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Residential Real Estate Law Outline Week 1 1. Snapshot a. Improvements (infrastructure) i. Offsite b. Jurisdictional bodies/Permitting i.

Interior design and outdoor design approval not the same ii. Roadway iii. Village use and density 1. Power that is delegated to municipalities 2. Has an impact on the value of the land 3. Body of case law that gives guidance when the ordinances may not be constitutional 4. Bulk standards a. Floor area ratios b. Land use c. Feasibility analysis i. Is the land suitable for what we plan to do 1. One of the most expensive ii. Due diligence period where you have the ability to get out d. Tri-party relationship i. Owner ii. Architect iii. General Contractors 2. Chronology of a Deal a. Come up with acquisition number i. Look at comparables ii. Pro formas 1. How many units can be built b. Primary due diligence c. Underwriting d. Make offer i. Get the land under control or under contract ii. Some will buy outright and take the risk 1. Often public companies or large businesses e. Environmental Reports i. Illinois put liability on the title buyer 1. Unless there was due inquiry a. Phase 1 environmental analysis: research

i. Certain standards that have to be followed to say that we have undertaken due inquiry 1. Ie stains that would suggest barrels of oil in the ground ii. Do to find out if there are other problems that would require more inquiry 1. Would affect the numbers of the pro formas ii. Geotechical Investigation Report 1. Need to know a little bit about geology 2. Whether or not you can build on the land a. Is the soil stable enough to carry the weight of the house b. Ie house settles drywall cracks iii. Wetlands are something that you need to be aware of 1. Have federal jurisdiction a. Rationale: have allowed the discovery of very important things i. Ie medicine 2. Definition in federal law 3. Letting them exist in their state and creating a buffer where cant do business within that buffer a. If do acquire wetlands, have regulations on how to maintain it 3. Title reports a. Title insurance: checks title and makes sure that you own Schedule A minus Schedule B i. Effective date is that as of the date that the title company or policy going backwards in time, insuring you that you are entitled as up to that time ii. Schedule A: legal description of the land 1. This is the land that you hold fee simple land to as of this date 2. Holding the whole bundle iii. Schedule B: Encumbrances 1. Covers easements 2. Legal obligations that run with the land 3. Recapture agreements b. Survey report i. All of improvements on the land that exists ii. Prescriptive easements 1. Corollary to adverse possession c. More important than the deed 4. Land use due diligence after making an offer

a. 60-90 days of due diligence without monetary risks i. Meeting with village staff/trustees/board about whether they would support the use of the project 1. Some will have pre-conference application 5. Zoning with community a. Ordinances made up of text and maps i. Property has a zone: residential, business, etc 1. Likely going to go in and ask to change the zoning ii. Happening at the municipal level 1. Bring in marketing experts, architect b. Public process i. Preliminary approval with picture ii. Engineering design 1. Final approval 2. Sanitary, water, and storm pipes a. Concerns: Separation of pipes, leakage i. Location: water pipes work on pressure, sewer pipes work on gravity b. Have to have them close to the site i. If offsite factor into pro forma 6. Sales, marketing a. Legal perspective: contracts with customers, what the salesmen are saying i. Have to make sure that the house is built according to plans and specs (contract) ii. Warranty/what happens after closing 7. Brief overview of jurisdictional bodies a. Flood plain issues: FEMA (Federal Emergency Management Agency) i. Depends on the elevation ii. Elevations that get inundated with water at 50/100 year events iii. Un-buildable big due diligence issues b. Wetlands: Army Corps of Engineers c. Environmental: EPA d. Zoning/land use: municipality i. If not in a municipality county 1. Local issue e. Water: municipality i. Also storm water f. Roadway: county, state, federal departments of transportation i. Issues: curb cuts access g. Fire protection districts: Fire chief, police chief

i. Create the rules for building codes ii. Cant get a freeze on updates to building codes that involve life safety issues h. Department of national resources i. Animals, historic event in that area, endangered animals i. Historic preservation i. Local, state, or federal level 8. Real Estate Sales Contract a. 3 different acquisition approach i. 30 days and close 1. 30 days due diligence and then close a. Any other risks buyer will deal with it b. Value will reflect that risk (lower price) 2. Large business, wealthy clients ii. Simple option 1. Buying the rights to buy something at a certain price at a certain time 2. Addresses concern about whole purchase price 3. If you can control the land in an option, if you get to where you need it to make it work pay it, if not, lose the option iii. Putting down earnest money that will be non-refundable if we fail to close 1. Mid-size companies 2. Different remedies than in an option contract a. In general, remedies i. Specific performance ii. Recissions iii. Damages 3. Seller cant get specific performance because money is not unique a. Land on the other hand is unique buyer can get specific performance 4. Law gives you these remedies a. If want to limit remedies, have to do it contractually 5. In an option, paying for the option to buy a. Still have to pay purchase price b. Earnest money is credited towards the purchase price 6. Getting to a closing means that you have to be successful in due diligence and zoning a. Zoning serves as collateral for a lender 7. Able to manage your risks a. Ie not being able to get zoning

