Real Estate Litigation | A Snell & Wilmer Blog

In California, the “prevailing party” in litigation is generally entitled to recover its costs as a matter of law. See Cal. Code Civ. Proc. § 1032. But under California Code of Civil Procedure section 998, a party may make a so-called “offer to compromise,” which can reverse the parties’ entitlement to costs after the date of the offer, depending on the outcome of the litigation. Cal. Code Civ. Proc. § 998. The potential payoff of a 998 offer to compromise is explained in section 998(c)(1):

If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer.

Author: acarucci | Leave a comment Tagged commercial real estate, real estate litigation

Conflicts of Laws, Deficiency Actions, and Statutes of Limitations – Oh My!

Posted on May 2, 2017 by Ben Reeves

What law governs a deficiency action if the choice-of-law provisions in the note and deed of trust conflict? The Arizona Court of Appeals answered that very question in ZB, N.A. v. Hoeller, No. 1 CA-CV 16-0071 (Ct. App. April 15, 2017). It turns out, the note controls.

The Facts

In ZB, ZB, N.A. (ZB), a Utah bank, lent money to the Hoellers to purchase a commercial property in Missouri. The note included a choice-of-law provision stating that Utah law governed the debt. The deed of trust securing the commercial property, however, provided that Missouri law controlled “procedural matters related to the perfection and enforcement of [ZB’s] rights and remedies against the [p]roperty.” In 2012, the Hoellers defaulted, and the bank recovered the property through a trustee’s sale.… Read More »

Author: Ben Reeves | Leave a comment Tagged choice-of-law provisions, deficiency action, real estate litigation, Statute of Limitations

Landlords Beware: Subordination Agreements

Posted on April 27, 2017 by Kevin Parker

By: Kevin J. Parker

In the recent Arizona Court of Appeals case Earle Investments, LLC v. Southern Desert Medical Center Partners, 762 Ariz. Adv. Rep. 12 (2017), the Court of Appeals addressed the question of the scope of a subordination agreement signed by the property owner (Lessor/Landlord) at the request of the Lessee/Tenant and Lessee/Tenant’s Lender. In general, by subordination, Party No. 1 with a higher/better lien priority agrees to allow Party No. 2 (usually a lender providing construction funds for the overall betterment of the property) to get a lien position in front of Party No. 1. Party No.… Read More »

Author: Kevin Parker | Leave a comment Tagged subordination

Colorado House Bill 1279 stalls over 120-day unit owner election period

Posted on April 14, 2017 by Luke Mecklenburg

With the session more than halfway through, the Colorado Legislature’s 2017 attempts at meaningful construction defect reform may fail again. This year, the Legislature did not attempt a single-bill construction defect overhaul like those that have failed over the last half-decade. Rather, it has sought to enact reforms on a piecemeal basis, with several smaller bills addressing specific issues that have been affecting condominium construction along Colorado’s booming Front Range.

This new approach appears to be headed towards much the same outcome as the failed efforts of the past. House Bill 1169 would have given developers a statutory right to repair before being sued by homeowners, and Senate Bill 156 would mandate arbitration or mediation. … Read More »

Author: Luke Mecklenburg | Leave a comment

What is the Effect of an Untimely Challenge to the Timeliness of a Trustee’s Sale?

Posted on April 11, 2017 by Ben Reeves

Ever wonder what happens if a person challenges the timeliness of a trustee’s sale after the sale already occurred? Waiver of the argument of course! And, in the case of Wells Fargo Bank, N.A. v. Waltner, the affirmance of an eviction judgment.

In the Waltner case, Wells Fargo Bank, N.A., as Trustee for WaMu Mortgage Pass-Through Certificates, Series 2005-PR4 Trust (the “Bank”), purchased a residential property at a trustee’s sale in September 2015. The Bank gave the occupant of the house, Sarah Waltner (“Waltner”), notice to vacate the property, but she did not do so. Accordingly, the Bank filed a summary action to evict Waltner, which the trial court ultimately granted.… Read More »

Author: Ben Reeves | Leave a comment Tagged A.R.S. 33-811(C), Statute of Limitations, trustee's sale, waiver

Utah Becomes First State to Enact the Uniform Commercial Real Estate Receivership Act

Posted on March 27, 2017 by Ben Reeves

By: David Leta

On March 25, Utah became the first state to enact the Uniform Commercial Real Estate Receivership Act (“UCRERA”) which was drafted by the National Conference of Commissioners on Uniform State Laws (the “Conference”) and adopted by the Conference at its annual meeting in July 2015. The Utah Uniform Commercial Real Estate Receivership Act, (the “Utah Act”) mirrors UCRERA and applies to all commercial real property receiverships that are filed in the Utah District Courts on and after May 9, 2017.

The Utah Act provides both substantive and procedural guidance in an area of law that historically has been marked by inconsistency and uncertainty.… Read More »

Author: Ben Reeves | Leave a comment

Arizona Supreme Court Holds a Credit Bid at a Trustee’s Sale Should Not be Credited to a Title Insurer Under a Standard Lender’s Title Policy To the Extent the Bid Exceeds the Collateral’s Fair Market Value

Posted on February 28, 2017 by Richard Herold

By: Richard H. Herold

The Arizona Supreme Court recently addressed what impact, if any, a lender’s credit bid at an Arizona trustee’s sale has on an insurer’s liability under Sections 2, 7 and 9 of the standard’s lender’s title policy (“Policy”), holding in Equity Income Partners, LP v. Chicago Title Insurance Company, 241 Ariz. 334, 387 P.3d 1263 (February 7, 2017) as follows:

Section 2 of the Policy, entitled “Continuation of Insurance,” not Section 9, entitled “Reduction of Insurance; Reduction or Termination of Liability,” applies when a lender acquires property at a trustee sale by “either a full- or partial-credit bid” since Section 2 directly addresses the existence and amount of coverage in such circumstances.

Author: Richard Herold | Leave a comment Tagged credit bid, Lender's title insurance, trustee's sale

Federal Court Issues Permanent Injunction and Permanently Shuts Down Santa Ysabel’s Desert Rose Bingo

Posted on January 19, 2017 by acarucci

On December 12, 2016, Judge Battaglia of the United States District Court for the Southern District of California issued the Court’s long-awaited ruling on the State of California and Federal Government’s motions for summary judgment in the Iipay Nation of Santa Ysabel tribe’s (the “Tribe”) Desert Rose Bingo case. The State of California argued that the Tribe’s Internet bingo website, Desert Rose Bingo, offered a Class III game—as classified under the Indian Gaming Regulatory Act (“IGRA”)—to patrons in violation of the Tribe’s Tribal-State Compact with the State. Both the State and the Federal Government also argued that the Tribe’s Internet bingo operation violated the federal Unlawful Internet Gambling Enforcement Act (“UIGEA”) by allowing patrons to participate off-reservation.… Read More »

Author: acarucci | Leave a comment Tagged real estate, real estate litigation

Forcible Entry and Detainer Actions: Courts May Not Consider Tenant’s Hardship

Posted on December 5, 2016 by Erica Stutman

If you own property and a tenant wrongfully refuses to vacate the premises (for example when the lease expires or after proper written notice of termination), you may have a quick and easy remedy to have the tenant removed. Arizona’s forcible entry and detainer (FED) statute allows a person to bring a speedy, summary action to obtain an order that the person must leave the property immediately. See A.R.S. § 12-1171 – 1183. To allow for quick resolution, the only question a court may consider in a FED action is who has the right of possession of the property. … Read More »

Author: Erica Stutman | Leave a comment Tagged eviction, Forcible Entry and Detainer, Sunquest, Tucson Lot 4

Green Energy Can Complicate Real Estate Foreclosures

Posted on November 24, 2016 by Bob L. Olson

Bob L. Olson

A quick drive through almost any newer residential community in the Southwest will show that a lot of residents are embracing “Green Energy” or renewable energy by placing solar panels on their properties. While most people would agree that increasing the use of alternative energy is socially responsible, there are a number of real estate investors that may view it as an opportunity to make additional profits by purchasing distressed properties with solar panels and then reselling those properties for more than they would be worth without solar panels. The theory is relatively straight forward as many believe that foreclosure of a deed of trust that was recorded before the solar panels were installed would extinguish any liens in favor of the vendor that sold or financed the sale of the solar panels. … Read More »

Author: Bob L. Olson | Leave a comment Tagged alternative energy, fixture, foreclosure, green energy, lease, renewable energy, solar

Franchisors Should Consider Signing a Conditional Lease Assignment Rather Than a Franchisee’s Lease

Posted on November 10, 2016 by Richard Herold

By: Richard H. Herold

In Franchise & High Properties, LLC v. Happy’s Franchise, LLC, a 2015 decision issued by the Court of Appeals in Michigan, the franchisor, Happy’s Pizza Franchise, LLC, signed a five-year lease for the commercial space to be occupied by its franchisee, Happy’s Pizza #19, Inc. The franchisor did so to secure a right of first refusal to purchase the property and to enforce the franchise agreement to have the lease assigned to the franchisor if the franchisee defaulted.

The issue in the case was whether the term “tenant” referred solely to Happy’s Pizza #19 or whether it also included Happy’s Franchise as a co-tenant. … Read More »

Author: Richard Herold | Leave a comment Tagged franchise litigation, franchisee, Guarantor, landlord, lease, tenant

Sierra Pacific v. Bradbury goes unchallenged: Colorado’s six-year statute of repose begins when a subcontractor’s scope of work ends

Posted on October 25, 2016 by Luke Mecklenburg

It’s official: the October 20, 2016 deadline to petition for certiorari to the Colorado Court of Appeals on its decision in Sierra Pacific Industries, Inc. v. Bradbury has passed, so it appears that decision will stand.

