Keeping Current--Property offers a look at selected recent cases, rulings and regulations, literature and legislation. The editors of Probate & Property welcome any suggestions and contributions from readers.
* ADVERSE POSSESSION: Railroads.
In response to a certified question, the West Virginia Supreme Court recently concluded that a railroad track is a public highway. Because neither adverse possession, prescriptive easement nor equitable estoppel may lie against a public highway, no party may establish an interest in the trackway of a railroad through any of these methods so long as the trackway continues to be used for railroad purposes. A&M Properties, Inc. v. Norfolk Southern Corp., 506 S.E.2d 632 (W. Va. 1998).
* BANKRUPTCY: Spendthrift trust.
Debtor and his wife transferred their home to themselves as trustees for the benefit of their daughter, then age 12. Although the trust contained spendthrift and discretionary clauses, the trustee/settlors could elect to sell the property and terminate the trust, with debtor, his wife and the daughter each receiving an equal share. Interpreting Massachusetts law, the bankruptcy court held that one-third of the residence was the debtor's property and part of the bankrupt's estate. The court reasoned that the trust was created by the debtor as settlor for his benefit as to one-third and, therefore, was ineffective as a spendthrift trust. In re Landry, 226 B.R. 507 (D. Mass. 1998).
* BANKRUPTCY: Chapter 13 not available to mortgagor's successor in interest.
When the debtor's father died, the mortgage was in his father's name. The father's will left the property to his son and daughter, and the son moved in. The mortgagee obtained a judgment of foreclosure and sale. The debtor, as executor, deeded the property to himself and his sister and immediately filed for Chapter 13. He proposed to redeem the property by installments over the life of the plan. In a case of first impression, the bankruptcy court held that a successor in interest may not use Chapter 13 to modify contract rights established between the mortgagor and mortgagee. In re Parks, 227 B.R. 20 (W.D.N.Y. 1998).
* EASEMENTS: Oral grant; use for prescriptive period.
When an easement was orally granted and, therefore, imperfectly created, its open and uninterrupted use under claim of right for the prescriptive period gave rise to an easement by prescription. The use was deemed not to be "permissive," which would have defeated the claim for a prescriptive easement. Walker v. Hollinger, 968 P.2d 661 (Idaho 1998).
* EASEMENTS: Wetlands.
There was no implied easement by necessity over grantors' remaining lands when grantees' land was not landlocked and the deed did not include an easement. But grantees' reliance on grantors' permission to use a road across grantors' land for 14 years and their incurring substantial obligations in reliance could support a claim of irrevocable license. A dissent opined that an easement was necessary because direct access to grantees' home could require a dredge-and-fill permit and a conservation easement. Dupont v. Whiteside, 721 So. 2d 1259 (Fla. Dist. Ct. App. 1998).
* FAIR HOUSING ACT: Refusal to rent to unmarried couples.
The Alaska Fair Housing Statute and a similar Anchorage ordinance banned discrimination based on marital status. Landlords argued that this violated their first amendment free exercise rights and fifth amendment property rights. The 9th Circuit, deeming this to be a "hybrid" claim, applied the strict scrutiny test and held that Christian landlords who refuse to rent to unmarried couples were exempt from the fair housing laws. Thomas v. Anchorage Equal Rights Comm'n, 165 F.3d 692 (9th Cir. 1999).
* LANDLORD AND TENANT: Eviction; tenant's personal property.
When, in the course of a lawful eviction, the sheriff removes a tenant's personal property, the landlord is not liable for damage to the property. The court distinguished the case in which the landlord removes, or takes possession of, tenant's personal property resulting in a bailment situation. Khan v. Heritage Property Management, 584 N.W.2d 725 (Iowa Ct. App. 1998).
* MECHANICS' LIENS: Waiver by endorsing check.
When homeowners made a check payable to a general contractor and materialman and the materialman endorsed the check, the supplier waived his right to foreclose on his lien. By virtue of his endorsement, the supplier was deemed to have received payment. Henry Products, Inc. v. Tarmu, 967 P.2d 444 (Nev. 1998).
* MORTGAGES: Installment contracts.
