Probate & Property Magazine


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: Subdivisions. A lot owner in a subdivision claimed title by adverse possession of a small portion of an adjacent lot. The owner of the adjacent lot argued that rearranging the boundary lines between lots through adverse possession would be a resubdivision of already platted land, in violation of the local subdivision ordinance. The court held that a subdivision ordinance has no application to instances of adverse possession. Wahna v. Long, 587 N.W. 2d 531 (Neb. 1998). * CONSTITUTIONAL LAW: Free speech. The owner of a shopping mall must make reasonable accommodations for groups or individuals to conduct constitutionally permitted free speech. The owner, however, may impose time, place and manner restrictions on the speech activity as long as the restriction is a reasonable exercise of business judgment, intended to keep the speech from interfering with the mall's business, and the restriction, as applied, does not make the exercise of free speech rights ineffective. Green Party of New Jersey v. Hartz Mountain Indus., Inc., 735 A. 2d 9 (N.J. Super. Ct. App. Div. 1999). * COTENANCY: Partition. A man and woman bought a small apartment building as joint tenants. She contributed most of the down payment and closing costs and did most of the work of managing and maintaining the apartments for several years. After the woman asked for partition while living in one of the apartments, the court found that physical partition was impossible and that partition by sale was inequitable under the circumstances. Because the man's ownership interest was "very minimal" in dollar terms, the court ruled that the woman should pay him a reasonable sum for his share and that he then should convey his interest to her. Fernandes v. Rodriguez, 735 A. 2d 871 (Conn. Ct. App. 1999). * EASEMENTS: Necessity. Purchasers bought land, intending to build on high ground near an adjacent river. A wetland separated the building site from a public road on the opposite side of the parcel. The purchasers claimed an easement by necessity across a private access road on sellers' adjacent land, because building their own access road through the wetland would be very expensive. The court held that an easement by necessity is appropriate only when the easement is absolutely necessary, as opposed to convenient or more reasonable than another means of access. Dupont v. Whiteside, 721 So. 2d 1259 (Fla. Dist. Ct.App. 1998). * EASEMENTS: Necessity. Shore land included a buildable area at the bottom of a bluff, plus a portion of the bluff with direct access to a public road along the top of the bluff. The landowner sold the land at the top of the bluff and then claimed an access easement across neighboring property below the bluff. The court held that an easement by necessity is not available to an owner who "landlocks herself." Schwab v. Timmons, 589 N.W.2d 1 (Wis. 1999). * EASEMENTS: Prescription. In a jurisdiction that requires acquiescence rather than adversity, owners of subdivision lots claimed an access easement by prescription over a road crossing the developer's unplatted land. Finding that the developer originally intended to grant the access easement to the lot owners but never actually did so, the court concluded that the lot owners had used the road under a claim of right, with the developer's knowledge and acquiescence, satisfying the requirements for a prescriptive easement. Walker v. Hollinger, 968 P.2d 661 (Idaho 1998). * EASEMENTS: Prescription. The owner of land with limited access to a private lake claimed a prescriptive easement to use the entire lake on the basis of boating activities over a long period of time. The court held that the normal presumption of adversity does not apply to recreational use of an aquatic resource. Unlike prescriptive use of land, prescriptive use of a private lake "leaves no telltale path or road" that should give the true owner notice of the prescriptive use. Carnahan v. Moriah Property Owners Ass'n, Inc., 716 N.E. 2d 437 (Ind. 1999). * EMINENT DOMAIN: Public purpose. The state used its eminent domain power to acquire land for expansion of a state-owned convention center. The building to be constructed by a public/private partnership on the acquired land was to include four stories, with the top story dedicated to the convention center's use and lower stories available for the private partner. The court held that the expansion satisfied the "public purpose and necessity" requirement of the state constitution. Any private benefit was incidental to the public purpose of the convention center expansion. State ex rel. Washington State Convention and Trade Ctr. v. Evans, 966 P.2d 1252 (Wash. 1998). * INVERSE CONDEMNATION: Flooding. A county approved a developer's drainage plan that included installation of facilities in the county's adjacent, undeveloped road right-of-way. Surface water then flooded a neighbor's land and reduced its value. The neighbor claimed the county's participation in the subdivision drainage plan was an inverse condemnation and trespass. The court held that approval of the drainage plan alone was not sufficient to constitute a taking, but use of the county's right-of-way to conduct surface water onto the claimant's land might be enough to require the county to compensate the neighbors for a taking. Phillips v. King County, 968 P.2d 871 (Wash. 1998). * LANDLORD AND TENANT: Assignment or sublease. A ground lessee installed underground storage tanks on the leased land. The lessee then assigned the lease to Turner, with the landlord's consent but with no mention of the storage tanks. The landlord and Turner entered into a new lease, again with no mention of the storage tanks. When Turner later tried to assign the leasehold, the landlord conditioned consent on the proposed assignee's accepting responsibility for the underground storage tanks. Because there was no clear