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.
* BANKRUPTCY: Automatic stay. A bank's petition for relief from the automatic stay was denied because it had not yet recorded the deed from a foreclosure sale at the time of the filing. The debtors thus retained the right to cure and reinstate their mortgage under Bankruptcy Code § 1322(c)(2), i.e., they still had property rights in the collateral. It would be a violation of the automatic stay for the bank to record the deed. In re Beeman, No.99-10346-JMD, 1999 Bankr. LEXIS 788 (Bankr. N.H. 1999).
* BANKRUPTCY: Unclean hands. Landlord's backdating of a lease assignment and assumption agreement does not invalidate bankruptcy claim against the assignor, because the landlord's misconduct was entirely unrelated to the claim against the assignor before the court. In re New Valley Corp., No. 98-6267, 1999 U.S. App. LEXIS 15016 (3d Cir. 1999).
* BANKRUPTCY: Unlawful detainer. An unlawful detainer judgment extinguishes a residential tenant's interest in the property. A post-judgment bankruptcy filing does not affect the landlord's right to regain possession of his property because the property is no longer an interest of the estate. Lee v. Block, No. B128410, 1999 Cal. App. LEXIS 709 (1999).
* BANKRUPTCY: Unrecorded conveyance. The debtor transferred her one-half interest in real property one year before filing a bankruptcy petition. The grantee did not record the deed until after the debtor had filed bankruptcy. The court permitted the bankruptcy trustee to take possession of and sell the property, rejecting an assertion of constructive notice. The trustee had the rights of a bona fide purchaser of real property without notice. In re Briggs, No. UT-99-003, 1999 Bankr. LEXIS 790 (10th Cir. 1999).
* BROKERS: Yield spreads. A wholesale mortgage lender who pays a retail mortgage broker "yield spread premiums" violates the Real Estate Settlement Procedures Act's provisions restricting kickbacks and duplicative payments. The premium is "unlawful compensation" under the terms of RESPA. Levine v. North Am. Mortgage, No. 98-556, 1999 U.S. Dist. LEXIS 10199 (D. Minn. 1999).
* CONSTITUTIONAL LAW: Searches. Periodic searches of rental housing by a city building inspector to determine compliance with the city's housing code infringed the fourth amendment. The city was a college town concerned about the deterioration of its rental housing. The city construed its ordinance as permitting invasive searches to find evidence of occupancy limit violations. The court held that such searches may be conducted only after a showing of probable cause and issuance of a specific warrant. Platteville Area Apartment Assoc. v. City of Platteville, Nos. 98-3070 et seq., 1999 U.S. App. LEXIS 13634 (7th Cir. 1999).
* EASEMENTS: Rails-to-trails. A conveyance that used the term "right of way" conveyed an easement rather than a fee simple absolute. The court distinguished abandonment of rail service from abandonment of the easement. Conversion to trail usage was within the easement's scope, the court held. Chevy Chase Land Co. v. United States, No. 24, Sept. Term, 1998, 1999 Md. LEXIS 462 (Md. 1999).
* EMINENT DOMAIN: Billboards. A billboard was not "taken" by eminent domain because it was "personal property" for eminent domain purposes. Removable leasehold structures or improvements are not treated as part of the real estate taken. Therefore, the owner is not entitled to compensation. Rite Media v. Secretary of Mass. Highway Dep't, No. SJC-07804, 1999 Mass. LEXIS 395 (Mass. 1999).
* EMINENT DOMAIN: Compensation. A lessee who claimed that it had lost the "probability of renewal" of its current lease, as opposed to a contractual option to renew, was not entitled to compensation. To receive compensation for a government condemnation, the lessee must have a compensable property right. San Diego Metro. Transit v. Handlery Hotel, Inc., 86 Cal. Rptr. 473 (Cal. Ct. App. 1999).
* EMINENT DOMAIN: Emergency. Condemnation and demolition of an apartment building without notice and a predeprivation hearing did not violate the owner's due process rights when there was competent evidence that an emergency existed or that affording predeprivation process would otherwise be impractical. The discretionary invocation of an emergency procedure results in a constitutional violation only if it is arbitrary or an abuse of discretion. Catanarzo v. Weiden, No. 97-7140, 1999 U.S. App. LEXIS 17765 (2d Cir. 1999).