Because the relationship between seller and buyer in an installment sales contract is substatially that of mortgagee and mortgagor, the purchaser has the right to redeem its interest on default to prevent forfeiture. The right to redeem cannot be waived in the contract. Lamberth v. McDaniel, 506 S.E.2d 295 (N.C. 1998).
* MORTGAGES: PMI termination rights.
Two recent cases address this issue. In the first case, the mortgagee's failure to inform the mortgagor of his right to terminate private mortgage insurance (PMI) when a certain percent of the loan had been paid was held not to have been a deceptive or fraudulent act or a violation of the obligation of good faith and fair dealing. The terms of the mortgage contract provided for PMI to be paid for the life of the loan. Perez v. Citicorp Mortgage, Inc., 703 N.E.2d 518 (Ill. Ct. App. 1998). An Illinois statute now requires notice to the mortgagor of the right to cancel PMI. In the second case, the mortgagor relied on the policies and servicing guidelines of FNMA, which provide that the servicer may waive PMI when 80% of the loan-to-value ratio is reached. The court relied on the terms of the mortgage contract in concluding that the mortgagee need not waive the PMI premium payments during the life of the loan. Huntingon Mortgage Co. v. DeBrota, 703 N.E.2d 160 (Ind. Ct. App. 1998).
* SELLER AND BUYER: Zoning and planning.
When both parties to an installment contract were mistaken about which restrictions applied to the subject property, the mistake was one of law and not of fact, and there was no basis to rescind the agreement. Burggraff v. Baum, 720 A.2d 1167 (Me. 1998).
* SURFACE WATER: Subdivision's runoff.
The county approved the drainage system for a residential subdivision, and adjoining owners were later damaged by large amounts of surface water because of the developer's inadequate drainage system. The county's approval did not give rise to an action in inverse condemnation against the county by the adjoining owners. Phillips v. King County, 968 P.2d 871 (Wash. 1998).
* TAKINGS: Nuisances.
The Iowa Supreme Court invalidated the state's "right to farm" law, declaring that immunizing agricultural operations from nuisance lawsuits was a taking of neighbors' property rights to be free of a nuisance. Bormann v Board of Supervisors, 584 N.W.2d 309 (Iowa 1998), cert. denied, 119 S. Ct. 1096 (1999).
* TAKINGS: Subdivision.
Plaintiffs owned Lot 1, consisting of an apartment building and lawn, for 25 years. They then subdivided the lawn into several lots but were denied building permits for the lots. In response to their takings claim, the court concluded that the appropriate denominator was the original Lot 1 in its entirety, that the plaintiffs retained economically viable use of their land, that no Lucas categorical taking had occurred and that there was no taking under Penn Central's balancing inquiry. District Intown Properties L.P. v. District of Columbia, 23 F. Supp. 2d 30 (D.D.C. 1998).
* ZONING AND PLANNING: Fair housing; ADA.
Statutes requiring that no community living arrangement (including those for groups of developmentally disabled adults) may be established within 2,500 feet
of any other such facility substantially limited meaningful access to housing for the developmentally disabled and were therefore preempted by FHAA and ADA. Oconomowoc Residential Programs, Inc. v. City of Greenfield, 23 F. Supp. 2d 941 (E.D. Wis. 1998).
* ZONING AND PLANNING: Nonconforming use; forfeiture.
When the city zoning ordinance required nonconforming uses to be registered at the time of the zone changes making such uses nonconforming, the failure to register results in forfeiture of the nonconforming use. No "taking" resulted from the forfeiture because the property retained some of its economic value. In reaching its conclusion, the court overruled its earlier decision that amortization of nonconforming uses was a per se violation of the takings clause and due process clause of the Constitution. Board of Zoning Appeals v. Leisz, 702 N.E.2d 1026 (Ind. 1998).
* ZONING AND PLANNING: Nonconforming use; expansion denied. A landlord operated a multi-unit apartment building in a zone limited to one- and two-family dwellings. Creation of three additional apartments within the building was deemed an illegal expansion. Enforcement of the ordinance was also held not to be an unconstitutional taking. Ragucci v. Metropolitan Dev. Comm'n, 702 N.E.2d 677 (Ind. 1998).
