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: Condominium association lien. A condominium association lien properly filed under the Maryland condominium statute is a statutory lien and cannot be avoided as a judicial lien under 11 U.S.C. 522(f)(1). In re King v. Cherrywood Residents Ass'n, 208 B.R. 376 (D. Md. 1997).
- BANKRUPTCY: One-time capital gains exclusion not available to trustee. A trustee sold a debtor's residence for a substantial capital gain. Although the debtor had attained age 55, the one-time exclusion provided by 26 U.S.C. 121 was not applicable because the trustee had succeeded to the debtor's interest. To make things worse, the trustee was not entitled to a stepped up basis but succeeded to debtor's basis. In re Barden, 205 B.R. 451 (E.D.N.Y. 1996).
- BANKRUPTCY: Privity between debtors and mortgagee. Debtors acquired property from their daughter subject to a mortgage. The mortgagee did not consent to the transfer as required by the terms of the mortgage but accepted payments from the debtors totaling more than $60,000. Although there was no privity between the debtors and the mortgagee, the debtors were entitled to schedule the debt for repayment under a Chapter 13 plan. In re Allston, 206 B.R. 297 (E.D.N.Y. 1997).
- BROKERS: Fiduciary duty to buyer. After purchasing property listed by a broker, the buyers learned that part of the land was in a flood plain, limiting its development. The court held that the broker's failure to ascertain that the property was in the flood plain and reveal that fact breached the broker's fiduciary duty to the purchasers. Enright v. Jonassen, 931 P.2d 1212 (Idaho 1997).
- BROKERS: Fiduciary duty to seller. A broker's failure to reveal to a seller that the buyer was also negotiating to buy adjoining property was not a breach of the broker's fiduciary duty to the seller when the broker was not aware of the ultimate sale price of the adjoining property before the seller signed the contract of sale. Olsen v. Vail Assoc. Real Estate, Inc., 935 P.2d 975 (Colo. 1997).
- COVENANTS: Changed conditions. Following the majority rule, a Connecticut court ruled that, despite dramatic change in the surrounding area since residential restrictions were imposed on a subdivision in 1943, owners of border lots within the subdivision were bound because the restrictions remained beneficial to the other lots within the subdivision. Capello v. Ciresi, 691 A.2d 42 (Conn. Super. Ct. 1996), aff'd, 689 A.2d 1169 (Conn. Ct. App. 1997).
- COVENANTS: Dwelling size. In a covenant providing that subdivision dwellings shall not be less than 1,150 square feet, the term "dwelling" does not include a garage or storage building. The owner's house consisted of only 634 heated square feet and violated the covenant. Carpenter v. Davis, 688 So. 2d 256 (Ala. 1996).
- COVENANTS: Liability for withholding consent. When homeowners, acting through their board, un- reasonably and arbitrarily withheld approval of a lot owner's plans for construction, the board and individual homeowners who concurred in withholding approval were jointly and severally liable for damages. Riss v. Angel, 934 P.2d 669 (Wash. 1997).
- DEEDS: Effect of adoption statute. In 1930, the grantor conveyed real property to his daughter "and the legal heirs of her body." The daughter died in 1993, survived by an adopted daughter. A recent Arkansas statute creates a parent-child relationship "as if the adopted individual were a legitimate blood descendant . . . for all purposes including applicability of . . . instruments" irrespective of when the instrument was executed, unless an adopted individual is expressly excluded. The court held the use of the term "legal heirs of her body" indicated the grantor's intent to exclude the adopted child. Sides v. Beene, 938 S.W.2d 840 (Ark. 1997).
- EASEMENTS: Appurtenant or personal. Grantor conveyed parcel to grantees and "unto their heirs and assigns forever." In the same deed, the conveyance of an easement across grantor's retained land was not specifically described and did not include "heirs and assigns forever." The court concluded that the easement was not appurtenant but was merely personal to the grantees. Riffle v. Worthen, 939 S.W.2d 294 (Ark. 1997).
- EMINENT DOMAIN: Valuation when taken. Before an owner acquired title, most of the parcel being taken had been designated as wetlands. Also, in exchange for the right to subdivide what was then a larger parcel, the owner's predecessor in title had recorded a covenant stating that the parcel might consist of wetlands not suitable for development. When the town condemned the parcel, its value was properly calculated as regulated wetlands and not as unregulated land. Basile v. Town of Southampton, 678 N.E.2d 489 (N.Y. 1997).
