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About This Blog
Welcome to the Snell & Wilmer real estate litigation blog. Check back here often for useful news and information about current topics involving real estate litigation. We hope that you will find the blog both timely and helpful, and we invite you to join the discussion by posting comments about the articles and contacting the authors with your thoughts about the posts.
Real Estate Litigation Group Members and Blog Contributors
- Bob Henry
- Kevin Parker
- Matt Fischer
- Richard Herold
- Adam Lang
- Robert Kethcart
- Cory Braddock
- Benjamin Reeves
- Erica Stutman
- Patrick Paul
- Rick Erickson
- Ginny Olmstead
- Neal McConomy
- Michael E. Lindsay
- Bob L. Olson
- Nathan G. Kanute
- Sean M. Sherlock
- Lyndsey Torp
- Anthony Carucci
- Luke Mecklenburg
- Jon Frank
- Kevin Walton
- Lauren Munsell
- Lauren Podgorski
- Addy Colton
- John Sarager
- Jenna Le
- Ian Douglas
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Recent Posts
- Foreclosure Deficiency: Construction Loan vs. Home Improvement Loan
- Know your Obligations: Colorado’s Statutory Expansions of the Implied Warranty of Habitability Are Now in Effect
- CCP 998 Does Not Confer an Independent Right to Attorneys’ Fees
- Is a Bankruptcy Plan that Violates Federal Criminal Law Proposed in Bad Faith?
- That’s Common Knowledge! Failure to Designate an Expert Witness in a Professional Negligence Case is Not Fatal Where “Common Knowledge” Exception Applies
Topics
- Anti-deficiency Statute
- Bankruptcy
- Commercial Real Estate Industry
- Construction and Development
- Environmental
- Evictions
- Foreclosures
- Guaranty Contracts
- Judgment Liens
- Medical Marijuana
- Real Estate and Bankruptcy
- Real Estate Appraiser Litigation
- Real Estate Broker Litigation
- Real Estate Purchase/Sale Transaction Litigation
- Real Estate Receivers
- Statutes Affecting Real Estate
- Title Insurance
- Uncategorized
- Zoning
Foreclosure Deficiency: Construction Loan vs. Home Improvement Loan
By: Kevin J. Parker
In a recent Arizona Court of Appeals case, Helvetica Servicing, Inc., v. Pasquan, 2019 WL 3820015, (8/15/19), the Court of Appeals addressed the distinction between (1) a construction loan (or refinance of same) and (2) a home improvement loan (or refinance of same), as it relates to Arizona’s anti-deficiency statute, A.R.S. §33-729(A).
In general, an anti-deficiency statute provides that although a purchase-money lender or a construction lender can – in appropriate circumstances – foreclose on their loan and cause a sale of the property to pay the loan, the lender cannot (if the statutory criteria are met) force the homeowner/borrower to pay the remaining balance still owed on the loan following the foreclosure (known as the deficiency).… Read More »
Author:
Kevin Parker
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Tagged anti-deficiency, Deficiency judgment, foreclosure, real estate litigation
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Know your Obligations: Colorado’s Statutory Expansions of the Implied Warranty of Habitability Are Now in Effect
The Colorado legislature had a busy session this year. Among the several significant bills it enacted, HB1170 strengthens tenant protections under the implied warranty of habitability. It became effective on August 2, 2019, so landlords and tenants alike are now subject to its requirements.
The bill makes numerous changes to Colorado’s implied warranty of habitability, and interested parties should review the bill in detail. Landlords in particular may want to consider retaining legal counsel to make sure they have proper procedures in place to promptly deal with any habitability complaints within the new required timelines. This posting is not intended to provide a comprehensive guide to the changed law, but simply to highlight some of the most significant changes.… Read More »
Author:
Luke Mecklenburg
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Tagged Colorado leasing, HB 1170, Landlord Obligations, Warranty of Habitability
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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 »
Author:
Luke Mecklenburg
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Tagged adverse possession, colorado real property, CRS 38-41-101, real estate, real estate litigation, real property, residential, Snell & Wilmer
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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 »
Author:
nmcconomy
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Tagged CCIOA, common-interest communities, HOA, homeowner, homeowners association, homeowners' associations, real estate, real estate litigation, real property, residential, residential construction, residential real estate development
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Cybersecurity on Your Project: Why Not Follow National Security Strategy?
