Maronda Homes, Inc. files bankruptcy petition; Title issues of which to be aware.

Last week, the Pittsburgh area's third largest builder filed for bankruptcy protection.

Maronda Homes Inc., the region's third-largest home builder, filed for bankruptcy protection from creditors yesterday amid a national and local housing market that continues to stagnate.

H/T Pittsburgh Tribune Review

The builder assures buyers that settlements will continue as scheduled:

For Maronda customers, homes will be built, and closings will be held on time "with no issues whatsoever," according to attorney Joseph F. McDonough, representing Maronda.

U.S. Bankruptcy Judge Judith Fitzgerald approved an order that closings continue, he said.

It may be true that closings will continue as scheduled, but title agents will face additional issues as a result of the bankruptcy filing and whatever legal/debt issues forced Maronda into bankruptcy.
Title agents should do the following in addition to their regular duties handling the closings:

• scrutinize all bankruptcy orders to make certain that sales are authorized and liens are removed.


• devote additional diligence to the judgment index in the county in which the real estate exists.


• make certain that all subcontractors and materialmen have been paid prior to closing. The period for filing mechanics liens was expanded in 2007 to six months following the performance of the work. Even if the subcontractors have filed no lien prior to settlement, any lien they file up to six months after settlement could take priority over the new deed and the new mortgage.


• be certain that all real estate taxes have been paid - especially for the current year - instead of relying only on the records of tax claim bureau.

Buyers should be careful to hire a real estate attorney for settlements instead of letting the mortgage broker or realtor choose a non-attorney title company to conduct settlement. Non-attorney settlement companies may not be aware of the above issues, especially the mechanics lien issues.

These concerns should be addressed always, but in the current real estate market these issues are more likely to create a problem.

Maronda conducts development in five states, including western Pennsylvania.

Blockbuster in Central Pennsylvania; Commercial tenants in bankruptcy

From Yahoo finance comes the story of numerous companies that might not exist in one year. Blockbuster stands out among the list because of its real estate usage:

Blockbuster may still be around as a company that has movie kiosks and a small mail and Internet-delivered content business. But its brick and-mortar business is dead.

I have no idea whether this prediction is true, but commercial landlords can take action to protect themselves (not merely from Blockbuster but from any commercial tenant that might disappear or declare bankruptcy).

There remain numerous Blockbuster locations in Central Pennsylvania. Some have closed over the past few years, including one in Hampden Township and one in Silver Spring Township. Numerous other commercial tenants have abandoned their properties or declared bankruptcy since the real estate bubble began its collapse.

The most important concept for a commercial landlord to remember in a tenant bankrtuptcy is to keep on top of the time limitations set by the bankruptcy code. The bankruptcy code requires the tenant either to make arrangments for full payment of all past due arrearages or to abandon the property within a set time limit. But these provisions do not enforce themselves. The landlord must file motions with the bankruptcy court to ensure that the tenant either pays or leaves. Otherwise, the tenant might remain in the property indefinitely without paying rent.

Future posts here will explain those time limitations and provide guidance.