- LANDLORD AND TENANT: Discrimination. On a question of first impression in Michigan, the court of appeals ruled that unmarried cohabitation is not protected from housing discrimination under the state Civil Rights Act. The court noted divergent opinions on this issue in other jurisdictions. Baiz v. Hoffius, 564 N.W.2d 493, (Mich. Ct. App. 1997).
- LANDLORD AND TENANT: Smoke detectors. The New Jersey Supreme Court ruled that a landlord's placement of a smoke detector within a single-family rental unit did not constitute a repair for which an injured tenant could recover on the basis of negligent repairs. The statute requiring smoke detectors in such dwellings was not effective until after the fire. Dowler v. Boczkowski, 691 A.2d 314 (N.J. 1997).
- LANDLORD AND TENANT: Sublessor 's duty to renew. A sublease for part of the leased premises contained a renewal option but did not bind the lessee as sublessor to renew the primary lease. The court held that the sublessee's interest terminated at expiration of the primary lease. Tiger Crane Martial Arts, Inc. v. Franchise Stores Realty Corp., 652 N.Y.S.2d 674 (N.Y. App. Div. 1997).
- MORTGAGES: Acceptance of late payments; unpaid real estate taxes. Although a mortgagee's acceptance of late payments may waive the right to accelerate and foreclose for late payment, acceptance does not waive a mortgagee's rights on default for failure to pay real estate taxes because the mortgagee was not aware of the unpaid taxes when it accepted late payments of principal and interest. Alderman v. Davidson, 933 P.2d 365 (Or. Ct. App. 1997).
- MORTGAGES: Mechanics' lien priority. The holder of a prior deed of trust participated extensively in a construction project, inducing the contractor to provide necessary material and labor. The court ruled that the holder of the deed of trust waived its priority. In re Exec Tech Partners v. Resolution Trust Corp., 107 F.3d 677 (8th Cir. 1997).
- MORTGAGES: Revolving credit loan; release of lien. A mortgagee who pays off the existing indebtedness of a mortgagor under a revolving line of credit agreement at loan closing is not entitled to a release of the revolving credit lien unless the mortgagor asks for the release. Thus, further disbursements under the revolving credit agreement could result in priority over the new mortgage. First Am. Title Ins. Co. v. TCF Sav. Bank, 676 N.E.2d 1003 (Ill. Ct. App. 1997).
- SUBDIVISIONS: One-party deeds. An owner conveyed a large parcel in 20 acre tracts to itself to avoid subdivision requirements. Following a case decided while these attempted conveyances were taking place, the court held that conveyances from a grantor to itself as grantee were void and did not effectively divide the land into smaller parcels. Elk Park Ranch, Inc. v. Park County, 935 P.2d 1131 (Mont. 1997).
- TENANCY BY THE ENTIRETY: Creditors; proceeds of sale. Unless a contrary intention is shown, in the District of Columbia the proceeds from a sale of realty held as tenants by the entirety are held in a similar manner. The judgment creditor of one spouse alone cannot attach the proceeds. Finley v. Thomas, 691 A.2d 1163 (D.C. 1997).
- SELLER AND BUYER: Incompetency. When an elderly seller lacks capacity to understand the purchase agreement and deed she executes, the documents are voidable; the buyer cannot require enforcement of the transactions merely by showing that the average person would have considered them fair and reasonable. Go-Mart, Inc. v. Olson, 482 S.E.2d 176 (W. Va. 1996).
- SELLER AND BUYER: Marketable title. When a house on a subdivision lot encroached into the setback area as set forth in covenants on a recorded subdivision plat, the title was not marketable and the buyer was entitled to the return of an earnest money deposit despite the title insurance company's commitment to insure over the problem. Nelson v. Anderson, 676 N.E.2d 735 (Ill. Ct. App. 1997).
- SELLER AND BUYER: Statute of Frauds; downpayment. Buyers who made a downpayment under an oral contract and received a receipt from the sellers acknowledging the downpayment were not entitled to return of the downpayment when the sellers were ready, willing and able to perform, even though buyers could not enforce the oral contract. Blackmon v. Berry, 939 S.W.2d 863 (Ark. Ct. App. 1997).