b. Can stage earnest money if dont know how village will feel about the project 9. Guel v. Bullock a. Although contract failed to specify city or state of subject property, P was entitled to opportunity to introduce parol evidence to clear up any ambiguity b. Elements of a contract under statue of fraud i. Description of the property which is sufficiently certain so that it can be identified ii. Price, terms and conditions of sale iii. Names of the vendor and vendee iv. Signature of the party to be charged Week 2 1. Home Rule- 25,000 or more in population or by referendum a. More flexibility in governing b. 2 enabling statutes i. 6(a) of Illinois Constitution 1. Home rule unit may exercise any power and perform any function pertaining to its government and affairs a. Including, the power to regulate for the protection of the public health, safety, morals, and welfare ii. 5/11-13-1 of ILCS 1. Grants to corporate authorities in each municipality certain powers 2. Regulate and limit bulk (what is arising from the ground) of buildings 3. Building codes 4. Value of the land increases with the uses you can get of it a. Counties and municipalities have tremendous influence over the value of a parcel because of zoning 2. Zoning ordinances are made up of 2 parts a. Text i. Rules and definition b. Map 3. Residential districts a. Go from less intense to more intense as the numbers increase b. Probably the least intense of that zoning district c. Default is R-1 i. Why not open space as the default? 1. 5th Amendment- cant take without fair market value to them

2. If property was inadvertently left of zoning area have a good 5th Amendment claim because deprived of all economic use of the land d. Permit v. Special Permit i. Permit- as to the rights of owner ii. Special Permit- depending on the facts and circumstances of proposal, we will consider this 4. Northbrook Zoning Code a. Review standards table b. Some uses allowed to encroach into yardsawnings, eaves c. Public Hearing Process 11-303 i. Theme of due process 1. Notice by signs, mailings, newspaper ii. If faulty notice back to the start 1. Void from the beginning 2. Notice element is important part of public process a. Intentional or not is irrelevant 5. Open Meetings Act a. Public policy that citizens shall be given advance notice of and right to attend all meetings at which any business of a public body is discussed i. Meeting- any gathering (in person, video, audio conference, telephone call, electronic means, etc) of either 1. A majority of a quorum of the members of a public body held for the purpose of discussing public business 2. If 5-member body quorum of the members (3 members) held for the purpose of discussing public business b. Exception for discussing litigation or land sale i. Cant hamstring public bodies from conducting business 1. Other side can just watch and see what your strategies are ii. Public interest would be clearly endangered or the personal privacy or guaranteed rights of individuals would be clearly in danger of unwarranted invasion iii. Exceptions construed against closed meetings 6. Zoning Process a. Map amendment b. Sometimes text amendment i. Ie creation of a new zoning category c. Variation i. Small exception to the details 1. Ie changes in measurements

ii. Youre almost there but just need a little tweak d. Special use permit i. Planned unit development ii. But overall, the density or lots are the same 1. Aggregating the numbers 2. But changing up the design iii. Zoning category will set the bulk parameters, after that, then get creative 7. Subdivision Process a. Cant create your projects without subdivision map i. Bank wants this for financing b. Plat of subdivision does/effectuates three things i. Creates the lots of records ii. Sets out easements iii. Creates restrictive covenants 1. Ie cant alter the grade of the common area c. Who has to sign off on the plat i. Community ii. Roadway jurisdiction 1. Curb cuts, additional improvements, unsafe conditions (retention ponds too close to the roadway) 8. LaSalle National Bank of Chicago v. County of Cook a. If restrictions imposed bear no real and substantial relation to the public health, safety, morals, comfort and general welfare ordinance is void i. Zoning ordinance is presumptively valid ii. Not up to the courts to interfere with the discretion with which municipal bodies are vested 1. Unless the legislative action of the municipality is shown to be arbitrary, capricious, or unrelated to the public health, safety, and morals b. LaSalle standards- determining the validity of the ordinance i. Existing uses and zoning of nearby property ii. Extent to which property values are diminished by the particular zoning restrictions iii. Extent to which the destruction of property values of P promotes the health, safety, morals, or general welfare of the public iv. Relative gain to the public as compared to the hardship imposed upon the individual property owner v. Suitability of the subject property for the zoned purposes

