Keeping Current Property offers a look at selected recent cases, rulings and regulations, literature and legislation. The editors of Probate & Property welcome any suggestions and contributions from readers.
- BANKRUPTCY: Installment sale contract. The court applied the doctrine of equitable conversion to deny vendor's motion to have Chapter 13 debtor assume or reject an installment sale contract, holding that the debtor had equitable title to the property. In re Vinson, 20 B.R. 972 (S.D. Ill. 1996).
- BANKRUPTCY: Totally unsecured second mortgage; "strip off." In a case described as one of first impression in the Ninth Circuit, the bankruptcy court held that a totally unsecured second mortgage lien may be "stripped off" in a Chapter 13 proceeding. In re Geyer, 203 B.R. 726 (S.D. Calif. 1996).
- BROKERS: Duty after listing agreement expires. An owner contracted to sell property to his broker, who had been unable to secure a buyer for over one year. After the contract but before closing, the broker found a third party to purchase the property at a price greater than the price in the broker's contract with owner. In reversing summary judgment for the broker, the court held that an issue of fact existed as to whether the agency relationship continued and the broker owed a fiduciary duty to the owner. Letsos v. Century 21-New West Realty, 675 N.E.2d 217 (Ill. Ct. App. 1996).
- CONTRACTS: Fraud; rescission. A buyer induced to enter a real estate contract by a seller's fraud generally may elect to rescind the contract or to affirm and sue for fraud. If the contract provides it is the "entire agreement" of the parties, however, the buyer cannot assert reliance on alleged misrepresentations outside the contract to establish a claim of fraud. A malpractice claim against the real estate agent for failure to disclose should be treated as a kind of fraud claim subject to "entire agreement" language in the contract. Pennington v. Braxley, 480 S.E.2d 357 (Ga. Ct. App. 1997).
- EASEMENTS: Lack of title in "dominant estate." Following the weight of authority, the court held that conveyance of an easement to be appurtenant to a public park was unenforceable because the public authority never obtained title to the dominant estate. Snyder v. Monroe Township Trustees, 674 N.E.2d 741 (Ohio Ct. App. 1996).
- EASEMENTS: Landlocked tract. A grantor sold part of its tract to a condominium complex, leaving the remainder landlocked. The grantor then sought declaratory judgment of its right to use the road across the condominium's tract. The court concluded that an owner who voluntarily landlocks itself is not entitled to a private way of necessity. Also, Georgia does not recognize implied reservation of an easement by a grantor, and the grantor had not shown it was entitled to an easement by prescription. Mersac, Inc. v. National Hills Condominium Ass'n, 480 S.E.2d 16 (Ga. 1997).
- EASEMENTS: Relocation. Noting a split of authority among the states, a Pennsylvania court concluded that it could compel relocation of a prescriptive easement at the servient owner's request when the resulting easement is as safe as the original location, the relocation results in a relatively minor change and relocation advances the interests of justice. The court cautioned, however, that such a remedy is extraordinary and should be used sparingly. Soderberg v. Weisel, 687 A.2d 839 (Pa. Super. Ct. 1997).
- LANDLORD AND TENANT: Death of lessee; options to renew; assignments. A tenant had a 10 year lease with options to renew so long as he lived. The court held that, on the tenant's death, the lease would pass to his heirs until the expiration of the then-current lease period. Because the lease was personal to the tenant and could not be assigned without the landlord's consent, the option to renew would not pass to the tenant's heirs. Dobyns v. South Carolina Dept. of Parks, Recreation and Tourism, 480 S.E.2d 81 (S.C. 1997).
- NUISANCE; Weed ordinance. An ordinance declaring weeds and grass above six inches in height to be a nuisance is a reasonable exercise of police power. The ordinance is not unconstitutional: it provides a definite height for cutting, requires advance notice before the borough can proceed to abate the nuisance and terms such as "ornamental" can be construed according to their common meanings. Pennsylvania v. Siemel, 686 A.2d 899 (Pa. Commw. Ct. 1996).
- TITLE INSURANCE: Tort liability. Agreeing with the majority of other jurisdictions, the Nebraska Supreme Court held that a title company may be liable in tort for a misrepresentation made in a preliminary title insurance commitment. The title company thus has a duty to report to interested persons known, but as yet unrecorded, matters affecting title to the real estate. Tess v. Lawyers Title Ins. Corp ., 557 N.W.2d 696 (Neb. 1997).
- ZONING AND PLANNING: Impact fees. A water resource development fee, imposed on all new real estate developments, was upheld in Arizona Home Builders Ass'n v. City of Scottsdale, 930 P.2d 993 (Ariz. 1997). In Colorado, a school impact fee assessed on issuance of building permits was invalid because the statute provided for such a fee at the time of subdivision approval. Board of Cty. Comm'rs v. Bainbridge, Inc., 929 P.2d 691 (Colo. 1997). In Nevada, the court held that a "fair share cost" program adopted by a county and school district was an impact fee or tax and not merely a regulatory measure and, as such, was preempted by state legislation for funding of schools. Douglas County Contractors Ass'n v. Douglas County, 929 P.2d 253 (Nev. 1996).
