Keeping CurrentKeeping Current—Property Editor: Prof. James C. Smith, University of Georgia, Athens, GA 30602, jim@uga.edu. Contributing editors: Prof. William G. Baker, Prof. Ronald Benton Brown, Prof. Matthew J. Festa, Prof. Shelby D. Green, and Prof. John A. Lovett.

Probate & Property Magazine, March/April, Volume 23, Number 2

Keeping Current | Property

Keeping Current—Property offers a look at selected recent cases, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.

CASES

COVENANTS: Covenant limiting use of property for “residential or dwelling house purposes and not for any commercial purposes” does not preclude rental apartments. The deeds to four adjoining lots prohibited use for “commercial purposes,” and one also stated that the property could be used only for “residential or dwelling house purposes” and not for “commercial or industrial use.” The grantees converted an existing building on the property into a three-unit apartment building, provoking a challenge by neighbors who owned single-family homes. The neighbors asserted that the deed covenants should be read to limit use to owner-occupied, single-family dwellings and to prohibit any use undertaken with a view to profit. The court found that although the grantor’s intent to prevent the use of the property for commercial applications was clear from the language in the deed, there was no restriction on the character of the residential use, which would have been easy to express. Moreover, the language barring “industrial use” in addition to “commercial use” suggested that the restriction was aimed at activities engaged in for commerce as their primary activity. Giving “commercial” its common everyday meaning, the court found that merely residing in an apartment and paying rent to an owner is not engaging in commerce or having profit as the primary aim. Instead, like the neighboring single-family residences, the apartment building remains a place for people to live; its character being fundamentally different from a department store or service station. Silsby v. Belch, 952 A.2d 218 ( Me. 2008).

CONDEMNATION: Court retains jurisdiction over condemnation action when condemning authority amends pleadings to take a smaller portion of land than originally sought. The University of Houston filed a condemnation petition for approximately one acre of property to expand the university campus. The trial court appointed special commissioners, who assessed the landowner’s damages at $275,000, and the landowner timely objected. The university then filed an amended petition that sought to condemn only a five-foot strip of land, thereby reducing the amount of land sought by 97%.

The landowner moved to dismiss on jurisdictional grounds, arguing that the amended complaint operated as an abandonment of the petition and that, because the special commissioners had only considered the value of the larger tract, the amendment deprived the trial court of its “appellate” jurisdiction in condemnation proceedings. The trial court granted the motion to dismiss and, after a jury verdict, awarded the landowner over $1 million including attorney’s fees under a state statute authorizing fees and costs on a court’s dismissal of a condemnation proceeding. Tex. Prop. Code § 21.019(c). The court of appeals reversed, and the state supreme court affirmed the reversal, holding that the courts retain jurisdiction over amended condemnation proceedings that seek a smaller portion of land than sought in the original petition. The court did hold that the amended petition in this case operated functionally as a voluntary dismissal of the claim to the larger tract and that the condemning authority was liable for a portion of the landowner’s attorney’s fees. The abandonment of the claim to the larger tract did not entitle the landowner to recover all attorney’s fees and expenses, however—only those that the landowner would not have incurred had the smaller tract been sought originally. FKM Partnership, Ltd. v. Board of Regents, 255 S.W.3d 619 ( Tex. 2008).

FORECLOSURE: A foreclosure sale at a price less than 1% of appraised value is set aside when the lender failed to bid because of inadvertence. A lender obtained a foreclosure judgment for $716,139 on a property appraised at $500,000 but failed to appear at the foreclosure sale. A disinterested third party bid $1,000. Three days later the lender filed a motion to set aside the sale based on inadvertence and mistake that caused its agents to fail to attend the sale. A number of things had led to the lender’s agent failing to bid on the property. The lender was represented by two law firms, one to litigate priority issues and the other to handle the foreclosure sale. The lawyer who litigated the priority also handled publication of the notice of sale. The lender’s agent for purposes of bidding on the property, however, was an employee of the other law firm. When she did not find proof of publication of the notice of sale at the newspaper office, she thought that the sale would not occur. A copy of proof of publication was faxed to the bidding agent’s supervisor, but not until 10 a.m. on the morning of the sale. By the time the bidding agent received bidding instructions, the sale was over. Moreover, the bidding agent’s supervisor thought the sale would not occur until 11 a.m. The trial judge denied relief because the foreclosure buyer was not at fault, but the court of appeal reversed, finding a gross abuse of discretion. The lender had filed its motion promptly and the $1,000 price would have been an outrageous windfall to the buyer. The court based its decision on the need to protect the viability of the foreclosure process, to encourage good faith bidding on foreclosure properties, and to promote judicial economy by eliminating the need for subsequent litigation to allocate the loss between the lender and its attorneys. Long Beach Mortgage Corp. v. Bebble, 985 So. 2d 611 ( Fla. Dist. Ct. App. 2008).

