P R O B A T E & P R O P E R T Y
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|Articles from other issues of Probate and Property|
P R O B A T E & P R O P E R T Y
|Other articles from this issue|
|Articles from other issues of Probate and Property|
Keeping Current—Property Editor: Prof. Daniel B. Bogart, Chapman University School of Law, One University Drive, Orange, CA 92866, email@example.com. Contributing editors: Prof. James C. Smith and Prof. William G. Baker.
Keeping Current—Property offers a look at selected recent cases, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
COTENANTS: Court may consider pending offer to purchase in arranging a partition in kind. Cotenants who owned 92% of a 215-acre tract wanted to sell the property. They brought a partition action against the owner of the remaining 8%, who refused to sell. While the action was pending, plaintiffs received an offer to buy for $5.375 million ($25,000 per acre). The trial court ordered a partition in kind, awarding defendant two small tracts, totaling over nine acres, valued at $443,550 ($49,283 per acre). Defendant appealed, complaining that the trial court rushed to judgment, refusing her requests for continuances because it took into consideration the pending offer. The appellate court upheld the partition, observing that the trial court partitioned in the manner desired by defendant and her surveyor and that she received tracts worth more than her share of the sale proceeds, had she elected to participate in the sale. Talmadge v. Elson Properties, 612 S.E.2d 780 (Ga. 2005).
FORECLOSURE: Lender may collect attorney’s fees to defend borrower’s action to set aside foreclosure, notwithstanding anti-deficiency judgment legislation. After a lender conducted a nonjudicial foreclosure, the borrower brought an action to set aside the sale on the ground that the California “fair value” statute required an appraisal of the property. The state supreme court held for the lender, ruling that the statute required an appraisal only if the lender sought a deficiency, which the lender had not done. The borrower then brought a second action, complaining that the trustee who foreclosed was no longer the trustee of record at the time of foreclosure. The lender had recorded a substitution of trustee before the foreclosure, which the lender and its attorneys apparently ignored. The trial court set aside the sale, but the appellate court reversed, applying the doctrine of equitable reformation. That decision is questionable. Statutes providing for nonjudicial foreclosure are to be strictly construed, and if the legislature wanted to pass a statute saying it makes no difference who serves as trustee, it would have done so. After remand, the lender sought attorney’s fees, relying on an attorney’s fee provision in a pre-foreclosure workout agreement, which called for the award of fees to the prevailing party in any action to enforce the loan agreement or in connection with the mortgaged property. The trial court awarded $1 million for attorney’s fees. The borrower invoked the California anti-deficiency judgment act, which prohibits a deficiency judgment when property is sold under a power of sale in a deed of trust or mortgage. Cal. Civ. Proc. Code § 580d. The court held the statute did not bar the attorney’s fee award. It noted that the borrower had commenced unmeritorious litigation after completion of the foreclosure. It saw no conflict between the award and the policies to be advanced by the legislation: the award was not related to deficiency on the promissory note and not attributable to general market conditions for real estate values. Jones v. Union Bank of California, 25 Cal. Rptr. 3d 783 (Cal. Ct. App. 2005).
LOAN COMMITMENTS: Rate-lock agreement with no fixed expiration date is unenforceable. On August 19, a homebuyer entered into a mortgage loan rate-lock agreement with a lender under a mortgage loan application, which guaranteed a 6.25% interest rate if the loan closed by November 25. The agreement provided that if the loan did not close by that date, the lender would re-price the loan, and the loan would close at the greater of the stated rate or the rate at which the lender “is then willing to make the Loan in view of prevailing market conditions.” In October, the buyer applied for a nonbinding loan with another lender. The homebuyer financed his purchase using a loan from the second lender at a closing, which because of the homebuilder’s delays took place in January. The first lender sued the buyer for breach of contract and the second lender for tortious interference with contract. A Minnesota statute requires that a lender include in its loan agreement “a definite expiration date or term of the agreement.” Minn. Stat.
§ 47.206(2). In a case of first impression, the court found a statutory violation because, although there was an expiration date for the rate-lock, there was no final expiration date for the obligation to borrow from the lender at the higher rate after the rate-lock expired. This rendered the rate-lock agreement void and unenforceable. River City Mortgage Corp. v. Baldus, 695 N.W.2d 375 (Minn. Ct. App. 2005).
