USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
2.9 Condemnation, Expropriation or Compulsory Purchase Federal, state and local governments have the right to exercise the power of “eminent domain” , which permits the government to “take” private property, provided that the property is used for a public purpose or to benefit the public. The 5th Amendment to the United States Constitution requires the government to provide “just com - pensation” to private property owners for the “taking” of their land. Jurisdictions differ as to what qualifies as a public use. 2.10 Taxes Applicable to a Transaction Most states, counties and municipalities tax real estate transfers based on a percentage of the purchase price. Sellers typically pay the transfer taxes, but the parties may agree otherwise. Negotiations with respect to this issue are common. Certain types of transfers, such as transfers made pursuant to bankruptcy proceedings, may be tax-exempt. Some states also impose a transfer tax for indi - rect transfers, such as when there is a transfer of a controlling interest in a company that owns real property, and because of this, the parties themselves may agree on how the tax liability will be allocated among the parties. 2.11 Legal Restrictions on Foreign Investors Foreign investors can generally acquire real estate without restrictions; the USA Patriot Act prohibits US individuals and businesses from entering into real estate transactions with certain individuals, entities and foreign governments. The US Treasury Department’s Office of Foreign Assets Control maintains a list of such restricted parties. Several other federal laws and regula - tions apply to foreign investments in real estate, including, but not limited to:
and historical uses of the property are analysed to assess whether or not such uses may have contaminated the soil or groundwater beneath the property, as may occur with gas or service stations. It is often recommended that a Phase II Environ - mental Site Assessment be conducted, in which soil and water samples are taken to be analysed for contaminants. If contamination is discovered, the property owner is responsible for the reme - diation costs pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), which is the main federal statute that regulates remediation of hazardous substances that pose a threat to the environment and to public health. Conduct - ing a Phase I Environmental Site Assessment prior to closing can be done to comply with the requirements of CERCLA’s safe havens for bona fide prospective purchasers and innocent land - owners, in which liability for remediation costs can be reduced or eliminated. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law A prospective buyer can ascertain the permit - ted uses of a parcel of real estate by examin - ing the property’s certificate of occupancy (or comparable instrument) and by researching the applicable zoning code and land use regulations. It is common for developers to enter into specific development agreements with relevant public authorities in order to facilitate a project. For example, a developer may agree to contribute to a fund to help pay for investments in pub - lic infrastructure. These agreements can help developers obtain the necessary “buy-in” from elected officials and community groups needed to proceed with a project.
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