In the push to get a construction project started, important management tasks may be overlooked or subordinated by “higher priority” tasks, and the importance of completing many of those tasks may not become apparent unless there is a legal dispute. In my latest article for the Daily Journal of Commerce, I provide a brief
Avoiding Development Disasters: Land Inventory and 1031 Exchanges
The ability to defer taxes through a 1031 Exchange can make or break a real estate transaction. But federal tax law does not treat all real estate owners equally. Under IRC Section 1031(a)(2), real property held “primarily for sale” in the ordinary course of a trade or business is excluded from Section 1031 and may be subject to ordinary income taxes in the event of a sale.
Generally, land held for investment purposes can be swapped for “like kind” property without triggering taxable gain. However, certain property is excluded from 1031 because, under IRC Section 1221(a)(1), it is not a capital asset, including:
(i) Stock in trade of the taxpayer
(ii) Inventory; or
(iii) Property held by the taxpayer primarily for sale to customers in the ordinary course of a trade or business.
Such property, including any real estate which qualifies as inventory, is excluded from 1031 treatment and, upon sale, is taxed at ordinary income rates. This means that active developers dealing in subdivided property for sale in the ordinary course of business may be excluded from capital gains tax treatment.
Solar PPA Provider That Only “Arranges” Installation of System It Owns Is Not a “Contractor” in California
In the recently issued but unpublished decision Reed v. SunRun, Inc. (Los Angeles County Super. Ct. No. BC498002, Feb. 2, 2018), the Second District Court of Appeal ruled that a solar power purchase agreement (“PPA”) provider that only sells solar energy to homeowners is not required to be a licensed California contractor under certain
Advance Contractual Lien Releases in Washington – An Enforceable Shield or Unintended Liability?
As the construction boom continues in Washington (and especially in Seattle), owners and developers look for ways to mitigate risk on projects. Risk mitigation is often accomplished through negotiated terms and conditions of the parties’ contractual agreements. In my latest Daily Journal of Commerce article, I explore the validity of advance contractual lien releases and
Criminal Charges for Contractor in Trench Collapse
A contractor’s duty to provide a safe workplace includes a duty to comply with safety regulations about worksite conditions, worker equipment, and work methods. Those regulations are enforced by the Washington Department of Labor and Industries (“L&I”), which has authority to inspect worksites and to impose fines and stop work orders.
In a recent case,
Best Practices for Staying Off of OSHA’s “Naughty List”
Construction projects, both big and small, pose a host of safety risks and challenges and, as a result, are subject to a number of regulations designed to limit the probability and severity of jobsite accidents. In my latest article for the Daily Journal of Commerce, I discuss common violations, some recent regulatory changes, best
Microsoft Planning Large Campus Renovation and Expansion Project in Redmond
Microsoft Corporation recently announced plans to revitalize its 500-acre Redmond campus with dramatic renovation and expansion work to be completed over the next five to seven years. The project will include the addition of 18 new buildings, 6.7 million square feet of renovated office space, $150 million in transportation infrastructure improvements, public spaces, sports fields
What is Imputed Agent Knowledge Under California’s Real Estate Disclosure Rules
Recently, in RSB Vineyards LLC v. Orsi, the First Appellate District Court of Appeal confirmed the long-standing rule in California: sellers must disclose all known material matters. While this affirmed rule was not surprising, the court was very helpful in providing the first detailed framework for what it means for a seller to have
When Three’s Company, and Not a Crowd
Negotiating construction contract language in 2017 can have important consequences years into the future. The obligations and rights arising from one often overlooked clause, that addressing contractual “third-party beneficiaries,” i.e. “a person or entity who, though not a party to the contract, stands to benefit from the contract’s performance,” can vary considerably from state to
Oregon Supreme Court Rules That the Practice of Architecture Includes Development of Master Plans
In a rare opportunity to interpret Oregon’s statutory requirements for licensure of architects, the Oregon Supreme Court recently held that the development of master plans constitutes the “practice of architecture”—even if constructible drawings and specifications are not contemplated or produced.
The case, Twist Architecture & Design, Inc. v. Oregon Board of Architect Examiners, 361 Or 507, 395 P3d 574 (2017), stemmed from a determination by the Board of Architect Examiners (the “Board”) that Seattle based firm Twist Architecture & Design, Inc. and two of its principals who were not licensed in Oregon (collectively “Twist”) engaged in the unlawful practice of architecture and unlawfully represented themselves as architects in violation of ORS 671.020—Oregon’s statute containing the licensure requirement—when they prepared master plans for three proposed commercial developments in Oregon.