In Sierra Pacific, the Court of Appeals held as a matter of first impression that the statute of repose for a general contractor to sue a subcontractor begins to run when a subcontractor’s scope of work is substantially complete, regardless of the status of the overall project. Sierra Pac. Indus., Inc. v. Bradbury, 2016 COA 132, ¶ 28, ___ P.3d ___. The Court of Appeals interpreted the statute of repose in C.R.S.… Read More »

Author: Luke Mecklenburg | Leave a comment

Avoiding Lender Liability for Credit-Related Actions in California

Posted on October 21, 2016 by acarucci

Aside from general statutory prohibitions on lender discrimination, there are certain circumstances under California law in which lenders may be held liable for credit-related actions, such as negotiating or denying credit. See generally 11 Cal. Real Est. § 35:3 (explaining that the business of lending money is subject to the Unruh Civil Rights Act, Cal. Civ. Code § 51 et seq., the Fair Employment and Housing Act, Cal. Gov. Code § 12900 et seq., the Federal Fair Housing Act, 42 U.S.C. § 3601 et seq., and the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq.… Read More »

Author: acarucci | Leave a comment Tagged commercial real estate, foreclosure, foreclosures, real estate, real estate litigation, real property

What Do I Do With This Stuff? Dealing With Abandoned Property After Foreclosure

Posted on October 5, 2016 by Lyndsey Torp

By: Lyndsey Torp

You’ve successfully foreclosed on a commercial building in California, and, thankfully, the borrower moved out after foreclosure or after a period of tenancy. But the borrower left behind all sorts of property – furniture, filing cabinets, records, and other assorted property. While you may be tempted to just toss it all in the dumpster, doing so may subject you to liability. There are several statutes that you should consider when determining how to handle the abandoned property.

Statutory Options for a Landlord

A landlord-tenant relationship may arise following foreclosure if, for example, the owner of the property accepts rent from the former owner.… Read More »

Author: Lyndsey Torp | Leave a comment Tagged abandon, abandoned property, foreclosure, lost property, personal property, records

Developer Awarded Cost of Preparing Administrative Record in CEQA Lawsuit

Posted on September 22, 2016 by Sean M. Sherlock

Lawsuits under the California Environmental Quality Act (“CEQA”) typically proceed as petitions for administrative mandamus. This means the petitioner is asking the court to review an agency’s decision and ultimately issue a mandate directing the agency to set aside its decision. In this respect the court acts like an appellate court, reviewing the agency’s decision. There are no witnesses or trial exhibits or jurors or opening statements. The court reads the parties’ briefs, hears their arguments, and makes its decision based on the evidence in the administrative record of proceedings.

The administrative record is often voluminous. It includes not only the environmental reports, but also all project application materials, staff reports and related documents, public notices, written comments and responses, all evidence or correspondence submitted to or relied upon by the agency, hearing transcripts, written findings, and more. … Read More »

Author: Sean M. Sherlock | Leave a comment Tagged administrative record, CEQA, costs of suit

Washington Answers the Question of Whether Title Companies Owe a Duty of Care to Third Parties…

Posted on September 14, 2016 by Ben Reeves

Centurion Properties III, LLC v.… Read More »

Last year (as we blogged about here and wrote a more in depth Law360 article about here), the Ninth Circuit certified to the Washington Supreme Court the question of whether title companies owe a duty of care to third parties when they record legal instruments. We finally have an answer…

“We answer the certified question no and hold that title companies do not owe a duty of care to third parties in the recording of legal instruments. Such a duty is contrary to Washington’s policy and precedent, and other duty of care considerations.”

Author: Ben Reeves | Leave a comment Tagged Centurion, duty, gratuitous recording, real estate litigation, title company liability

California Supreme Court Upholds Precondemnation Procedures

Posted on September 9, 2016 by Patrick J. Paul

By Patrick J. Paul

On July 21, 2016, the California Supreme Court in Property Reserve v. Superior Court upheld the state’s precondemnation entry and testing statutes provided they were reformed to allow impacted property owners the ability to have a jury trial to determine damages associated with such entry and testing.

The California Department of Water Resources (DWR) sought to construct water conveyance facilities that would require significant property condemnation. As part of this process, DWR further sought to investigate the environmental and geological suitability of more than 150 private properties considered for the conveyance route.

DWR proposed two sets of precondemnation diligence – – environmental and geological activities.… Read More »

Author: Patrick J. Paul | Leave a comment

Equitable Subrogation Part Deux: Mechanic’s Lien vs. Later Bank Deed of Trust

Posted on August 30, 2016 by Kevin Parker

By Kevin J. Parker

https://www.swlaw.com/people/kevin_parker

This post follows, almost two years to the day, Rick Erickson’s post of August 29, 2014. As noted by Rick Erickson in his August 29, 2014 post, the Arizona Supreme Court in the Weitz case (2014) had determined that equitable subrogation principles were applicable to enable an earlier-recorded mechanic’s lien to be trumped by a later-recorded bank deed of trust, if the loan secured by the later deed of trust paid off a lien that had been ahead of the mechanic’s lien. In a decision filed August 9, 2016, the Arizona Court of Appeals further clarified the scope of such equitable subrogation.… Read More »

Author: Kevin Parker | Leave a comment Tagged equitable subrogation, mechanic's lien, real estate litigation

“Rip and Tear” Damage Remains Covered Under CGL Policy as “Accident”—for Now.

Posted on August 4, 2016 by mlindsay

By: Michael Lindsay and Luke Mecklenburg

The Colorado Supreme Court has approved a settlement between the parties to an appeal of the 2012 Colorado Pool Systems v. Scottsdale Insurance Company Court of Appeals case, leaving that ruling intact. The ruling parses a fine line between uncovered costs of repairing defective work and covered costs of damage caused to nondefective work while repairing defective work. This nuanced opinion, which is now established Colorado law, is worth a second look.

In Colorado Pool Systems, Inc. v. Scottsdale Insurance Company, the Colorado Court of Appeals determined that so-called “rip and tear” damage caused by a construction professional to nondefective work while correcting defective work is covered as an “accident” under standard Commercial General Liability insurance language. … Read More »

Author: mlindsay | Leave a comment

Landlords Must Not be Arbitrary When Denying a Tenant’s Request To Sublease or Assign

Posted on July 8, 2016 by Richard Herold

By: Richard Herold

So, you’re a landlord who’s entered into a 30-year lease, the lease has rent escalation clauses which are dramatically out of step with the market, and it’s your view that you are therefore losing money every month. The tenant is closing its business and wants to sublet or assign the lease to a similar business for the final seven years of the lease. While these cases are fact-sensitive, some of the following rules may apply where the lease provides the tenant with an opportunity to ask the landlord to consent to an assignment of the lease or a sublease.… Read More »

Author: Richard Herold | Leave a comment Tagged Arizona real estate, commercial real estate, landlord, lease, real estate litigation, tenant

Hold that paintbrush! A glimpse into design-control in planned communities

Posted on June 27, 2016 by Erica Stutman

You are choosing a new paint color for the outside of your house, and you think, “Since all the other houses are beige, I’ll do mine purple.” Not so fast – you better check your community’s governing documents before brushing on that first coat of paint.

If you live in a planned community, you’ve probably seen a Declaration of Covenants, Conditions, and Restrictions (or similarly-titled document) (CC&Rs), which established the community and a homeowners’ association to govern it. Among other things, CC&Rs often allow for the creation of a design-review or architectural committee to act on behalf of the association, giving the committee members broad discretion to review and approve homeowners’ plans to modify their properties.… Read More »

Author: Erica Stutman | Leave a comment Tagged architectural committee, CC&Rs, design-control, HOA, homeowners association

Common Law Indemnity Claim Affirmed on Justifiable Beliefs

Posted on June 22, 2016 by Rick Erickson

By Rick Erickson https://www.swlaw.com/people/rick_erickson

Yesterday, the Arizona Court of Appeals issued an interesting opinion in Hatch Development v. Solomon. Hatch illustrated two key points in real estate and construction litigation: (1) a contractor’s indemnity does not always require an expressly written obligation; and (2) when facts are undisputed that a contractor is solely at fault for a construction defect, a property owner can be indemnified after paying a neighboring property owner for damages caused by the contractor’s defective work.

Hatch was a homeowner who hired Solomon to install sewer lines. After installation, heavy rain led to muddy water in the sewer lines, suggesting a defect in the installation. … Read More »

Author: Rick Erickson | Leave a comment Tagged Arizona real estate, common law indemnity, construction, construction defect litigation, implied indemnity, indemnity, real estate, residential construction, restatement of restitution, sewer installation, statute of limitation

California’s One-Action Rule May Apply to Federal Lenders

Posted on June 3, 2016 by acarucci

California’s one-action rule provides that “[t]here can be but one form of action for the recovery of any debt or the enforcement of any right secured by mortgage upon real property or an estate for years therein . . . .” Cal. Code Civ. Proc. § 726(a). In other words, the one-action rule prescribes that the only process for recovery of a debt secured by a mortgage or deed of trust is to foreclose on the lien. The rule aims to prevent a multiplicity of actions and vexatious litigation, and to force a beneficiary to look to all of the security as the primary fund for payment of a debt before looking to the trustor’s other assets.… Read More »

Author: acarucci | Leave a comment Tagged anti-deficiency, commercial real estate, deficiency, foreclosure, foreclosures, Guarantor, guaranty, one-action rule, real estate, real estate litigation, real property

Governor Ducey Vetoes Water and Development Bills

Posted on June 2, 2016 by Patrick J. Paul

By Patrick J. Paul

With the second regular legislative session of Governor Doug Ducey’s tenure complete, the Governor exercised his veto pen rejecting several laws impacting water and land development.

On May 9th, Governor Ducey vetoed two measures that could have allowed developers to manipulate the requirements of Arizona’s Groundwater Management Act of 1980: Senate bills 1268 (adequate water supply requirements) and 1400 (county water supply). The bills’ sponsor, Senator Gail Griffin, had expressed concerns that the federal government was exercising too much control of the water supply in Cochise County in its efforts to ensure the continued flow of water in the San Pedro River.… Read More »

Author: Patrick J. Paul | Leave a comment

Applying New California Rules to Your Real Estate Litigation Practice

Posted on May 18, 2016 by Lyndsey Torp

By: Lyndsey Torp

Several new California procedural rules went into effect on January 1, 2016. While we are several months into the new year, litigators may need a reminder of these new rules. The list below summarizes several of the notable new rules.

Pleading Stage
- New California Code of Procedure section 430.41(a)(2) mandates that the parties meet and confer at least five days before filing a demurrer (California’s motion to dismiss). If the parties fail to meet and confer, the demurring party may submit a declaration to the court explaining why the meet and confer did not happen, and the demurring party is granted an automatic 30-day extension.

