Keeping Current-Property offers a look at selected recent cases, rulings and regulations, literature and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
ADVERSE POSSESSION: Continuous possession interrupted by owner's bankruptcy. After the owner filed for reorganization under the old Bankruptcy Act, the bankruptcy estate was deemed in possession. Thus, the adverse possessor's continuous possession was interrupted even without the bankruptcy trustee filing an action in ejectment. General Iron Indus., Inc. v. A. Finkl and Sons Co., 686 N.W.2d 1 (Ill. Ct. App. 1997).
BANKRUPTCY: Insurance proceeds. The mortgagee purchased at its foreclosure sale and a deficiency resulted. The property was damaged by fire on the day after the sale. Held: the insurance proceeds had to be applied to reduce the deficiency. The court reasoned that the mortgagee became the equitable owner, but debtors retained legal title. Both had insurable interests and the mortgagee could have protected its interest with insurance. In re Gay, 213 B.R. 500 (E.D. Ky. 1997).
CONDOMINIUMS: Directors' personal liability. Condominium association directors are individually liable only when their breach of duty constitutes a crime or involves fraud, self-dealing or unjust enrichment. Directors cannot be held personally liable for negligence, even if their actions were clearly wrong. Perlow v. Goldberg, 700 So. 2d 148 (Fla. Dist. Ct. App. 1997).
DEEDS: Fee or easement. When the consideration was deemed more than nominal but also included "benefits anticipated from said railroad," a 1973 conveyance to the railroad company of a "strip of land . . . over, across and through the following described tract" conveyed a fee interest even through the habendum clause stated the conveyance was "for the uses and purposes therein expressed." Tazian v. Cline, 686 N.E.2d 95 (Ind. 1997).
DEEDS: Covenants of title. A buyer admitted he knew of a "pig path of a road" on realty he purchased but asserted he did not believe it to be a public road. His knowledge prevented a claim against the seller for breach of title warranty. The buyer knew or should have known of the existence of a public roadway as an encumbrance on the property. Richitt v. Southern Pine Plantations, Inc., 491 S.E.2d 528 (Ga. Ct. App. 1997).
DEEDS: Covenants; zoning. If the seller can determine from municipal records that the property violates local zoning regulations at the time of the conveyance and the violation substantially impairs the purchaser's use and enjoyment of the property, the violation is an encumbrance for purposes of the covenant against encumbrances in a warranty deed. Bianchi v. Lorenz , 701 A.2d 1037 (Vt. 1997).
DEEDS: Life estate in stranger to the deed. The grantor conveyed to grantees subject to a "life estate in Irene Parker," who had resided on the property with the grantor. The court held that the deed created a valid life estate in Parker, a stranger to the deed. Conveying "subject to" was tantamount to reserving a life estate in the third party the court said, overruling a 50 year old case. Nelson v. Parker, 687 N.E.2d 197 (Ind. 1997).
DEEDS: Warranty not merged. A seller's express contract warranty to construct a townhouse in good and workmanlike manner was collateral to sale of the property and did not merge with the deed at closing. Davis v. Tazewell Place Assocs., 492 S.E.2d 162 (Va. 1997).
EMINENT DOMAIN: Subsequent owner's rights. In 1981 the city installed a sewer line on the subject property without an easement and without compensating the then owner. The court held that a 15 year statute of limitation applied (the same as for adverse possession). A later purchaser could maintain an action to recover compensation if the previous owner transferred to him the right to recover. V.J. Drabek v. City of Norman, 946 P.2d 658 (Okla. 1996), reh. denied (1997).
HOMESTEAD EXEMPTION: "Heirs" may include devisees. Construing Florida's constitutional exemption of a homestead from forced sale, the court held that when a decedent dies with no surviving spouse or minor children, a devise of the homestead to a grandchild is exempt even though the grandchild would not have inherited under intestacy laws. Snyder v. Davis, 669 So. 2d 999 (Fla. 1997).
LANDLORD AND TENANT: Assignee's liability. The assignee tenant expressly "assume[d] all of the terms, provisions, obligations, responsibilities and liability of Assignor." The assignee could be held liable for debt that the bankrupt assignor/tenant incurred before the date of the assumption agreement, despite the assignee's claim that it intended to shoulder only the assignor's prospective obligations. Dental One Assocs., Inc. v. JKR Realty Assocs., Ltd., 491 S.E.2d 414 (Ga. Ct. App. 1997).