* ZONING AND PLANNING: Variance. In determining whether an unnecessary hardship has been established to grant a dimensional as opposed to a use variance, courts may consider multiple factors, including the economic detriment to the applicant if the variance is denied, the financial hardship created by any work necessary to bring the building into strict compliance with the zoning requirements and the characteristics of the surrounding neighborhood. Hertzberg v. Zoning Board of Adjustment, 721 A.2d 43 (Pa. 1998).
Stanley A. Millan reviews recent significant environmental decisions from the Fifth Circuit and their implications in Environmental Law: Fifth Circuit Decisions on Water, Waste, and States' Rights, 44 Loy. L. Rev. 415 (1998).
* Free speech: shopping mall cases.
In State Constitutions: The Shopping Mall Cases, 1998 Wis. L. Rev. 883 (1998), Brady C. Williamson and James A. Friedman start with Supreme Court cases and then analyze decisions based on state constitutions as to free speech rights in shopping malls.
* IRS liens and state real estate taxes.
In Giving and Taking Notice: The Relative Priority and Enforceability of the Federal General Tax Lien Versus the State's Specific Real Property Tax Lien, 21 Hamline L. Rev. 469 (1998), Lance Staricha provides a comprehensive analysis of this priority problem. Although Minnesota's real property tax law is discussed, the article is instructive as to similar state laws and priority issues involving the federal government's general tax lien.
* Joint tenancies: severance.
In Realism and Formalism in the Severance of Joint Tenancies, 77 Neb. L. Rev. 1 (1998), R. H. Helmholz sets forth the strong arguments of numerous commentators for an intent-based approach, i.e., not adhering to the formalism of the four unities. He then analyzes in depth the case law since the 1950s on the topic and concludes that inroads have been made on the formalism approach but it still exists, particularly in severance of joint tenancies.
* Restrictive covenants and cellular towers.
Carol R. Goforth discusses the Telecommunications Act of 1996 and tower location in residential neighborhoods in "Not in My Back Yard!" Restrictive Covenants as a Basis for Opposing the Construction of Cellular Towers, 46 Buff. L. Rev. 705 (1998).
* Maryland limits the powers of condominium, coop and homeowners associations to restrict certain activities by residents.
Included in the statute are operation of home-based businesses, posting of political campaign signs by residents, and residents' use of common areas for meetings to discuss association governance issues. Md. Corp. & Assoc. Code Ann. §§ 5-6B-18.1 et seq.; Md. Real Prop. Code Ann. §§ 11-101 et seq.,11-111.1 et seq.
* Maryland extensively revises regulation of mortgage lenders and mortgage brokers.
The revisions limit fees charged to borrowers, restrict methods used to solicit borrowers, adopt requirements for methods of executing application forms and conducting settlements for closings, impose continuing education and bonding requirements on licensees and clarify criminal sanctions for conversion of borrower funds. Md. Comm. L. Code Ann. §§ 12-405, -903(a)-1005; Md. Fin. Inst. Code Ann. §§ 11-204, -301(b),- 505, -508, -511, -523; Md. Real Prop Code Ann. § 7-109.
* Maryland comprehensively revises regulation of real estate brokers and salespersons.
The law requires greater disclosure to sellers and buyers about the roles and duties of brokers, enacts principles governing the formation and termination of "presumed agency relationships" between brokers and buyers, enacts principles governing dual agency relationships among brokers, sellers and buyers and restricts the ability of multiple listing services to discriminate in their dealings with large or small brokerages. Md. Bus. Occ. & Prof. Code Ann. §§ 17-101 et seq.
* Massachusetts creates exemptions from liability to the state for brownfields remediation expenses and from liability to third parties for property damage from contamination.
The act caps the potential liability of some lenders, and provides that settlement agreements between the state and responsible parties protect such parties against later claims of third parties seeking contribution for remediation costs or asserting direct liability for property damage (but not personal injuries). Mass. L. Ann. §§ 21E-2 et seq., § 59-59A.
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 Pam Hollins at (312) 988-5651.
Keeping Current--Property Editor: Nicholas L. White, School of Law, University of Memphis, Memphis, TN 38152.
Contributing Editors: Ralph Brashier and Robert Flores.