- ZONING AND PLANNING: Manufactured homes; federal preemption. A city ordinance requiring compliance with building or safety standards different from HUD regulations is preempted by the specific language of the National Manufactured Housing Construction and Standards Act. The court noted, however, that municipalities may zone land to pursue legitimate objectives related to health and welfare, and that it is not the function of federal district courts to serve as zoning appeals boards. Colorado Manufactured Housing Ass'n v. Board of County Comm'rs, 946 F. Supp. 1539 (D. Colo. 1996).
- ZONING AND PLANNING: Nonconforming use; abandonment. Construing a zoning ordinance that provided that a nonconforming use discontinued for more than one year could not be resumed, the court held that intent to abandon must be proved but that such discontinuance created a rebuttable presumption that the owner could rebut. To hold that the mere passage of time could amount to abandonment would deprive the owner of property without due process of law. City of Glendale v. Aldabbagh, 928 P.2d 659 (Ariz. Ct. App. 1996).
- ZONING AND PLANNING: "Zoning freeze"; vested rights. A developer had gained approval of a definite subdivision plan in 1989, conditional on the developer finishing necessary groundwork by a specified date; otherwise the approval of the plan would be automatically rescinded. Although improvements were not made within the time limit, the court held that a rezoning after the plan's approval was not applicable to the developer's property under state law that "freezes" the zoning for eight years from the date of subdivision approval. Heritage Park Dev. Corp. v. Town of Southbridge, 674 N.E.2d 233 (Mass. 1997).
- ZONING: Historic preservation. Plaintiffs challenged a historic preservation ordinance for vagueness. Noting that the adequacy of standards governing the application of such ordinances was a question of first impression in New Jersey, the court examined cases from Texas and North Carolina and concluded that the design criteria and guidelines of the ordinance in question provided adequate notice of what was lawful, given the context and purpose of the ordinance. Nadelson v. Township of Millburn, 688 A.2d 672 (N.J. Super. Ct. Law Div. 1996). TAX DEVELOPMENTS
- NONRECOGNITION TREATMENT: Sale of land. Despite the IRS' argument that a sale involved business assets, the Tax Court concluded that the sale consisted only of land, and thus the later acquisition of replacement property qualified the sale for nonrecognition treatment under Code 1031. The land had been used by the taxpayer to mine sand under a nontransferable county permit. The sale was characterized as a sale of land, and no price adjustment was made for sand mined between the date of the sale agreement and the closing date. The buyer later operated a dump and gave away sand. Beeler v. Commissioner, T.C. Memo. 1997-73.
- TAX FREE TRANSACTION: Condemnation; replacement. Under threat of condemnation, a school sold its leasehold to a city development authority for $1.4 million and acquired replacement property in the form of an existing building and facilities that it constructed. The IRS ruled that this was a tax-free transaction under Code 1033. PLR 9706004.
- Bankruptcy; Chapter 11 single asset cases. In Lender's Guide to Single Asset Real Estate Bankruptcies, 31 Real Prop., Prob. and Tr. J. 393 (Fall 1996), John C. Murray provides a thorough and helpful discussion of strategies for secured creditors to deal with single asset cases in Chapter 11.
- Bankruptcy; sale of land free of restrictions. Nearly all bankruptcy decisions hold that land sold in bankruptcy is sold subject to restrictive covenants affecting land. The courts generally do not see covenants as contractual obligations that can be avoided. In Sale of Property of the Estate Free and Clear of Restrictions and Covenants in Bankruptcy, 4 Am. Bankr. Inst. L. Rev. 431 (1996), Basil H. Mattingly proposes that bankruptcy laws should be construed to permit sale "free and clear" when certain conditions are met.
- Cost recovery under CERCLA. Michael V. Hernandez discusses the confusion surrounding 107 and 113 claims brought by potentially responsible parties in Cost Recovery or Contribution?: Resolving the Controversy over CERCLA Claims Brought by Potentially Responsible Parties, 21 Harv. Envtl. L. Rev. 83 (1997).
- Environmental law and Native Americans. The role of Native Americans in protecting the environment is discussed by several authors, including Frank Pommersheim, N. Bruce Duthu, Richard A. Monette, Dean B. Suagee and Rebecca Tsosie, in Symposium: Stewards of the Land: Indian Tribes, the Environment, and the Law, 21 Vt. L. Rev. 3 (1996).
- Land use and environmental regulation. Property rights and the future of environmental and land use regulation are discussed in a law review symposium issue that includes works by Charles M. Haar, James E. Krier, Michael Allen Wolf and Loren A. Smith. 30 U. Rich. L. Rev. 961-1218 (1996).
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