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.
- BROKERS: Disclosure. Buyer's broker failed to disclose to the seller information concerning buyer's financial problems. The court held that both a buyer and the buyer's agent have a common law duty to disclose adverse financial information concerning the buyer's ability to perform, even if such information is publicly available. The buyer's agent cannot hide behind a duty of loyalty to the buyer, because nondisclosure is tortious and agents cannot have a duty to facilitate a tort. Lombardo v. Albu, 14 P.3d 288 (Ariz. 2000).
- CONSTITUTIONAL LAW: Right of Assembly. A political activist sued the owner of a retail store after being arrested for trespass while gathering ballot initiative signatures on the store's property, against the express policy of the owner. She claimed that Oregon's constitution gave her the right to gather the signatures. The Oregon Supreme Court, disavowing its prior decision, held the state constitution provided no such right. The store owner, therefore, had a right to direct the activist to leave the store's private sidewalks and to have her arrested for trespass after she failed to do so. Stranahan v. Fred Meyer, Inc., 11 P. 3d 228 (Ore. 2000).
- EMINENT DOMAIN: Public purpose. Washington's Mobile Home Park Resident Ownership Act gave certain qualified residents a right of first refusal when the park owner decided to sell the park. In holding the Act unconstitutional, the state supreme court found that the Act was not a valid exercise of the state's police power, nor a valid exercise of the state's power of eminent domain, because it transferred a property right to private parties for their private use. Manufactured Housing Communities v. State, 13 P. 3d 183 (Wash. 2000).
- HAZARDOUS SUBSTANCES: Corporate officer's liability. After a company with a single shareholder, officer and director violated an environmental remediation agreement with the state, it sought to hold the officer personally liable under the "responsible corporate officer" doctrine. The court denied the state's request, holding that for such personal liability to attach, the officer must be in a position of authority to control the activities; there must be a nexus between the officer's position and the violation; and the officer's actions must have facilitated the violations. The stipulated fact that the defendant was the sole officer was held insufficient evidence of such elements of personal liability, when there was no evidence of his knowledge, action or inaction with regard to the violation. Commissioner, Indiana Dept. of Envtl. Mgmt. v. RLG, Inc., 735 N.E.2d 290 (Ind. Ct. App. 2000).
- JOINT VENTURES: Statute of Frauds. An oral joint venture agreement required one party to contribute land the other would maintain. After three years of operation, the maintaining party sought a partition of what he claimed was a tenancy in common, even though the land was titled in the name of the other party. The court, in finding for the maintaining party, held the parties did not intend to transfer title to the property through their oral agreement so as to implicate the Statute of Frauds. The interests in the joint venture were, therefore, not voided by the fact that the joint venture agreement did not comply with the Statute of Frauds. Lightsey v. Marshall, 992 P.2d 904 (N.M. Ct. App. 1999), cert. denied, 128 N.M. 148 (1999).
- LANDLORD AND TENANT: Notice. A landlord sent notice of default via certified mail to an address listed in the lease but not specified as a notice address. The lease did not contain a notice provision. The letter was never claimed at the post office. The court held that an unclaimed letter sent to an address not designated as a notice address was not a refused letter and the landlord's notice, therefore, was ineffective. Grenfell v. Anderson, 989 P.2d 818 (Mont. 1999).
- RECORDING ACTS: Constructive notice. A mortgagor obtained a trial court order discharging the mortgage and recorded it. The mortgagee successfully appealed the order but did not record the reversal. The mortgagor subsequently sold the property and signed affidavits stating that there were no mortgages on the property. A title search found the order discharging the mortgage but turned up nothing regarding reversal of the trial court order. When the mortgagee then sought to foreclose on the buyer, the buyer claimed that he was a bona fide purchaser. The court held that the presence of a court judgment in the official land records imposes a duty on buyers to look outside such records to determine the finality of the judgment. The buyer was therefore on implied actual notice of the successful appeal. Slachter v. Swanson, 2000 Fla. App. LEXIS 12249 (Fla. Dist. Ct. App. 2000).
