Homie Can’t Do That

By:  Patrick J. Paul

The Arizona Attorney General recently reached an agreement with Utah-based real estate company Homie which made a splash in the Phoenix market during the fall election with candidate-type signage posted throughout the community urging a “Vote for Homie” as significant change and assured that such change would be “coming to your pocket.”  The problem?  Confusion to the voter, improper collection of personal data.

Homie first entered the Phoenix market in January 2018 with a softer digitally-based advertising splash.  Homie suggested that customers could save an average of $10,000 in home sales transactions by utilizing its technology and licensed real agents and directed further inquiry to its website  http://homieforsenate.com/. … Read More »

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Arizona Court Determines Statute of Limitations Applicable to a Claim for Reformation of a Deed of Trust (and a Related Claim for Declaratory Judgment)

By:  Kevin J. Parker

In a recent Arizona Court of Appeals case, Deutsche Bank National Trust Co. v. Pheasant Grove LLC, 798 Ariz. Adv. Rep. 15 (August 23, 2018), the Court of Appeals addressed the question of what statute of limitations was applicable to a declaratory judgment claim.  In that case, a bank’s deed of trust inadvertently omitted one of the lots that was supposed to secure that bank’s loan.  The deed of trust should have covered lots 8 and 9, but by its terms covered only lot 8.  A different bank subsequently recorded a deed of trust that encumbered lot 9. … Read More »

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Ten Years After Colorado’s Adverse Possession Amendment: a brief look backwards and forwards

In response to national outrage over an infamous adverse possession case in Boulder, Colorado, in which a lawyer and a judge intentionally took their neighbors’ undeveloped land through adverse possession, the Colorado legislature amended the state’s adverse possession statute (C.R.S. § 38-41-101) to make the claim significantly harder to prove.  It did this because it believed “there were insufficient ‘obstacles’ to establishing a claim for adverse possession under the existing law.”[1]  Effective July 1, 2008, the amendment created a heightened burden of proof, additional element requirements, and the possibility of a losing defendant recovering money from successful plaintiffs for the value of the land they took and the taxes the defendant had paid on that land.… Read More »

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Wait, You Want An HOA?! Restricting Implied Common-Interest Communities

By: Neal McConomy

While the butt of many jokes and a thorn in the side of some property owners, homeowners associations (“HOAs”) serve the vital function of collecting and disbursing funds to care for and maintain common areas of residential developments. Without HOAs, neighborhood open spaces, parks, and other amenities risk falling into disrepair through a type of tragedy of the commons, wherein residents use such amenities but refuse to subsidize care and maintenance for these common areas believing someone else will pony-up the funds. HOAs, when properly organized and managed, avoid this problem by ensuring everyone pays their fair shares for the common areas.… Read More »

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California Supreme Court Clarifies Deadline to File Anti-SLAPP Motions in Light of Amended Pleadings

By: Tony Carucci

California’s “anti-SLAPP” (“SLAPP” is an acronym for strategic lawsuit against public participation) statute—codified at California Code of Civil Procedure section 425.16 et seq.—is the primary vehicle for defending against any action involving petitioning or free speech. The statute was designed to provide an early and fast summary judgment-like procedure to allow defendants and cross-defendants to file a motion to dismiss either an entire complaint, specific causes of action, or even just portions of a cause of action, and to require the plaintiff to respond before conducting discovery. By facilitating an early challenge to a plaintiff or cross-complainant’s claims, the anti-SLAPP statute allows the responding party to avoid the costs and delay that chill the exercise of constitutionally protected rights.… Read More »

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“But I didn’t know what I was signing….”

By Bobby Kethcart

In real estate cases—which frequently involve long purchase agreements, loan documents, personal guarantees, deeds of trust, etc.—we’ve likely all had a client or opposing party who trots out the line that they didn’t know what they were signing, or they didn’t read or understand what they were signing, so the document shouldn’t be enforced according to its terms.

