18A — December 2023 — M id A tlantic Real Estate Journal
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M id A tlantic R eal E state J ournal
By Dolores R. Kelley, Stark & Stark Five Under-the-Radar Title issues that cause . . .
continued from page 2A 4 Reasons Why Investors Should Consider QOZF . . .
online investment market- places at www.kpi1031.com where investors can view 20-40 quality real estate investment offerings including a number of QOZF investments. Care- fully curated from more than 20 different real estate spon- sor firms, these QOZFs span a variety of different asset classes including, multifam- ily apartments, single-family rental/build for rent commu- nities, commercial properties and more. In Conclusion: Qualified Opportunity Zone Funds offer a unique combina- tion of tax incentives, the poten- tial for upside appreciation, and the benefit of doing something good for those who are less fortunate. By simply rolling profits over from the selling of stocks, cryptocurrency, bonds, jewelry, art or real estate into a QOZF, accredited investors can reap an array of tax benefits as well as realize the opportunity for appreciation potential. In fact, Kay Properties recently assisted a client with a QOZF after he sold an original Apple One computer that was signed by Apple Co-founder, Steve Wozniak. The benefit of work - ing with Kay Properties is that when we help clients on the Qualified Opportunity Zone Fund strategy, we are always focused on educating our clients on the potential advantages and the poten- tial risks/downside of QOZF investing. Please register at www.kpi1031.com for access to QOZF investments as well as for a consultation with one of the Kay Properties team mem- bers to discuss the pros and cons of Qualified Opportunity Zone Fund investments and if they might make sense for your particular situation. *Diversification does not guarantee returns and does not protect against loss. Dwight Kay is founder & CEO of Kay Properties and Investments. MAREJ Chapman , CenterPoint’s CEO. “He will collaborate closely with me, our owner- ship, and the Board of Direc- tors to help drive our strategic objectives while also assum- ing new responsibilities for coordinating such objectives with our various business units,” Chapman finished. After working as a broker at CBRE for 11 years, Clew- low joined CenterPoint in 1997. MAREJ
is held for at least 10 years, any capital gains derived from the sale of the QOZF (not the original deferred gain) are considered tax-free. 2. Diversification of Portfolio*: Diversifying one’s invest- ments is a cornerstone prin- ciple of prudent planning for your family and future*. Op- portunity Zone Funds allow investors to diversify into real estate within the designated zones. Many investors that consider QOZFs have sold a business or stock position and able to diversify into QOZFs that are focused on real estate as an asset class. 3. Potential for Apprecia- tion and Returns: While there’s always a risk associated with any invest- ment including real estate related investments, Qualified Opportunity Zone Funds often are put together and managed by large real estate invest- ment and development firms that are focused on delivering upside and appreciation po- tential for their investors and themselves. The combination of tax benefits and potential appreciation makes Qualified Opportunity Zone Funds an attractive option for investors. 4. Flexibility in Invest- ment Choices: Qualified Opportunity Zone Funds aren’t restricted to a specific type of investment within the designated zones. This means that investors can select from a range of assets, including real estate, infra- structure projects, or business investments. However, as a side note, the vast majority of QOZF investments that I have seen over the years have been real estate related proj- ects. This allows investors to select QOZF investments that line up with their preferences, risk tolerances, objectives and goals. Kay Properties has cre- ated one of the most robust OAK BROOK, IL — Cen- terPoint Properties has created the role of COO and appointed its executive VP and chief investment officer, Jim Clewlow , to lead the firm’s investment, develop- ment, and asset management teams. “Jim has been a fixture at CenterPoint for 25 years and has been particularly instru- mental in our growth and regional expansion,” said Bob
The latter may include the shoreline beyond the current high tide line, but may also include areas where there is no longer any water. This means that commercial prop- erty a buyer is attempting to purchase may not extend as far as it appears. A buyer may secure a grant of tidelands where water formerly flowed, but New Jersey does not part with rights to land up to the current high water mark. A buyer may also face limi- tations on improvements at the shoreline, such as the construction of a boat ramp or dock. Depending on the body of water in question, the buyer may be required to obtain a license, or may not be permitted to construct piers and launches at all. If the seller did not receive a license when they installed their boat ramp or dock, the buyer might not be able to use it. Riparian rights regard- ing a property adjacent to a navigable body of water can be further complicated by the United