MORTGAGES: Divorce decree awarding equity in house to husband subject to obligation to pay share of equity to wife conveys full title to husband. A divorce decree provided that “the house,” “all equity in the house,” and the debt on the house are to be “distributed” to the husband, subject to his obligation to pay the wife one-half of the equity within the next three years. The divorce decree also obligated the wife to pay $2,000 to the husband in exchange for his assumption of the entire mortgage debt. A year after the divorce, the husband obtained a judgment for the $2,000, which the wife had failed to pay. To satisfy the judgment, the sheriff executed on the wife’s “right to receive” her equity in the house from her husband. At the execution sale the husband purchased this right. He then refinanced the mortgage with a title insurance commitment reflecting that he was the sole owner of the house. Three years after the divorce, the wife brought a contempt proceeding for the nonpayment of her equity and a quiet title action against the husband, his attorney, and the title insurer. She claimed that the divorce decree merely awarded the husband possession and that she retained her undivided one-half interest in the title. Affirming a grant of summary judgment for the husband, the supreme court ruled that the divorce decree divested the wife of her real property interest in the house and converted it to a monetary obligation secured by a lien on the house. Although the decree could have been drafted better, the parties’ intent was to give the house to the husband, and the court held that this had the effect of legally conveying title, despite a lack of any formal language of conveyance. The sheriff’s sale was proper because the wife did not own real property; the obligation secured by a lien was personal property. The court also held that the title insurer owed no duty to the wife. Chavez v. Barrus , 192 P.3d 1036 (Idaho 2008).

“NO SMOKING” REGULATIONS: State law prohibiting smoking in places of employment does not unconstitutionally interfere with property rights in private facilities. In 2006 Washington voters passed Initiative Measure No. 901 to prohibit smoking “in a public place or any place of employment.” Wash. Rev. Code § 70.160.030. The initiative amended a prior statute that restricted indoor smoking but exempted “private facilities which are occasionally open to the public.” Id. § 70.160.020(2). An American Legion Post sought declarative and injunctive relief to preclude enforcement of the ban against the Post. The Post claimed that its facility is a private facility open only to members and their guests and is therefore exempt from the statute’s reach and that the law is an unconstitutional regulation of private property. The trial court granted summary judgment to the state and county agencies charged with enforcing the smoking ban, and the supreme court affirmed in a 5–4 decision. The majority ruled that the statutory exception for “private facilities” did not apply to exempt from the ban any private property that is also a “place of employment,” which includes the American Legion Post. The majority also held that the statute was a rational exercise of the police power that did not infringe the Post’s private property rights. The dissenting justices argued that the majority’s refusal to exempt private facilities misreads the voters’ intent in passing the antismoking initiative, and that the ban unconstitutionally regulates private property without due process. In spite of the close decision the opinion makes clear that the state’s smoking ban applies to any “place of employment,” including private clubs. American Legion Post No. 149 v. Wash. State Dep’t of Health, 192 P.3d 306 ( Wash. 2008).

RECORDING ACTS: Purchaser with actual notice of conservation easement has inquiry notice of right of first refusal set forth in recorded easement document. Owners of a 296-acre dairy farm conveyed the “development rights, right of first refusal, and a perpetual conservation easement and restrictions” to a land trust. The right of first refusal gave the land trust the right to purchase the farm at the price and on the terms offered to the owners by a third party. Four years later, the owners listed their farm for sale and purchasers made an offer, which they accepted. The contract of purchase did not expressly mention the right of first refusal, although the listing agreement and the real estate broker advised the purchasers that the development rights had been sold. After receiving notice of the purchasers’ offer, the land trust elected to exercise the right of first refusal, but assigned that right to another party, who bought the land. The purchasers brought suit against the sellers for breach of contract and against the land trust, its assignees, and the broker for tortious interference with contract rights. The breach of contract action failed because the purchasers had inquiry notice of the right of first refusal; they had actual notice of the recorded conservation easement, from which they could have determined all of the rights and burdens associated with the easement. The trial court held that the land trust’s exercise of its right of first refusal voided the purchasers’ contract, but the supreme court instead reasoned that waiver of the right was an implied condition, thereby preventing the formation of a contract in the first place. As the tortious interference claim was one of first impression, the court adopted the rule, followed in Kentucky and Florida, that absent evidence of malice, ill will, or improper motive, the mere exercise of the right of first refusal cannot constitute tortious interference with contract. The purchasers tried to establish such improper motive by asserting that officials from the land trust stated that they were “too old to farm,” but they failed to dispute the land trust’s response that it exercised the right primarily to keep the land in active dairying, which its assignees intended to do, but the purchasers did not. Field v. Costa, 958 A.2d 1164 ( Vt. 2008).

