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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Everyone Wins When a Foreclosure Sale Generates Excess Proceeds

By: Ben Reeves

Introduction

When a foreclosure sale generates more money than needed to pay off the lien, the excess proceeds usually go first to creditors in the order of their priority, and second to the owner after creditors are paid in full. So, in truth, not everyone wins when a foreclosure sale brings in too much money.  Amusingly, in Steinmetz v. Everyone Wins, the court awarded excess sale proceeds to….you guessed it…Everyone Wins, despite the owner’s argument that Arizona’s anti-deficiency statutes barred it from recovering anything.

In addition to supplying a clever title for this post, Steinmetz v. Everyone Wins provides an important analysis of how Arizona’s anti-deficiency statutes, homeowner’s assessment lien statutes, and foreclosure statutes apply when determining who “wins” when it comes to excess sale proceeds.… 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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What Types of “Damages Claims” Survive a Trustee’s Sale?

By: Ben Reeves

Introduction

Arizona’s trustee’s sale statutory scheme provides for the waiver of all defenses and objections to a trustee’s sale that: (i) are not raised prior to the sale, and (ii) do not result in an injunction against the sale going forward.  See A.R.S. § 33-811(C).  In other words, if you have an objection to a trustee’s sale, you must seek and obtain an injunction prior to the sale or your objection will be waived.

Arizona’s Court of Appeals previously held that notwithstanding this statutory waiver, “common law” defenses to repayment of the debt survive a non-judicial foreclosure even in the absence of an injunction prior to the sale.  … 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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Oregon and Nevada Adopt the Uniform Commercial Real Estate Receivership Act

By:  Ben Reeves

Nevada and Oregon join Utah in adopting the Uniform Commercial Real Estate Receivership Act (the “Act”) promulgated by the Uniform Law Commission.  We have been following the development of the Act since its drafting stages.  If you want more information about the Act, check out our prior posts about the drafting process, what the Act is and does, and Utah’s enactment of the Act.… Read More »

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The Contributors to This Blog Are Pleased to Announce That….

Snell & Wilmer’s Real Estate Litigation Group, which provides the content for The Real Estate Litigation Blog, is pleased to announce that it has been recognized in both the national and metropolitan rankings by U.S. News Media Group and Best Lawyers for the 2018 edition of “Best Law Firms.”  We achieved the following rankings:

 •            National Tier 1: Litigation – Real Estate

•             Phoenix (AZ) Tier 1: Litigation – Real Estate

•             Utah Tier 1: Litigation – Real Estate

•             Colorado Tier 1: Litigation – Real Estate

•             Reno (NV) Tier 1: Litigation – Real Estate

•             Tucson (AZ) Tier 1: Litigation – Real Estate

The rankings are determined through an evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field, and review of additional information provided by law firms as part of the formal submission process.  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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Arizona Supreme Court Clarifies Area Variance Standard; Property Owners May Obtain an Area Variance When Special Circumstances Existed at Purchase

By:  Nick Wood, Adam Lang, Noel Griemsmann, and Brianna Long

In Pawn 1st v. City of Phoenix, the Arizona Supreme Court rejected a Court of Appeals rule that would have unduly restrained alienation of property in Arizona. The Court of Appeals found that the City of Phoenix Board of Adjustment acted beyond its authority when it granted an area variance to a pawn shop where the special circumstances causing a need for the variance existed before the pawn shop purchased the property. Under Arizona law, boards of adjustment cannot grant an area variance where the special circumstances requiring the variance are self-imposed.… 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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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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Conflicts of Laws, Deficiency Actions, and Statutes of Limitations – Oh My!

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 »

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

By: Anthony J. Carucci

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 »

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

By: Ben Reeves

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.”

Centurion Properties III, LLC v.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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Landlords Must Not be Arbitrary When Denying a Tenant’s Request To Sublease or Assign

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 »

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

By: Anthony J. Carucci

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 »

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Special Rules for Eviction Actions

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 »

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

By: Anthony J. Carucci

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 »

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

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 »

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

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 »

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

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 »

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

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 »

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Are Short-Term Vacation Rentals Legal?

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 »

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Arizona Court Clarifies Premise Liability

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 »

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Successful Laches Defense Becoming Commonplace in Colorado

By: Neal McConomy

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 »

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

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 »

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

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 »

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Can an Unsigned Minute Entry Create a Judgment Lien?