evidence who owned the storage tanks, the court could not determine if the conditional consent was reasonable. The decision implies that the condition on the consent would not be reasonable if the landlord was the true owner of the storage tanks. Wright v. RubaDub Car Wash, Inc., No. 97-CT-00113-SCT, 1999 Miss. Lexis 254 (Miss. 1999). * LANDLORD AND TENANT: Assignment or sublease. A lease included a requirement for the landlord's written consent to an assignment or sublease. The landlord then refused consent for an assignment to a proposed assignee who would use the property differently. The court held that, "without a freely negotiated provision in the lease giving the landlord an absolute right to withhold consent, a landlord's decision to withhold consent must be reasonable." Cafeteria Operators L.P. v. AMCAP/Denver Ltd. Partnership, 972 P.2d 276 (Col. Ct. App. 1998). * LANDLORD AND TENANT: Discrimination. Landlords refused to rent to an unmarried couple, because cohabitation by unmarried couples was inconsistent with the landlords' religious beliefs. The spurned tenants alleged violation of their civil rights under state law. The court found marital status discrimination, which the state's civil rights act prohibited. The court initially also found that the landlords' religious freedom was not violated under the circumstances, but later vacated that portion of the opinion and remanded the case to a lower court for a factual determination of whether the landlords' religious freedoms had been violated. McCready v. Hoffius, 586 N.W.2d 723 (Mich. 1998), vacated in part and remanded, 593 N.W.2d 545 (Mich. 1999). * MORTGAGES: Assignment of rents. A lender recorded a mortgage that assigned the rents to the lender as additional security, with the borrower reserving the right to collect rent before a default The lender then sold the note and mortgage. A judgment lienholder then sought to garnish the rents at a time when the borrower was not in default. The new lender intervened; the borrower eventually filed for bankruptcy protection. Applying Mississippi law, the court held that the lender's assignment of rents was perfected when the mortgage was recorded, without any need for a default that would have triggered the lender's right to collect the assigned rents. Millette v. E.B., Inc., 186 F. 3d 638 (5th Cir. 1999). * MORTGAGES: Lien priority. A borrower purchased a home in a residential development governed by a declaration and covenants. The declaration and covenants gave any claims of the homeowners association a higher priority than "any mortgage." A lender made a purchase money mortgage loan to the borrower and recorded its mortgage. Years later, the association filed a the lien against the borrower. During foreclosure shortly thereafter, the lender sought a ruling that its mortgage lien was superior to the association's lien. The court held lien dated back to the recording of the declaration and covenants, so it had a higher priority than the mortgage lien. Association of Poinciana Villages v. Abatar Properties, Inc., 724 So.2d 585 (Fla. Dist. Ct. App. 1998). * MORTGAGES: Lien priority. A mortgage was properly recorded under Florida law. The note and mortgage then were sold to Assignee One, who recorded an assignment. Assignee One then sold the note and mortgage to Assignee Two, who also recorded an assignment, but not until after the mortgagor petitioned for relief under the Bankruptcy Code. The trustee in bankruptcy attempted to avoid the mortgage lien under Bankruptcy Code §§ 544 and 549, claiming that the perfection of the assignment after the mortgagor's petition for relief made the note and mortgage vulnerable. The court held that §§ 544 and 549 only allow the trustee to avoid fraudulent transfers of a mortgagor's property. The note and mortgage were not the mortgagor's property and could be assigned, even after the bankruptcy filing, without any impact on the mortgagor's bankruptcy estate. In re Halabi, 184 F. 3d 1335 (11th Cir. 1999). * MORTGAGES: Negligent disbursement. During construction of a new residence, the lender hired an appraisal company to monitor construction progress for draw request purposes. The lender disbursed funds on the appraiser's recommendation, but the contractor did not complete the house within the original budget. The homeowners sued the appraisal company for negligent certification of completed work, leading to the inappropriate disbursement of loan proceeds. The court held that the homeowners were third-party beneficiaries of the contract between the lender and the appraisal company, entitled to recover actual and consequential damages. Vogan v. Hays Appraisal Assocs., 588 N.W.2d 420 (Iowa 1999). * MORTGAGES: Sham foreclosure. A borrower obtained most of the financing for purchase of real estate from a bank, giving the bank a first priority lien. The seller provided the balance and took a second priority lien. Later, the borrower conveyed the property to a "straw man" and also had a corporation controlled by the same straw man acquire the first priority note and mortgage. Despite having sufficient funds to pay the first loan in full, the borrower then engineered foreclosure of the first priority lien in an attempt to eliminate the second priority lien. The court set aside the foreclosure of the first lien, calling it a sham. Webber v. Inland Empire Invs., Nos. E020383, E021506, 1999 Cal. App. LEXIS 807 (1999). * ZONING: Civil rights. Two zoning commissioners participated in consideration of a rezoning application by a landowner against whom they apparently felt some personal animosity. After the application was denied, the landowner sued the city, claiming a violation of his equal protection rights and alleging liability under § 1983. The court ruled that the evidence presented by the landowner established a prima facie case of arbitrary action by the city zoning commissioners. Thomas v. City of West Haven, 734 A.2d 535 (Conn. 1999).