In its recent Cybersecurity Strategy, the U.S. Department of Homeland Security (DHS) defined “cyberspace” as “the independent network of information technology infrastructure, including the Internet, telecommunications networks, computers, information and communications systems, and embedded processors and controllers.” To DHS, protecting cyberspace includes threats against “federal and nonfederal information systems.” In other words, both private and public interests are at risk. In his 2018 National Defense Strategy, U.S. Department of Defense Secretary, Jim Mattis, essentially concurred in declaring cyberspace a “warfighting domain” and promising to “invest in cyber defense, resilience, and the continued integration of cyber capabilities into the full spectrum of military operations.”
The construction industry is a key player in cybersecurity because contractors, designers and owners are responsible for building and delivering projects providing critical public services like national defense, health care, law enforcement, transportation, and utilities.… Read More »
Author:
Rick Erickson
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Tagged breach of contract, builder, chief information officer, construction, construction law, construction management, contractor, cyber, cyber threat, cybersecurity, design team, DHS, electronically stored information, ESI, general contractor, homeland security, information systems, liability insurance, national security, national security strategy, network security, project manager, real estate, real estate development, risk management, subcontractor
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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 »
Author:
Ben Reeves
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Tagged Excess Sale Proceeds, foreclosure, real estate litigation
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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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Ben Reeves
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Tagged ARS 33-811, foreclosure sale, real estate litigation, trustee's sale, wrongful foreclosure
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When Does a Contractor Legally Abandon a Construction Project?
Lately, we’ve been spending more time as litigators pursuing and defending claims of abandonment against contractors. It has become apparent that abandonment is often misinterpreted in its legal meaning and effect. Here are some thoughts on abandonment to consider.
On its face, the concept of abandonment is simple enough. For any number of reasons, a contractor abandons a project when the contractor stops showing up. Abandonment is major concern for all players on the project because it causes critical path delays and significant costs to replace the contractor with another contractor, many times at a much higher cost than the original contractors’ bid.… Read More »
Author:
Rick Erickson
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Tagged abandon, abandonment, breach, breach of contract, claims, construction, construction litigation, contract, contractor, developer, legal excuse, licensing, owner, Registrar of Contractors, subcontractor
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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 »
California Supreme Court Hands Victory to Private Property Owners Over Public Use
By: Sean M. Sherlock
In 1970 the California Supreme Court held that, under certain circumstances, private property owners impliedly dedicate their property to the public if they permit the public to use it. Gion v. City of Santa Cruz (1970) 2 Cal.3d 29. This holding was controversial, and the next year the California Legislature enacted Civil Code section 1009 limiting the public’s ability to permanently use private property through an implied dedication.
In the 40-plus years since then, the lower courts have wrestled with the issue of whether the statute limiting implied dedication applies only to recreational uses by the public, or also to nonrecreational uses.… Read More »
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Sean M. Sherlock
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Tagged implied dedication, private property, public use
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Appeals of Rulings by The Registrar of Contractors Must Be Timely Filed in Superior Court.
Recently in Johnson v. Arizona Registrar of Contractors, the Arizona Court of Appeals affirmed dismissal of a homeowner’s late appeal of an adverse decision by the Registrar of Contractors (“Registrar”). After successfully pursuing a complaint to suspend a roofing contractor’s license, the homeowner tried but failed to get her roofing repair costs from the Registrar’s Recovery Fund. The homeowner sent her appeal to the Registrar. However, the governing Arizona statute, A.R.S. § 12-904(A), clearly required the homeowner’s appeal to be filed in Superior Court, not with the Registrar. Once the homeowner realized her mistake, her appeal to Superior Court was a day late. … Read More »
Author:
Rick Erickson
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Tagged appeals, contractor complaints, homeowners, judicial review, jurisdiction, recovery fund, Registrar of Contractors, residential construction
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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 »
Author:
Ben Reeves
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Tagged choice-of-law provisions, deficiency action, real estate litigation, Statute of Limitations
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Colorado House Bill 1279 stalls over 120-day unit owner election period
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
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What is the Effect of an Untimely Challenge to the Timeliness of a Trustee’s Sale?