LANDLORD AND TENANT: Intervening mortgage. A successor landlord and a tenant under a lease with no option to renew extended the lease with new provisions. The extension was a new lease and subject, therefore, to a mortgage that the successor landlord executed after the original lease but before the extension. Dime Savings Bank of N.Y. v. Montague Street Realty Assocs., 686 N.E.2d 1340 (N.Y. 1997).
LANDLORD AND TENANT: Mortgage before lease; entitlement to rents after foreclosure. After noting the long standing general rule that entry by a mortgagee in possession under a mortgage granted before the lease ousts the tenant and terminates the lease, the court held that the mortgagee may, by accepting an assignment of rents from the mortgagor/lessor, be entitled to the rents under the lease as lessor and not as mortgagee. HRPT Advisors, Inc. v. McDonald, Levine, Jenkins & Co., P.C., 686 N.E.2d 203 (Mass. Ct. App. 1997).
LANDLORD AND TENANT: Notice to quit. On a question of first impression in New Jersey, a trial court held that service by certified mail, signed by a tenant or a member of his household 14 years of age or older, satisfied a statute requiring personal service of notice to quit for removal of tenants in other than protected tenancy situations. Roland-Leopoid v. Khoury, 700 A.2d 910 (N.J. Super. Ct. Law Div. 1997).
LANDLORD AND TENANT: Liability for criminal acts. Addressing the foreseeability required to hold a landlord responsible for third parties' criminal acts, the Nebraska Supreme Court held that prior similar criminal acts need not necessarily have occurred on the premises. The totality of the circumstances must be considered in determining foreseeability. Gans v. Parkview Plaza Partnership, 571 N.W.2d 261 (Neb. 1997). The Georgia Supreme Court ruled that proof of prior property crimes on the premises, such as automobile theft and vandalism, does not create a factual issue of whether the landlord could reasonably anticipate a violent sexual assault on its premises. Doe v. Prudential-Bache, 492 S.E.2d 865 (Ga. 1997).
MORTGAGE: De mimimis failure to pay real estate taxes triggers default. Acceptance of late payments of principal and interest did not waive the mortgagor's obligation to pay real estate taxes on time when time was of the essence. A deficiency of $5.19 in payment of real estate taxes triggered default and foreclosure was allowed. The mortgager had no opportunity to cure the default. Shirley v. Tolbert, 945 P.2d 567 (Or. Ct. App. 1997).
RESTRICTIVE COVENANTS: Religion and residential use. Using a residence for religious services, altering the exterior and landscaping without the consent
of an architectural control committee violated the single-family restrictive covenants. Enforcement of the covenants did not violate federal and state fair housing laws because followers of the religion were not barred from exercising their religion. Only the use of the premises for religious gatherings was prohibited. Tien Tao Ass'n, Inc. v. Kingsbridge Park Community Ass'n, 953 S.W.2d 525 (Tex. Ct. App. 1997).
SELLER AND BUYER: Statute of frauds; inadequate description. In a suit by the buyers to reform and enforce an earnest money agreement, the court, following established precedent, held that a street address did not satisfy the statute of frauds. It denied the buyers' plea for reformation, ruling that there was no scrivener's error and the doctrine of mutual mistake did not apply when both parties knowingly omitted the required legal description. Halbert v. Forney, 945 P.2d 1137 (Wash. Ct. App. 1997).
TENANCY IN COMMON: Deed by one cotenant; deed warranties. When one cotenant conveys his interest by general warranty deed, judgment liens against another cotenant are not an encumbrance on the title of the undivided interest conveyed. Windell v. Miller, 687 N.E.2d 585 (Ind. Ct. App. 1997).
ZONING AND PLANNING: Spot zoning. Spot zoning is not illegal if it is germane to an object within the police power and there is a reasonable basis to treat
the rezoned property differently from surrounding property. The trial court did not err in finding that land rezoned for a softball field complex satisfied the requirements for legal spot zoning. Fox v. Polk County Bd. of Supervisors, 569 N.W.2d 503 (Iowa 1997).
