Keeping Current - Property
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.
- CONDOMINIUM: Maintenance. Directors' decisions on maintenance will be judged against a standard of reasonableness rather than by invoking the business judgment rule. Directors are entitled, however, to rely on advice of counsel when interpreting the requirements that association bylaws place on them. Bennett v. Weimar, 975 P.2d 691 (Alaska 1999).
- FRAUDULENT CONVEYANCES: Intent. A trust gave a loan guarantee to a bank. The borrower was one of the two trustees. When the bank made a claim on the guarantee but before judgment was entered, the trust transferred substantially all of its assets to another trust that the same trustees controlled. The court set aside the transfer under the Massachusetts Uniform Fraudulent Conveyance Act, noting the following "badges of fraud": (1) actual or threatened litigation against a debtor; (2) purported transfer of all or substantially all of a debtor's property; (3) special relationship between debtor and transferee; (4) debtor's insolvency or severe indebtedness; and (5) debtor's retention of the property involved in the transfer. Beal Bank v. Pittorino, 177 F.3d 65 (1st Cir.1999).
- LANDLORD AND TENANT: Premises liability. The warranty of habitability applies only to significant physical defects in the property, not to natural accumulations of ice and snow. Also, the violation of a separate legal obligation to remove ice and snow does not establish landlord's negligence. McAllister v. Boston Hous. Auth., 708 N.E.2d 95 (Mass. 1999). Accumulations due to faulty building design, however, are an exception to the general rule of nonliability for natural accumulations of snow and ice, an Illinois appellate court holds. The building owner was liable for injury caused by a potentially lethal ice missile that fell from a building protrusion through a restaurant entrance canopy. Bloom v. Bistro Restaurant, L.P., 710 N.E.2d 121 (Ill. App. Ct.1999).
- LANDLORD AND TENANT: Maintenance. A landlord's failure to maintain a shopping center parking lot as expressly required by the lease will support a tenant remedy of lease termination without proof of damages. Decade 80-I, Ltd. v. PDQ Food Stores, Inc., 593 N.W.2d 94 (Wis. Ct. App. 1999).
- MORTGAGES: Bad faith foreclosure. A lender that attempted to trigger a foreclosure by increasing the property tax escrow payment amount without informing the borrower may be liable not only for a breach of good faith and fair dealing but also for tortious interference with a business relation and defamation. Voyles v. Sandia Mortgage Corp., 1999 Ill. App. LEXIS 761 (Nov. 4, 1999).
- MORTGAGES: Failure to appear. A junior priority judgment creditor sought foreclosure of the debtor's property free and clear of liens with payment of lienholders in order of priority. The bank holding the first priority lien never appeared. The court held the bank lost its lien and was not entitled to receive any of the proceeds. Galt Alloys, Inc v. Keybank National Ass'n., 708 N.E.2d 701 (Ohio 1999).
- NUISANCE: Telecommunications tower. The displeasing size and shape of a 200 foot tall cell tower that is otherwise permitted by law will not constitute a nuisance even if there is a diminution in value of the adjacent property. Oliver v. AT&T Wireless Servs., CO29233, 1999 Cal. App. LEXIS 1028 (Nov. 29, 1999).
- RESTRICTIVE COVENANTS: Assessment allocation. An association governing two noncontiguous subdivisions assessed all owners for water supply improvements to only one subdivision. Owners from the other subdivision refused to pay, claiming that they would not benefit. The court held that the covenants did not require allocation of assessments only to the directly benefited owners. There was no evidence that the association managers were unfairly allocating assessments generally. Workman v. Brighton Properties., Inc., 976 P.2d 1209 (Utah1999).
- RESTRICTIVE COVENANTS: FCC preemption. An FCC administrative judge held that subdivision restrictions limiting the number and size of television antennas were preempted by an FCC rule prohibiting restrictions on antenna installations that: (1) unreasonably delay installation, maintenance or use; (2) unreasonably increase cost of installation, maintenance or use; or (3) preclude reception of an acceptable quality signal. The landowner installed five 30 foot high masts on which he installed five television antennas and three satellite receivers. The association did not prove that the owner was able to receive an acceptable quality signal without the antenna array or that sufficient safety or historical grounds existed for an exception to the rule. In the Matter of: Stanley and Vera Holliday, CSR 5399-0, 1999 FCC LEXIS 5039 (Oct. 6, 1999).