SALES CONTRACTS: Seller may keep buyer’s deposit as liquidated damages because buyer failed to give notice of default. A buyer contracted to buy 81 residential subdivision lots for $7.29 million. The contract required the seller to obtain all necessary permits for building single-family homes. Each lot required its own septic system, with approval to be based on individual percolation tests run on each lot. The buyer, nervous about the approvals, orally requested that the seller provide a written guaranty that each lot could get septic tank approval. At the closing, however, the seller only was willing to offer to help the buyer get any individual lot approval that was not readily forthcoming. The buyer rejected this and walked out of the closing. More than two weeks later, the buyer sent a letter demanding the return of its deposits. The trial court granted summary judgment to the buyer because the seller did not furnish septic tank approvals for every lot, but the appellate court reversed. To terminate the contract based on default, the contract required that the nonbreaching party give written notice of default, with the party in default then having 15 days to cure it. Only if the default was not cured could the nonbreaching party terminate the contract. The buyer gave only oral notice of its concern at the time of closing. In fact, the buyer did not give written notice until it demanded the return of its deposit, more than 15 days after the failed closing. Thus, the court concluded that the buyer had breached, with the seller entitled to keep the deposits as liquidated damages. A liquidated damages clause must pass a three-part test: (1) damages must be difficult or impossible to estimate accurately, (2) the parties must intend to provide damages rather than a penalty, and (3) the amount must be a reasonable estimate of loss that will be caused by a breach. The first and second parts of the test were satisfied by the fact that the parties were experienced in the real estate business and they had expressly agreed that the damages would be difficult to ascertain and that this was a reasonable way to liquidate the damages. But was this a reasonable estimate of the probable loss? The buyer had deposited $100,000 as earnest money when the contract was executed and later made an additional deposit of $50,000 when the subdivision plat was recorded. Nothing about the sequence of deposits made the amount seem more like a penalty than an estimate of harm. More importantly, the deposits totaled only 2.06% of the total price. Fuqua Constr. Co., Inc. v. Pillar Development, Inc. , 667 S.E.2d 633 (Ga. Ct. App. 2008).

STATUTE OF FRAUDS: Unsigned mortgage loan forbearance agreement is not enforceable despite borrower’s payment made in accordance with agreement. After homeowners defaulted on their mortgage loan, they and the lender negotiated a forbearance agreement, under which the owners made a one-time payment of $13,422. Unfortunately for the mortgagors, the lender never signed the forbearance agreement. The mortgagors disagreed with some of the terms of the lender’s agreement, and they were authorized to cross out the incorrect terms, sign it, and fax it back. They did this and made the payment, but never received a copy signed by the lender. More than two years later, the lender sold the mortgage loan. Later the new lender, who bought the loan, commenced foreclosure. The homeowners filed an action for declaratory judgment and an injunction based on the terms of the forbearance agreement. The new lender successfully invoked the statute of frauds, which applied because the forbearance agreement was, in effect, a modification of the note and deed of trust. The court rejected the mortgagors’ claim that the new lender had waived the statute of frauds defense by not pleading it in its answer. The mortgagors did not make a claim based on the forbearance agreement until later in the trial court proceeding, and the lender promptly challenged the enforceability of that agreement. The mortgagors also claimed that their payment under the forbearance agreement was sufficient to estop the defendants from raising the statute of frauds under the doctrine of part performance. This doctrine requires that the acts unequivocally refer to the contract or closely relate to the contract’s terms and that the party seeking to enforce the contract must have changed position in reliance on the contract to the extent that applying the statute of frauds would produce an unjust or unconscionable result. That court ruled, however, that merely making a payment based on an oral contract is not sufficient, and that the mortgagors did not sufficiently change their position so as to justify estoppel. Secrest v. Security National Mortgage Loan Trust 2002-2, 84 Cal. Rptr. 3d 275 (Ct. App. 2008).