Author: Lyndsey Torp | Leave a comment Tagged 2016 California Code of Civil Procedure, 2016 California rule changes

California Case Deals with Nuisance Lawsuit Intended to Delay Foreclosure

Posted on May 11, 2016 by Sean M. Sherlock

A recent California case provides good precedent for dealing with nuisance lawsuits that are intended to delay valid foreclosures. In Brown v. Deutsche Bank National Trust Company —Cal.Rptr.3d—, 2016 WL 2726229 (May 9, 2016), plaintiff sued defendants to stop them from foreclosing on her home. The trial court sustained defendants’ demurrer without leave to amend, and dismissed plaintiff’s complaint. The court of appeal affirmed.

In 2004, plaintiff took a $450,000 home loan from Washington Mutual Bank. Washington Mutual failed in 2008, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed its receiver. The FDIC sold many of Washington Mutual’s assets, including loans and mortgage servicing rights, to JPMorgan Chase Bank (“Chase”). … Read More »

Author: Sean M. Sherlock | Leave a comment Tagged demurrer, foreclosure, judicial notice

Special Rules for Eviction Actions

Posted on April 11, 2016 by Kevin Parker

By: Kevin Parker

In a recent case, the Arizona Court of Appeals addressed the special rules of procedure for eviction actions. The eviction rules became effective January 1, 2009. In Sotomayor v. Sotomayor-Munoz, 735 Ariz. Adv. Rep. 28 (March 28, 2016), the court addressed the question of whether the evicted tenant had timely appealed. The trial court had entered a formal judgment of eviction; and the tenant had filed various post-judgment motions which the tenant apparently believed extended the tenant’s deadline for filing a notice of appeal. The Court of Appeals determined that the appeal was untimely because, according to the court, the particular motions filed by the tenant did not extend the appeal deadline. … Read More »

Author: Kevin Parker | Leave a comment Tagged appeal, eviction, landlord-tenant, real estate litigation

Nevada Supreme Court Holds that Foreclosure Of HOA Lien Extinguishes Equal Priority HOA Lien.

Posted on April 8, 2016 by Bob L. Olson

By: Bob L. Olson

In Nevada’s master-planned communities it is common for one home to be in multiple homeowners’ associations. In such cases there is generally a master association for the master-planned community and then sub-associations for specific developments within the master-planned community. The liens of the master association and the sub-association have equal priority unless their declarations provide otherwise. See NRS 116.3116(8) (formerly NRS 116.3116(4)). Earlier this year in Southern Highlands Community Association v. San Florentine Avenue Trust, 132 Nev. Adv. Op. 3 (Jan. 14, 2016), the Nevada Supreme Court (the “Court”) had the opportunity to discuss the effect of the foreclosure by one association on the other association’s lien of equal priority.… Read More »

Author: Bob L. Olson | Leave a comment Tagged foreclosure, Homeonwers Associations, lien priority, NRS 116.3116, San Florentine, Southern Highlands

Examining Denver’s new construction defect reform ordinance

Posted on March 18, 2016 by mlindsay

Construction defect reform is a hot-button issue in Colorado. This is especially true along the booming Front Range, where rapidly increasing population has driven the prices of renting and buying property a mile high. Developers maintain that building condominiums is just too risky given their exposure to lawsuits from dissatisfied owners under current state law, while homeowners’ rights groups insist that the current system is necessary to protect homeowners from shoddy construction in what amounts to the biggest investment of many peoples’ lives.

In the face of such a polarizing issue, the Colorado legislature has tried but failed to pass any meaningful reform.… Read More »

Author: mlindsay | Leave a comment

Eminent Domain: Be Careful What You Ask For

Posted on February 5, 2016 by Richard Herold

By: Richard Herold and Patrick Paul

The condemnation[1] of property for public works may not always be as clean and easy as the government would like. Although local governments are often critical players in the cleanup and redevelopment of contaminated properties, contaminated property can: (1) trigger disclosure requirements; (2) lead to environmental liability, for example, under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) (42 U.S.C. §9601, et seq.) or an analogous state statute;[2] and/or (3) impact the ultimate valuation of the property.

Local governments can be liable under CERCLA as any one of the following:

A current owner or operator of the contaminated property
An owner or operator of the property at the time of contamination
A party who arranged for the disposal of contamination
One who transported the hazardous substances to the property

Condemning authorities can, however, avail of Superfund’s bona fide prospective purchaser defense by engaging in all appropriate inquiry in advance of condemnation and/or taking reasonable post condemnation steps with respect to any known or discovered contamination.… Read More »

Author: Richard Herold | Leave a comment Tagged condemn, condemnation, eminent domain, environmental liability, real estate, real estate litigation, real property, seller disclosures, valuation

Tips on Pursuing and Defending Complaints against Contractors

Posted on January 18, 2016 by Rick Erickson

By Rick Erickson firm bio

The often staggering cost of litigation has prompted an equally staggering amount of regulatory complaints against contractors in recent years. Why? Because filing a complaint against a contractor may not cost a complainant anything but time. And any litigation expenses are mostly borne by the contractor/respondent, who is anxious to defend and protect their license and reputation (i.e. their livelihood).

Here are some tips for pursuing or responding to a complaint and getting the best out of your state’s contractor regulatory agency (in Arizona, the Registrar of Contractors):

(1) Respect the Registrar. Your regulatory agency is probably understaffed and overworked.… Read More »

Author: Rick Erickson | Leave a comment Tagged building code, construction, construction bonds, construction litigation, contractor administration, Registrar of Contractors, regulation of contractors, regulatory complaints, surety liability, workmanship

Lenders Should Contract for the Right to Recover Lost Goodwill Proceeds when Commercial Property is taken in Eminent Domain

Posted on January 14, 2016 by acarucci

Business Goodwill Generally

In California, the “goodwill” of a business “consists of the benefits that accrue to a business as a result of its location, reputation for dependability, skill or quality, and any other circumstances resulting in probable retention of old or acquisition of new patronage.” Cal. Code Civ. Proc. § 1263.510(b). Put another way: “Goodwill is the amount by which a business’s overall value exceeds the value of its constituent assets, often due to a recognizable brand name, a sterling reputation, or an ideal location. Regardless of the cause, however, goodwill almost always translates into a business’s profitability.” People ex rel.… Read More »

Author: acarucci | Leave a comment Tagged commercial real estate, condemnation, eminent domain, just compensation, lien, real estate, real estate litigation

Guarantors’ “Lost Profits” Completely Offset Lender’s Deficiency Claim

Posted on January 8, 2016 by Ben Reeves

Believe it or not, lenders can breach loan agreements too…and when they do, there can be significant consequences. In Great Western Bank v. LJC Dev., LLC, 726 Ariz. Adv. Rep. 21 (Ariz. Ct. App. Nov. 10, 2015), the Court of Appeals affirmed that guarantors’ “lost profits” resulting from the lender’s breach of a loan agreement completely offset the amount owed under the guaranty. Much can be learned from this unusual outcome, so please continue reading for an analysis of the facts and legal principles of this case.

The Loan Agreements

In Great Western Bank, the bank entered into an acquisition and development loan (the “A&D Loan”) with Cedar Ridge Investments, LLC (“Borrower”) to allow Borrower to acquire and begin the development of infrastructure for a fifty-home subdivision in Flagstaff, AZ to be known as Cedar Ridge.… Read More »

Author: Ben Reeves | Leave a comment Tagged deficiency action, Guarantor, lost profits, offset, real estate litigation

The Uniform Law Commission Approves the Uniform Commercial Real Estate Receivership Act

Posted on December 15, 2015 by Ben Reeves

As we previously reported here, several years ago the Uniform Law Commission (the “ULC”) (the organization that drafted such favorites as the Uniform Commercial Code and the Uniform Arbitration Act) determined that states would benefit from a model act that would govern the powers, rights, and duties of receivers appointed over commercial real property. Since that time, a drafting committee has worked diligently to prepare a comprehensive statute that would address this unique area of law. The ULC recently approved the drafting committee’s final version, and the result is the Uniform Commercial Real Estate Receivership Act (the “Act”).… Read More »

Author: Ben Reeves | Leave a comment Tagged model receivership act, real estate litigation, receiver, Uniform Commercial Real Estate Receivership Act

School district’s condemnation of a private road passes the test

Posted on December 4, 2015 by Erica Stutman

By: Erica Stutman 

The power of eminent domain allows a government or quasi-governmental entity to condemn (take) private property for a public use upon a showing of necessity. In exchange, the property owner must receive “just compensation” equal to the property’s fair market value, and may be entitled to additional damages, such as severance damages, relocation expenses, costs, or interest. The eminent domain powers of school districts and other political subdivisions is set forth in A.R.S. § 12-1111.

In Catalina Foothills Unified School District No. 16 v. La Paloma Property Owners Association, the Arizona Court of Appeals confirmed that a school district may condemn a private road for vehicles to enter a school campus. … Read More »

Author: Erica Stutman | Leave a comment Tagged ARS 12-1111, condemnation, cost to cure, eminent domain, fair market value hearing, just compensation, severance damages

Property Taxes: A Shopping Center May Not Always be a Shopping Center

Posted on November 2, 2015 by Richard Herold

By: Rick Herold, Craig McPike & Ben Reeves

In the world of real property taxes, Valuation + Classification = Assessed Valuation. Sounds simple, right? The County Assessor determines the first factor, valuation (subject to certain guidelines under applicable Arizona law). The Arizona State Legislature determines the second factor, the property’s legal classification and corresponding assessment ratio (i.e., tax rate). Given the wide disparity in assessment ratios, classification can be a major issue for taxpayers.