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 »
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Ben Reeves
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Tagged A.R.S. 33-811(C), Statute of Limitations, trustee's sale, waiver
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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
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
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Tagged credit bid, Lender's title insurance, trustee's sale
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Federal Court Issues Permanent Injunction and Permanently Shuts Down Santa Ysabel’s Desert Rose Bingo
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 »
Sierra Pacific v. Bradbury goes unchallenged: Colorado’s six-year statute of repose begins when a subcontractor’s scope of work ends
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 »
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Luke Mecklenburg
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California’s One-Action Rule May Apply to Federal Lenders
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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acarucci
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Tagged anti-deficiency, commercial real estate, deficiency, foreclosure, foreclosures, Guarantor, guaranty, one-action rule, real estate, real estate litigation, real property
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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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Bob L. Olson
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Tagged foreclosure, Homeonwers Associations, lien priority, NRS 116.3116, San Florentine, Southern Highlands
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Examining Denver’s new construction defect reform ordinance
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 »
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mlindsay
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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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Richard Herold
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Tagged condemn, condemnation, eminent domain, environmental liability, real estate, real estate litigation, real property, seller disclosures, valuation
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Lenders Should Contract for the Right to Recover Lost Goodwill Proceeds when Commercial Property is taken in Eminent Domain
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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acarucci
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Tagged commercial real estate, condemnation, eminent domain, just compensation, lien, real estate, real estate litigation
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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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Ben Reeves
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Tagged model receivership act, real estate litigation, receiver, Uniform Commercial Real Estate Receivership Act
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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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Kevin Parker
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Tagged electronic signature, real estate litigation, statute of frauds
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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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Ben Reeves
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Tagged judgment lien, Lewis v. DeBord, real estate litigation
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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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Patrick J. Paul
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Tagged Clean Water Act, economic loss rule, homebuilder, Water of the United States
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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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Ben Reeves
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Tagged HOA Liens, Nevada, real estate litigation, SB 306, Super-Priority Liens
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New Landlords Should Not Ignore Arizona’s Requirement To Register With The County Assessor’s Office
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.
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Cory Braddock
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Tagged Arizona residential properties, residential, tenant
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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 »
Author:
Ben Reeves
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Tagged anti-deficiency, NRS 40.455, real estate litigation, receiver sales, U.S. Bank v. Palmilla
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Are Vacant Lots Protected Under Arizona’s Anti-deficiency Statutes?
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.
… Read More »
Author:
Ben Reeves
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Tagged A.R.S. 33-814, anti-deficiency, BMO v. Wildwood Creek, M&I v. Meuller, MidKansas v. Dynamic
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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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Ben Reeves
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Tagged judgment lien, Lewis v. DeBord, real estate litigation, Sysco v. Hoskins
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Update – Prospective Waivers of “Fair Market Value” Hearings are Definitely Void.
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 »
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Ben Reeves
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Tagged A.R.S. 33-814, anti-deficiency, CAS 13-101 v. Loop 101, fair market value hearing, waiver
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It just got a little bit harder to enforce judgment liens
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 »
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Ben Reeves
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Tagged byers v. wik, judgment enforcement, judgment lien, Lewis v. DeBord, real estate litigation
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General Contractor’s Prospective Waiver Of Its Lien Rights Is Enforceable In California
By: Lyndsey Torp
http://www.swlaw.com/attorneys/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 »
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Lyndsey Torp
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Tagged contractor, deed, foreclosure, lien, loan, mechanics, owner, subordination, waiver
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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 »
Author:
Ben Reeves
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Tagged HOA Lien, Nevada, NRS 116.3116, real estate litigation, SFR Investments v. U.S. Bank
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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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Richard Herold
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Tagged condemnation, easements, eminent domain, natural gas act, pipelines
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Governmental Power and Property Lines
By: Neal McConomy
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 »
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nmcconomy
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Tagged health, litigation, municipal, ordinance, parking, police power, rational basis, rational relationship, real estate, real property, safety, welfare
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Guarantors Score Two Victories Before the Nevada Supreme Court.