vi. Length of time the property had been vacant as zoned considered int eh context of land development in the area in the vicinity of the subject property c. Invalidated the zoning ordinances 9. Sinclair Pipeline Company v. Village of Richton Park a. Bolstering LaSalle standards--First case after LaSalle b. Defines what the relief is i. LaSalle erred by simply invalidating the ordinance ii. Creates relief of mandamus 1. Can come in for injunctive relief a. To zone that property what it should be zoned 2. Relief awarded may guarantee that the owner will be allowed to proceed with that use without further litigation and that he will not proceed with a different use c. Concept that the land owner does not need to exhaust all administrative remedies i. If you get turned down by the municipality, dont have to go back and try some other way 10. LaSalle and Sinclair causes people to act within certain parameters a. What grew up around the property you are entitled to creates checks and balances i. How does it work in the real world/commerce 1. Using those standards as a business standards a. Look at property coming in this context b. Sent message to the local bodies as to what are the guidelines that causes them to make better calls in the field i. As municipalities make their decisions, now rely on the LaSalle standards, adopt into the zoning code Week 3 1. Developers Agreement a. Deal between the municipality and developer about what is about to go down i. Basics of contracts law ii. Want to include code freeze (dont want costs to increase because of building code changes) 1. Matter of business concerns code freeze granted 2. Life safety concerns no freeze granted b. Entitlements that are going to the developers c. Not contract zoning because no consideration is going from the developer to the city

i. Ie agreeing to forebear something that you are entitled to (restrict uses beyond zoing) 2. Timing a. Negotiate things that address concerns of presales and village concerns b. Water, underground work compromise i. Position that allows developer to move forward but addresses the interests of the village 3. Certificate of occupancy a. All improvements have to be in before certificate is granted i. If so becomes a huge burden on the developer; sequence of construction 4. Development of the property a. Disclosure document i. Village doesnt want to be stuck with complaints about additions about homeowner 1. Village requires that issues to be addressed, maintenance obligations that want to be highlighted to the buer ii. Forces Developer to record a separate document b. Home improvement limitations as a result of building envelope restrictions i. Title insurance on schedule B ii. Result restrictions run with the land 5. Improvements a. Addresses types of improvements and who is responsible for what i. Includes landscaping b. Streets Village c. Mains i. Sanitary, water village ii. Storm pipe can go either way 1. Storm water retention Homeowners association 2. Underground pipe village but move to HOA d. Service lines to the house i. Part sits on owners lot ii. Part sits on village right of way iii. If runs through common area HOA e. Landscaping HOA f. Interests i. Village wants specifications of the improvements are up to the villages standards 1. Want to make sure that it will work 2. Ie how strong the streets are ii. Developer- warranty and maintenance period

1. Pass warranty on to the subcontractor g. Developers duty to construct improvements i. Plans/Specifications (what is it made of) ii. Parties involved 1. Architect/engineer designs 2. Owner 3. Contractor puts it in h. Developers Guaranty and Maintenance of Improvements i. If improvement is repaired Guaranty shall be extended 1. Pitfall to watch out for 2. Tacking period to what is improved 6. Environmental Compliance a. Site remediation to residential standard i. No further remediation letter b. Village hires own consultants to make sure done carefully because of liability 7. Declaration of Covenants a. Roadmap as to what goes into the contract b. Village wants to make sure that what goes to the association gets laid out because doesnt want to be stuck with it 8. Village of Northbrook Subdivision & Development Code a. Amount of Performance Guarantee i. Performance surety 1. Form of financial insurance that a party is easy to draw upon in case the developer fails to perform a. Ie letter of credit ii. Included in since can be drawn upon developers pay interest on it dont borrow twice 1. As build improvements ask for partial reduction of letter of credit that is allowed under 3-504 9. Contract with the municipality a. LaSalle Standards b. Is the landowner agreeing to a use of restrictions that amounts to consideration? 10. Contract zoning- a land use regulation where a local zoning authority accommodates a private interest by rezoning a district or a parcel of land within that district, on the condition that the limitations or restrictions set by the town for those parcels are accepted by the owner a. Conditions are not necessarily applied to other similarly zoned parcels. 11. Ziemer v. County of Peoria a. Dedication of land for roadway purposes is not unusual

i. Difference in the case is that the body taking the road and the body making the zoning are one and the same problem b. Not a rule per se that is invalid c. Consideration doesnt have to be money d. Crt- found promise was given in exchange for amendment since no special circumstances to justify conditional zoning and no facts showing that the public health, safety, and welfare were considered at the time the zoning amendment was passed i. Evidence established a prima facie case showing that rezoning was approved and zoning amendment was passed in exchange for restrictive covenant limiting use of defendants land and for dedication of certain land to the county, thus constituting invalid conditional zoning 12. Goffinet v. County of Christian a. Conditional zoning is not always invalid i. Look at the surrounding circumstance 1. Overriding public policy concerns 2. Not much of a detriment b. Factors i. Shift towards industry was recognized in the comprehensive plan for county ii. Use of land for natural gas-producing plant was one which would benefit large numbers of the public iii. Value of adjacent land would not be decreased by the zoning change iv. Rezoning was not invalid as spot zoning

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