Recently, the Court of Appeals confirmed that a shopping center for valuation purposes may not be a shopping center for classification purposes. Scottsdale/101 Associates LLC v.… Read More »

Author: Richard Herold | Leave a comment Tagged movie theater, real estate, shopping center, tax appeal, valuation, zoning

Statute of Frauds: (1) Email as “Writing” and (2) Email Signature as “Signature”

Posted on October 26, 2015 by Kevin Parker

By: Kevin J. Parker

Arizona, like most states, has a Statute of Frauds that essentially requires real estate related contracts to be both (1) in writing and (2) signed by the party to be charged. A.R.S. § 44-101. Questions often arise as to whether an email can satisfy the “writing” requirement, and whether an electronic signature can satisfy the “signed by the party to be charged” requirement. The answer to these questions, like many legal questions, is: it depends. Whether an email can satisfy the “writing” requirement might depend on whether the transaction relates to interstate commerce. Pursuant to federal statute, 15 U.S.C.… Read More »

Author: Kevin Parker | Leave a comment Tagged electronic signature, real estate litigation, statute of frauds

It just got a little bit easier to enforce judgment liens

Posted on October 20, 2015 by Ben Reeves

Last year, we posted It just got a little bit harder to enforce judgment liens, which analyzed a Court of Appeals decision that invalidated a judgment lien against third-party purchasers due to the judgment creditors’ failure to record an information statement along with the judgment. Lewis v. Debord, 236 Ariz. 57, 335 P.3d 1136 (Ct. App. 2014). In that case, even though the Court of Appeals found that the judgment lien remained valid, the opinion concluded that the failure to record the information statement affected the “priority” of the judgment lien and rendered the third-party purchasers’ ownership interest superior to the judgment creditors’ lien interest. … Read More »

Author: Ben Reeves | Leave a comment Tagged judgment lien, Lewis v. DeBord, real estate litigation

Offensive Discovery after Strudley and Changes to the Colorado Rules of Civil Procedure

Posted on September 10, 2015 by nmcconomy

Toxic tort cases often involve real property, especially in areas with large mining and energy sectors like the West and Southwest. The cases frequently have large potential damage values and require extensive discovery. Numerous expert witnesses, vast amounts of real property testing, and significant document production are common. The cost of engaging in this far reaching discovery is often a significant factor in early settlement negotiations. Toxic tort defendants have a substantial incentive to settle disputes before engaging in discovery no matter the likelihood of success at trial because the discovery costs alone represent a sizeable expense that cannot be recovered even with a successful verdict at trial.… Read More »

Author: nmcconomy | Leave a comment Tagged Civil Procedure, Colorado, Colorado Rules of Civil Procedure, discovery, Lone Pine orders, offensive discovery, quash, toxic tort

Homebuilders Welcome Recent Court Decisions

Posted on September 2, 2015 by Patrick J. Paul

By: Patrick Paul

Arizona homebuilders will welcome with open arms two recent legal rulings of substantial impact to their industry. In the first decision, on July 28, 2015, in Sullivan v. Pulte Home Corp., No. 1 CA-CV 14-0199, the Arizona Court of Appeals held that homebuilders do not owe a duty of care to subsequent (non-original homeowners) for economic losses arising from latent construction defects unaccompanied by physical injury to persons or other property.

The fairly simple fact scenario follows. In 2000, Pulte Home Corporation sold the home at issue to the original homeowners, who, in 2003, sold the property to the Sullivan Plaintiffs. … Read More »

Author: Patrick J. Paul | Leave a comment Tagged Clean Water Act, economic loss rule, homebuilder, Water of the United States

Does a title company owe a duty of care to third parties in the recording of legal instruments?

Posted on August 18, 2015 by Ben Reeves

This is precisely the question that the Ninth Circuit recently certified to the Washington Supreme Court in Centurion Properties III, LLC v. Chicago Title Ins. Co.

Facts of the Case

In this case, Centurion Properties III, LLC (the “Borrower”) purchased a tract of real property in Washington with a loan from General Electric Capital Corporation (the “Senior Lender”), and secured the loan with a first position lien against the property. The loan documents and lien instruments specifically prohibited further encumbrance of the property without the Senior Lender’s prior written consent. Chicago Title served as the escrow agent, closing agent, and the title insurer for this transaction.… Read More »

Author: Ben Reeves | Leave a comment Tagged Centurion Properties v. Chicago Title, duty to third-party, real estate law, title insurance

HOA Super Priority Legal Battles Continue in the Silver State: What Senate Bill 306 Means for Nevada HOAs, Lenders and Homeowners

Posted on July 29, 2015 by Ben Reeves

By: Aaron D. Ford and Karl O. Riley

In 1991, the Nevada Legislature enacted the Uniform Common-Interest Ownership Act (UCIOA) which had been promulgated by the National Conference of Commissioners on Uniform State Laws (NCCUSL) (the Statute).^[1] This law provides that a homeowners association (HOA) may record a lien on each home in the community it governs and in enacting this law, the Legislature authorized an HOA to foreclose its lien through a nonjudicial foreclosure process.^[2] When the lien attaches or comes into existence continues to be a dispute issue in the ongoing litigation. Under this law, the HOA’s lien is prior to the first mortgage lien to the extent of certain maintenance and abatement charges and either six or nine months of assessments for common expenses, depending on the circumstances.… Read More »

Author: Ben Reeves | Leave a comment Tagged HOA Liens, Nevada, real estate litigation, SB 306, Super-Priority Liens

New Landlords Should Not Ignore Arizona’s Requirement To Register With The County Assessor’s Office

Posted on July 23, 2015 by Cory Braddock

By: Cory L. Braddock

With ongoing price volatility in Arizona’s residential real estate market, homeowners may be tempted to become recreational landlords. Anyone considering renting their home, however, should be aware that Arizona law requires residential rental property owners to register their residential rental property with the county assessor’s office, presumably so that assessor can assess the appropriate taxes to the property owner. See A.R.S. § 33-1902.

The owner of a residential rental property is required to maintain the following information with the county assessor:

The name, address, and telephone number of the property owner;
The street address and parcel number of the property; and
The year the property was built.

Author: Cory Braddock | Leave a comment Tagged Arizona residential properties, residential, tenant

Are Short-Term Vacation Rentals Legal?

Posted on July 9, 2015 by Ben Reeves

The recent explosion in popularity of short-term vacation rentals through services such as Airbnb.com and VRBO.com not only provides terrifying horror stories about problem renters (google it if you’re interested), but also raises serious questions about the legality of the practice.

Many cities are currently struggling with this very issue. Opponents to short-term rentals argue that transient renters disrupt otherwise peaceful neighborhoods and negatively impact local business like traditional hotels. Proponents of the practice contend that they have a constitutionally protected property right to use their private property without governmental interference. In Jerome, Arizona, the City recently grappled with this very issue, and ultimately decided to inform a few of its citizens that they could no longer rent their homes on a short-term basis—much to the chagrin of the affected property owners.… Read More »

Author: Ben Reeves | Leave a comment Tagged real estate litigation, short-term rentals, zoning

Arizona Court Clarifies Premise Liability

Posted on July 2, 2015 by Kevin Parker

By: Kevin J. Parker

In a recent Arizona Court of Appeals case, the court clarified the rules for liability of a property owner to a person injured on the premises. In Lee v. M & H Enterprises, Inc. and Wal-Mart Stores, Inc. (filed April 21, 2015), the Arizona Court of Appeals addressed the question whether Wal-Mart as the property owner was liable for injuries suffered by an employee of an independent contractor performing construction services on the premises. The injured person sued both Wal-Mart and his employer, the construction company. The court reiterated the general rule that a landowner is not liable for the negligent conduct of an independent contractor on the premises unless the landowner has been independently negligent.… Read More »

Author: Kevin Parker | Leave a comment Tagged Premises liability, real estate litigation

Guarantors Can Waive Anti-Deficiency Protections

Posted on June 22, 2015 by Ben Reeves

By: Richard H. Herold and Ben Reeves

In Arizona, guarantors can now be held liable for deficiencies even where borrowers avoid liability due to Arizona’s anti-deficiency statute.

Arizona courts have been active in the last few years in addressing the law governing post-trustee’s sale deficiencies under Arizona’s anti-deficiency statute, A.R.S. §33-814(G), which provides that no deficiency action may be maintained “if trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling is sold pursuant to [a] trustee’s…sale.” The deficiency is determined by crediting the borrower and guarantor with the higher of: (a) the fair market value of the property on the date of the trustee’s sale; or (b) the sale price at the trustee’s sale, to reduce the total balance due and owing.… Read More »

Author: Ben Reeves | Leave a comment Tagged A.R.S. 33-814, anti-deficiency, Arizona Bank & Trust v. Barrons, guaranty, waiver

Upheld: Injured Subcontractor’s Lent Employee Has No Claim Against Landowner or General Contractor After Choosing Workers’ Compensation and Failing to Prove Landowner Controlled the Work

Posted on May 25, 2015 by Rick Erickson

By Rick Erickson (http://www.swlaw.com/attorneys/rick_erickson)

On this Memorial Day 2015, I write in honor of my U.S. Marine Corps colleague, Megan McClung, who was killed in Iraq nine years ago this December. Major McClung and I served together in Anbar Province in 2006. She was the first female Marine Corps officer to be killed in Iraq and the first female graduate of the U.S. Naval Academy to be killed in action. She is buried at Arlington National Cemetery.

In Lee v. M and H Enterprises, Inc., — P.3d —- (decided Apr. 21, 2015), the Arizona Court of Appeals recently clarified why, in most cases, landowners and general contractors are not liable when subcontractor employees are injured or killed on construction projects.… Read More »

Author: Rick Erickson | Leave a comment

The FDIC Reigns “Supreme” in Nevada

Posted on May 22, 2015 by Nathan Kanute

By: Nathan Kanute

For several years, Nevada Courts have considered a myriad of issues related to how Nevada law applies to loans made by banks that are later take over by the FDIC. In the past eight months, the Nevada Supreme Court has addressed two of those issues. See Munoz v. Branch Banking and Trust Company, Inc., 131 Nev., Adv. Op. 23 (Apr. 30, 2015) and Federal Deposit Insurance Corp. v. Rhodes, 130 Nev., Adv. Op. 88 (Oct. 30, 2014). In both cases, the Court held that the Supremacy Clause of the United States Constitution precluded application of the applicable Nevada statutes.… Read More »

Author: Nathan Kanute | Leave a comment

Successful Laches Defense Becoming Commonplace in Colorado

Posted on May 8, 2015 by nmcconomy

Boiler plate language in responsive pleadings often includes “Plaintiff’s claims are barred by the doctrine of laches” (or “The doctrine of laches bars Plaintiff’s claims” if you prefer the active voice). However, litigation of a laches defense is fairly rare, and a defendant successfully arguing a laches defense is something of a legal Haley’s Comet, only less reliable. Often, courts refuse to consider a laches defense if a statute of limitations applies. See e.g., Ivani Contracting Corp. v. City of New York, 103 F.3d 257 (2d Cir. 1997); and Lyons P’ship v. Morris Costumes, Inc., 243 F.3d 789 (4th Cir.… Read More »

Author: nmcconomy | Leave a comment Tagged Colorado, equitable defenses, laches, real estate, real estate litigation, real property, statute of limitation

Nevada Supreme Court holds that Voluntary Payment Doctrine Prohibits a Party from Recovering Amounts Wrongly Paid to Homeowner’s Association in Order to Prevent Foreclosure

Posted on April 30, 2015 by Bob L. Olson

By: Bob L. Olson

On September 30,2014, we posted “Lenders Beware: the Nevada Supreme Court Holds that Foreclosures of Homeowner’s Association Liens May Extinguish First Priority Deeds of Trust” which discussed the recent decision of SFR Investments Pool 1, LLC v. U.S. Bank, N.A., 130 Nev. Adv. Op. 75 (Sept. 18, 2014) (“SFR”). At the risk of oversimplification, the SFR Court held that:

NRS 116.3116 (the “Statute”) splits the lien of a homeowner’s association (“HOA”) into a “superpriority piece” and a “subpriority piece.”
The superpriority piece of the HOA’s lien consists of the “last nine months of unpaid HOA dues and maintenance and nuisance-abatement charges” and is prior to the first priority lien.