Most of us instinctively believe the claim is a loser: You signed the document, you’re bound by it.

But is this actually right? … Read More »

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Developers Celebrate Arizona’s Opportunity Zones

By: Patrick J. Paul

President Trump’s Tax Cuts and Jobs Act passed by Congress in December included a new community development program designed to promote investment in low income urban and rural communities.  These “Opportunity Zones” provide that every Governor may nominate up to 25% of qualifying low-income Census tracts for consideration in the program which provides substantial reductions on capital gains taxes with the greatest benefits to those holding their investments for a period of at least 10 years.

States were required by March 21st to submit nominations or request a 30 day extension to subsequently submit.  The Treasury Department in turn has 30 days from the date of submission to designate the nominated zones. … Read More »

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Withdrawal of an Admission in California May Shift Costs—Including Attorneys’ Fees—Incurred in Connection with the Withdrawal

By: Tony Carucci

Under California Code of Civil Procedure section 2033.300, a court may permit a party to withdraw an admission made in response to a request for admission upon noticed motion. The court may only do so, however, “if it determines that the admission was the result of mistake, inadvertence, or excusable neglect, and that the party who obtained the admission will not be substantially prejudiced in maintaining that party’s action or defense on the merits.” Cal. Code Civ. Proc. § 2033.300(b). The court may also “impose conditions on the granting of the motion that are just, including, but not limited to .… Read More »

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Specific Performance of an Option Contract to Purchase Real Property is Barred Absent Agreement on All Material Terms

By:  Richard H. Herold

On November 14, 2017, the Court of Appeals (Division 1), in Offerman v. Granada, LLC, 2017 WL 5352664, reversed a trial court order directing specific performance of an alleged option to purchase real property, holding that the alleged option was too indefinite to be specifically performed because the parties did not agree to all of the material terms of the option.

Tenant-Purchaser Offerman executed a two-year lease with Landlord-Seller Granada, which granted Offerman “the option to purchase [the] property…for a sales price to be determined at that time by an independent appraiser acceptable to both Tenant and Landlord.… Read More »

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California Mediation Confidentiality May Apply to Third Party “Participants” Retained to Provide Analysis

By: Tony Carucci

California Evidence Code section 1119 governs the general admissibility of oral and written communications generated during the mediation process. Section 1119(a) provides that “[n]o evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation . . . is admissible or subject to discovery, and disclosure of the evidence shall not be compelled, in any . . . civil action . . . .” Cal. Evid. Code § 1119(a) (emphasis added). Similarly, section 1119(b) bars discovery or admission in evidence of any “writing . . . prepared for the purpose of, in the course of, or pursuant to, a mediation .… Read More »

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The “Ugly” Property Next Door is Ruining My Property Value

By:  Kevin J. Parker

Traditional bases for private nuisance claims include circumstances where noise, light, vibration, or odor emanating from a neighboring property harm the value of your property. Such bases can be objectively verified and quantified.  Courts in various states depart, however, on the issue of whether pure unsightliness of a neighboring property, which diminishes the value of your property, supports a cognizable damages claim against the neighboring property owner under the law of nuisance.

 As explained by the Vermont Supreme Court in the recent case of Myrick v. Peck Electric Co., 2017 WL 129041 (January 13, 2017), state laws vary on the viability of a claim for aesthetic nuisance. … Read More »

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Erasing Any Doubt: Arizona FED Actions Do Not Accrue Until Formal Demand for Possession is Tendered

By:  Bob Henry

Clearing up any lingering confusion, in Carrington Mortgage Services, LLC v. Woods, 767 Ariz. Adv. Rep. 4 (June 22, 2017), the Arizona Court of Appeals confirmed that residential forcible entry and detainer actions in Arizona accrue for statute of limitations purposes when a party entitled to possession makes a formal demand for return of possession not when the party could have made a demand for return of possession.

