the water. Thus, when the State authorizes the placement of fill between the beach front property owner’s property and the water’s edge to create a new beach, while the upland owner no longer has exclusive rights between the waters edge and his upland property, and no longer is entitled to natural accretions to his land, as long as the beach owner retains the legal right to access the waters, according to the U.S. Supreme Court, the property owner has lost no property right for which compensation must be paid by the State.

This case could have devastating consequences for private property owners who own property along renourished beaches which are impacted by the Deep Water Horizon oil spill. The damages to beaches that are likely to occur from the spill may not be considered as damages to the upland owner if such damage takes place waterward of the recorded Erosion Control Line. It may be difficult for a private upland property owner to prove a loss of property value due to damages to beach area which the owner no longer owns due to the beach renourishment project.

I will continue to analyze the impact of the U.S. Supreme Court’s decision and will revise this report as necessary.

The complete Decision of the U.S. Supreme Court may be found at http://bit.ly/c9Y1Xu

New Florida Law Erodes Waterfront Property Rights

An amendment to Florida’s Administrative Procedure Act, HB 993 (“the Bill”) passed last week by the Florida Legislature significantly changes the ability of affected property owners, and especially waterfront property owners, to challenge the correctness of government agency decisions which substantially affect their property. Hailed as a boon to big business, the Bill has major adverse consequences for individual home owners seeking to protect their investment. The Bill severely restricts the ability of private third parties to contest the issuance of, among other things, State environmental permits for projects that may impact the quality and use of waterfront properties.

By way of background, it should be understood that most activities that have the potential of adversely affecting water quality, navigation, wildlife, beaches, and wetlands, require one or more permits or approvals from State agencies. The decision to issue or deny such permits or approvals is required to be based upon criteria established by State statute and administrative regulations.

For example, before the State may issue a permit for the construction of a boat dock, the applicant must provide through the application process “reasonable assurances” that the proposed project will not adversely affect seagrass, manatees, water quality, or navigation.

Typically, for example, permit applicants for boat docks provide very little information regarding potential impacts to navigation, particularly from a neighbor’s perspective.  Furthermore, State agencies typically accept the information provided by the applicant at “face value”, and do not conduct their own investigation of a project’s potential navigational impacts.

Therefore, for example, if an applicant fails to present information regarding the existence of a navigation channel in close proximity to the proposed dock, and such proximity would adversely affect a neighbor’s ability to get his/her boat in and out of their existing or future dock, it is likely that the State would issue the requested dock permit.

Since 1975, the Florida Administrative Procedure Act has allowed “substantially affected parties” to request a formal administrative hearing to contest permitting decisions made by State agencies. At least since 1981, following the landmark decision in Florida Department of Transportation v. J.W.C., Inc.Florida Department of Transportation v. J.W.C., Inc., 396 So.2d 778 (Fla. 1st DCA 1981), the Florida Administrative Procedure Act established a “level playing field” between the permit applicant, the State agency, and the affected third-party.

Upon the filing of a challenge requesting a formal administrative hearing, typically an independent administrative law judge would be assigned to conduct a trial-like proceeding wherein evidence and testimony is presented by all parties to determine whether or not the permit met the requirements of State laws and regulations. Additionally, the filing of a challenge converted the permit issuance from “final agency action” to “preliminary agency action”.

It has long been the understanding following the FDOT v. J.W.C that the administrative hearing to contest the issuance of a State permit was a “de novo” proceeding. In other words, “no presumption of correctness attaches to the Department’s preliminary approval”. The administrative hearing was viewed as a step in the “formulation”, not “appeal” of agency action.

At the hearing, the applicant was required to present witnesses and evidence to demonstrate that the proposed project met the applicable standards. The challenging third-party had the opportunity to cross-examine both the applicant’s and State’s witnesses to challenge the sufficiency and accuracy of the information presented in support of the application.

This right of third-parties to directly question the applicant’s expert witnesses is crucial to the administrative hearing process. I have won a number of major environmental permitting challenges on behalf of affected third-parties just on the strength of my cross-examination of the applicant’s witnesses.

Since most permit applicants do not think that their application will be challenged, applications frequently are not submitted with the level of detail that would be sufficient to withstand close scrutiny. The reason for this is that many State permit reviewers do not hold the applicant’s to the level of detail that is required by the statutes and regulations. Thus, shortcuts are taken by both the applicant’s consultants and State employees. I have also found that there are a number of environmental consultants who will falsify or report half-truths in the data presented in support of an application.

When, during the course of an administrative hearing, the work effort of applicant’s consultants and State employees is placed under the “spotlight”, frequently it will be found that the applicant did not provide the requisite “reasonable assurances” that the proposed project complies with the applicable requirements of law.

In the boat dock example given above, if the third-party challenger showed under cross-examination of the applicant’s witnesses that no investigation of the potential impact of the proposed dock upon navigation was conducted, the third-party challenger would be entitled to a Final Order denying the requested dock permit.