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 »

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It just got a little bit harder to enforce judgment liens

LewisQuoteBy:  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 »

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

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 »

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

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.dpufRead More »

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

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 »

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

By: Erica Stutman

In Brandt Revocable Trust v. U.S., the United States Supreme Court held that abandoned railway rights-of-way that had been granted to railroad companies under the General Railroad Right-of-Way Act of 1875 left underlying landowners with property free of the rights-of-way, and the United States government has no interest in the abandoned land.

Pursuant to the Act, the government granted railroad companies the right to build railroads through public lands.  In large part, the government later conveyed the public land underlying the rights-of-way to private landowners by a land patent, which stated that the land was conveyed subject to a right-of-way for railroad purposes.… Read More »

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Not All Property Acquired Post-Petition is Safe from Creditors

By:  Ben Reeves

Although property obtained by a debtor after filing for bankruptcy is usually safe from creditors, a recent case from the Ninth Circuit Bankruptcy Appellate Panel allowed a Chapter 7 Trustee to sell real property obtained by the debtors post-petition.

In In re Jones, a debtor’s grandmother signed and recorded a “Beneficiary Deed” that transferred certain real property to the debtor effective upon the grandmother’s death.  A year and a half after the grandmother recorded the deed, the debtor filed for bankruptcy.  Three days after he filed for bankruptcy, the grandmother passed away.

The Chapter 7 Trustee attempted to sell the inherited property, but the debtor objected. … Read More »

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Mortgage Lenders Can’t Jump Ahead of Mechanic’s Liens

By:  Ben Reevesleap 4

In Weitz Co., LLC v. Heth, 223 Ariz. 442, 314 P.3d 569 (Ct. App. Nov. 26 2013), the Arizona Court of Appeals held that the plain language of Arizona’s mechanic lien statute, A.R.S. § 33-992(A), does not allow a lender to jump ahead of a mechanic’s lien under the doctrine of “equitable subrogation.”

In Weitz, First National Bank of Arizona lent a developer $44,000,000 to build a 165-unit, mixed-use commercial/residential project in downtown Phoenix.  The bank secured repayment of the construction loan by recording a deed of trust against the project.

The developer hired The Weitz Company as its general contractor. … Read More »

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Commercial Real Estate Broker Liens

Arizona, by statute, allows a commercial real estate broker in certain limited circumstances to record a lien against the owner’s real property which is the subject of the commission agreement, in order to protect the broker’s entitlement to their commission.  See A.R.S. §§ 33-1071 – 1076.  The lien rights apply only to commercial real property and residential property with five or more residential units.  The lien rights apply only to leasing and rental transactions, not sales.  The lien is enforceable by a foreclosure action the same as a mortgage.    The statutes identify very specific protocols that need to be followed.  For example, in order to take advantage of such lien rights, such lien rights must be referenced in the pertinent brokerage/listing agreement between the broker and the owner of the real property; a preliminary notice of intent to lien must be recorded no later than 15 days before the date the tenant takes possession; and in certain circumstances a notice of lien must be filed within 90 days after the tenant takes possession. … Read More »

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Frustration of Purpose: A Frustrating Doctrine

By: Erica Stutman

Next Gen Capital, LLC v. Consumer Lending Associates, LLC illustrates the difficulty a tenant faces when trying to avoid liability for breaching a lease based on the “frustration of purpose” defense. No. 1 CA-CV 12-0624 (Ariz. Ct. App. Dec. 19, 2013).  In 2007, Consumer Lending Associates (“CLA”) signed a five-year lease, which limited CLA’s primary use of the premises to operating its “payday loan” business.  CLA was operating pursuant to an Arizona statute, which, by its terms, expired on July 1, 2010.  When the authorizing statute expired, CLA vacated the premises and refused to pay rent due through the end of the term, claiming that the lease terminated “by operation of Arizona law.”  The landlord sued for breach of contract, and the superior court granted a motion for summary judgment, holding that CLA had to pay unpaid rent and relates charges through the end of the lease term. … Read More »

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Developers and Homebuilders: The Ramifications of Yanni v. Tucker Plumbing, Inc.