* FAIR HOUSING ACT: Damages. Even though a tenant had previously vacated the premises, she still had standing to recover money damages for racial discrimination under the Fair Housing Act, 28 U.S.C. § 1291. The landlord had retaliated against plaintiff for her objection to discrimination against prospective tenants. Harris v. Itzhaki, No. 97-55901, 1999 U.S. App. LEXIS 15219 (9th Cir. 1999).
* FORECLOSURE: Scrivener's error. Even though the secured property was misidentified on the deed, the holder still could foreclose on the property. The appeals court based its decision in equity. The evidence showed the existence of the loan and the intent of the parties to secure the loan with certain premises. The "scrivener's error" was reformed in equity. FDIC v. Five Star Management, Inc., No. 254, 1999 N.Y. App. Div. LEXIS 6782 (1999).
* LANDLORD AND TENANT: Free speech. In a case of first impression, the California Court of Appeal held that an owner of a private apartment complex who prohibits tenants from distributing unsolicited newsletters to apartments does not violate California's constitutional guarantee of free speech. Golden Gateway Ctr. v. Golden Gateway Tenants, No. A082319, 1999 Cal. App. LEXIS 688 (1999).
* LANDLORD AND TENANT: Housing cooperatives. A coop may summarily evict a resident for nonpayment of operating costs under a proprietary lease despite the resident's claim that in substance she "owned" the apartment unit and was not truly a tenant. The court held that the operating costs were in effect rent for purposes of the summary eviction statute. Harper Square Housing Corp. v. Hayes, No. 1-97-4177, 1999 Ill. App. LEXIS 414 (1999).
* LANDLORD AND TENANT: Lead testing. A landlord has a common law duty to inspect or test for contamination from lead-based paint if the landlord knows the paint is flaking from the walls. The court concluded contamination was a foreseeable risk and that landlords do have a common law duty to test residential property for lead paint. Antwaun A. v. Heritage Mutual Ins. Co., No. 97-0332, 1999 Wis. LEXIS 102 (Wis. 1999).
* LANDLORD AND TENANT: Low-income tenants. A tenant may not be evicted without good cause when the complex is federally subsidized under 26 U.S.C. § 42. The court rejected the landlord's arguments that this creates an "endless lease." The landlord may evict a tenant by bringing an action in the district court and showing good cause. Cimarron Village Townhomes v. Washington, No. C3-99-118, 1999 Minn. App. LEXIS 890 (1999).
* LANDLORD AND TENANT: Mobile home resident protection. The owner of four mobile homes rented to third-party occupants is a "resident" of the mobile home park under the Wisconsin statutes and administrative code, because the definition of "resident" does not include a physical residency requirement. The statute prevents the park owner from forcing the resident to remove the mobile homes from the park when the park is sold. Benkoski v. Flood, No. 98-1972, 1999 Wis. App. LEXIS 759 (Wis. App. 1999).
* LANDLORD AND TENANT: Searches. A landlord has apparent authority to consent to a police search of rented premises when the tenant's lease has not actually ended but a reasonable person could conclude that the tenant has abandoned the premises. State v. Brauch, No. 24122 1999 Ida. LEXIS 80 (Idaho 1999).
* LIENS: Demolition. Costs paid by the city for the demolition of property are treated like a tax lien that runs with the property following conveyance. The new owner had notice of the demolition and should have recognized the need to verify the discharge of the obligation before purchasing the property. The court further noted that, in this particular county, a reasonably comprehensive title search would include the inspection of any outstanding municipal obligations. McBriety v. Comm'rs of Cambridge, No. 378, Sept. Term, 1998, 1999 Md. App. LEXIS 122 (1999).
* ZONING AND PLANNING: Procedural defects. A township's failure to timely record a newly adopted ordinance in its statutorily required "book of ordinances" does not render the ordinance unenforceable. The ordinance dealt with the township's ability to recover costs for assistance with the cleanup of hazardous waste materials. Howell Township v. Rooto Corp., No. 21067, 1999 Mich. App. LEXIS 171 (1999).