MINERALS: Quitclaim grantee liable for plugging costs. Geodyne bought a 10% interest in a Gulf of Mexico oil and gas lease. Ten years later, production had dwindled to a marginal amount. While the operator was considering the feasibility of reworking operations to restore production, Geodyne arranged to sell its interest in this lease and other properties through an auction house. Newton bought Geodyne’s lease interest for $300, accepting a quitclaim deed. Despite the low price, it was a poor bargain for Newton. Three months later, the lessor (the state of Texas) notified the operator that the lease had expired due to the operator’s failure to continue operations. The state required plugging of the well, with the cost assessed to all interest holders. Newton’s 10% share of the cost came to $72,240. The operator sued both Geodyne and Newton for this amount. The trial court held that Geodyne falsely represented that it was selling an interest in a valid lease, ordering it to refund the $300 price and to pay the plugging costs. The supreme court reversed, holding there was no misrepresentation. The auction documents only identified the property by state lease number and percentage of working interest. The court emphasized that the quitclaim deed put the buyer on notice that the seller’s interest was of an “unknown extent” or had a “dubious basis.” Moreover, the auction was open only to bidders who represented they had substantial experience and investments in the oil and gas business and who signed a disclosure statement disclaiming representations and warranties and calling for bidders to exercise due diligence to verify the property. Newton also made a blue sky law claim that the oil and gas interest was a security, which could not be sold by quitclaim. The court agreed that the nonworking interest was a security, but interpreted the statute as not barring quitclaim conveyances. According to the court, a requirement that mineral interests had to be sold with warranty of title would chill market transactions. Mineral interests are often difficult to evaluate. Many are small fractional interests. Lease expiration frequently turns on contingencies and activities that are controlled by third parties. Geodyne Energy Income Production Partnership I-E v. Newton Corp., 161 S.W.3d 482 (Tex. 2005).
MORTGAGE PRIORITY: Equitable subrogation protects refinancing lender from mechanics’ liens. The Torrejons obtained a construction loan, secured by a first lien position deed of trust. They employed several subcontractors to construct a home on the property. The subcontractors were not fully paid for the work and, as a consequence, timely recorded mechanics’ liens. Several months later, the Torrejons obtained permanent financing from Chase Manhattan Mortgage to take out the construction loan. The mechanics’ liens were not recorded until after the Chase deed of trust was recorded (but they took lien priority from the date work was first performed). The subcontractors sued to foreclose their liens. The court applied the doctrine of equitable subrogation, which allows a subsequent lender who supplies funds used to pay off a superior encumbrance to be substituted into the lien position of the prior lienholder, despite the recording of an intervening lien. The court rejected the lien claimants’ argument that the permanent lender’s alleged negligence in failing to discover the lien claimants’ potential lien rights should bar application of the doctrine. The court also turned away the lien claimants’ contention that they would be prejudiced by application of the doctrine, because they would remain in the same position they occupied before subrogation. Of course, the permanent lender was only subrogated to the extent of the amount of the original loan. Lamb Excavation, Inc. v. Chase Manhattan Mortgage Corp., 95 P.3d 542 (Ariz. Ct. App. 2004).
NUISANCE: “Right-to-farm” act does not immunize owner whose first timber cutting occurs after construction of nearby homes. The owner of a ski lodge clear-cut seven acres of its land to pay for lodge repairs. The logging caused avalanches, which damaged downhill residential owners. They brought a nuisance action, which the lodge defended on the basis of the Washington “right to farm” statute that grants immunity to persons who engage in “forest practices” before nonagricultural owners initiate their use. Wash. Rev. Code § 7.48.305. The ski lodge had not logged the property before 1967, when the residential community was built. The trial court found the ski lodge liable for nuisance. The intermediate court of appeals reversed, granting immunity on the ground that ownership of merchantable timber constituted a forest practice. The supreme court reversed, reasoning that the ski lodge had not engaged in any forest practice before 1967. It required logging activities or other overt acts related to timber production. The residential owners did not “come to the nuisance.” When they purchased, they were not on notice that they were buying property next to commercial timberland. It appeared to them that the ski lodge was holding parts of its land as forested for recreational purposes. Alpental Community Club, Inc. v. Seattle Gymnastics Society, 111 P.3d 257 (Wash. 2005).