The Bill passed last week has clearly “tilted the playing field” in favor of permit applicants. Under the terms of the Bill, the proceeding before the administrative law judge is no longer a true “de novo” hearing. The agency’s action comes to the hearing with a presumption of correctness.

The applicant is no longer required to produce expert witnesses to support the correctness or accuracy of their work product contained in the application. The Bill states that the applicant may merely submit the application and supporting documents to show “prima facie” entitlement to the requested permit. Accordingly, the third-party objector is denied the opportunity for cross-examination of the authors of the information submitted to the State.

Under the Bill, the responsibility falls squarely upon the shoulders of the affected third-party to hire experts to conduct the studies either not performed by the applicant, or performed in an incomplete or inaccurate manner. This is a very costly and unfair burden.

The State’s environmental agencies were created by statute to protect the environment and private property. These agencies are funded by taxes paid by private property owners. Private property owners should not be required to pay even more as a consequence of the failure of State agencies to do the work they have been tasked to do.

If State agencies do not have the resources to thoroughly review the information provided in support of an application, or to conduct independent studies to verify the completeness or accuracy of applications, reason dictates that it should be the responsibility of the applicant to justify the facts or conclusions specified in its application.

The Bill, however, expressly benefits the applicant to the clear detriment of third-party property owners, by allowing the applicant to demonstrate prima facie entitlement to the requested permit or authorization simply by submitting into evidence the application, materials submitted in support of the application, the State agency’s report, and the agency’s written intent to issue the requested authorization.

To make matters worse, this major change in long-standing protections for private property owners afforded by the Administrative Procedure Act was made as an eleventh-hour “tack on” amendment to another bill regarding administrative agency “Rulemaking”. HB 993 has nothing to do with agency rulemaking. Additionally, the Title to HB 993 which is required to identify the scope of the proposed legislation, refers to the change as “providing that a non-applicant who petitions to challenge an agency’s issuance of a license, permit, or conceptual approval in certain circumstances has the burden of ultimate persuasion and the burden of going forward with evidence”.

There was nothing in the Title to HB 993 to suggest that the proposed legislation was going to change the protection of a “level playing field” that private property owners had enjoyed for at least 30 years. In fact, the language cited in the Title to HB 993 merely recited the standard that has been continuously applied since the FDOT v. J.W.C. case. One reading the Title to HB 993 could reasonably assume that the purpose of the Bill was simply to codify a policy that has been in place for a very long time, not to radically change the policy.

The Florida Legislature’s enactment of HB 993 presents further evidence of the State’s lack of concern for private property rights and the dire need for waterfront property owners to organize a state-wide association to have an effective voice in Tallahassee.

 

Mortgage Relief

Unemployed borrowers and homeowners whose residences are “underwater” are the focus of a new government program designed to help the ailing real estate market. Announced recently by the Obama administration, the $14 billion relief effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.

And people receiving unemployment benefits would see their mortgage payments drop to no more than 31 percent of their monthly income – but only for three to six months. The new program takes direct aim at Southwest Florida, which has been among the hardest-hit areas of the country for foreclosures.

Lee County’s real estate market had the second highest foreclosure rate in the country in 2009: 11.9 percent of housing units, second only to Las Vegas, received some kind of foreclosure notice, according to RealtyTrac.
On a typical day, 50 to 100 foreclosure lawsuits are filed in Lee circuit court. In 2009, 21,678 were filed here – fewer than the 26,125 recorded in 2008 but far more than in any other year. There were 1,420 foreclosures filed in February.
Administration officials cautioned that the plan isn’t an instant cure, won’t stop all foreclosures or help all troubled homeowners. Instead, officials said their goal is to meet their original target, announced last year, of helping 3 million to 4 million borrowers avoid foreclosure.
“In general, I am supporting of any action against people losing their homes,” said David Hall, president of First Community Bank of Southwest Florida in Fort Myers. “Banks don’t want to take back homes. On the other hand, customers have to be making their payments. If the government helps them make their payment, it would be wonderful,” Hall said.  He said it’s somewhat like a double-edge sword – on one hand the government wants banks to write down mortgages to ease those who are under water. But on the other side, they continue to watch a bank’s balance sheet and keep the economic pressure on.

He was unsure of just what the ramifications of Friday’s announcement might mean to the banking community, but he’s certain of one thing: There are still a lot of constraints from banking regulators.  Fort Myers attorney Charles Phoenix, who has handled numerous foreclosures, called Friday’s action “window dressing.” He said those on unemployment get a “meager amount,” and even if their mortgage were reduced by 31 percent, they’re still in trouble. In Florida, the benefits are up to $300 a week. “How much it helps …. for me, it’s just more money down the tubes,” Phoenix said.

On the other hand, Phoenix said, “It’s a step in the right direction. A couple of years too late, but still it’s a step in the right direction. This creates a lot of hope, which is a good thing.”

According to the latest statistics, about 14 million borrowers owe more than their home is worth, and two thirds of those owe at least 20 percent more than the current value. These people would be helped in either of two ways: Their mortgage companies can cut the total amount they owe, or they can refinance into loans backed by the FHA.

Taken from the News Press