Author: Bob L. Olson | Leave a comment Tagged HOA Lien, Nevada Association Services, real estate litigation, SFR Investments

Federal Courts to Apply More Protective State Law when Analyzing Validity of Pre-dispute Jury Trial Waivers in Diversity Jurisdiction Cases

Posted on April 22, 2015 by Sean M. Sherlock

By Anthony J. Carucci

The Ninth Circuit Court of Appeals recently held that federal courts sitting in diversity jurisdiction must apply the underlying state law to determine the validity of pre-dispute jury trial waivers where the state law is more protective than the federal law. In re Cnty. of Orange, No. 14-72343, 2015 WL 1727240, at *4–5 (9th Cir. Apr. 16, 2015).

Facts/Procedural History

In 2007, plaintiff County of Orange (the “County”) hired defendant Tata America International Corporation (“Tata”) to develop a property tax management system. Id. at *5. In 2008, the parties entered into a contract for that purpose, which included an unambiguous jury trial waiver.… Read More »

Author: Sean M. Sherlock | Leave a comment Tagged jury, waiver

Arizona Courts Lacks Authority To Stay Forcible Entry And Detainer Judgments When The Judgment Itself Is Not Pending Appeal

Posted on April 16, 2015 by Nicholas Kunz

By: Nicholas Kunz

Can a court stay the execution of a Forcible Entry and Detainer (“FED”) action when the FED judgment itself is not appealed? The Arizona Court of Appeals recently addressed this question, holding that the court did not have the authority to stay the execution of the FED judgment, because only the denial of an Abeyance/Motion to Set Aside Judgment—and not the original FED judgment—was being appealed.

Facts/Procedural History

Tri City National Bank (“TCNB”) became the owner of a property occupied by the Gradys through a trustee sale. Shortly after the trustee sale, TCNB filed an action for FED to remove the Gradys from the property.… Read More »

Author: Nicholas Kunz | Leave a comment Tagged FED, Forcible Entry and Detainer

Church Property Tax Liability in Arizona for Commercial Leases

Posted on April 8, 2015 by Bob Henry

By: Bob Henry

Arizona House Bill 2128, which was signed into law by Governor Doug Ducey on March 23, 2015, has potential impact on the commercial real estate leasing market. The bill enables owners of real property that is leased to religious institutions to enjoy the closest thing to a complete exemption that is available to lessees of real property owned by for-profit organizations or individuals.

This blog does not opine on policy issues, and the wisdom of this legislation can be debated. But this legislation nevertheless creates some potential practical and logistical issues—for better or worse, and depending on one’s perspective and circumstances. … Read More »

Author: Bob Henry | Leave a comment Tagged commercial real estate, HB 2128, leasing

A Purchaser Who Doesn’t Inquire May Be Teeing Up For Failure

Posted on April 2, 2015 by Erica Stutman

Picture this: While on the hunt for new development opportunities, you stumble across a golf course in the middle of a high-end community, and you think this would be the perfect spot for more houses, or a retail center, or a movie theater, or …oh, the possibilities are endless! Better yet, you learn you can buy it for a bargain. Before closing the deal, you review the property’s recorded chain of title and find nothing requiring the property to be used as a golf course. You sign the closing papers and start planning your perfect new development.… Read More »

Author: Erica Stutman | Leave a comment Tagged equitable easement, equitable servitude, golf course, implied easement, implied servitude, real estate development, real property, restrictive covenant

If Receiver’s Sales Aren’t Foreclosures, What Are They?

Posted on March 20, 2015 by Ben Reeves

By: Ben Reeves & Bob Olson

When no statute specifically authorizes a court-appointed receiver to sell real property, what type of sale is it? The Supreme Court of Nevada recently addressed this question, holding that “a receiver sale of real property that secures a loan is a form of judicial foreclosure.” U.S. Bank v. Palmilla Dev. Co., 131 Nev. Adv. Op. 9 (2015).

Facts

In U.S. Bank v. Palmilla, U.S. Bank made a $20.15 million loan to Palmilla Development Company secured by a development of townhomes. Palmilla defaulted, and U.S. Bank applied for, and obtained, the appointment of a receiver over its real property collateral.… Read More »

Author: Ben Reeves | 1 Comment Tagged anti-deficiency, NRS 40.455, real estate litigation, receiver sales, U.S. Bank v. Palmilla

Injunctive Relief for Building Encroachment. Do I Have to Move the House?

Posted on February 25, 2015 by Kevin Parker

By Kevin Parker

When a land owner mistakenly builds a house or other building or structure that encroaches on a neighbor’s property, what is the remedy? Does the offending land owner have to physically remove the structure from the neighbor’s property? Is the harmed neighbor entitled to a mandatory injunction against continuing trespass? Can the offending land owner invoke equitable “balancing of hardships” and simply pay damages? In a recent case, the Supreme Court of Rhode Island distinguished the encroachment situation from traditional injunctive relief analysis. (A court order requiring the offending land owner to remove the offending structure would be a mandatory injunction order.) The general rule is that a party seeking injunctive relief must prove irreparable harm not remediable by damages. … Read More »

Author: Kevin Parker | 1 Comment Tagged encroachment, injunction, real estate litigation, trespass

Inverse Condemnation: When is Your Claim Precluded by the Arizona Statute of Limitations?

Posted on February 19, 2015 by Richard Herold

By: Richard Herold

An inverse condemnation of a landowner’s property can occur when a governmental entity: (1) physically takes the property without compensation; or (2) passes a new law that has a serious impact on the value and/or utility of the property. At times, the taking may be obvious, for example, if the governmental entity deprives the owner of access to the property by putting up a fence. While regulatory takings are at times less obvious and/or pressing, in both cases, the property owner may adopt the view that he or she will simply address the problem later.

Believe it or not, the property owner needs to move quickly and file suit within one year of the taking.… Read More »

Author: Richard Herold | Leave a comment Tagged inverse condemnation

Are Vacant Lots Protected Under Arizona’s Anti-deficiency Statutes?

Posted on February 11, 2015 by Ben Reeves

No, of course not. Arizona’s anti-deficiency statutes only prohibit deficiency judgments after a trustee’s sale of a “dwelling”.[1] Under no definition can a vacant lot constitute a “dwelling”. This was the Arizona Supreme Court’s holding in BMO v. Wildwood Creek Ranch, LLC.

In BMO, Shawn and Kristina Rudgear (through their company Wildwood Creek Ranch, LLC) borrowed $260,000 to fund construction of a home on a vacant 2.26-acre lot. This loan was secured by a deed of trust against the lot.

Construction of the home never began, the Rudgears defaulted, and BMO Harris Bank foreclosed via trustee’s sale.

Author: Ben Reeves | 2 Comments Tagged A.R.S. 33-814, anti-deficiency, BMO v. Wildwood Creek, M&I v. Meuller, MidKansas v. Dynamic

Can an Unsigned Minute Entry Create a Judgment Lien?

Posted on January 22, 2015 by Ben Reeves

It appears that 2014 was a banner year for Arizona law on judgment liens. Indeed, we recently posted about the Lewis v. DeBord decision, which invalidates judgment liens vis-à-vis third-party purchasers if the judgment creditor fails to record an “information statement” with the judgment. The Court of Appeals has again tackled the question of judgment liens under Arizona law.

In Sysco Arizona, Inc. v. Hoskins, the Court of Appeals held that a recorded unsigned minute entry (which awarded judgment in the amount of $395,598.00) did not create a judgment lien. The reason for this ruling is simple – under Arizona law, an unsigned minute entry (even if it awards a money judgment) is not a formal “judgment” and the statutes require the recordation of a formal “judgment” to create a “judgment lien”. … Read More »

Author: Ben Reeves | Leave a comment Tagged judgment lien, Lewis v. DeBord, real estate litigation, Sysco v. Hoskins

Transfer of Property Title to a Holding Company Did Not Divest Landowner of Owner-Occupant Status Under A.R.S. § 33-1002(B)

Posted on January 20, 2015 by Rick Erickson

By: Richard G. Erickson

Recently, in Marco Crane & Rigging Co. v. Masaryk, 703 Ariz. Adv. Rep. 29 (Dec. 30, 2014), the Arizona Court of Appeals established that a subcontractor on a residential project has no lien rights against an owner-occupant, even though the homeowner transferred the property’s title to a holding company (an Arizona limited liability company) after the subcontractor commenced work.

In other words, the lien protections afforded to owner-occupants are determined, at the latest, when a contractor records its lien. After the contractor commences work and records its lien, the homeowner’s actions in negating owner-occupant status do not divest the homeowner of statutory protections against lienholders. … Read More »

Author: Rick Erickson | Leave a comment Tagged A.R.S. § 33-1002, construction, contractor, foreclosure, general contractor, holding company, homebuilder, homebuilding, homeowner, landowner, lien, lien law, Limited Liability Company, Marco Crane & Rigging Co. v. Masaryk, mechanic's lien, owner-occupant, residential construction, subcontractor

Update – Prospective Waivers of “Fair Market Value” Hearings are Definitely Void.

