In the insurance industry, title insurance is known as a “long-tailed” liability risk, which means that it is common for claims to be made many years after policies are issued. For this reason, owners of real estate, their lenders and their counsel have long scrutinized the financial health of title insurance underwriters.

Yesterday afternoon, the House delayed a vote on H.R. 1106, “Helping Families Save Their Homes Act of 2009” (the “Act”) after a little over an hour of debate, amidst unexpected opposition from some Democrats.

The U.S. Court of Appeals for the Eleventh Circuit has affirmed a lower court ruling that lease termination fees can be considered preferential transfers under the Bankruptcy Code, subject to avoidance. The court’s holding reinforces concerns over whether landlords can structure lease terminations in a manner that protects them from preference recovery.

The U.S. Court of Appeals for the Ninth Circuit has held that a bankruptcy trustee could not avoid an unauthorized sale of real estate to a bona fide purchaser— although the proceeds of the sale did belong to the estate.

The court ruled that an unauthorized postpetition transfer of real property in California could be avoided only if the buyer had actual knowledge of a bankruptcy filing, or if the trustee recorded the transfer of title to the property from the debtor to the estate in the land records of the applicable county, In re Tippett, 542 F.3d 684 (9th Cir. 2008).

A bankruptcy filing by a property owner may not be the only action that prevents foreclosure of a security interest in that property held by a secured creditor. In a growing list of cases, courts also have held the bankruptcy of a junior secured creditor with a lien on the property invokes the automatic stay against such action.

In the last decade, commercial landlords have favored obtaining from tenants standby letters of credit over security deposits because standby letters of credit provided added security in the event of a tenant’s bankruptcy.

As the federal government and private markets make progress to quell economic recession and stimulate the engines of financial growth, recent headlines from the commercial real estate industry have focused on certain developments, such as the proposed changes in rating agency methodologies and the repeated false starts with the government’s TALF and PPIP programs.

Reinhardt v. Vanderbilt Mortgage and Finance Inc. (In re Reinhardt)

563 F.3d 558 (6th Cir. Ohio 2009)

The Illinois Mortgage Foreclosure Law has been amended effective as of October 29, 2009, by adding new protections for occupants of dwelling units1 in properties that are in foreclosure. These protections will apply to projects which were rental housing from the outset, and to for-sale housing projects in which units are being rented pending sale or which have been converted to rental housing.  

Notice to Occupants by Receivers and Mortgagees in Possession

By some accounts, there is over $300 billion of commercial real estate debt set to mature over each of the next four years. As a result of a lack of demand, a lack of liquidity and lackluster valuations, a significant portion of this debt will go into default. In many cases, bankruptcies will ensue for both the projects and their owners.