TAKINGS: State’s inclusion of land within boundaries of a game refuge may constitute a regulatory taking. State law established a game refuge that included a prohibition on hunting. The legislature delegated to the Department of Natural Resources (DNR) the authority to establish the boundaries of the refuge, directing that the refuge be comprised of the land within 110 yards of the banks of the North Platte River in a particular county. The legislature further defined the “banks” of the river as “the elevation of ground which confines the water at a level not exceeding flood stage.” Neb. Rev. Stat. § 37-706(3). The DNR drew a boundary that included land set back from a man-made canal, resulting in 53 acres of plaintiffs’ land falling within the game refuge. Plaintiffs claimed damages from loss of hunting income and a reduction in their property value. They alleged that the DNR’s actions exceeded its statutory authority, that the regulations deprived them of due process because they “go too far,” and that the action was a taking of their property without compensation. The state supreme court held that the legislature intended to delegate to the DNR the responsibility for determining whether any particular waterway should be considered part of the river and that the DNR reasonably exercised this authority. The court rejected the substantive due process claim and disapproved of an earlier case seeming to create a “due process takings” claim; allegations that a regulation “goes too far” are properly analyzed under the Takings Clause. The court reversed the dismissal of the plaintiffs’ regulatory taking claim, however. The trial court had ruled that no takings claim was stated because the state’s actions had neither worked a physical invasion of plaintiffs’ property nor denied them all economic value. The state supreme court relied on Lingle v. Chevron U.S.A., Inc., 544 U.S. 528 (2005), to hold that relief is nonetheless possible for a claim of partial economic deprivation under the balancing test set forth in Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978). The court held that plaintiffs had in fact stated a claim that they were entitled to compensation for a regulatory taking and remanded to the district court. Scofield v. Department of Natural Res., 753 N.W.2d 345 ( Neb. 2008).

ZONING: City has no duty to provide correct information in certifying compliance with local land use ordinances. Plaintiffs leased property and applied to the state Driver and Motor Vehicle Services Division (DMV) for a “vehicle dealer certificate” to start a used car business. An Oregon statute requires that as a prerequisite to approval by the DMV, an applicant must first provide a certificate from a local government official stating that the applicant’s business complies with local land use ordinances and business regulations. Or. Rev. Stat. § 822.025(6). An official in the city planning department signed plaintiffs’ certificate of compliance, and the DMV approved the dealership application. Later, the city notified plaintiffs that their property was subject to an overlay zone that prohibited automobile sales. Plaintiffs moved their business to another location and sued the city to recover economic damages, arguing that the city’s negligence in failing to provide correct zoning information and in certifying compliance with land use law caused foreseeable harm. The city contended that even if its employee had been negligent in certifying plaintiffs’ compliance and failing to inform them of the overlay zone, the city was not liable because it owed no duty to plaintiffs. The state supreme court unanimously affirmed the trial court’s grant of summary judgment to the city, noting that the purpose of the statutory certification requirement is to assist the DMV in deciding whether to approve the application and not to benefit the applicant by providing guidance in business decisions; nor did any duty arise from plaintiffs’ relationship with the city. The court concluded that the city’s certification is intended to protect the public at large and that the city has no duty to provide accurate information regarding an applicant’s land use compliance. Loosli v. City of Salem , 193 P.3d 623 (Or. 2008).