Posted on January 9, 2015 by Ben Reeves

In 2013, we blogged about the Arizona Court of Appeals’ determination that prospective contractual waivers of “fair market value” hearings are unenforceable as a matter of public policy. The link to our prior blog post is here. Although we noted some deficiencies in the Court of Appeals’ reasoning, we recognized that the holding reached a defensible legal result. On review, the Arizona Supreme Court reached the same outcome…but with a more robust legal analysis. See CSA 13-101 Loop, LLC v. Loop 101, LLC, et al., No. CV-14-0029 (Ariz. Dec. 31, 2014).[1]

The Arizona Supreme Court held that although Arizona’s anti-deficiency statutory scheme did not expressly prohibit contractual waivers of “fair market value” hearings, Arizona’s overall public policy behind the trustee’s sale process entitled borrowers and guarantors to the protection afforded by a “fair market value” hearing.… Read More »

Author: Ben Reeves | Leave a comment Tagged A.R.S. 33-814, anti-deficiency, CAS 13-101 v. Loop 101, fair market value hearing, waiver

Beneath the Surface: Entek GRB, LLC v. Stull Ranches, LLC and the Continuing Battle Between Surface Owners and Subsurface Owners

Posted on December 29, 2014 by nmcconomy

On August 14, 2014, the Tenth Circuit vacated and remanded the lower court’s decision regarding a dispute between a surface owner’s and a subsurface owner’s respective rights to access and enjoy land and property rights. Entek GRB, LLC v. Stull Ranches, LLC, 763 F.3d 1252 (10th Cir. 2014). The decision reached in Entek GRB, LLC v. Stull Ranches, LLC addresses a debate occurring throughout Colorado and the United States: what controls do surface owners have regarding subsurface owners’ claims for access to and occupation of surface areas in their pursuit to exercise their rights to the oil, gas, and other minerals beneath the surface owner’s land. … Read More »

Author: nmcconomy | Leave a comment

Guarantor Waivers Narrowed

Posted on December 18, 2014 by Sean M. Sherlock

By: Lyndsey A. Torp and Sean M. Sherlock

A general waiver by a guarantor of “all defenses” does not actually waive “all defenses.” California Bank & Trust v. Del Ponti, — Cal.Rptr.3d —, 2014 WL 6908141 (Cal.App. 4 Dist.). That was the holding in a recent opinion wherein the California Court of Appeal affirmed judgment against a lender, holding that the bank could not recover on its loan guaranties because it had breached the underlying loan agreement.

In California Bank & Trust v. Del Ponti, borrower obtained a construction loan from Vineyard Bank (which was later assigned to California Bank & Trust) to develop a townhome project, with guaranties from two principals of the borrower. … Read More »

Author: Sean M. Sherlock | Leave a comment Tagged defense, Guarantor, guaranty, waiver

It just got a little bit harder to enforce judgment liens

Posted on December 16, 2014 by Ben Reeves

Introduction

As everyone knows, the enactment of the Statute of Westminster II in 1285 ushered the concept of a “judgment lien” into English law. The statute – for the first time in English legal history – authorized a judgment creditor to obtain a writ of elegit (as opposed to a writ of fieri facias) to take possession of the judgment debtor’s land to pay for the judgment debtor’s debts. 1285 was indeed a very good year for judgment creditors. Nearly three-quarters of a millennium later, the judgment lien remains an important remedy for judgment creditors.

Judgment Liens in Arizona

Although Arizona law has (for the most part) abandoned the use of fanciful Latin phraseology, Arizona does provide for a “judgment lien” – which (despite the plain, uninspired name) creates a lien against all of the real property then owned or later acquired by the judgment debtor. … Read More »

Author: Ben Reeves | Leave a comment Tagged byers v. wik, judgment enforcement, judgment lien, Lewis v. DeBord, real estate litigation

California Case Requires Arbitration Despite Lack of Actual Controversy

Posted on December 9, 2014 by Sean M. Sherlock

By: Lyndsey A. Torp and Sean M. Sherlock

For parties to litigate a contract dispute in a court of law, the parties’ disagreement must have ripened into an actual controversy presenting more than a mere academic difference of opinion. But under a recent California Court of Appeal opinion, no actual controversy is required to compel arbitration over a disagreement. Bunker Hill Park Limited v. U.S. Bank National Association, — Cal.Rptr.3d —, 2014 WL 6684796 (Cal.App. 2 Dist.). To avoid being compelled to arbitrate purely academic disagreements, parties should draft their arbitration clauses to limit arbitrable disputes to those that have ripened into actual controversies.… Read More »

Author: Sean M. Sherlock | Leave a comment Tagged arbitration, justiciability, ripeness

Nevada Supreme Court adds New Elements to Constructive Eviction Claims.

Posted on December 5, 2014 by Bob L. Olson

By Bob L. Olson

Nevada, like many jurisdictions, has recognized the ability of a tenant to vacate property if it becomes unfit for occupancy for the purpose for which it was leased. This is commonly known as a “constructive eviction.” Traditionally, to establish a claim for or defense of constructive eviction, the tenant had to prove the following three elements:

1. The landlord either acted or failed to act;

2. The landlord’s action or inaction rendered the whole or a substantial part of the premises unfit of occupancy for the purpose for which it was leased; and

3. The tenant must actually vacate the property within a reasonable time.… Read More »

Author: Bob L. Olson | Leave a comment Tagged commercial lease, constructive eviction, evict, eviction, landlord, lease, tenant

Landlords Need Not Deny Puppy Love

Posted on November 21, 2014 by Erica Stutman

http://www.swlaw.com/attorneys/lyndsey_torp

Dog-lovers will be happy to know they may rent property to a tenant and the tenant’s dog without necessarily being subject to strict liability if man’s best friend turns out to be not-so-friendly after all. In Spirlong v. Browne, the Arizona Court of Appeals decided that the strict liability for injuries or damages caused by a dog that is imposed upon a person “keeping” a dog requires that the person exercises care, custody, or control of the dog, and that merely allowing a dog to live in your property does not alone subject a person to liability. … Read More »

Author: Erica Stutman | Leave a comment Tagged 11-1001, 11-1020, 11-1025, dog bite, dog owner, landlord, lessee, lessor, Spirlong, strict liability, tenant

General Contractor’s Prospective Waiver Of Its Lien Rights Is Enforceable In California

Posted on November 12, 2014 by Lyndsey Torp

By: Lyndsey Torp

In another decision favoring lenders (See http://www.swlaw.com/blog/real-estate-litigation/2014/08/29/arizona-supreme-court-to-contractor-sorry-but-equitable-subrogation-of-a-banks-later-deed-of-trust-trumps-earlier-mechanics-lien-rights/), the California Court of Appeal, in an opinion published in September 2014, entitled Moorefield Construction, Inc. v. Intervest Mortgage Investment Company, et al., D065464, held an original contractor can contractually waive or impair its own lien rights, even before it gets paid or performs work, as long as it does not waive or impair the lien rights of its subcontractors. In Moorefield, the court of appeal reversed a trial court’s decision awarding a general contractor $2.2 million on its mechanic’s lien. In doing so, the court of appeal upheld a subordination agreement that the general contractor, Moorefield Construction, Inc., signed with the lender, Intervest Mortgage, “subordinating” the general contractor’s mechanic’s lien claim to the lender’s deed of trust, which was security for the construction loan.… Read More »

Author: Lyndsey Torp | Leave a comment Tagged contractor, deed, foreclosure, lien, loan, mechanics, owner, subordination, waiver

Arizona Chamber of Commerce Forms Policy Group for Real Estate and Community Development Issues

Posted on November 6, 2014 by Bob Henry

By: Bob Henry

The Arizona Chamber of Commerce & Industry has formed a new policy committee for “Real Estate and Community Development Issues.” The Arizona Chamber’s policy committees—now 16 different committees that cover policy areas ranging from “Budget & Government Reform” to “Workplace, Workers Compensation and Insurance”—are actively involved in supporting and opposing legislation on issues that are of particular importance to the Arizona business community. The Arizona Chamber’s formation of a new policy committee focusing specifically on real estate and community development issues should thus be welcome news to those who do business in the real estate industry in Arizona. … Read More »

Author: Bob Henry | Leave a comment Tagged Arizona Chamber of Commerce & Industry, Budget & Government Reform, Community Development, Policy Committees, real estate, Real Estate and Community Development Issues, Workers Compensation and Insurance, Workplace

Vendees’ Liens—Construction Lenders Beware!

Posted on October 31, 2014 by Ben Reeves

By: David A. Sprentall

A recent Arizona Court of Appeals decision highlights a lien priority risk for secured construction lenders when the financed project fails. The problem—known as a “vendee lien”—is most likely to arise when up-front deposits are paid by buyers of units in condominiums or similar projects.

The case, Rigoli v. 44 Monroe Marketing, LLC, involved a construction loan made by Corus Bank in 2006 for the development of the 44 West Monroe condominium tower in downtown Phoenix. As a condition to the loan, the developer was required to have presales of at least 100 units and earnest money deposits of approximately $4.5 million.… Read More »

Author: Ben Reeves | Leave a comment Tagged 44 Monroe, construction lending, quiet title, vendee lien

Homestead Exemption Cannot be Denied on Equitable Grounds

Posted on October 8, 2014 by Kevin Parker

By Kevin J. Parker

Arizona’s homestead exemption allows a person to protect from certain creditors up to $150,000 of their equity in their residence (dwelling house, condominium, or mobile home). A.R.S. § 33-1101 et seq. This homestead equity is exempt from non-consensual liens, for example recorded judgments against the owner. The homestead exemption does not apply as against consensual liens such as a mortgage or deed of trust.

In a recent opinion, the Arizona Court of Appeals addressed the question of whether a property owner could be precluded on equitable grounds from asserting the homestead exemption. Rogone v. Correia (Opinion filed September 25, 2014). … Read More »

Author: Kevin Parker | Leave a comment Tagged foreclosure, homestead exemption, judgment liens, real estate litigation

New California Case Illustrates Peril of Full Credit Bid

Posted on October 6, 2014 by Sean M. Sherlock

By: Sean M. Sherlock

In a new California case, a lender that made a full credit bid at a foreclosure sale lost its right as mortgagee under a lender’s insurance policy for damage to the property that occurred prior to foreclosure. This was so even though the lender held multiple deeds of trust, and foreclosed on only one of them. The case provides valuable guidance in devising a foreclosure bidding strategy.

