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: Tenancy in common. A father and his son bought a farm as co-tenants. The father died shortly after the purchase, and his interest went to his widow and three minor children. The son and his wife lived on the farm, worked the land, made improvements, paid all real estate taxes and paid off the purchase money loan. At various times, the son sold and leased portions of the farm and claimed to his siblings that he was the sole owner. In a proceeding to settle ownership of the farm, the court held that although there is a presumption that a cotenant in exclusive possession of jointly owned property is holding for the common benefit of all of the joint tenants, the presumption is rebuttable. Exclusive possession, making improvements and paying taxes and mortgages will not constitute ouster, but other acts, such as selling the property and claiming exclusive ownership, will raise factual issues regarding adverse possession that must be presented to a jury. Wright v. Wright, 512 S.E.2d 618 (Ga. 1999).
- BROKER LIABILITY: Waiver. After buyers found many latent defects in their newly purchased home, they sued their broker for failing to warn them about the defects. The broker obtained a summary judgment based on exculpatory language in the real estate sale agreement that released "all brokers . . . from any and all liability" for the condition of the property. The court reversed, because such language constitutes a waiver of negligence liability, which is unenforceable unless specifically negotiated and narrowly drawn. Aranki v. RKP Invs., 979 P.2d 534 (Ariz. Ct. App. 1999).
- CONDOMINIUMS: Assessment liens. A condominium association's letter to a unit owner stating that if assessments were not paid the association could file a lien was insufficient notice to satisfy the state condominium law, because it only stated a lien was possible. Notice of the actual lien filing should have been sent to the unit owner. The court also held that the condominium assessments were within the scope of the Fair Debt Collection Practices Act (FDCPA). Thus, when the association failed to stop its debt collection efforts after the unit owner sought verification of the amount owed, it violated the FDCPA. Loigman v. Kings Landing Condominium Ass'n, 734 A.2d 367(N.J. Ch. Div. 1999).
- CONDOMINIUMS: Public policy. A statutory requirement that all condominium unit owners pay their pro rata share of the costs to maintain the common elements prevails on public policy grounds over a declaration containing a special declarant right to exempt certain units from payment of such costs. The purported exemption power was held unenforceable. Alma Invs., Inc. v. Bahia Mar Co-owners Ass'n, 999 S.W.2d 820 (Tex. Ct. App. 1999).
- DEEDS: Scope of special warranty. The quantum of property conveyed by special warranty deed was less than the deed described because the grantor previously had accepted a boundary fence at a location inside the deeded boundary line. Acceptance of the boundary fence resulted in a change in the property boundary and the loss of part of the grantor's property. The court held the grantor warranted against deficiencies permitted by the grantor as well as those the grantor affirmatively created. Egli v. Troy, 602 N.W.2d 329 (Iowa 1999).
- EMINENT DOMAIN: Access relocation. Relocation of an access easement by the condemning authority, which arguably impaired the value of the dominant estate, was held an insufficient basis for an inverse condemnation claim, because none of the dominant estate was taken in the condemnation. Relocation of the access easement was treated as an exercise of the police power and not the power of eminent domain. State v. Dikert, 725 A.2d 119 (N.J. Super. Ct. App. Div. 1999).
- EMINENT DOMAIN: Easement. A public agency held a right of way across private land. A pipeline owner, with the agency's permission, attempted to install a pipeline in the right of way. The court held that the installation of the pipeline would constitute an expansion of the original easement and a taking of the servient owner's property. Barillas v. NPC., Inc., 730 So.2d 1062, (La. Ct. App. 1999).
- EMINENT DOMAIN: Notice. A statute governing the acquisition of easements for public pipeline rights of way required the landowner to be served with a notice of the just compensation hearing at least two days before the hearing. The court held that the statute was unconstitutional on its face, because the government cannot deprive a person of property rights based on such an unreasonably short notice of hearing. Branaman v. Long Beach Water Management Dist., 730 So.2d 1146 (Miss. 1999).