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 »
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Bob L. Olson
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Tagged deficiency, foreclosure, Guarantor, one-action rule
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Nevada Supreme Court and District Court Issue Decisions Regarding Nevada’s Limitations on Deficiency Judgments.
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 »
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Bob L. Olson
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Tagged AB 273, anti-deficiency, deficiency, Eagle SPE, foreclosure, Sandpointe
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Borrowers Can Avoid Liability Even After a Trustee’s Sale
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 »
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Ben Reeves
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Tagged A.R.S. 33-811(C), anti-deficiency, BT Capital, Moran AZ Financial v. Gotses
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Amendments to Arizona’s Anti-deficiency Statute Exclude Homebuilders from Anti-Deficiency Protection
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 »
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Ben Reeves
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Tagged A.R.S. 33-814, anti-deficiency, HB 2018, MidKansas v. Dynamic
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Legal Pot Leads to Possible Nuisance Suits, but Viability is Unlikely
By: Neal McConomy
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 »
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nmcconomy
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Tagged law, marijuana, nuisance, privacy, private, public, real property, recreational, residential, rights
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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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Rick Erickson
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Tagged administrative remedies, contractor complaints, contractor licensing, enforcement, Registrar of Contractors, regulation of contractors
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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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Cory Braddock
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Tagged petition to quiet title, statute of limitation
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Mortgage Lenders Can’t Jump Ahead of Mechanic’s Liens
By: Ben Reeves
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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Ben Reeves
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Tagged equitable subrogation, mechanic's lien, real estate litigation, Weitz v. Heth
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California Amends its Anti-Deficiency Statute
By: Ben Reeves
As of January 1, 2014, California amended its anti-deficiency statute to stop mortgage lenders from “collecting” from homeowners on post-foreclosure debts. Although the amendments were designed to tackle a purely consumer / residential real estate issue, only time will tell if the changes have unintended consequences beyond the consumer / residential realm.
Prior to the amendment, California’s anti-deficiency statute, Cal. Civ. Proc. Code § 580d, only barred lenders from obtaining a judgment against homeowners to recover the difference between the value of the home after foreclosure and the amount of the debt owed on the mortgage (i.e.… Read More »
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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Kevin Parker
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Tagged broker commissions, broker lien, real estate litigation
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Arizona Court of Appeals Holds That Certain Residential Developers Are Not Protected By The Anti-Deficiency Statute After Foreclosure Of A Deed Of Trust On Vacant Land
By Eric Spencer and Adam Lang
Nearly three years ago, in M&I Marshall & Isley Bank v. Mueller, the Arizona Court of Appeals held that the Arizona anti-deficiency statute protects a borrower who started, but never completed, construction of a single-family dwelling before defaulting on its loan. This week, the same appellate court limited those anti-deficiency protections by holding in BMO Harris Bank v. Wildwood that a developer of vacant land – land on which no construction has begun – cannot invoke the anti-deficiency statute as a matter of law, regardless of whether the borrower intends to eventually reside on that land.… Read More »
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Adam Lang
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Tagged 33-814, anti-deficiency, borrower, deficiency, dwelling, homebuilders, Lang, lenders, Mueller, Spencer, vacant lot, Wildwood
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Arizona Residential Mortgage Brokers: Potential Additional Liability Exposure on the Horizon
by Bob Henry
Arizona Senate Bill 1026, introduced by Senator Ableser, proposes some significant changes to the law governing Arizona’s residential mortgage brokers that could expand their potential liability arising out of their day-to-day business dealings.