In Najah v. Scottsdale Ins. Co., ___ Cal.Rptr.3d ___, 2014 WL 4827882 (Cal.App. 2 Dist., Sep. 30, 2014), plaintiff (lender) sued defendant (insurer) for failing to pay a claim for property damage that occurred prior to plaintiff’s foreclosure on the property.… Read More »

Author: Sean M. Sherlock | Leave a comment Tagged foreclosure bid, Full credit bid, lender's insurance, mortgagee insurance

Lenders Beware: the Nevada Supreme Court Holds That Foreclosures of Homeowners’ Association Liens May Extinguish First Priority Deeds of Trust

Posted on September 30, 2014 by Ben Reeves

By: Bob L. Olson

Nevada has adopted the Uniform Common Interest Ownership Act of 1982 (the “Act”) which governs homeowners’ associations (“HOA”). One particular provision of that Act, enacted by Nevada in 1991 and later amended, and codified as NRS 116.3116 (the “Statute”), states that HOA liens are “prior to all other liens and encumbrances on a unit” except for, among other liens:

(b) A first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent . . . :

NRS 116.3116(2)(b) (emphasis added).

At first glance the Statute unconditionally subordinates the HOA’s lien to a first priority mortgage or deed of trust (hereinafter “first priority lien” and the holder, the “mortgage holder”) recorded against the unit before the date on which the assessment sought to be enforced became delinquent.… Read More »

Author: Ben Reeves | 1 Comment Tagged HOA Lien, Nevada, NRS 116.3116, real estate litigation, SFR Investments v. U.S. Bank

Easements Made Easier: Building Pipelines with the Power of Eminent Domain Under the Natural Gas Act

Posted on September 29, 2014 by Richard Herold

By: Richard H. Herold

Any person or entity seeking to construct a natural gas pipeline and successful in obtaining a certificate of convenience and necessity from the Federal Energy Regulatory Commission may exercise the power of eminent domain to obtain easements across private property when those easements are necessary and cannot be obtained consensually (by contract) from the landowners. Columbia Gas Transmission, L.L.C. v. 76 Acres More or Less, 2014 WL 2960836 (D. Md. June 27, 2014). the Columbia Gas Court recently held that (1) the property’s legal description need not be attached to sufficiently identify the property to be condemned, and (2) even in the absence of a federal condemnation statute authorizing immediate possession of the property, the condemning plaintiff may obtain an order to take immediate possession of the property since it would be wasteful and inefficient to skip over one or more parcels in the construction process – only if the condemning plaintiff is capable of satisfying the requirements for preliminary injunctive relief under Fed.R.Civ.P.… Read More »

Author: Richard Herold | Leave a comment Tagged condemnation, easements, eminent domain, natural gas act, pipelines

Social Media Concerns Potentially Affecting Arizona’s Real Estate Industry

Posted on September 12, 2014 by Jefferson Hayden

By: Jefferson R. Hayden http://www.swlaw.com/attorneys/jefferson_hayden

A growing number of governmental authorities are cracking down on the use of social media with regard to commercial transactions. In Arizona, for example, legislation was proposed restricting an employer’s right to access social media account information of its employees. Though SB 1411 was not passed in 2013, the Arizona real estate industry should pay close attention to its own social media practices since it is covered by the Fair Housing Act. If the legislative progression of other states is any indicator, the Arizona real estate industry may also encounter future issues in both the landlord/tenant and lending realms.… Read More »

Author: Jefferson Hayden | Leave a comment

Arizona Supreme Court to Contractor: Sorry But Equitable Subrogation of a Bank’s Later Deed of Trust Trumps Earlier Mechanics’ Lien Rights

Posted on August 29, 2014 by Rick Erickson

By Rick Erickson

http://www.swlaw.com/attorneys/rick_erickson

The smoke has finally cleared in a hard and long-fought battle between a bank and contractor both claiming priority to foreclose millions of dollars on a Phoenix condominium project. The project, well-known as Summit at Copper Square in central Phoenix (“Summit”), went broke in 2007. The foreclosure case began in 2008, and the construction and real estate industries have been keeping a close eye on the outcome. In the end, the Arizona Supreme Court weighed in for its “first opportunity to address the interplay between equitable subrogation and the priority granted to mechanics’ liens by [Arizona Revised Statutes] § 33-992(A).”

The Arizona Supreme Court issued its decision in The Weitz Company L.L.C.… Read More »

Author: Rick Erickson | Leave a comment Tagged contractor, equitable, foreclosure, lien, loan, mechanics, security, subrogation

Nevada Supreme Court Clarifies Mechanic and Materialman Lien Issues

Posted on August 22, 2014 by Nathan Kanute

By: Nathan Kanute and Bob Olson

On August 7, 2014, the Nevada Supreme Court issued two opinions dealing with the priority of mechanics’ liens and the proof required for a materialman to establish a lien. These cases provide valuable guidance to lenders, materialmen, contractors, and subcontractors operating in Nevada.

In Byrd Underground, LLC v. Angaur, LLC, 130 Nev. Adv. Op. 62, the United States Bankruptcy Court for the District of Nevada certified three questions to the Nevada Supreme Court. The questions focused on whether placement of fill materials and grading constituted “construction of a work of improvement” for purposes of a lien priority determination under NRS 108.225. … Read More »

Author: Nathan Kanute | Leave a comment Tagged lien priority, materialman's lien, mechanic's lien

A Subsequent Developer has no Ability to Force a Public Body to Call an Abandoning Developer’s Performance Bonds for Infrastructure Improvements.

Posted on August 19, 2014 by Ben Reeves

The Arizona Court of Appeals decided on July 22, 2014 that a developer cannot compel a public entity to call its performance bonds to complete infrastructure improvements on a construction project that a prior developer abandoned due to bankruptcy. Ponderosa Fire Dist. et al. v. Coconino County et al., 1 CA-CV 13-0545.

– See more on this case from our blogger Rick Erickson at: http://www.swlaw.com/blog/construction-ally/2014/07/23/a-subsequent-developer-has-no-ability-to-force-a-public-body-to-call-an-abandoning-developers-performance-bonds-for-infrastructure-improvements/#sthash.3iBSqIC1.dpuf… Read More »

Author: Ben Reeves | Leave a comment Tagged developer, performace bonds, Ponderosa Fire v. Coconino County, real estate litigation

Colorado Supreme Court Revisits Rule Against Perpetuities

Posted on August 14, 2014 by golmstead

By: Ginny Olmstead http://www.swlaw.com/attorneys/virginia_olmstead

In March of this year, the Colorado Supreme Court revisited a fundamental doctrine of property law, which it described as “long cherished by law school professors and dreaded by most law students: the infamous rule against perpetuities.” The rule applies an unusual formula to prevent property from remaining “tied up” by grants of contingent future interests vesting too remotely in time. Although the rule was originally crafted to prevent excessively long family settlements, courts have since applied it to commercial transactions as well. This has created some odd results in case law governing commercial transactions, because the rule’s formula is structured around “lives in being” and potential heirs. … Read More »

Author: golmstead | Leave a comment

Full Credit Bid Rule Bars Recovery for Wrongfully Enjoined Lender

Posted on August 13, 2014 by Michelle Keogh

By: Michelle Keogh

On June 30, 2014, Judge James A. Teilborg, a Senior District Judge in Arizona, ruled that Tri City National Bank (“TCNB”) was not entitled to bond money posted by the plaintiffs after TCNB was wrongfully enjoined from executing a trustee sale. Grady v. Bank of Elmwood, 2014 WL 2930510 (D. Ariz. June 30, 2014).

In Grady, the plaintiffs initially sought injunctive relief against Bank of Elmwood (“BOE”). Plaintiffs signed a promissory note and a deed of trust with BOE for their home loan of just over $1.8M. Less than a year later, the plaintiffs filed suit in Maricopa County Superior Court seeking to have the note voided for fraud. … Read More »

Author: Michelle Keogh | Leave a comment Tagged Full credit bid

Guarantors Remain Liable for “Carve-out” Obligations, Despite Non-recourse Loan

Posted on July 31, 2014 by Ben Reeves

Introduction

Believe it or not, guaranty contracts mean what they say. If a guarantor agrees to reimburse a lender for misappropriated security deposits, unpaid taxes, and the cost of enforcement, then – not surprisingly – courts will hold the guarantors liable for these expenses.

In Investors Warranty of America, Inc. v. Arrowhead Business Center, L.P., the guarantors signed a limited guaranty contract obligating them to pay up to $350,000 if the borrower defaulted on the $5,250,000 commercial loan secured by an office building in Peoria. In addition to this capped amount, the guarantors agreed to pay for certain “carve-out” expenses, including misappropriated security deposits, unpaid taxes, and costs of enforcement. … Read More »

Author: Ben Reeves | Leave a comment Tagged bad-boy guaranty, carve-out, investors warranty v. arrowhead, non-recourse, real estate litigation

Governmental Power and Property Lines

Posted on July 21, 2014 by nmcconomy

On May 27, 2014, the Colorado Supreme Court issued its opinion in Town of Dillon v. Yacht Club Condos. Home Owners Ass’n, 2014 CO 37. Overturning the rulings of both the trial court and the Colorado Court of Appeals, the Colorado Supreme Court reaffirmed the long-standing deference Colorado law shows to state legislative bodies exerting their police powers. This opinion reminds Colorado property owners that property rights and interests end at the property line and no one should rely on the ability to use public land around their property in the future.

Between 1965 and 1967, a developer constructed the Yacht Club Condominiums in Dillon, Colorado, consisting of three buildings and fifty condominium units. … Read More »

Author: nmcconomy | Leave a comment Tagged health, litigation, municipal, ordinance, parking, police power, rational basis, rational relationship, real estate, real property, safety, welfare

Guarantors Score Two Victories Before the Nevada Supreme Court.

Posted on July 17, 2014 by Bob L. Olson

By: Bob Olson and Nathan Kanute

On May 29, 2013, the Nevada Supreme Court issued two decisions that all real estate lenders need to be aware of because they have the potential to eliminate the ability of a lender to recover a deficiency judgment from a guarantor.

