Monthly Archives: April 2011

Real Estate Bust Hasn’t Dimmed Americans’ Faith in Real Estate

As reported by the Wall Street Journal

Despite an extended slump in real-estate prices, most Americans still believe homes are the best investment, according to this a survey released today by the Pew Research Center.

According to the results of a telephone survey conducted in March, Pew found eight-in-ten adults believed a home was the best long-term investment a person could make.

This isn’t to say that Americans faith in real estate is unflappable. The “intensity” of the public’s faith has fallen off, according to the survey, with 37% of respondents saying they “strongly agree” that homeownership is the best investment, compared with 49% from a CBS News/New York Times survey conducted two decades ago, Pew said.

There is also some evidence that the next generation views real estate with a more pessimistic eye. According to Pew: “Adults ages 65 and older are more sold on the investment value of homeownership than any other age group. Some 48% of this older cohort agree that homeownership is the best long-term investment a person can make, compared with 39% of those ages 50 to 64; 32% of those ages 30 to 49; and 35% of those ages 18 to 29.”

Signed Contracts Needed to Support Mechanics Lien in Massachusetts

Written for the Association of Corporate Counsel by Hugh J. Gorman, III of the law firm of Prince Lobel Glovsky & Tye LLP.

The Massachusetts District Court Appellate Division recently upheld a municipal court trial judge’s order dissolving a mechanic’s lien because written proposals betweena contractor and a property owner were never signed.

In the case of Petrucelli Construction Co., Inc. v. Hirain Barrios, the appellate division ruled that Massachusetts law requires that written contracts must be “signed by the party to be charged” in order to be enforceable. The mechanic’s lien statute G.L.c. 254, § 2A defines a written contract as “any written contract enforceable under the laws of the Commonwealth.”

In Petrucelli, because the contractor’s three proposals to the real property owner were never signed, there was no enforceable written contract upon which a mechanic’s lien could be founded. As a result, the appellate division upheld the trial court’s dissolution of the contractor’s mechanic’s lien.

The Petrucelli decision is a bright line reminder to contractors that in order to maintain an enforceable mechanic’s lien, you must have a written contract signed by the real property owner. Thereafter, you must also strictly adhere to the steps and timetables set forth in M.G.L.c. 254 to perfect it.

Construction Indicators Show Economy Gaining Steam

Written by Associated Builders and Contractors.

Despite the loss of 1,000 jobs in March, the nation’s construction industry

Associated Builders and Contractors

unemployment rate edged down to 20 percent for the month, according to the April 1 employment report by the Labor Department. Year-over-year, construction employment is down by 36,000 jobs, or 0.6 percent. Today’s rate is lower from 21.8 percent in February and 24.9 percent posted in March 2010.
Nonresidential building construction now supports 658,100 jobs in the U.S. The sector added 2,600 for the month, but has lost 1,800 jobs, or 0.3 percent of job totals, on a year-over-year basis. The specialty trade contractor segment lost 6,700 jobs in March and has lost 41,000 jobs, or 1.2 percent, over the last twelve months. Heavy and civil engineering construction gained 2,400 jobs for the month and has added 25,100 jobs, or 3.1 percent, from March 2010.
In contrast, heavy and civil engineering construction gained 2,400 jobs for the month and has added 25,100 jobs, or 3.1 percent, over the past twelve months. The residential building construction sector added 600 jobs in March, but has lost 18,600 jobs, or 3.2 percent, compared to the same time last year.
Overall, the nation added 216,000 jobs in March, the largest monthly gain since March 2007. The private sector added 230,000 jobs for the month while the public sector shed 14,000 jobs. Year-over-year, the nation has added 1,300,000 jobs, or 1 percent. The national unemployment rate now stands at 8.8 percent.
Analysis“The employment estimates for March indicate that the nation’s economic recovery continues to gain steam,” said Associated Builders and Contractors Chief Economist Anirban Basu. “While high and rising gas prices are likely to slow the pace of momentum as we approach the summer months, 2011 is poised to be a solid year of progress for America’s economy.
“Unfortunately, the recovery in nonresidential construction has scarcely begun. Specialty trade contractors continue to hemorrhage jobs in large numbers, indicating that the capacity to supply construction services continues to exceed demand,” said Basu. “This had been predicted, at least to a certain extent. With publicly financed construction no longer expanding and with many privately financed activities not yet in recovery mode, the overall level of demand continues to be stagnant.
“However, there are leading indicators, including ABC’s own Construction Backlog Indicator, that suggest that the recovery of privately financed construction will begin sometime later this year,” Basu said. “Evidence the fact that heavy and civil engineering construction added 2,400 jobs in March, perhaps a reflection of improvement to come as projects now in various stages of planning begin to break ground in larger numbers later this year and in 2012.”

Source for this post was

IRS Gives Priority to Mechanics Liens

IRS mechanics lienIn a general victory for contractors and suppliers owed money on a residential project, the IRS published final regulations (TD 9520) that govern the validity and priority of federal tax liens under IRC § 6323.

Under IRC § 6321, the federal government has an automatic tax lien against any person who does not pay federal tax for which they are liable after the government demands payment. This lien extends to all that person’s property and rights to property. Section 6323 provides that a federal tax lien is only valid against certain persons if a notice of federal tax lien (NFTL) is filed; that section also generally addresses the validity and priority of federal tax liens.

Numerous amendments to section 6323 have been made since 1976 but until now have not been reflected in the regulations. The final regulations published on Monday reflect these changes to the law.

The recently enacted regulations, which became effective on April 4, 2011, specify that a federal tax lien will not supersede a valid mechanic’s lien against a personal residence in certain cases.

This regulation entitles those who file mechanics liens to higher priority and more of a chance to get the money for which they worked so hard. The draft of the relevant section is cited at length below:

(g) Residential property subject to a mechanic’s lien for certain repairs and improvements—(1) In general. Even though a notice of a lien imposed by section 6321 is filed in accordance with § 301.6323(f)-1, the lien is not valid against a mechanic’s lien or (as defined in § 301.6323(h)-1(b)) who holds a lien for the repair or improvement of a personal residence if—Show citation box
(i) The residence is occupied by the owner and contains no more than four dwelling units; andShow citation box
(ii) The contract price on the prime contract with the owner for the repair or improvement (excluding interest and expenses described in § 301.6323(e)-1) is not more than $6,890, effective for 2010 and adjusted each year based on the rate of inflation.Show citation box
(iii) For purposes of paragraph (g)(1)(ii) of this section, the amounts of subcontracts under the prime contract with the owner are not to be taken into consideration for purposes of computing the $6,890 prime contract price. It is immaterial that the notice of tax lien was filed before the contractor undertakes his work or that he knew of the lien before undertaking his work.