In Carrington, the borrowers (the Woodses) remained in property that they had acquired in 2008 but then lost to foreclosure several years later.  The original lender obtained title to the property at a trustee’s sale on February 16, 2010, but did not take any action to remove the Woodses at that time. … Read More »

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Does Your 998 Offer to Compromise Include Attorneys’ Fees and Costs?

By: Anthony J. Carucci

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.

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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

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:

  1. 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.
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Green Energy Can Complicate Real Estate Foreclosures

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 »

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Avoiding Lender Liability for Credit-Related Actions in California

By: Anthony J. Carucci

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 »

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Developer Awarded Cost of Preparing Administrative Record in CEQA Lawsuit

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 »

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

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 »

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Applying New California Rules to Your Real Estate Litigation Practice

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

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 »

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Eminent Domain: Be Careful What You Ask For

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 »

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

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 »

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It just got a little bit easier to enforce judgment liens

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 »

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Homebuilders Welcome Recent Court Decisions

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 »

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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

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:

  1. NRS 116.3116 (the “Statute”) splits the lien of a homeowner’s association (“HOA”) into a “superpriority piece” and a “subpriority piece.”
  2. 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.
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Federal Courts to Apply More Protective State Law when Analyzing Validity of Pre-dispute Jury Trial Waivers in Diversity Jurisdiction Cases

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 »

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

By: Nicholas Kunz1411947988kdp8g

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 »

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

 

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 »

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California Case Requires Arbitration Despite Lack of Actual Controversy

 

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 »

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Vendees’ Liens—Construction Lenders Beware!

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 »

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Homestead Exemption Cannot be Denied on Equitable Grounds

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 »

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

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 »

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Colorado Supreme Court Revisits Rule Against Perpetuities

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 »

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

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 »

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The Registrar is Changing the Game for Complaints Against Arizona Contractors

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 »

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ABOR Fences Out a Property Owner’s Quiet Title Action

By: Cory L. Braddock 

In May of last year, the Arizona Court of Appeals determined that “the statute of limitations does not run against a plaintiff in possession who brings a quiet title action purely to remove a cloud on the title to his property.”  Cook v. Town of Pinetop-Lakeside, 661 Ariz. Adv. Rep. 31 (App, May 28, 2013).  The Cook decision was discussed in detail in our prior blog post entitled The Clock Doesn’t Tick-Tock for Owners in Possession.  Now, the Arizona Court of Appeals, presumably with some regret, has been forced to address real property statute of limitations issues for the second time within six months. … Read More »

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Bona Fide Tenancies for a Term Remain Protected

By:  Julie E. Maurer

A recent California Court of Appeals decision determined that the federal Protecting Tenants Against Foreclosure Act (“PTFA”) impliedly overrides state laws that provide less protection to tenants, but expressly allows states to retain the authority to enact greater protection.  The PTFA was enacted by Congress in May 2009 (Pub.L. 111-22, Div. A, Title VII, §§ 702-704, May 20, 2009, 123 Stat. 1660) and, in 2010, the Congress amended it (Pub.L. 111-203), Title XIV, § 1484, July 21, 2010, 124 Stat. 2204).  The PTFA provides protections for bona fide tenants of residential real property at foreclosure until the PTFA is scheduled to sunset at the end of 2014.… Read More »

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Bidding on State Land Trust Leases: Even the Top Revenue-Generating Bids Must be Balanced Against Qualitative “Best Use” Factors Designed to Protect the Land

By:  Richard H. Herold

The Court of Appeals recently held that that the Commissioner of the State Land Trust Department properly balanced Wildearth Guardians, Inc.’s higher revenue-generating bid against “best use” qualitative factors set forth in the Arizona Administrative Code.  As a result, the appellate court affirmed the Commissioner’s decision to award a 10-year grazing lease to the Knights for their 28-year record of stewardship and protection of the leased land near Springerville, Arizona, despite the $79,344 in additional revenue over 10 years which would have been generated for the benefit of Arizona’s public schools by the Wildearth Guardian’s bid.  Wildearth Guardians, Inc.Read More »

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Suing a Licensed Real Estate Professional May Require You to Complete and Turn In Your Homework.