States’ authority to control bulkhead and pier- head lines. When acquiring property near a coastline or along any navigable waters, a buyer should obtain a tide- lands search to verify whether the property is within the state owned tidelands. Any tidelands grant or license issued should appear in the land records, and in some instances, a new license or an assignment may be required. Rollback Taxes on Land Previously Used for Agriculture In New Jersey, owners of land actively used for farming that meets certain qualifica - tions, or owners of undevel- oped land that meets those same qualifications, can apply for a special tax assessment. But if the use is changed to a non-farming use leading up to a sale of that land, the parties to the transaction will have to negotiate who will pay any rollback taxes. Farmland assessments con- sider the value of the property as farmland, rather than the advisers with on-the-ground intelligence as well as under- standing of macroeconomic trends. It’s especially impera- tive to time decisions to the inflation and interest rate curve. With local market
market value of the land for development. This can dra- matically reduce the amount of property tax due. However, when that land is no longer used for farming or no longer meets the eligibility criteria for the assessment, the property taxes don’t just change moving forward. The property becomes subject to rollback taxes. Property taxes would be imposed at a regular assessment for the current tax year and the two prior years. The property owner would be responsible for the difference between the amount paid un- der the farm assessment and the amount that would have been due based on the general market value of the property over the preceding two years. When a property for sale is subject to rollback taxes, those taxes are typically im- posed after the closing and become a lien on the property. When a would-be buyer’s tax search shows a property for sale was farmland assessed and is now subject to rollback taxes, they should work with their attorney to ensure that they and the seller agree about who will be responsible for paying the taxes. These Title Issues May Be Temporary Obstacles, But They’re Obstacles Nonetheless It’s not unusual for com- mercial real estate buyers to hit unexpected bumps in the road on the path to clos- ing a transaction. These five under-the-radar title issues are often bumps in the road hiding in plain sight. A buyer and their counsel’s failure to resolve these title issues early on, preferably before a trans- action closes, could come back to haunt them in the future both when they attempt to use a property as they desire and when they decide to eventu- ally sell the property. Dolores R. Kelley is a Shareholder of Stark & Stark, Chair of its Real Estate, Zoning & Land Use Group, and a member of its Beer & Spirits Group. MAREJ presence bolstered by an international network of in- formation sharing, CORFAC brokers are poised to help their clients make the most of opportunities as they become available. MAREJ
cial property, it must be paid off by either the seller or the buyer prior to or at closing. Ne- gotiations over the payment of the lien can slow down the sale of the property it is attached to. Adverse Possession Adverse possession could affect title to a commercial real estate property because it allows a non-owner of that property to gain title to it if they’ve occupied it without the owner’s permission for a specified number of years in a way that would be obvious to others. In New Jersey, it takes 30 years of uninterrupted pos- session to gain title to land through adverse possession. That period increases to 60 years if the land is unculti- vated or woodlands. It’s tempting for would-be buyers to assume that adverse possession is nothing to worry about because they could eas- ily tell if someone, for several decades, had taken over a por- tion of a property they’re con- templating purchasing. Unfortunately for those would-be buyers, the encroach- ment necessary to secure ad- verse possession may not be obvious until they conduct a survey. If a neighboring land- owner decades ago built a road across the back of a property, or a structure that extends 15 feet over their property line, and they (or a successor in interest) have used either for 30 or more years, they (or their successor) may have legal title to that property, which would obviously complicate a sale of it. Riparian Rights Waterfront property in New Jersey is popular and pricey. But for would-be buyers of waterfront property, if the body of water at the property’s shoreline is natural, title can become complicated. Specifi - cally, that shoreline may not be property the seller ever owned title to and could sell. The State of New Jersey owns all “lands that are flowed by the tide,” up to the high water mark, and lays claim to “formerly flowed tidelands.” continued from page 16A
CenterPoint Properties appoints new chief operating and investment officers
CORFAC year-end survey depicts continued instability ue for business development in challenging conditions. continued from page 15A
Amid continued market uncertainty, those looking to invest in or divest of com- mercial real estate need
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