- REGULATORY TAKINGS: Exactions. A city, as a development approval condition, required a subdivision developer to pay for improvements to a road adjoining the development. The court held that the monetary exaction must meet Dolan's "rough proportionality" test, finding no significant difference between the exaction of money and required dedication of land. Benchmark Land Co. v. City of Battle Ground, 14 P. 3d 172 (Wash. Ct. App. 2000).
- REGULATORY TAKINGS: Sign regulations. A city ordinance prohibiting rooftop signs and requiring removal of nonconforming signs after a 12 year amortization period is upheld. The court held the ordinance not a taking under either the categorical test for taking all economically beneficial use or the balancing test for interference with investment backed expectations. Adams Outdoor Advertising v. City of East Lansing, 618 N.W. 2d 766 (Mich. 2000).
- RESTRICTIVE COVENANTS: Replatting. The developer of a large-lot subdivision further subdivided many of the lots after the sale of other lots to purchasers who had relied on the size of the lots set forth in the plat at the time of their purchase. The court, in upholding the lot splitting, held it would not be prohibited absent an explicit, recorded covenant prohibiting further subdivisions and that the filing of a general plan of development did not create such a restrictive covenant. Forrest Const., Inc. v. Milam, 20 S.W.3d 440 (Ark. Ct. App. 2000).
- RIGHT OF FIRST REFUSAL: Fixed price. A lease granted the tenant a first "right of refusal" on the premises for a two year period at a specified price. The court, in excluding extrinsic evidence of the parties' intent, held the provision unambiguously granted only a right of first refusal rather than an option to purchase at any time during the two years. The mere existence of a fixed price does not turn a right of refusal into an option. Stuart v. D'Ascenz, 2000 Colo. App. LEXIS 1694 (Colo. Ct. App. 2000).
- SELLER AND BUYER: Arbitration. A home buyer sued the seller for fraud. The seller claimed that the buyer should have sought arbitration as required by the sale agreement and that buyer's improper resort to a judicial remedy precluded arbitration. The court, in requiring arbitration, held that fraud in the inducement to enter the purchase contract was not sufficient to avoid the arbitration clause, because arbitrators are competent to handle such matters. Furthermore, the summary judgment against the buyer that was granted based on the improper resort to court proceedings was not res judicata, which would preclude arbitration. Johnson v. Siegel, 84 Cal. App. 4th 1087 (Cal. Ct. App. 2000).
- SELLER AND BUYER: Fraud. A sale agreement contained a disclaimer which stated that "purchaser is not relying upon any representations of the seller as to any condition which the purchaser deems to be material to purchaser's decision to purchase the property." The court held that such a clause was insufficient to protect a seller from a claim of fraudulent misrepresentation, although it would be sufficient to preclude a breach of contract claim. Snyder v. Lovercheck, 992 P.2d 1079 (Wyo. 1999).
- SELLER AND BUYER. Legal description. The prospective buyer of a cooperative apartment sued after the seller demanded an additional $50,000. The court held that the sale agreement, which omitted a legal description of the apartment, was unenforceable even though it was for stock in the cooperative rather than for real property, because the shares did not have the attributes of true securities and were necessarily accompanied by a proprietary lease. Firth v. Hefu Lu, 12 P.3d 618 (Wash. Ct. App. 2000).
- STATUTE OF FRAUDS: Waiver. A borrower, after failing to pay off a loan at maturity, obtained the lender's oral promise that it would not seek payment directly from the borrower's customers until it had given the borrower at least 10 days' notice. Five days later the lender sent notice to the borrower's customers demanding direct payment. The court held that an agreement to lengthen the time of performance was not an agreement to grant or extend credit that falls under the Statute of Frauds; that promissory estoppel overcame any consideration problems; and that the lender had effectively waived any requirement in the loan documents that modifications to the loan be made in writing. Rule Sales and Services, Inc. v. U.S. Bank National Ass'n, 991 P.2d 857 (Idaho 1999).