The bill proposes amendments to A.R.S. § 6-909, which currently sets forth various “prohibited acts” for those who are engaged in the business of making or negotiating “mortgage loans” in the State of Arizona. If enacted, S.B. 1026 would impose upon mortgage brokers an independent duty to verify a loan applicant’s ability to repay a loan, which historically has been the obligation (from a business perspective) of the institution actually providing the loan to the borrower, and not a statutory obligation or duty of the person or institution helping a borrower secure the loan.… Read More »
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Bob Henry
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Tagged Arizona Mortgage Broker Liability, S.B. 1026, Senate Bill 2026
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Guarantors Beware! A.R.S. § 33-814 May Not Save You from a Deficiency Judgment
By: Ben Reeves
In First Credit Union v. Courtney, 309 P.3d 929, 669 Ariz. Adv. Rep. 18 (Ct. App. 2013), the Arizona Court of Appeals rejected three creative arguments that A.R.S. § 33-814 protected the guarantors from paying on their guaranty. The opinion provides a stark reminder that Arizona courts will usually enforce a guarantor’s contractual obligation to repay a debt.
In 2006, First Credit made a $3.56 million construction loan to Orange Grove I, L.L.C. (the “Borrower”). First Credit secured the loan with a lien against commercial real property called the Appian Estates. The Courtneys guaranteed repayment of the loan. … Read More »
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Ben Reeves
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Tagged anti-deficiency, ARS 33-814, First Credit Union v. Courtney, Guarantor
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The Uniform Law Commission Makes Progress Drafting a Model Act on the Appointment and Powers of Real Estate Receivers
By: Ben Reeves
If all goes as planned, the Uniform Law Commission will finalize and promulgate a model act dealing with the appointment and powers of commercial real estate receivers at some point in 2015. Last month, the Drafting Committee for this model act met in Minneapolis, MN to discuss and revise the latest draft. Since a significant part of my practice is devoted to real estate receiverships in Arizona, I flew up to Minnesota to participate in the meeting as an Observer.
Led by Chair, Tom Hemmendinger, and Reporter, Wilson Freyermuth, the committee meticulously analyzed every aspect of the draft act, including the grounds for appointment, the receiver’s powers upon appointment, the rights of third-parties affected by a receivership, and – by far the most provocative issue – whether a receiver should have the power to sell real property. … Read More »
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Ben Reeves
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Tagged model act, power to sell, real estate receiver, uniform law commission
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A Compilation and Summary of Real Estate Related Legislation Enacted by the 51st Arizona Legislature
On Friday June 14, 2013, at 12:59 a.m., on the 152nd day of the regular legislative session, the 51st Arizona Legislature adjourned sine die, or “without assigning a day for a further meeting or hearing.” Generally, except as otherwise noted in the act itself, legislation in Arizona is not effective until 90 days after the regular session adjourns sine die. Accordingly, on Friday, September 13, 2013, the vast majority of legislation enacted by the Arizona Legislature in the 2013 legislative session went into effect.
Although real estate related bills certainly did not dominate the legislative landscape this past session, they still held their own. … Read More »
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Adam Lang
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Tagged bills, criminal trespass, deeds of trust, dilapidated, easements, flood control districts, flood protection districts, foreclosures, homeowners' associations, house, joint tenancy, legislators, legislature, mobile homes, mortgage insurance, planned communities, real estate, real estate licenses, real property, recreational vehicles, right-of-way, senate, state board of appraisal, statute
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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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Ben Reeves
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Tagged A.R.S. § 33-814, CSA 13-101 Loop LLC v. Loop 101 LLC, fair market value hearing, real estate litigation, waiver
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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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Cory Braddock
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Tagged expert opinion, real estate agent, real estate broker
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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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Ben Reeves
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Tagged Arizona, ARS 33-814, Helvitica Servicing v. Pasquan, real estate litigation, Wells Fargo v. Brewer
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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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Ben Reeves
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Tagged merger of rights, Mid Kansas v. Dynamic Development, real estate litigation, Wells Fargo v. Riggio
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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 »
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Kevin Parker
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Tagged Limited Liability Company, LLC, real property
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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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Richard Herold
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Tagged condemnation, eminent domain, essential nexus, just compensation, land use, real estate litigation, rough proportionality, unconstitutional conditions, unconstitutional taking
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Arizona’s Anti-deficiency Statute, A.R.S. 33-814(G), Cannot be Prospectively Waived Says the Court of Appeals
By: 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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Ben Reeves
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Tagged A.R.S. § 33-814, anti-deficiency, Parkway Bank v. Zivkovic, real estate litigation, waiver
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A Person Owning a Fractional Interest in a Vacation Home is Protected by Arizona’s Anti-deficiency Statute
By: Ben Reeves
In Independent Mortgage v. Alaburda, the Arizona Court of Appeals held that Arizona’s anti-deficiency statute, A.R.S. § 33-814(G), precluded a lender from suing its borrowers for a deficiency after foreclosing on the borrowers’ fractional interest in a vacation home. 230 Ariz. 181, 281 P.3d 1049 (Ct. App. 2012).