* ZONING AND PLANNING: Telecommunications Act. Denial of a special exception was not supported by "substantial evidence" as required by the Telecommunications Act of 1996 § 704(a). The act requires that a denial of a request to build a wireless service facility must be "in writing and supported by substantial evidence contained in the written record." The zoning board hearing was a quasi judicial proceeding requiring evidence beyond generalized opinions by neighboring property owners that there would be negative impact on their view and property values. Omnipoint Corp v. Zoning Bd. of Pine Grove, No. 98-1962, 1999 U.S. App. LEXIS 14610 (3d Cir. 1999).
* Mortgages. In Lenders and Land, 64 Mo. L. Rev. 249 (1999), Ann M. Burkhart discusses the history of the American mortgage and the mortgage lender, dividing U.S. history into three eras. The present, she argues, is the third era of mortgage lending, when there is less emphasis on protecting the mortgage lender and more focus on the increasing burden placed on lenders for the public good. Lenders in this era, as they did in early America, bear risks stemming from their lending practices. In this era, however, the risk is not from the ultimate ownership of the land but rather from the government's attempt to regulate land to protect the public welare.
* Nuisance law. Louise Harper provides a detailed history and perspective on the law of nuisances in Untangling the Nuisance Knot, 26 B.C. Envtl. Aff. L. Rev. 89 (1998). She attempts to rationalize the current perception of nuisance law by focusing on economic development, lawyering and conscious attempts at reconstruction. She concludes that nuisance law is a very muddled area
of property law, but one that is a guide to the law of takings.
* Property rights and communal concerns. In Silver Anniversary, Common Ground: Reconciling Rights and Communal Concerns in Real Property Law, 25 B.C. Envtl. Aff. L. Rev. 831 (1998), Thomas McInerney III is critical of the Supreme Court's recent movement towards a strict scrutiny analysis in the area of takings law. McInerney highlights the movement by the Court from rational basis analysis to strict scrutiny and argues that this case law directly conflicts with the theory of communitarian property rights.
* Takings law. In Deterrence and Distribution in the Law of Takings, 112 Harv. L. Rev. 997 (1999), Michael Heller and James Krier argue that a four-tiered approach to takings law would be much more equitable and able to deal with a variety of situations involving takings. The traditional notion is that there are only two possible solutions in takings law. Either private property owners should receive compensation, or they should not. The authors advocate two additional solutions to deal with situations in which takings are uncoupled from compensation.
* Vested property rights. David Hartman explains the burden placed on real estate developers when regulations and administrative rules change in the midst of development. In Risky Business: Vested Real Property Development Rights--The Texas Experience and Proposals for the Texas Legislature to Improve Certainty in the Law, 30 Tex. Tech L. Rev. 297 (1999), the author examines how reliance on common law doctrines of vested rights and equitable estoppel produced uncertain results.
* Maryland provides for future expansion of airports by allowing acquisition of development restriction easements on surrounding lands. The easements may be used to restrict most types of residential and commercial use and are funded from the previously established "Program Open Space." Md. Transp. Code Ann. §§ 5-4A-01 et seq.
* Massachusetts declares that buyers of realty have no cause of action against sellers or brokers for merely failing to disclose psychological impacts. The law covers such matters as HIV status of former occupants, crimes committed on premises and ghosts. Affirmative misrepresentations are "not authorized," however. Mass. Gen. Laws Ann. ch. 93, § 108. 1998 Mass. Acts 294.
* Michigan immunizes real estate brokers from actions based on failure to disclose to buyers information about registered sex offenders in a neighborhood. The act adds to an existing list of psychological impacts that brokers need not disclose. Mich. Comp. Laws Ann. § 339.2518(c). 1998 Mich. Pub. Acts 437.
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: Eugene L. Grant, 1211 SW 5th Ave., Ste. 1600, Portland, OR 97204-3795. Contributing editors: Robert Flores and Terry Frazier.Probate & Property Magazine is published six times annually and is included in section members' annual dues.