- EMINENT DOMAIN: Public purpose. A landowner/ developer induced the local government to condemn for resale to the developer adjacent land for a future expansion of its hotel. In setting aside the condemnation, the court held the future expansion of an existing private project was not a public purpose, especially given that the funding legislation for the condemnation emphasized the need for the immediate development of hotel space. Casino Reinvestment Dev. Auth. v. Banin, 727 A.2d 102 (N.J. Super. Ct. Law Div. 1998).
- LANDLORD AND TENANT: Covenants. A lease required reimbursement to the landlord for taxes, insurance and maintenance and repair costs. After seven years, the tenant abandoned the premises because the landlord was overcharging for taxes and insurance. The landlord sued, claiming damages for lost rent. The court held for the tenant based on the New Jersey rule that lease covenants are mutually dependent. If a landlord breaches its obligations under a lease, a tenant can be excused from performing its obligations even if quiet enjoyment of the premises is unaffected. Mansol Assocs., L.L.C., v. Mansol Indus., Inc., No. 972016 (D.N.J. 1999).
- LANDLORD AND TENANT: Premises liability. A statutory duty to keep residential property in habitable condition does not apply to a rented beach cottage that is not the tenants' primary residence. Therefore, a landlord and its rental agent were not liable for injuries to tenants and their guests when a deck collapsed. Under the common law, a landlord is under no duty to make repairs and is not liable for personal injury caused by the failure to repair. The court refused to impose a common law implied warranty of suitability for occupancy on landlords and their agents who lease a furnished residence for a short term. Conley v. Emerald Island Realty, 513 S.E.2d 556 (N.C. 1999).
- LANDLORD AND TENANT: Premises liability. Plaintiff was attacked in a store parking lot by a "nicely dressed, clean cut" man who tried to drag her into some nearby overgrown bushes that had served as an encampment for homeless people. Although there were no known prior attacks in the parking lot and it did not appear that the attacker was one of the homeless who resided in the bushes, plaintiff nevertheless claimed that the store had a duty to trim the bushes because they were inherently dangerous. Plaintiff's expert testified that bushes where homeless people camp out create havens for violent crimes, even when the crimes are not committed by the homeless themselves. The court held for the landlord, stating the requisite degree of foreseeability can rarely, if ever, be present in the absence of similar incidents on the premises. Nicole M. v. Sears, Roebuck & Co., 90 Cal. Rptr. 2d 922 (Cal. Ct. App. 1999).
- LANDLORD AND TENANT: Premises liability. Plaintiff was attacked while going to her car in a parking garage. The court balanced the landowner's burden of providing security measures against the degree of risk of injury from criminal attacks and held for the landowner, relying on the absence of any prior attacks. Sharon P. v. Arman, 91 Cal. Rptr. 2d 35 (Cal. 1999).
- LANDLORD AND TENANT: Subrogation. A tenant in a multi-tenant building negligently caused fire damage to the entire building. The subrogation clause waived damage claims for "property owned" by the landlord, which was held to unambiguously mean the whole building and not just the leased premises. Disabled Veterans Trust v. Porterfield Constr., Inc., 996 S.W.2d 548 (Mo. Ct. App. 1999).
- LANDLORD AND TENANT: Tortious interference. Owners of a gym relocated to a rental property after suffering a foreclosure. Former customers of the gym acquired the foreclosed property at auction and agreed to purchase the business assets of the gym operation. They encouraged the former owner's new landlord to refund the deposit and rent money, asserting that the new lease was invalid. The court reversed a directed verdict in favor of the customers, holding there was sufficient circumstantial evidence of tortious interference to submit the case to the jury. Sowell v. Blackman, 512 S.E.2d 713 (Ga. Ct. App. 1999).
- LANDLORD AND TENANT: Voluntary termination. A shopping center ground lessee defaulted by failing to make rent and tax payments. The lessor terminated the ground lease without resistance from the lessee. The sublessee claimed its sublease continued, because the ground lease termination was voluntary. In upholding termination of the sublease, the court stated that the lessee's failure to resist termination did not render the termination voluntary. Applebee's Northeast, Inc. v. Methuen Investors, Inc., 709 N.E.2d 1143 (Mass. App. Ct. 1999).