TAKINGS: Logging prohibition to protect bald eagles is constitutional. A state wildlife agency found a bald eagle nest on a 40-acre tract of timberland. Because bald eagles are a threatened species under the federal Endangered Species Act, the state approved a logging plan that created a nine-acre buffer for the nest site. The owner logged 31 acres, and after the end of the bald eagle nesting season, submitted a new plan to log the remaining nine acres. The state denied this plan, finding that the area was an “active resource site,” which bald eagles were likely to use as a nest site in the future. The owner brought a takings claim under the state and federal constitutions, prevailing before the intermediate appellate court on the ground that the regulation deprived the owner of all economically beneficial use of the nine acres. The state supreme court reversed, concluding that the proper inquiry was focused on the entire 40-acre parcel. Because the owner logged most of its land, the regulation was not a total deprivation of economic use. Coast Range Conifers, LLC v. State of Oregon, 117 P. 3d 990 (Or. 2005).
TRESPASS: Landowner liable for independent contractor’s removal of neighbor’s trees based on stumpage value. Two neighbors owned undeveloped tracts of forest land. One neighbor contracted to sell her timber for $18,000. The contract authorized the lumberjack to cut timber on her tract, as described in a recorded deed, and had an indemnity protecting the owner from any cutting of timber on adjacent properties. The lumberjack cut approximately 735 trees on the neighbor’s 20-acre tract. The neighbor sued the owner and lumberjack for damages, relying on two Maine statutes. One statute requires a landowner who authorizes the cutting of 10 or more acres to clearly mark all property lines within 200 feet of the area to be cut. Me. Rev. Stat. tit. 14, § 7552-A. The owner, not having marked property lines, conceded liability under this statute. The statute calls for “double damages,” which the court interpreted as stumpage value plus the cost of cleanup, as the lumberjack had left slash and other debris on the neighbor’s land. The second statute authorized damages of a set “forfeiture amount” per tree, based on tree diameter, when trees “have been destroyed or carried away.” Me. Rev. Stat. tit. 14, § 7552(3). This formula resulted in damages more than four times greater than the stumpage value. The court held the lumberjack liable under this statute but exonerated the owner because she did not authorize or ratify the trespass, and it was not the natural result of the work contracted to be done. Stockly v. Doil, 870 A.2d 1208 (Me. 2005).
WATER: Landowners abutting man-made pond have no riparian rights. More than 60 years ago, the erection of a dam and spillway turned a brook into a 20-acre pond. In 1955, the pond owner conveyed the dam and adjacent land containing a mill and a factory, retaining title to the pond. The deed conveyed to the grantee an easement to use pond water for industrial purposes, and obligated the grantee to maintain the dam and the water level of the pond. In the 1990s, successors to the grantor (pond owner) stocked the pond with fish and formed a private club, whose members use the pond for recreational fishing. Successors to the grantee began granting recreational use licenses, allowing persons to fish and swim in the pond. The pond owners brought an action to enjoin these uses as trespasses. The trial court and intermediate appellate court held for defendants on the ground that their riparian rights authorized recreational uses. The state supreme court reversed, holding that because plaintiffs owned the pond bed and the pond was man-made and nonnavigable, defendants had no riparian rights. In some other states, including Michigan and Minnesota, defendants would have prevailed. The court rejected the Restatement rule, which grants to the owner of a tract touching the water, but not including the water or waterbed, “rights to use the surface in common with other riparian proprietors [and] to use the water in any way that does not involve a trespass on the land underlying the water.” Restatement (Second) of Torts § 843 cmt. (e) (1979). Announcing a “strong public policy favoring the protection of private property rights,” the court held that no riparian rights attach to a tract adjoining a man-made, nonnavigable body of water if the owner’s deed does not include any part of the waterbed. Ace Equipment Sales, Inc. v. Buccino, 869 A.2d 626 (Conn. 2005).
ZONING: Home office is allowed if it does not alter residential character of property. The town of Islip allows a home office for a “single physician, dentist, chiropractor, lawyer, architect, engineer, surveyor, accountant, financial planner, insurance agent or teacher,” and in addition, “similar uses, which do not alter the character of the house as a residence.” Another provision bars a real estate broker from having a home office, but allows an insurance broker to have one. A mortgage broker sought to establish an office in an attached garage. The board of zoning appeals rejected the application, reasoning that a mortgage broker’s profession is closer in character to that of a real estate broker than an insurance broker. The court reversed, holding that the broker was entitled to a home office because his proposed use would not alter the residential character of the home. Arceri v. Town of Islip Zoning Board of Appeals, 791 N.Y.S.2d 149 (N.Y. App. Div. 2005).