By Bob Henry

On November 20, 2013, Division Two of the Arizona Court of Appeals issued its opinion in Yanni v. Tucker Plumbing, Inc., 2013 Ariz. App. LEXIS 235.    While the opinion was a victory of sorts for the real estate and construction industry generally in Arizona, the opinion could have long-term ramifications to developers and home builders.    In short, the opinion could encourage more direct suits by homeowners against developers and homebuilders – including potential class actions, as was the situation in Yanni – for defects in the construction of homes arising out of defective and substandard work by subcontractors.… Read More »

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Partition Disputes

Partition is a statutory procedure whereby co-tenants (for example joint tenancy, tenancy-in-common, community property) can file a court action to physically divide or sell the property.  See A.R.S. § 12-1211 et seq.  Unless the co-tenants have a private partition agreement, any co-tenant can compel sale or physical division of the property through the statutory partition process.  Under the statutory partition process, the court appoints commissioners to study whether a physical division of the property is appropriate.  If so, the property will be physically divided among the co-owners.  If not, the property will be sold by the commissioners and the net proceeds divided among the co-owners. … Read More »

Author: Kevin Parker | 1 Comment Tagged ,

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AZRE Article Discusses Social Media Resources for the Industry

By:  Matthew P. Fischer

In the most recent issue of the magazine AZRE: Arizona Commercial Real Estate (September October 2013), reporter and former editor Peter Madrid wrote on social media coverage of the Arizona commercial real estate industry in his article, “The Message Is the Medium:  Commercial real estate practice groups embracing social media as a source and outlet of gathering disseminating relevant news.”  Among the social media resources mentioned, Mr. Madrid discusses the Snell & Wilmer Real Estate Litigation Blog.  You can read the article online by clicking the hyperlinked title.  Keep up the great work AZRE!… Read More »

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Can You Waive the Right to a “Fair Market Value” Hearing?

By:  Ben Reeves

We finally have an answer to the question of whether parties can contractually waive the right to a “fair market value” hearing under Arizona law – and the answer, according to the Court of Appeals – is “no.”

In CSA 13-101 Loop, LLC v. Loop 101, LLC et al., No. 1CA-CV 12-0167 (Ariz. Ct. App. September 10, 2013), the Arizona Court of Appeals held that Arizona’s deficiency statute, A.R.S. § 33-814(A), prohibits a party from waiving the right to a “fair market value” hearing.  This statute generally entitles borrowers and guarantors to an evidentiary “fair market value” hearing to determine the value of foreclosed property that should be applied towards repayment of the debt that was secured by the foreclosed property. … Read More »

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A Non-Purchase Money Second Deed of Trust is Not Protected by Arizona’s Anti-deficiency Statute

By:  Ben Reeves & Julie Maurer

Arizona anti-deficiency laws do not prohibit a non-purchase money lender from suing on its note after foreclosure by a senior lender.  In Wells Fargo Bank, N.A. v. Brewer, No. 1CA-CV 12-0383 (Ariz. Ct. App. May 21, 2013 unpublished), the Arizona Court of Appeals held that Arizona’s anti-deficiency statute, A.R.S. § 33-814, did not prevent Wells Fargo from suing on its note after a senior lender foreclosed on the borrowers’ multi-million dollar home.

In 2007, Wells Fargo agreed to lend the Brewers up to $1,000,000 and secured the loan with a second position deed of trust recorded against the Brewers’ home. … Read More »

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Understanding zoning nonconforming uses is no walk in the park, but a mobile-home park may be treated as a unified use.

By:  Erica Stutman

When Arizona municipalities adopt new zoning ordinances and regulations, existing property owners have the right to continue using their property for the use in place when the new ordinance or regulation becomes effective, including the right to make reasonable repairs and alterations.  See A.R.S. § 9-462.02(A).   This right to continue the “legal nonconforming use,” which is premised on due process concerns, may be lost if the owner makes major changes to the property after the new zoning law takes effect.  When property is divided into smaller units, questions may arise as to what constitutes the prior use and what changes destroy the protected status. … Read More »

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A Lender Holding Two Liens Can Foreclose on the Senior Lien and Sue on the Junior Lien