ZONING: Estoppel. A developer sought to construct a multi-family complex, but the city rezoned the property before building permits were issued. The developer sued the city, claiming vested rights, and won an order from the trial court that building permits be issued. The developer continued with construction during appeal. The Wisconsin Supreme Court held that the developer's rights had not vested and that the order to issue building permits was improper. The developer then sought a declaration that the city was equitably estopped from revoking the permits and ordering the building razed. The court of appeals held that the city was free to revoke the permits and order the building razed, because the developer could not reasonably rely on the validity of the building permits under the circumstances. Lake Bluff Housing Partners v. City of South Milwaukee, 588 N.W.2d 45 (Wis. Ct. App. 1998).


* Brokers. Patricia A. Wilson examines several different brokerage relationships now available to real estate buyers and sellers, including single or exclusive agency, dual agency, designated agency, and - her primary focus-nonagent brokerage, in Nonagent Brokerage: Real Estate Agents Missing in Action, 52 Okla. L. Rev. 85 (1999). * Community associations. In Whistling Dixie: The Invalidity and Unconstitutionality of Covenants Against Yankees, 10 Vill. Envtl. L.J. 57 (1999), Alfred L. Brophy and Shuba Ghosh contend that although the subject of covenants against people of the "Yankee race" may be amusing to some, such covenants actually violate the Equal Protection Clause, Privileges and Immunities Clause and Commerce Clause of the U.S. Constitution. * Custom. Steven W. Bender conducts an extensive examination of the sometimes tenuous balance between public beach access rights, as established by custom, and the rights and interests of dry sand owners, in Castles in the Sand: Balancing Public Custom and Private Ownership Interests on Oregon's Beaches, 77 Or. L. Rev. 913 (1999). * Indian trust lands. Mary Jane Sheppard provides an in-depth analysis of the legal and procedural intricacies involved when Indian tribes apply to the U.S. Department of the Interior to have their lands taken into trust, in Taking Indian Land Into Trust, 44 S.D. L. Rev. 681 (1999). * Regulatory takings. Kathryn E. Kovacs argues that the preclusion problem created by the Williamson County decision has been further complicated by federal courts' efforts to circumvent the decision, in Accepting the Relegation of Takings Claims to State Courts: The Federal Courts' Misguided Attempts to Avoid Preclusion Under Williamson County, 26 Ecology L. Q. 1 (1999).

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.

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