Broker Liability; California Law. In his short note, The Cold Decision of Coldwell Banker: A California Court Ends the Evolution of Broker Liability with One Decision, 35 Golden Gate U. L. Rev. 259 (2005), Dominic H. Porrino examines a recent California Court of Appeals case that should be of interest to real property lawyers beyond the confines of that state. Abrogating a very traditional common law rule, California courts have previously held that a broker may have a duty of care to the purchaser in residential transactions. Brokers may be liable in the event the purchaser relies on representations of the broker about the quality of the property. However, in Coldwell Banker Residential Brokerage Company, Inc. v. Superior Court, 11 Cal. Rptr. 3d 564 (Cal. Ct. App. 2004), the California Court of Appeals held that a broker does not hold a duty of care to the child of a purchaser of a home who suffers from asthma problems resulting from mold later discovered in the house, when the broker had told the purchaser that the home was in excellent condition. This creates the nonsensical result that mom may sue for injuries if she develops asthma, but son, living in the same house and dependent on mom for a roof over his head, cannot. Porrino surveys the development of the broker’s obligation to disclose defects and duty to third persons in California. He suggests that the court in Coldwell Banker, “instead of making an equitable decision, followed the strict wording of a statute and a creative interpretation of case law to come to its ruling.”
Easement Law; Limiting Implied Easements. In Restating Implied, Prescriptive, and Statutory Easements, 40 Real Prop. Prob. & Tr. J. 75 (2005), Professor Michael V. Hernandez criticizes the law of implied and prescriptive easements as it is presently applied by courts. According to the author, the extant common law “rewards dishonesty, redistributes private property without a resulting public use, myopically focuses on the perceived needs of the party claiming the easement without regard to justice for the party that will be burdened by it, and conflicts with well established equitable principles.” Hernandez argues that easements implied by necessity should only arise when it is the intent of the parties to create the easement, and that neither a public policy of eliminating landlocked parcels nor a presumption that parties do not intend to land lock parcels is sufficient to justify implying an easement. The author brings a constitutional light to bear on easements by necessity, asserting that the implication of an easement by necessity (absent intent of the parties) violates the Takings Clause of the Constitution. Hernandez compliments the drafters of the Restatement (Third) of Property for the manner in which the new Restatement treats covenants. But he suggests that the Restatement falls short in its modernization of implied easements. In addition to easements implied by necessity, Hernandez examines easements implied by prior use, easements by estoppel, and irrevocable licenses.
Predatory Lending; Model Mortgage Counseling Law. This column has previously highlighted the effect of predatory residential lending practices. The problem apparently remains acute. Professor Debra Pogrund Stark returns to the issue in Unmasking the Predatory Loan in Sheep’s Clothing: A Legislative Proposal, 21 Harv. Blackletter L.J. 129 (2005). Stark does a very able job of describing how residential borrowers fall victim to these loans, and she draws on recent studies of the subprime lending industry. But the author’s primary contribution is her solution. Stark argues that information is the cure: “requiring a trained mortgage counselor to advise a borrower contemplating entering into a high-cost home loan can effectively prevent a great number of predatory lending without impinging on the legitimate sub-prime market.” The author suggests that a mandatory advisor law be adopted federally. Given the extent to which federal law already intrudes on real estate practice, this should not come as a shock, and the uniformity of practice would, she argues, benefit lenders as much as borrowers. The author also defends her proposal from criticism that it would add undue costs to the loan process, thereby limiting availability of credit to those of moderate means.
Real Estate and Bankruptcy; Kratovil Conference. Chicago’s John Marshall Law School is one of very few schools to offer an LL.M. in real estate law and is also home of the Center for Real Estate. The John Marshall Law Review recently published scholarly articles written in connection with the Law Review’s and Law Center’s 2004 Kratovil Conference on Real Estate Law and Practice entitled Real Estate in Bankruptcy: A Look Backwards for a Better View Forwards. Real property lawyers will find this collection of articles to be especially well written, accessible, and informative. The articles predate the recent amendment to the Bankruptcy Code, but do in some instances anticipate changes. A number of the most notable bankruptcy and real estate law academics, as well as highly regarded attorneys, contributed to the symposium. The editors of this column provide a brief summary of this scholarship below.