- RIGHT OF FIRST REFUSAL: Enforceability. A right of first refusal is enforceable against a third party if the third party knew of the right of first refusal and failed to inquire whether the holder of the right wished to exercise it. Stuart v. Stammen, 590 N.W.2d 224 (N.D. 1999).
- SELLER AND BUYER: Exclusive negotiations. A seller violated its duty to negotiate in good faith with plaintiff created by a written agreement providing that either party could terminate negotiations at any time and that no modifications could be made without the written consent of both parties. The agreement did not provide for exclusive negotiations, but the seller made oral representations to the buyer that the property had been taken off the market and concealed third-party negotiations. GMH Assocs., Inc. v. Prudential Realty Group, 38 D&C 4th 225 (C.P. Del. 1998).
- SELLER AND BUYER: Lawyer as escrow agent. Funds deposited with a lawyer or agent for a party cannot be a valid escrow regardless of the parties' intent. Thus, a suit against the alleged escrow agent to enforce the terms of the escrow agreement will fail. Galvanek v. Skibitcky, 738 A.2d 1150 (Conn.1999).
- TRESPASS. "Stigma" damages. A landowner had a shopping center on three contiguous parcels of property. Two of the parcels suffered a trespass by gasoline leaking from a neighboring property. The court held that the plaintiff could recover damages for the two parcels that suffered actual trespass by gasoline based on permanent diminution in value resulting from the "stigma" in the community, even though the contamination was remedied. The landowner could not recover "stigma" damages, however, for the parcel that never suffered actual trespass but did suffer the stigma devaluation. Walker Drug Co. v. La Sal Oil Co., 972 P.2d 1238 (Utah 1998).
- WATERS AND WATER COURSES: Artificial high water mark. The U.S. Army Corps of Engineers significantly increased the flow of water through a dam, changing the high water mark for a downstream landowner. The court held the high water mark is ambulatory and, for purposes of determining state riparian rights and land ownership, will be based on current conditions even if artificially created by the dam's water release. State ex rel. Sprynczynatyk v. Mills, 592 N.W.2d 591 (N.D. 1999).
- ZONING AND PLANNING: Preemption. A municipality sought to prevent use of a privately owned parcel of land for overflow parking at a state run ferry service. The court held that the state government entity was providing an essential government function, making it immune from local zoning laws, even when the function was performed on land leased from a private individual. Town of Bourne v. Plante, 708 N.E.2d 103 (Mass. 1999).
- ZONING AND PLANNING: Religious freedom. A city may validly deny a special use permit for a church in a commercial zone. Denial of the permit did not unconstitutionally interfere with religious activities because the city's interest in creating economic development and tax revenues was compelling and it had chosen the least restrictive method of achieving those goals. City of Chicago Heights v. Living Word Outreach Full Gospel Church & Ministries, 707 N.E.2d 53 (Ill. App. Ct.1998).
- Z ONING AND PLANNING: Temporary takings. Disagreements between a city and the state coastal zone commission delayed adoption of state mandated zoning regulations for 20 years. The court held that the delay was a temporary regulatory taking. No development application was required when the lack of state mandated city zoning prevented a meaningful application. Mills Land & Water Co. v. City of Huntington Beach, 98 Cal.Rptr.2d 52 (Cal. Ct. App. 1999).
- ZONING AND PLANNING: Vested rights. Filing a land use application will vest the landowner's right to have the application judged by the land use rules in effect at the time of the filing even if the rules change during the pendency of the application. Weyerhaeuser v. Pierce County, 976 P.2d 1279 (Wash. Ct. App. 1999).
- Construction defects. When a homeowner discovers defective construction, the task of identifying the party responsible for remedying the problem can be time consuming, expensive, and too frequently unsuccessful-especially when liability insurance coverage is involved. In Comment, Constructing a Solution to California's Construction Defect Problem, 30 McGeorge L. Rev. 299 (1999), Wendy A. Gable proposes a statutory homeowners' warranty program as the solution to this problem in California.