By: Cory L. Braddock

A lawyer must have a good faith belief, after reasonable inquiry, that a lawsuit he files is grounded in fact and warranted by existing law.  Ariz. R. Civ. P. 11.  In other words, lawyers violate Arizona’s rules of civil procedure when they file frivolous lawsuits.  In Arizona, the legislature has, at least in some cases, added an additional layer of scrutiny to lawsuits filed against licensed professionals.  Specifically, a plaintiff must certify whether or not expert testimony is necessary to prove the licensed professional’s standard of care or liability for the claim.  See A.R.S. § 12-2602(A). When expert testimony is necessary, the plaintiff is required to serve a preliminary expert opinion affidavit with their Rule 26.1 initial disclosure.… Read More »

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Protecting Your Project From Litigation: Limited Liability Company vs. Partnership

If you have multiple investors/owners, one of the benefits of using a Limited Liability Company (LLC) to own real property rather than using a partnership is that the LLC offers better protection of the real property from creditors of any individual part-owner (LLC member or partner).  A judgment creditor of an LLC member is limited to getting a charging order against the member’s interest in the LLC.  The charging order gives the judgment creditor the rights of an assignee of the member’s interest.  This assignee position simply gives the judgment creditor the “passive” right to receive the distributions from the LLC (if any) that would otherwise go to the LLC member. … Read More »

Author: Kevin Parker | Leave a comment Tagged , ,

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Anticipating Earnest Money “Damages” – Don’t Assume It

By Bob Henry

The Arizona Supreme Court issued an opinion last month in Thomas v. Montelucia Villas, LLC, 2013 Ariz. LEXIS 152 (June 14, 2013) that adds a few wrinkles to efforts by sellers in real estate transactions to retain “earnest money” from a buyer upon the buyer’s default.   While the opinion addresses issues that are fairly unusual in the earnest money world, the holding is one that any seller or developer of real estate should keep in mind when drafting real estate contracts.… Read More »

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The Risk of Intent in Your Letter of Intent

By:  Richard Herold

Although the press frequently reports cavalierly on the execution of a “letter of intent” (“LOI”), as if it is a meaningless document, a LOI can be enforced if the parties intend to be bound, which turns primarily upon a close review of the language of the LOI and, sometimes, the surrounding facts and circumstances.

 First and foremost, under Arizona’s statute of frauds at A.R.S. §44-101(6), to have an enforceable agreement to sell real property, it must be in writing and signed by the “party to be charged” (i.e., the party you want to sue or hold accountable under the agreement).… Read More »

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Purchase Options: Strict Compliance Required

By:  Kevin Parker

In a rising real estate market, we tend to see more disputes relating to purchase options.  Given the increase in value, the property owner would rather avoid the option and sell at a higher price.  The option holder can make a large profit by simply exercising the option.  In 2003, the Arizona Supreme Court set forth many important legal principles relating to option contracts in real estate transactions.  In Andrews v. Blake, 205 Ariz. 236, 69 P.3d 7 (2003), the lessee of a plant and tree nursery had an option to purchase the property for $300,000.  The owner/landlord claimed that the lessee failed to timely exercise the purchase option. … Read More »

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Statutory Caveat Emptor Survives…or Does It?

By:  Matthew P. Fischer

Arizona has codified the concept of caveat emptor (i.e., buyer beware) for three particular circumstances.  Pursuant to A.R.S. § 32-2156, real property sellers are not obligated to disclose:  (1) deaths or felonies that have occurred on the premises; (2) prior occupancy by someone with a non-communicable disease; and (3) nearby sex offender residents.  The constitutionality of § 32-2156 was recently challenged in Lerner v. DMB Realty, et al., 294 P.3d 135 (Ariz. Ct. App. Nov. 27, 2012), specifically with respect to subsection three (click on the case name for the full opinion of the court). … Read More »

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