- Growth management. Wake Forest Law Review and the Virginia Environmental Law Journal both recently published symposium issues on this topic. Sustainable Growth: Evaluating Smart Growth Efforts in the Southeast, 35 Wake Forest L. Rev. 509 (2000), includes several articles evaluating smart growth initiatives in Georgia, Florida and North Carolina, plus William Buzbee's introductory analysis of growth management issues, Sprawl's Dynamics: A Comparative Institutional Analysis Critique, 35 Wake Forest L. Rev. 509 (2000). In the Virginia symposium, Managing Growth in the Twenty-First Century: Philosophies, Strategies, Institutions, 19 Va. Envtl. L.J. 239 (2000), Robert Cervero suggests that transportation infrastructure planning is a key ingredient to smart urban development in Growing Smart by Linking Transportation and Urban Development, 19 Va. Envtl. L.J. 357 (2000).
- Riparian rights and the shoreline. The degree of the public's interest in a landowner's resources is at the heart of Joseph Kalo's article, The Changing Face of the Shoreline: Public and Private Rights to the Natural and Nourished Dry Sand Beaches of North Carolina, 78 N.C. L. Rev. 1869 (2000). Kalo allows for the possibility that North Carolina may recognize a public interest in using dry sand areas for recreation, even when the land appears to be in private ownership. He notes that establishing the boundaries between publicly owned wet sand areas and privately owned dry sand areas is a separate, complex issue.
- Tree ordinances as takings. Many local ordinances require developers to protect and preserve trees where practicable. In Whose Tree Is It Anyway?, 77 U. Det. Mercy L. Rev. 579 (2000), Ruthmarie Shea suggests that such ordinances may result in compensable regulatory takings to the extent that they appear to assume that trees are public property instead of landowners' private property.
- Tax liens and tenancies by the entireties. Steve Johnson reviews the impact of the Supreme Court's decision in Drye v. United States, 120 S. Ct. 474 (1999), in After Drye: The Likely Attachment of the Federal Tax Lien to Tenancy-by-the-Entireties Interests, 75 Ind. L.J. 1163 (2000). Johnson concludes the Court held that attachment of federal tax liens is a matter of federal law, unaffected by whether state law would allow an entireties owner to alienate his or her interest in the property without a spouse's consent.
- Colorado makes permanent provisions encouraging environmental self-evaluation and voluntary cleanup of polluted sites. The 1999 "sunset" of the sections is repealed. The acts recognize an evidentiary privilege regarding information developed in a voluntary self- evaluation of environmental problems. Colo. Stat. §§ 13-25-126.5 et al protects persons who voluntarily clean up and redevelop polluted sites. § 25-16-311.
- Connecticut joint tenants may have unequal shares, contrary to the common law requirement of unity of interest. Conn. Stat. § 47-14a.
- Connecticut adopts an electronic records and signatures act. The act is expressly not applicable to wills or conveyances of realty. 1999 Conn. Legis. Serv. P.A. 99-155.
- Connecticut validates land records and property tax records compromised by historical minor defects. One act provides that various defects, omissions and irregularities existing before the date of the act are no longer sufficient bases on which to challenge the validity of the pre-act transactions and resulting records, including property tax assessments, all types of realty conveyances, and condominium declarations. Conn. Stat. §§ 12-60 et al. A separate act provides that the validity of realty transaction documents may not be challenged on the basis of such minor defects unless action is brought within two years of recording. 1999 Conn. Legis. Serv. P.A. 99-238.
- Connecticut bars certain pitches by mortgage lenders and brokers in their advertising, including use of simulated checks, statements that loans are fully pre-approved or indications that the offers are made by a government agency. Conn. Stat. §§ 36a-497, 524.
- Connecticut declares adverse possession ineffective as against a non-profit conservation landholding organization. (It was previously declared ineffective against railroads.) Conn. Stat. § 47-27.
- Connecticut permits fiduciaries to take various steps regarding environmentally compromised realty held in their fiduciary capacity. These include refusing to take control of such lands, engaging in studies and remediation activities, litigating with private persons or government entities and expending trust funds for expenses of such activities. Conn. Stat. § 45a-234.
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, firstname.lastname@example.org. Contributing editors: Robert Flores and Terry Frazier, email@example.com.
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