In Nevada it is common for lenders to commence foreclosure proceedings and, at the same time, sue all guarantors that have waived the benefit of Nevada’s one-action rule for the full amount of the debt they guaranteed. Often the foreclosure sale will occur before lender obtains a judgment against the guarantor. In Lavi v.… Read More »

Author: Bob L. Olson | Leave a comment Tagged deficiency, foreclosure, Guarantor, one-action rule

Real estate salesperson succeeds in mission to collect commission

Posted on July 11, 2014 by Erica Stutman

By: Erica Stutman

A.R.S. § 32-2152 allows a real estate broker or salesperson to file a court action to collect earned compensation if he was a “qualified licensed broker or salesperson at the time the claim arose.” In Focus Point Prop., LLC v. Johnson, 689 Ariz. Adv. Rep. 4 (June 19, 2014), plaintiff Cleo Johnson tested the meaning of a “qualified” licensee, arguing that her salesperson was not entitled to his commission because his license could have been revoked at the time he performed his services.

In 2009, Johnson, trustee of a trust, hired Jeff Kantor from Focus Point Properties to sell a commercial property owned by the trust and also to assist with rehabilitation activities and leasing. … Read More »

Author: Erica Stutman | Leave a comment Tagged A.R.S. 32-2153(B), A.R.S. § 32-2152, broker commissions, Cleo Johnson, Focus point, real estate agent, real estate broker, real estate salesperson

Nevada Supreme Court and District Court Issue Decisions Regarding Nevada’s Limitations on Deficiency Judgments.

Posted on June 18, 2014 by Bob L. Olson

By: Bob Olson and Nathan Kanute

In 2011 the Nevada Legislature enacted Assembly Bill 273 (“AB 273”) which amended NRS 40.459 by limiting deficiency judgments to the difference between the amount the lender paid to acquire the loan or obligation and the larger of the market value of the property or the amount paid for the property at a foreclosure sale. As one can imagine, a large number of borrowers and guarantors have tried to take advantage of this recent law to limit or in some cases eliminate their liability for deficiencies. Creditors, on the other hand, have cried foul by arguing that, among other things, the law cannot be applied retroactively, it impairs the value of their pre-enactment paper and violates the Contracts Clauses of both the United States and Nevada Constitutions. … Read More »

Author: Bob L. Olson | Leave a comment Tagged AB 273, anti-deficiency, deficiency, Eagle SPE, foreclosure, Sandpointe

Is the Future Bright for Commercial Real Estate in Arizona?

Posted on June 6, 2014 by Cory Braddock

By Cory L. Braddock

AZRE Magazine recently published an interesting article discussing the outlook for the commercial real estate market in Arizona. To give it a read, click here.… Read More »

Author: Cory Braddock | Leave a comment

Borrowers Can Avoid Liability Even After a Trustee’s Sale

Posted on May 28, 2014 by Ben Reeves

Since a lender must have a valid debt and valid lien to conduct a trustee’s sale, a borrower that allows the foreclosure sale to occur impliedly agrees that the debt and lien are valid. In Madison v. Groseth and BT Capital, LLC v. TD Serv. Co. of Arizona, 229 Ariz. 299, 301, 275 P.3d 598, 600 (2012), Arizona appellate courts reached that exact conclusion, holding that under A.R.S. § 33-811(C), a borrower that does not obtain an injunction stopping a trustee’s sale waives all defenses to the validity of the sale and all defenses related to the sale. … Read More »

Author: Ben Reeves | Leave a comment Tagged A.R.S. 33-811(C), anti-deficiency, BT Capital, Moran AZ Financial v. Gotses

Unmitigated Waivers: Guarantors Remain Liable Despite 4-Year Delay in Foreclosure Sale

Posted on May 14, 2014 by Ben Reeves

If a lender delays foreclosure allowing years of default interest to accrue such that a guarantor’s obligation increases from $6 million to $12 million, should the guarantor remain on the hook for the full $12 million? In Pi’ikea, LLC v. Williamson, 683 Ariz. Adv. Rep. 32 (Ct. App. 2014), the Arizona Court of Appeals recently confirmed that if the guarantor waived the “mitigation of damages” or “impairment of collateral” defense in its guaranty contract, then the answer is an unmitigated YES.

The Facts

In 2004, TBM Equities, LLC borrowed $5,922,000 to build an apartment complex in Tucson, AZ. … Read More »

Author: Ben Reeves | Leave a comment Tagged Guarantor, guaranty, impairment of collateral, mitigation of damages, Pi'ikea v. Williamson, waiver

Seller Liability for Disclosures (or Non-Disclosures), Part 2

Posted on May 12, 2014 by Kevin Parker

May 12, 2014

By: Kevin J. Parker

In our blog post dated April 29, 2013, Matthew Fischer discussed the case Lerner v. DMB Realty, LLC (Arizona Court of Appeals, November 27, 2012). In that case, the Arizona Court of Appeals addressed, among other things, the viability of a claim wherein a buyer of residential real estate alleged that the seller had an obligation – under the facts of that case – to disclose that they were selling because of the presence of a registered sex offender next door.

The complicating factor was that Arizona, by statute, expressly states that sellers are not obligated to disclose the existence of registered sex offenders in the vicinity. … Read More »

Author: Kevin Parker | Leave a comment Tagged real estate, seller disclosures, seller liabilty, seller non-disclosures

Amendments to Arizona’s Anti-deficiency Statute Exclude Homebuilders from Anti-Deficiency Protection

Posted on April 28, 2014 by Ben Reeves

Last Tuesday, April 20, 2014, Arizona’s Governor, Jan Brewer, signed HB 2018 into law. This bill closes a long-standing loophole that allowed commercial homebuilders to take advantage of Arizona’s anti-deficiency statute, even though the statute was originally enacted to protect only homeowners. In sum, for loans secured by residences that are originated after December 31, 2014, commercial homebuilders will no longer be able to avoid liability based on Arizona’s anti-deficiency statute, A.R.S. § 33-814(G).

A.R.S. § 33-814(G) provides that after a trustee’s sale, a lender cannot sue to recover the difference between the value of a “dwelling” and the amount owed on the loan (i.e., the “deficiency”). … Read More »

Author: Ben Reeves | Leave a comment Tagged A.R.S. 33-814, anti-deficiency, HB 2018, MidKansas v. Dynamic

Legal Pot Leads to Possible Nuisance Suits, but Viability is Unlikely

Posted on April 25, 2014 by nmcconomy

Almost four months into Colorado’s legalization of recreational marijuana for adults aged twenty-one and over, the weather is warming, windows are opening, and outdoor spaces are getting more use. All the while, a segment of the Colorado population, especially in the City and County of Denver (“Denver”), is exercising its new-found legal right to use marijuana.[1] A pungent plant known for its skunk-like aroma, marijuana, accompanied by its distinct scent, is poised to waft onto properties across Colorado that may find the odor less than euphoric.[2] The issue becomes whether these Denver residents have a legal avenue to control the once contraband odors from invading their living spaces, be it an adjacent apartment, backyard, or living room.… Read More »

Author: nmcconomy | 1 Comment Tagged law, marijuana, nuisance, privacy, private, public, real property, recreational, residential, rights

Arizona Supreme Court Holds That Property Owner Who Quarreled With Light Rail Construction Should Be Compensated For Lost Access

Posted on April 22, 2014 by Eric Spencer

By Eric H. Spencer

Late last week, the Arizona Supreme Court handed down a decision that clarified the rights of property owners who lose access to an abutting road and, in the process, reinforced the principle that both elimination and substantial impairment of access is compensable under the Arizona Constitution. But perhaps more significant, the Supreme Court in City of Phoenix v. Garretson held that a property owner should be compensated even if it retains relatively convenient access to that road through other means.

In so holding, the Supreme Court no doubt sent initial shockwaves through public works departments across Arizona who may be wondering whether they are hamstrung in making even basic traffic improvements. … Read More »

Author: Eric Spencer | Leave a comment Tagged eminent domain, just compensation, right of access

Sellers Cannot Look to the Appraiser When Lenders Pull the Plug on a Prospective House Flip

Posted on April 10, 2014 by Eric Spencer

By: Eric Spencer

An outgrowth of Arizona’s housing downturn in recent years has been the proliferation of would-be real estate investors who purchase, renovate and flip residential properties. On the other hand, in part to prevent the next downturn from occurring, lenders have tightened borrowing requirements and balked at financing any purchase of a “flipped” home that exceeds the appraised value. Often caught in the middle of these competing interests are the appraisers themselves: when a lender-commissioned appraisal comes back substantially below the proposed purchase price, the prospective buyer often has no choice but to walk away. And, when the real transaction falls apart accordingly, the real estate investor-turned-seller might seek to hold the appraiser liable for what it deems to be a negligently-conducted valuation of the property. … Read More »

Author: Eric Spencer | Leave a comment Tagged appraisal, appraiser liability, Restatement of Torts §552, Southwest Non-Profit Housing Corp. v. Nowak

The Registrar is Changing the Game for Complaints Against Arizona Contractors

Posted on April 8, 2014 by Rick Erickson

By Rick Erickson http://www.swlaw.com/attorneys/rick_erickson

Sweeping changes at the Registrar of Contractors have the construction and real estate industries concerned and curious. The Registrar recently received some poor performance reports by the Auditor General and State Ombudsmen. As a result, the Registrar overhauled its procedures for handling complaints and adjudicating contested cases against Arizona contractors. You should be following these changes before the Registrar rolls out its new approach this summer.

The Registrar regulates contractor licensing and enforcement of workmanship standards against thousands of licensees throughout Arizona. In doing so, the Registrar dictates administrative remedies available to property owners on residential and commercial projects. … Read More »

Author: Rick Erickson | Leave a comment Tagged administrative remedies, contractor complaints, contractor licensing, enforcement, Registrar of Contractors, regulation of contractors

A Section 363 Sale Does NOT Transfer Property Free and Clear of an Equitable Servitude

Posted on April 1, 2014 by Ben Reeves

Sales in bankruptcy court under 11 U.S.C. § 363 (called “363 Sales”) are often used to sell property during a bankruptcy case. The 363 Sale process provides an efficient procedure to liquidate estate property and offers several advantages to sales outside of bankruptcy – including the highly desirable ability to sell property “free and clear” of interests. The procedure is used so regularly and with such great success that parties often expect 363 Sales to transfer property free and clear of all interests as a matter of course. That result, however, is not always the case.

In re Hassen Imports Partnership reminds us that a 363 Sale does not automatically transfer title free and clear of all interests in real property. … Read More »

Author: Ben Reeves | 1 Comment

Brandt Revocable Trust v. U.S. – the United States’ theory of land ownership derailed

Posted on March 30, 2014 by Erica Stutman