- LENDER LIABILITY: Deceptive practices. A lender violated the Deceptive Trade Practices Act (DTPA) in a combination construction/permanent home loan. The lender paid out funds to an insolvent builder who failed to complete construction of the home, failed to obtain required lien waivers before making disbursements and hired a second contractor to complete construction without the buyers' approval. That contractor also later quit the job without finishing. The court held the buyers were "consumers" under the DTPA, because of the close connection between the lender and builders. Norwest Mortgage, Inc. v. Salinas, 999 S.W.2d 846 (Tex. Ct. App. 1999).
- MORTGAGES: Fraudulent inducement. Summary judgment for a mobile home seller was overturned where factual issues existed concerning fraudulent inducement of the buyer's execution of a purchase money mortgage. Unclean hands based on fraudulent inducement would invalidate the seller's right to an equitable mortgage based on the sale agreement. Green Tree Acceptance, Inc. v. Anderson, 981 P.2d 804 (Okla. Ct. App. 1999).
- RESTRICTIVE COVENANTS: Restraint on alienation. A military officers club developed a planned unit residential development for its members. The club provided extensive maintenance to the units, including the exterior, landscaping, appliances and mechanical systems. Units were sold to members subject to a fixed resale price and by restricting resale to club members or the club itself. The restrictions were held valid and enforceable restraints on alienation, because the club itself was required to purchase the property if no club members were interested. Indian River Colony Club v. Bagg, 727 So.2d 1143 (Fla. Ct. App. 1999).
- Bankruptcy law changes as takings. Julia Patterson Forrester considers proposed changes to bankruptcycourts' treatment of secured lenders in Bankruptcy Takings, 51 Fla. L. Rev. 851 (1999). Forrester concludes that at least some of the proposed changes to bankruptcy laws might amount to a compensable "taking" of secured creditors' rights under the fifth amendment, if such changes run contrary to the settled expectations of secured lenders.
- Environment and habitat conservation. In Rearranging the Deck Chairs: Endangered Species Act Reforms in an Era of Mass Extinction, 22 Wm. & Mary Envtl. L. & Pol'y Rev. 227 (1998). Patrick Parenteau addresses the use of the "No Surprises" policy by the National Marine Fisheries Service and the U.S. Fish and Wildlife Service to induce landowners to enter into Habitat Conservation Plans (HCPs) under the Endangered Species Act (ESA). Parenteau argues the services do not have authority under the ESAto guarantee landowners that no additional habitat protection measures will be required if circumstances change in the future. Real estate developers and their counsel may wish to take note of Parenteau's warning about the shaky legal foundation of HCPs that depend on the No Surprises policy.
- Environment; CERCLA. In Current Landowner Liability Under CERCLA: Restoring the Need for Due Diligence, 9 Fordham Envtl. L.J. 401 (1998), Craig N. Johnston discusses the cleanup cost liability of a landowner whose land is contaminated with hazardous waste. Johnston reviews the basic rules of landowner liability and criticizes several recent federal appeals court decisions that could undermine CERCLA's traditional liability scheme.
- Farmland preservation and takings. In T akings, Fairness, and Farmland Preservation, 60 Ohio St. L.J. 1033 (1999), Mark Cordes asserts that agricultural use zoning still is the most common and most effective tool for local governments seeking to preserve the agricultural character of land within their boundaries in an age of transferable development rights, property tax concessions and other land use planning tools for combating sprawl. Application of an agricultural zoning regulation may effectively "take" a parcel, however, by substantially diminishing the economic value of the parcel as a potential site for development. Cordes argues that agricultural use zoning should be regarded as constitutional and fair by reviewing courts, except when application of the zoning regulation prohibits all economically viable use of the parcel or its value is substantially reduced by down-zoning after the owner bought the parcel with reasonable development expectations.
- Secured lending and Article 9 revisions. In Filing and Enforcement Under Revised Article 9, 54 Bus. Law. 1965 (1999), Steven L. Harris and Charles W. Mooney Jr. explain how and where to file financing statements to perfect liens against title to various forms of real and personal property. Professors Harris and Mooney were the reporters for the ALI committee that recently drafted revisions to Article 9 of the UCC. Most real estate lenders and their counsel will need to become familiar with the Article 9 revisions, which have a uniform effective date of July 1, 2001 wherever they have been adopted by state legislatures.
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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