Kratovil Conference; Pine Gate Revisited. Professor Douglas G. Baird looks back 25 years to find the primary real estate problem with which the lenders (and the drafters of the Code) were concerned in his article Remembering Pine Gate , 38 J. Marshall L. Rev. 5 (2004). He examines In re Pine Gate Assocs., Ltd., 12 Collier Bankr. Cas. 607 (Bankr. N.D. Ga. Mar. 4, 1977). In Pine Gate, a limited partnership that controlled single asset real estate (an apartment complex) filed for Chapter XII protection (under the prior Bankruptcy Act), and then proposed to strip down the lender’s claim with a lowball cash payment. Under the plan, the lender lost its right to foreclose, but the debtor kept the property. According to Baird, “this became known as the Pine Gate problem. The people who worried about bankruptcy reform had to worry about what to do with this case.” Baird curtly notes that “[d]uring the 1970s, special interests had not yet gotten their claws into bankruptcy reform. Those involved were, to a very large extent, bankruptcy lawyers and judges, and academics who wanted to get it right. . . . The 1970s was perhaps the last time we had to get the law right.” In response to Pine Gate, the drafters of the 1978 Bankruptcy Code included provisions that “made nonrecourse debt recourse in Chapter 11,” “gave the secured creditor the right to elect to have its entire claim treated as secured,” and provided to real estate lenders “the benefit of the absolute priority rule and the right to get the indubitable equivalent of the value of their collateral.” The author reviews the 25 years following enactment of the Code, and argues that none of the Code provisions meant to alleviate the Pine Gate problem worked as intended. According to Baird, the critical flaw in real estate bankruptcies is valuation. “Strip-down [would not be] a big deal in a world in which the secured creditor gets cash or cash equivalents equal to what it could get in the event of foreclosure.”
Kratovil Conference; Treatment of Home Refinance Loans in Bankruptcy. Professor A. Mechele Dickerson argues that residential “refinanced loans should be treated differently than purchase money loans in bankruptcy,” in her article, Bankruptcy and Mortgage Lending: The Homeowner Dilemma, 38 J. Marshall L. Rev. 19 (2004). Dickerson explains that “[m]ortgage debt is favorably treated in bankruptcy cases because the Code (like other state and federal laws) encourages homeownership. To protect lenders who enable borrowers to buy homes, the Code requires mortgage debt to be paid before other claims and protects the mortgage holder’s lien during the bankruptcy case.” Dickerson correctly points out that the holders of unsecured claims get the short end of the stick. The author focuses on the recent effect of subprime lending and home equity loans. These bankruptcy claims receive purchase money protection in bankruptcy, even though the worst of these “predatory” loans “do not help borrowers increase their wealth,” and are therefore “functionally equivalent” to nonpurchase money and unsecured debt. Dickerson argues that a “pre-petition refinance or home equity loan presumptively should be voided in bankruptcy and the mortgage debt should be treated as a general, unsecured claim.” The author describes the effect of predatory lending practices and newer loan mechanisms that over-encumber residential property. This proposal will seem radical to many readers, and Dickerson responds to some of the more likely criticisms.
Kratovil Conference; New Value Exception. Bank of America National Trust and Savings Association v. 203 N. LaSalle Street Partnership, 526 U.S. 434 (1999), is a seminal Supreme Court bankruptcy law opinion. In that case, the Court implicitly recognized “the continuing validity of the new value exception” to the absolute priority rule, but “left open numerous questions about how and when the exception should be implied.” In his article 203 N. LaSalle Five Years Later: Answers to the Open Questions, 38 J. Marshall L. Rev. 61 (2004), Professor Paul B. Lewis addresses a number of open questions. These include the “minimum accepted bid by Old Equity,” and whether “new value contributed by equity holders [must] be used to pay creditors or for working capital needs.” The author reviews case opinions that have arisen since the Supreme Court’s decision in 203 N. LaSalle, finding typical ambiguity among the courts. Lewis does a nice job of explaining the policy behind a new value exception. Even better, the author explains how the decision alters the strategic decision making of lawyers “thinking about possible confirmation of new value plans.”