LITERATURE

Property Rights and the Poor. In his best-selling book, The Mystery of Capital (2000), Peruvian economist Hernando de Soto argues that developing countries can largely unlock the power of capitalism merely by giving poor people formal title to the assets they currently hold extra-legally. This process of “fixing” property rights into an abstract, standardized, and fungible form that can be accessed and integrated through modern land registries, de Soto claims, will enable poor people everywhere to leverage their assets, generate capital for small businesses, and produce wealth through expanded markets. In her new article, Exporting the Ownership Society: A Case Study on the Economic Impact of Property Rights, 39 Rutgers L.J. 59 (2007), Prof. Rashmi Dyal-Chand, a rising star in American property law scholarship, takes on de Soto’s now famous and highly influential theory and exposes some of its limitations. Dyal-Chand’s approach is to examine whether the recent attempt in the United States to offer the benefits of home ownership to many more low-income Americans than ever before has created the positive wealth-generating effects predicted by de Soto. She finds that de Soto accurately describes some of our recent experience with the expansion of the so-called “ownership society”: low-income homeowners have seen their titles recorded; prices have standardized; a large secondary market in residential, mortgage-backed securities has flourished (until recently); and this securitization has produced cash for homeowners in the form of home equity loans. Nevertheless, de Soto’s model fails to account for crucial developments. First, only a relatively small percentage (10%) of home equity loans in the United States are actually used to capitalize small businesses. Second, many of the 44% of poor Americans who have been able to become homeowners do not benefit at all from the property effects predicted by de Soto. They are not accumulating wealth in large part because the loans they receive—either purchase money loans or home equity loans—are provided on such onerous and predatory terms that they render ownership “practically meaningless.” Indeed, as we now know, many of these home-owners have not gained wealth at all, but lost equity or, worse yet, entirely lost their homes through foreclosure. The causes identified by Dyal-Chand are now well-known: expert marketing that targets vulnerable communities afflicted by information asymmetries, traditional racial discrimination, and geographic misfortune, to name just a few. Dyal-Chand also nicely describes how unsecured credit-card lending is replacing home equity loans as a primary means—albeit risky—of small business capitalization, further rendering de Soto’s prescriptions out of date. Because Dyal-Chand’s article was written well before the most catastrophic effects of the subprime mortgage meltdown had appeared, it has a certain oracular quality. In the end, her real message is that while formalization of property rights might be a useful step in the process of economic development both here and in developing countries around the world, to ensure real wealth creation that actually benefits the poor, governments and economic development organizations like the World Bank and the International Monetary Fund will need to implement not only formal, opportunity-creating legal reforms but also substantive, positive regulation of the entire process of property formalization.

Good Faith and Commercial Leasing. To what extent should the well-known contract doctrine of good faith and fair dealing infiltrate the realm of commercial leasing? This is the question that Prof. Daniel B. Bogart confronts in his provocative article, Good Faith and Fair Dealing in Commercial Leasing: The Right Doctrine in the Wrong Transaction, 41 J. Marshall L. Rev. 275 (2008). He begins with a careful exposition of the implied covenant of good faith and fair dealing as developed in section 205 of the Restatement (Second) of Contracts and explains two leading rationales for the doctrine in that context. The first rationale—and the one reflected in section 205’s comments—is an “excluder analysis.” The idea is that the phrase “good faith” has no core, objective meaning of its own but is used to exclude a heterogeneous catalogue of examples of “bad faith” and thus “do justice.” The second rationale—essentially economic in nature—defines good faith in terms of “opportunities foregone upon entering a particular contract.” In other words, a party acting in bad faith is doing so to take “a second bite at the apple” and thus claim an advantage that was foregone earlier. It is this second rationale that Bogart believes could play a useful, though limited, role in policing parties’ behavior in the negotiation and performance of commercial leases. In the residential lease context, Bogart endorses a robust use of the doctrine of good faith and fair dealing—primarily through the implied warranty of habitability—precisely because a typical residential tenant and professionally managed landlord have such asymmetrical bargaining positions and usually only the latter will have the benefit of counsel. In the commercial context, however, Bogart claims most leases are carefully negotiated, leverage can be found on both sides of the bargaining table, and both parties typically have an opportunity for the input of counsel. It is this fundamentally different negotiation situation that warrants a much more limited and cautious use of the implied covenant of good faith and fair dealing in commercial leasing. In fact, a too aggressive use of the doctrine could do real harm, Bogart warns, because it could discourage commercial landlords and tenants from investing in hiring the best trained and most effective lawyers. Put more positively, Bogart argues that a narrow application of the doctrine will tend to “raise the bar” for lawyering standards in the context of commercial leasing, a result that many readers of this column will surely welcome.