If a lender conducts a trustee’s sale of “trust 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 A.R.S. § 33-814(G) bars a lender from suing a borrower to recover any difference between the value of the property and the amount of debt owed (i.e.… Read More »
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Ben Reeves
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Tagged A.R.S. 33-814, anti-deficiency, dwelling, Independent Mortgage v. Alaburda
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The Clock Doesn’t Tick-Tock for Owners in Possession
By: Cory L. Braddock
The Arizona Court of Appeals recent decision in Cook v. Town of Pinetop-Lakeside, 661 Ariz. Adv. Rep. 31 (App, May 28, 2013) reiterated its forty-three year old holding in City of Tucson v. Morgan, 13 Ariz. App. 193, 195, 475 P.2d 285, 287 (App. 1970) and held 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.”
In 2001, Jerry Cook asked the town of Pinetop-Lakeside (the “Town”) to abandon a public right-of-way to him because the right-of-way was no longer needed for public use. … Read More »
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Cory Braddock
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Tagged cloud on title, Cook v. Town of Pinetop-Lakeside, disputed title, quiet title, statute of limitation
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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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Richard Herold
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Tagged letter of intent, real estate, statute of frauds
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A.R.S. § 33-814(A) and Bankruptcy Proofs of Claim: To File or Not to File…Conflicting Cases Leave Creditors With No Clear Answer
By: Ben Reeves
Under Arizona law, does a secured creditor need to file a deficiency action within 90 days after a trustee’s sale to preserve the unsecured portion of its claim in a bankruptcy case? Or is filing (or amending) a proof of claim sufficient? Two recent cases out of Arizona provide conflicting answers.
The two cases reached the issue based on a similar fact pattern. In both cases, the debtors stipulated to relief from the automatic stay to allow a trustee’s sale to occur. In both cases, the sales resulted in substantial, unsecured deficiencies. In both cases, the trustees objected to the unsecured portion of the unsecured claims based on the lenders’ alleged failure to comply with A.R.S.… Read More »
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Ben Reeves
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Tagged A.R.S. § 33-814, bankruptcy, In re Rader, In re Wright, Proof of Claim, trustee's sale, unsecured claim
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Arizona Residential Landlords in Foreclosure – Expanding the Duty to Notify Tenants
By: Bob Henry
The Arizona Residential Landlord Tenant Act, A.R.S. § 33-1301 et seq., already requires landlords to provide written notice (with specific language) to tenants of a “potential foreclosure” on the property if a “foreclosure action” has been “initiated” at the time the parties enter into the rental agreement. A.R.S. § 33-1331. This obligation was added by the Arizona Legislature in 2010 in reaction to the flurry of foreclosures arising out of the recent real estate crash to protect tenants from entering into leases on properties that were already in significant financial distress and, indeed, in the process of being foreclosed on.… Read More »
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Ben Reeves
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Tagged A.R.S. § 33-1331, Arizona residential properties, foreclosures, landlord, lease, residential, tenant
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