- ZONING AND PLANNING: Nonconforming use; abandonment or discontinuance. In construing a town zoning code that provided that abandonment or discontinuance for a period of two years would result in termination of the nonconforming use, the court distinguished between abandonment requiring a voluntary and intentional relinquishment of the use and discontinuance that is simply nonuse for the stated period. There are two distinct ways under state law in which the nonconforming use can be lost, the court concluded. Ka-Hur Enterprises, Inc. v. Zoning Bd. of Appeals of Provincetown. 676 N.E.2d 838 (Mass. 1997).
- ZONING AND PLANNING: Nonconforming use; substantial discontinuance. When zoning law prohibits continuation of a nonconforming use when substantially all nonconforming uses are discontinued for two years, substantial, rather than complete, cessation forfeits an owner's rights to continue the nonconforming use. The owner's intent is not relevant. Toys "R" Us v. Silva, 676 N.E.2d 862 (N.Y. 1996).
- SALE OF PRINCIPAL RESIDENCE: Application of 121 and 1034. The Tax Court disallowed an individual's attempt to apply Code 121 and 1034 to the sale of a principal residence and the purchase of a replacement because the house sold was owned by a partnership in which the individual has an interest instead of directly by the individual. Allied Marine Systems, Inc. v. Comm'r, T.D. Memo. 1997-101.
- SALE OF PRINCIPAL RESIDENCE: Section 1034 rollover. The Tax Court denied a couple's attempt to roll over the gain on the sale of a principal residence under Code 1034 because the new residence was purchased by the husband's parents instead of the couple. DeOcampo v. Comm'r, T.C. Memo. 1997-161. Similarly, the Tax Court denied 1034 treatment when a son of the taxpayer purchased the replacement home. Moreno v. Comm'r, T.C. Memo. 1997-218.
- Eminent domain ; regulatory takings. Gregory S. Alexander provides a concise analysis of recent taking cases in Ten Years of Takings, 46 J. Legal Educ. 586 (Dec. 1996).
- Eminent domain; regulatory takings. Divergent views of the "takings" issue by legal scholars and practitioners are featured in Institute of Bill of Rights Symposium Defining Takings: Private Property and the Future of Government Regulation, 38 Wm. and Mary L. Rev. No. 3 (March 1997).
- Eminent domain; regulatory takings. In Fundamental Property Rights, 85 Geo. L. J. 555 (Feb. 1997), Ronald J. Krotozynski Jr. analyzes the Supreme Court's substantive due process jurisprudence and concludes that fundamental property rights should be accorded the same level and scope of scrutiny as other rights that are deemed fundamental liberty interests.
- Land use. In Land Use Regulation in an Age of Heightened Scrutiny, 75 N.C. L. Rev. 1243 (1997), David A. Dana evaluates the efficiency of the Su- preme Court's nexus/rough proportionality review and questions whether the Court should strongly affirm those tests.
- Property rules. Presentations by speakers Richard A. Epstein, James E. Krier, Saul Levmore, Carol M. Rose, and Stewart J. Schwab at the 1997 annual meeting of the AALS section on remedies are included in a sym-posium entitled Property Rules, Liability Rules, and Inalienability: A Twenty-five Year Retrospective, 106 Yale L.J. 2082 (1997).
- Tenancy by the entirety. In Tenancy by the Entirety: The Strange Career of the Common-Law Marital Estate, 1997 B.Y.U L. Rev. 35, John V. Orth discusses the evolution of the ownership form and concludes that the only justification for the system today is "that people are familiar with it and that, by and large, it works."
- Colorado enacts measures designed to prevent or reduce children's exposure to lead. Colo. Rev. Stat 25-5-1101 et seq.
- Delaware enacts criminal penalties for new home construction fraud. Del. Code Ann. tit. 11, 9-17.
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 LaPrica D. Mims at the Section office, (312) 988-6233.
Keeping Current_Property Editor: Nicholas L. White, School of Law, University of Memphis, Memphis, TN 38152. Contributing editors: Ralph Brashier, Lars Gustafsson and David A. Thomas.
Probate & Property Magazine is published six times annually and is included in section members' annual dues.