Kratovil Conference; Treatment of Leasehold Contracts. In Precision in Statutory Drafting: The Qualitech Quagmire and the Sad History of 365(h) of the Bankruptcy Code, 38 J. Marshall L. Rev. 97 (2004), Professor Robert M. Zinman reviews the probable effect of the recent Seventh Circuit opinion, Precision Industries, Inc., v. Qualitech Steel SBQ, 327 F.3d 537 (7th Cir. 2003). That case held “in essence, that a landlord in bankruptcy could ignore the complex provisions of 365(h), designed and carefully nurtured over the years, to protect the tenant when the landlord is in bankruptcy by selling its fee interest free and clear of the lease under 363. Suddenly, all the protection for the tenant when a lease is rejected in a landlord’s bankruptcy became subject to question.” As Zinman argues, Qualitech is frustrating because, at least on the basis of the rules of statutory construction, the case is correctly decided. Zinman’s purpose, however, is not to take a direct shot at the opinion in Qualitech. Rather, he sounds an alarm for legislation to fix this Bankruptcy Code problem. Whether or not Qualitech is rightly decided, the effects of Qualitech are “severe enough to result in serious problems for the future of leasehold financing and investment.”
Kratovil Conference; Real Property Liens. In Treatment of Real Property Liens in Bankruptcy Cases, 38 J. Marshall L. Rev. 171 (2004), Gerald F. Munitz methodically examines the following basic bankruptcy propositions: “(i) the concept of adequate protection,
(ii) treatment of postpetition rent as ‘cash collateral,’ (iii) the estate’s ability to obtain credit including the priming of existing liens, (iv) the special provision of 1111(b) pertaining to an undersecured creditor in a chapter 11 case, and (v) the treatment of a lien on real estate under the ‘cram down’ power.” This article is an especially nice treatment for real estate lawyers whose practice backgrounds do not involve significant bankruptcy elements. Although the author brings thorough research and an understanding to a complex subject, he starts from the beginning. He covers the constitutional and jurisdictional bases of bankruptcy law, and then lays out a chart with key provisions that affect the treatment of property liens in bankruptcy. Definitions are everything in a statute, and Munitz is careful to define the most basic terms.
Kratovil Conference; Bankruptcy and Title Insurance. Paul L. Hammann and John C. Murray, vice-presidents and counsel at First American Title Insurance Company, evaluate bankruptcy implications of the creditor’s rights exclusion from title insurance coverage in Creditors’ Rights Risk: A Title Insurer’s Perspective, 38 J. Marshall L. Rev. 223 (2004). The authors ask, among other things, “Under what conditions is it reasonable to expect the title insurer to agree to [a] ‘check-list’ request to delete the creditors’ rights exclusion?” This exclusion is “intended to make clear that no coverage is afforded by a title insurance policy for post-policy challenges to the insured title or to the validity, enforceability, or priority of the lien of the insured mortgage arising solely out of the insured transaction” when the transfer is later determined to be fraudulent or preferential. This article is distinguished by a very informed review of preference and fraudulent conveyance law. The authors are experts in the area of title insurance and bankruptcy; their article should be read by any lawyer routinely negotiating with title companies.
Colorado guarantees the right of individuals to display the United States flag. The right to display the flag may not be prohibited by a homeowners’ association. Reasonable restrictions may be imposed as long as they allow a display. 2005 Colo. Sess. Laws 308.
Connecticut limits the liability of landowners for contaminated property. Protection is limited to innocent landowners who comply with the site assessment and other requirements of the act. By implication, bona fide purchasers who comply with the act are also protected. 2005 Conn. Acts 90.
Connecticut adopts the “Uniform Commercial Code—General Provisions.” 2005 Conn. Acts 109.
Delaware authorizes custodianships for state-financed housing developments that are in violation of any financial or statutory duty for five days. In addition to a violation of any state or local statute, code, regulation, or ordinance, the Delaware State Housing Authority may petition for the establishment of a custodianship for unsound financial condition or lack of heat, running water, light, electricity, or adequate sewage facilities. 75 Del. Laws 121 (2005).
Delaware restricts the power of governmental entities to acquire property by eminent domain. No private property may be acquired by eminent domain by any agency, other than for rights-of-way or easements for public utilities, except as described by the agency at least six months in advance of the institution of condemnation proceedings, and then only for the purposes of a recognized public use. 75 Del. Laws 216 (2005).
Delaware enacts the Uniform Environmental Covenants Act. Environmental covenants are established as an interest in real property. The covenants arise as a result of environmental remediation or mitigation that imposes activity and use limitations on the property. Such covenants must be recorded and are subject to other requirements. 75 Del. Laws 206 (2005).