By:  Ben Reeves

In Wells Fargo Bank, N.A. v. Riggio, No. 1CA-CV-12-0430 (Ariz. Ct. App. June 4, 2013), the Arizona Court of Appeals held:  (i) that the “merger of rights” doctrine does not “merge” a lender’s first and second lien into a single unitary interest upon the foreclosure of the first lien, and (ii) A.R.S. § 33-814 does not apply to an action on a junior loan.  In other words, Arizona law permits a lender holding two liens against the same property to foreclose on the senior lien, and then sue on the second loan outside of Arizona’s anti-deficiency statutory scheme.… Read More »

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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 U.S. Supreme Court’s Latest Attempt to Differentiate a Fair Quid Pro Quo in the Developer’s Permitting Process From an Unconstitutional Taking

By:  Rick Herold

Introduction

The U.S. Supreme Court has issued an important decision in an attempt to add clarity and help government land use planners understand the difference between reasonable requests and unreasonable demands rising to the level of unconstitutional takings in the permitting process.  Koontz v. St. Johns River Water Management District, 2013 WL 3184628 (June 25, 2013).

When does a fair quid pro quo, a legitimate exercise of police power in the permitting process, go too far and lapse into an unconstitutional taking without just compensation through the government’s unconstitutional conditions in the permitting process?  In Koontz, the Supreme Court ruled that the seminal cases of Nollan v.Read More »

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Arizona’s Anti-deficiency Statute, A.R.S. 33-814(G), Cannot be Prospectively Waived Says the Court of Appeals

Money HouseBy:  Ben Reeves

In Parkway Bank & Trust Co. v. Zivkovic, 662 Ariz. Adv. Rep. 26 (Ct. App. 2013), the Arizona Court of Appeals held that provisions in loan documents purporting to waive the applicability of A.R.S. § 33-814(G) violate Arizona public policy and, therefore, are not enforceable under Arizona law.

A.R.S. § 33-814(G) provides that if a lender has a trustee’s sale foreclose of a “property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling . . . [then] no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.”  This statute is generally referred to as the “anti-deficiency” statute as it generally prevents lenders from suing homeowners for the difference between the amount owed on their mortgage and the value of their home.… 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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Green construction sounds great, but…

It isn’t always easy being green. Snell & Wilmer partner Marc Erpenbeck talks about emerging litigation issues generated by the proliferation of green construction projects in this informative article entitled “Understanding LEEDigation, The fast-growing trend of GREEN building spurs new issues for the commercial real estate industry” published in the May/June issue of AZRE Magazine. Click on the link to check it out.… Read More »

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Moving From Quiet Title to Wrongful Recordation

By: Adam Lang

Pretend you own real property in Arizona that you want to sell.  You have a buyer.  You enter into a purchase contract.  But when the buyer runs a title report, she learns that someone else has wrongfully recorded a claim on your property.  The buyer cancels. 

You want to hold the individual who wrongfully recorded the interest on your property accountable.  Not only do you need to consider the possible claims you should bring, but you may want to consider the order in which you decide to prosecute those claims. 

Two claims come to mind:  quiet title and wrongful recordation. … Read More »

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Broker Beware?

By: Erica Stutman

While oral contracts are often enforceable, certain categories of contracts must be documented in a signed writing or an action for breach of the contract will be barred by the statute of frauds.  See A.R.S. 44-101 for Arizona’s statute of frauds.  The statute of frauds plays an important role in real estate transactions, as agreements for the sale of an interest in real property and for leases longer than one year fall within the statute, as do most real estate broker or agent agreements.  A less obvious category that may affect a real estate agent or broker’s ability to collect commissions is an agreement which is not to be performed within one year from the date the agreement is made.… 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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Introducing the Snell & Wilmer Real Estate Litigation Blog

The Snell & Wilmer Real Estate Litigation Group is proud to announce the launch of its new blog.  After decades of handling commercial disputes and trials involving real estate, the Group was officially formed in 2008.  The firm’s real estate litigation and trial attorneys formed the Group to maximize expertise, efficiency and results for the benefit of the firm’s clients.

Through the launch of its blog, the Group is excited about the opportunity to share its collective insight on timely issues affecting real estate litigation.   Each blog post will be written by one or more of the attorneys of the Group, with the aim of providing a forum for the timely discussion and analysis of issues impacting real estate litigation.… Read More »

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