Good Cause and Tenant Eviction. Should a landlord be required to establish a good cause to evict a residential tenant even when the term of a residential lease has expired? In her new article, The International Trend Toward Requiring Good Cause for Tenant Eviction: Dangerous Portents for the United States? , 38 Seton Hall L. Rev. 427 (2008), Prof. Andrea B. Carroll argues against adoption of such a rule. Carroll’s case against security of tenure for residential tenants rests largely on her survey of European statutory schemes designed to secure housing rights for residential tenants and to remedy affordable housing shortages and the judicial decisions from pan-European tribunals that have upheld those schemes. She argues that good cause eviction regimes have not only unfairly burdened landlords, particularly those who seek to terminate a lease to occupy an apartment for their own personal use, but also have failed to achieve their intended social goals. Carroll cites statistics and studies of good cause eviction regimes, often introduced in tandem with rent control provisions, from Sweden, Portugal, Italy, Germany, France, and the United Kingdom, to support her claim that such regimes exacerbate housing shortages, decrease rental housing quality, lead to inefficient housing resource allocation (too many poor people get too much housing and pay too cheap a rent), diminish tenant mobility, and lead to black markets in housing. Carroll also cites studies of New York City’s long experience with rent control to support her anti-good cause position. One limitation of Carroll’s article, though, is that almost all of her empirical evidence, whether focused on European or U.S. regimes, is drawn from studies published in the 1970s and 1980s. Thus, a reader cannot judge whether any jurisdictions have modified their good cause eviction statutes to remedy some of the problems Carroll identifies. Carroll also does not acknowledge or attempt to measure any of the benefits to tenants (and their children in particular) that might result from security of tenure. Finally, though Carroll acknowledges that a few U.S. jurisdictions have also enacted pure good cause eviction regimes not tied to rent control (New Jersey and the District of Columbia, most notably), Carroll does not address whether these statutory reforms have caused the same kind of social harms she associates with European reform efforts. In the end, Carroll offers a well-written, neoclassical economic critique of statutory intervention in rental housing markets. Nevertheless, the debate over whether legislatures and courts should do more to achieve security of tenure for residential tenants will surely continue.

TIFs, Takings, and Blight. An increasingly common method of financing large scale redevelopment projects is for a local redevelopment agency to issue bonds to be repaid out of the increased property tax receipts generated by the projects as new construction is completed and property values in the redevelopment neighborhood rise. This strategy, known as tax increment financing (TIF), allows local governments to undertake major economic development projects without having to siphon funds from other parts of their budgets. There are downsides, however, to what superficially seems like a “win-win” situation, according to Prof. George Lefcoe in his intriguing study, After Kelo : Curbing Opportunistic TIF-Driven Economic Development: Forgoing Ineffectual Blight Tests; Empowering Property Owners and School Districts , 83 Tulane L. Rev. 45 (2008). Frequently, redevelopment agencies are tempted to manipulate notoriously elastic definitions of “blight” to acquire large parcels of land through eminent domain proceedings at relatively low cost, which they then turn over to developers chosen to implement the economic development projects. In addition, TIF-driven projects often deprive other branches of local governments, particularly school districts, of significant portions of their property tax revenue stream. Lefcoe’s article goes on to describe some of the important post- Kelo legislative reforms and occasional judicial decisions that have sought to curb opportunistic, TIF-driven condemnations. One of the central ironies of TIF-driven economic development projects, according to Lefcoe, is that they tend to work best precisely where they are least needed—in locations where property values are already on the rise. When they are used in truly blighted areas suffering from declining property values and lacking demand for new commercial or residential space, property values and tax revenues often will not increase quickly enough to finance the project costs of acquisition and redevelopment. In the end, though, Lefcoe asserts that narrowly drawn, purely tax-driven condemnations of private property for transfer to another private user are irresistible to local governments seeking to augment their tax bases. But he believes that the majority opinion in Kelo has spurred at least some state courts across the country to take a more skeptical look at such projects and occasionally declare that the “blight” or “economic development” condemnations that facilitate them are not consistent with public use requirements under state constitutions and statutes.

LEGISLATION

Delaware adopts the Uniform Common Interest Ownership Act. Common interest communities are not required to change existing documents. They may amend the documents to become subject to the act. New amendments to existing documents generally must comply with the requirements of the act. At least eight jurisdictions have now enacted this uniform law. 76 Del. Laws 422 (2008).

Pennsylvania enacts the Uniform Municipal Deed Registration Act. County recorders must record deeds without any prior requirement of registration with the municipality. The act appears to require the deed to be recorded regardless of whether the property has been inspected and received approval from code enforcement officials. The recorder must notify the municipality of the property transfer. 2008 Pa. Laws 110.

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