REAL ESTATE LAW UPATE: Trustee’s Sale

This article courtesy of real estate attorney Scout Souders.

  1. After Foreclosure Sale Trustee’s Deed Upon Sale Does Not Need To Be Recorded Prior To Serving Notice To Quit.

In the case of Dr. Leevil, LLC vs. Westlake Healthcare Ctr. [2017] 9 Cal App 5th 450 the Appellate Court held that a notice to quit was not premature even though the new owner, who received title at a foreclosure sale, had not recorded a Trustees Deed yet.

In this case the defendant was a medical center who had a Lease in a medical building. The Lease had an automatic subordination clause and a permissible subordination clause as well. [Read more…]

REAL ESTATE LAW UPDATE: February 7, 2017

1. California New Employment Law.

Beginning March 1, 2017, any business or place of public accommodation must label any
single user bathroom as “all-gender” under Health and Safety Code 118600. You can no longer label a single user bathroom as “male” or “female”.

Comment: You have got to be kidding me. Can you imagine the cost of new signage for all bathrooms from male/female to all-gender.

2. Employment Contracts Venue and Choice of Law Clauses.

Labor Code Section 925 now voids any provision that requires a California based
employee to litigate or arbitrate his or her claim in the employer’s home state outside of
California. Any employment contract entered into, modified or extended after January 1, 2017, cannot include a venue or choice of law clause. Such provisions are voidable by the employee and if the employee is required to go to court to void those provisions then they are entitled to their attorneys fees. From now on employers are going to have to come to California to litigate or arbitrate employment claims under California law if the employee is based in California.

Comment: This should cut down on lawsuits by the employer against the employee as no employer wants to take the risk of suing an employee in California with the labor laws so tilted in favor of the employee.

3. No Property Taxes Paid Equals No Adverse Possession Claim.

In the case of Nellie Gail Owners Association vs. McMullin (2016) 4 Cal App. 5th 982,
the McMullins purchased a house in Nellie Gail Ranch. In 2008 they applied to make several proposed improvements including an instillation of a new retaining wall that the McMullins claimed bordered an HOA owned park. The HOA denied the application on two separate occasions because the submitted plans did not clearly identify the property lines with a survey between the McMullin’s property and the common area lot/park. Thereafter, the McMullins just submitted one new application that was limited to their pool improvements that included a sports court, a small retaining wall etc.

A year later the McMullins went to the HOA again with another application to install the
previously denied retaining wall allegedly along the boundary line with the HOA park/lot. An HOA employee wrongfully stated that the application for the new retaining wall had been previously approved. Based upon that statement the McMullins somehow obtained a building permit from the City without obtaining any written approval from the HOA that the project had been approved. This is another mistake in the process. This time the mistake was made by the City in issuing the building permit without obtaining written HOA approval.

After discovering the construction of the retaining wall the HOA sent a cease and desist
letter telling the McMullins to stop work on the wall. Unbelievably, the HOA board decided not to pursue the wall as a violation of the CC&Rs and instructed the McMullins to meet with the HOA architect to finalize a landscaping, irrigation and drainage plan to screen the wall that had already been built.

In this comedy of errors in 2010 the City sent a letter to both the McMullins and the
HOA to inform them both that the wall was built entirely on HOA property and not on the
property line as stated by the McMullins. Therefore, the wall did not comply with City code
requirements. The City, the HOA and the McMullins could not reach a resolution concerning the improvements after the HOA owners voted to not sell the captured property by the McMullins (approximately 6,200 sqft.) to the McMullins. This was not just capturing a small area of HOA park/land, but 6,200 sqft of land.

Everyone sued, naturally, and the McMullins sought to Quiet Title of the disputed
property they had taken claiming that they owned the property by adverse possession. The HOA sued the McMullins to Quiet Title on the disputed property and sought a mandatary injunction requiring them to tear down the wall. The trial court entered judgment for the HOA on all claims and granted the mandatary injunction requiring the wall and all other improvements on the HOA property be removed. The McMullins appealed claiming two theories:

1. Equitable Estoppel in relying upon the HOA employee’s statement that they had been
approved and relying upon the City issuing them a building permit.