- Environmental risks. The risks of potential cleanup liability under various federal and state laws can intimidate a potential purchaser and even kill a transaction. Ann M. Waeger discusses insurance products available to deal with most such risks on a transaction-specific basis, in Current Insurance Products for Insuring Against Environmental Risks, 15 Prac. Real Est. Law. 9 (1999).
- Lease assignments. Issues relating to the assignment of a commercial lease have become more complicated in the past decade, Brent C. Shaffer notes in Handling Assignment Clauses in an Age of Chameleon Entities (Part I), 15 Prac. Real Est. Law. 61 (1999). States have made more forms of doing business, such as limited liability companies, available to tenants, while tenants and their legal advisors have developed creative new ways to make "end runs" around traditional limitations on assignments and subleases.
- Public lands. The dominant uses of public lands have changed in the past two decades, from primarily extractive uses to recreation and preservation, argue Jan G. Laitos and Thomas A. Carr in The Transformation on Public Lands, 26 Ecology L. Q. 140 (1999). They contend that the "multiple-use, sustained-yield" standard of public resource management-which applies by statute to the Bureau of Land Management and the U.S. Forest Service-has become obsolete and inefficient. The authors propose a different management model based on the micro-economic concept of efficiency.
- Right to farm law as taking. In Comment, Right-to-Farm Statute Runs a"Foul" with the Fifth Amendment's Taking Clause, 7 Mo. Env't'l L. & P. Rev. 28 (1999), William C. Robinson posits that a right-to-farm statute grant of immunity from a nuisance claim to an agricultural operation may "take" a valuable property interest from neighboring homeowners who otherwise would be entitled to stop the nuisance. Robinson argues a taking is likely to be found where the agricultural operation does not pre-date the complaining neighbors' land use.
- Transferable development rights. With at least 22 states authorizing some variation of transferable development rights (TDRs), such tools are becoming increasingly important to land use planners around the nation. In Transferable Development Rights in the Constitutional Landscape: Has Penn Central Failed to Weather the Storm?, 39 Nat. Resources J. 459 (1999), Andrew J. Miller highlights constitutional issues associated with this technique and suggests strategies for planners to address the problems.
- Minnesota reorganizes the landlord-tenant code. The legislation is intended as a clarification and reorganization of the landlord-tenant laws in Minnesota Statutes, Ch. 504 and 566, and is not intended to alter those laws, the legislature states. 1998 Minn. Sess. Law Serv. Ch. 253.
- Minnesota enacts exemptions from liability for clean-up costs under the state MERLA act (counterpart of CERCLA) for contractors performing construction work on brownfields sites. A limitations period is adopted for all actions arising under MERLA. 1998 Minn. Sess. Law Serv. Ch. 341.
- Mississippi allows record owners of land to preclude adverse possession from ripening into ownership in certain circumstances. Where the adverse possession takes the form of constructing fences or driveways, and the 10 year statutory limitations period has not yet run, record owners may protect ownership by filing in the land records statements that the fences or driveways were constructed without permission. 1998 Miss. Laws Ch. 504.
- Missouri adopts digital signatures. Electronic documents with qualified digital signatures are declared valid as if in written form. Standards are provided for authentication of signatures. 1998 Mo. Legis. Serv. S.B. 680.
- Montana requires voter approval of new taxes. Under a constitutional amendment arising from a voter initiative, a governmental unit may not impose any new or increased tax without prior approval of voters in the affected geographical area (except temporarily in emergencies by a super majority of the legislature). Individual voters have standing to sue to enforce these limits and enforcement suit remedies include attorneys' fees. Public officials may be held personally liable for violations. 1998 Montana Laws Ch. 75.
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, Terry Frazier and Jay O'Brien.
Keeping Current-Probate Editor: Gerry W. Beyer, Visiting Professor, Santa Clara University School of Law, 500 El Camino Real, Santa Clara, CA 95053. Contributors include Alexandra F. Caradimitropoulo, Dave L. Cornfeld, William P. LaPiana, Bridget Lovett and Theresa A. Sutton.
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