ZONING AND PLANNING: Adult uses; de facto veto. Under the zoning ordinance, a nude dancing facility had to locate more than 1,000 feet from churches, schools and other "sensitive interests." Considering the paucity of such sites, an ordinance permitting a "sensitive interest" to file for, and receive, a siting permit for its own facility after the applicant for a nude dancing facility had filed for a permit allowed a "knock out" or de facto veto by the "sensitive interest" and was therefore unconstitutional. Young v. City of Simi Valley, 977 F. Supp. 1017 (C.D. Cal. 1997).
ZONING AND PLANNING: PUD conflict with zoning. Although the city's comprehensive plan would have permitted a commercial PUD, the area was zoned
for residential use only. Under the city's zoning code, PUDs are limited to uses permitted by the zoning code; therefore, a commercial use PUD was not permitted. Citizens for Mount Vernon v. Mount Vernon, 947 P.2d 1208 (Wash. 1997).
Environmental law: Recent developments. Richard G. Opper, Jo-Christy Texas Brown, Julie R. Domike and Ronda L. Sandquist discuss current issues regarding the Clean Air Act, the Clean Water Act and international environmental law in Recent Developments in Environmental Law, 29 Urb. Law. 725 (1997).
Joint tenancies: Effect of joint tenant's death. In Creditors of a Joint Tenant: Is There a Lien After Death?, 99 W. Va. L. Rev. 637 (1997), John W. Fisher II analyzes West Virginia common law and recent statutes. He concludes that the creditor's rights against a joint tenant end when the debtor joint tenant is the first to die.
Mortgages: Casualty loss proceeds. In A Mortgagee's Interest in Casualty Loss Proceeds: Evolving Rules and Risks 32 Real Prop. Prob. Tr. J. 1 (1997), Patrick A. Randolph Jr. examines the rules regarding application of casualty insurance proceeds between the mortgagor and mortgagee.
Regulatory takings. Daniel R. Mandelker examines the segmentation problem in the Supreme Court's taking cases and suggests a resolution to the "segmentation muddle" in New Property Rights Under the Taking Clause, 81 Marq. L. Rev. 9 (1997).
Regulatory takings. Lynda J. Oswald reviews the genesis of the "harm/benefit" and "average reciprocity of advantage" rules and analyzes their application in modern takings doctrines in The Role of the "Harm/Benefit" and "Average Reciprocity of Advantage" Rules in a Comprehensive Takings Analysis, 50 Vand. L. Rev. 1149 (1997). She concludes these doctrines work well in most regulatory takings situations and that some "cases at the edges" should not deter their application.
Regulatory takings: Property rights protection law. Two articles analyze adverse impacts of Florida's Property Protection Act. In Florida's Private Property Rights Protection Act: Does It Inordinately Burden the Public Interest?, 48 Fla. L. Rev. 695 (1996), Julian Conrad Jurgensmeyer opines that the act might result in a fear to protect the environment and to control growth. In Property Rights and Wrongs; Historic Preservation and Florida's 1995 Private Property Rights Protection Act, 48 Fla. L. Rev. 709 (1996), Roy Hunt laments the law's impact on historic preservation and suggests conservation easements as an alternative to preserve historic sites and properties.
Seller and buyer: Residential property condition disclosure. In Reforming Residential Real Estate Transactions: An Analysis of Oklahoma's Disclosure Statute, 2 Okla. City L. Rev. 735 (1997), Leroy Gatlin II analyzes and reviews a law that is typical of disclosure statutes adopted in many states.
North Carolina enacts Brownfields Property Reuse Act. S.L. 1997-357.
Oregon enacts provisions limiting the continuation of encumbrances on real property interests. 1997 Or. Laws Ch. 290.
Rhode Island requires notice to owners of property abutting roads to be designated as scenic highways and opportunity to be heard. R.I. Gen. Laws § 24-15-3 et seq.
Readers interested in a comprehensive review of current developments in real estate law are encouraged to subscribe to the ABA Real Estate Quarterly Report, which is prepared by the Real Property Division's Decisions Committee. For more information on this publication, contact Kim Falk at the Section office, (312) 988-6233.
Keeping Current-Property Editor: Nicholas L. White, School of Law, University of Memphis, Memphis, TN 38152. Contributing editors: Ralph Brashier and David A. Thomas.
Probate & Property Magazine is published six times annually and is included in section members' annual dues.