Florida adopts the Commercial Real Estate Broker Lien Act. Real estate brokers are granted a lien in commercial real estate transactions to aid in the collection of fees. 2005 Fla. Laws ch. 275.
Louisiana modifies and updates its recording acts. The new law clarifies the effect of recording, including issues such as registry errors, scrivener’s errors, presumptions, and so on. All jurisdictions should consider similar legislation. 2005 La. Acts 169.
Maine allows a landlord to obtain copies of a tenant’s water and sewer bills. The purpose of this bill is to enhance water and sewer payments to municipalities and reduce the frequency of liens for failure to pay. 2005 Me. Laws 306.
Maine enacts the Uniform Environmental Covenants Act. See Delaware summary above. 2005 Me. Laws 370.
Maine mandates lead paint disclosure. Both lessors and sellers of residential property built before 1978 must submit the statutory disclosure to potential tenants or vendees. 2005 Me. Laws 339.
Minnesota guarantees the right of individuals to display the United States flag. See Colorado summary above. 2005 Minn. Laws 168.
Missouri expands the rights of homeowners in disputes concerning defective residential construction. The contractor is required to notify the homeowner about the rights and duties of the homeowner and contractor before entering into a contract for the sale, construction, or substantial remodeling of a residence. 2005 Mo. Legis. Serv. 168 (West).
Nevada revises the provisions governing the assessment of ad valorem taxes and special assessments on the property in a common-interest community. Amounts due must be assessed on each unit separately, and not on the common elements of the community. 2005 Nev. Stat. 337.
Nevada enacts the Uniform Environmental Covenants Act. See Delaware summary above. 2005 Nev. Stat. 363.
Nevada authorizes deeds that are effective on the death of the grantor. The deed, called a “beneficiary deed” in some jurisdictions, is revocable until the death of the grantor. 2005 Nev. Stat. 270.
Oklahoma modifies the duties and responsibilities of brokers. All brokerage agreements are deemed to incorporate certain duties and responsibilities. Transaction brokers may not abrogate or waive their duties or responsibilities, including accounting, reporting, and transmitting offers. 2005 Okla. Sess. Laws 423.
Oregon enacts a new procedure for execution sales. In addition to traditional real property interests, this process applies to manufactured homes and floating homes and treats them as real property even when the underlying real property is not subject to levy or foreclosure. 2005 Or. Laws 542.
Oregon authorizes landlords to install submeters for water, sewer, and utility service in residences. The change may be made unilaterally on 180 days’ notice. If the cost of the tenant’s water, sewer, or utility service was included in the rent before conversion to submeters, the landlord must reduce the rent appropriately. Submeters may result in conservation. 2005 Or. Laws 619.
South Carolina prohibits communication service providers from entering into an agreement that limits competition for the installation of facilities or equipment to provide communication services. Exclusive easements for facilities, or fees based on not providing facilities to other communication service providers, are prohibited. 2005 S.C. Acts 134.
Texas allows owners of certain residential subdivisions to adopt a procedure to modify restrictive covenants. Most covenants in residential subdivisions can be removed only with the unanimous consent of all owners. Under this act, residents can adopt a procedure to terminate or modify these covenants on a two-thirds majority vote. This chapter only applies to subdivisions within an unincorporated area of a county if the county has a population of less than 65,000. 2005 Tex. Gen. Laws 1077.
Texas extends “Brownfields” remediation or redevelopment. County brownfield cleanup and economic redevelopment programs are established to leverage state or federal money that may be available for that purpose. 2005 Tex. Gen. Laws 379.
Texas enacts the Uniform Real Property Electronic Recording Act. Electronic signatures, filing, recording, and storage are authorized by the Act. 2005 Tex. Gen. Laws 699.
Texas expands the rights of a purchaser under an executory contract for conveyance of real property. For example, the purchaser may terminate the contract for improper platting. Further, the purchaser under an installment contract is entitled to a deed on tender of the balance. The act contains a long and detailed list of the rights and duties of the parties. Other jurisdictions should consider similar legislation. 2005 Tex. Gen. Laws 978.
Texas authorizes tenants to terminate a lease early in some situations involving family violence or a military deployment or transfer. These rights may not be waived and must be disclosed in residential leases. 2005 Tex. Gen. Laws 348.