2. Their fallback argument was that they acquired title by adverse possession.

The Fourth District Court of Appeal affirmed the judge’s decision. The appellate court stated that the McMullins had forfeited the equitable estoppel claims by failing to raise those issues at trial. Moreover, equitable estoppel requires a party asserting the defense to be ignorant of the true facts and to justifiably rely on the conduct or statements of a party who has knowledge of such facts. Here the HOA did not have knowledge of the pertinent facts namely the retaining wall had been built entirely on its property. Additionally, the HOA’s statements instructing the McMullins to consult with their architect occurred after the McMullins had built the wall without HOA approval. Therefore, the McMullins could not have justifiably relied on the HOA’s statements in installing the retaining wall.

The court of appeal also stated that the McMullins failed to establish an adverse
possession claim because they failed to pay property taxes on the disputed property.

Comment: This was an expensive lesson for the McMullins. Not only did they have to pay their attorney to try the case in state court and an appellate attorney to appeal the case, but now they are putting on the party by having to pay the HOA’s attorneys fees to the tune of approximately $190,000.00 plus over $10,000.00 in costs. That is just for the superior court trial. They will get a costs bill as the loser on the appeal as well and they will have to pay for those attorneys fees and costs for the appeal. Ouch!

Scott Souders is a real estate attorney who has practiced real estate law in excess of 40
years in Southern California.

Disclaimer: The Real Estate Law Update cites cases or statutes which are summarized
and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

 

Article courtesy of:

J. SCOTT SOUDERS, P.C.
ATTORNEY AT LAW
13 CORPORATE PLAZA DR., SUITE 200
NEWPORT BEACH, CA 92660
(949) 718-3574
(949) 718-3582 FACSIMILE
scottsouders @ sbcglobal.net

New Real Estate Laws Passed In 2016

REAL ESTATE LAW UPDATE
From J. SCOTT SOUDERS, P.C. , ATTORNEY AT LAW

  1. Advertising Requirements Using “Team Names”.

Business and Professions Code Sections 10159.5 through 10159.7 governs the use of a “team name” and a fictitious business name in real estate sales advertising. Those provisions require a responsible broker’s name to be displayed as prominently and conspicuously as a team name in all advertising and defined such terms as “team name”, “responsible broker’s identity” and “fictitious business name”.

Effective August 29, 2016, chapter 224 revises the definition of “responsible broker’s identity” to mean either (1) the name under which the responsible broker is currently licensed; or (2) both that name and the associated license number. This bill was enacted to correct a drafting error that previously required listing both the name and license number of the responsible broker when the intent was to require one or the other, but not both.

  1. Broker/Salespersons

Under Business and Professions Code 10161.8 brokers are required to immediately notify the BRE whenever they employ, or terminate the employment of, a real estate salesperson. A willful or knowing violation of this law is a crime punishable as a misdemeanor.

Effective January 1, 2018, Business and Professions Code 10161.8 requires brokers to state whether the newly hired salesperson is an associate licensee and, if the associate licensee is a broker, to identify each responsible broker with whom the licensee is contractually associated.

  1. Advertising Disclosures

Under Business and Professions Code 10140.6 licensees are required to disclose certain information, including their license numbers on all advertising materials intended to the first point of contact with consumers and on Real Property Purchase Agreements. Under current law these disclosure requirements do not apply to “for sale” signs or to advertisements in print or electronic media.

Effective January 1, 2018, Business and Professions Code 10140.6 will require the licensee’s name and the responsible broker’s identity to be included in those solicitation materials and Purchase Agreements. Also beginning in 2018 the disclosure requirements under Business and Professions Code 10140.6 will apply to (1) printed and electronic advertisements; (2) for sale, for rent, for lease and open house signs as well as directional signs.

Comment: No doubt this law was pushed by the lobbyist for the sign industry.

  1. Common Interest Developments

The Davis Sterling Act, Civil Code Sections 4000 to 6150 requires HOAs to maintain the common areas including repairing damage caused by wood destroying pests such as termites. Under CC 4785 the HOAs may require an occupant to temporarily vacate the unit in order to apply pesticide. The HOA much give at least 15 days advance notice of the need to temporarily vacate to the occupants and the owners.

Under CC 1940.8.5 landlords must notify tenants before they can apply pesticide to a unit or the common area. The notice must contain specific information about the targeted pests and the pesticide to be applied among other details.

  1. Foreclosing After Death of Owner.

Civil Code Section 2920.7 was recently enacted in 2016 which prohibits a lender from foreclosing once they have been notified that the borrower has died. The lender cannot record a Notice of Default until (1) requesting reasonable documentation of the borrower’s death from the claimant; (2) give the claimant at least 30 days to provide that documentation, Civil Code 2920.7(a). The servicer must also provide the claimant with certain information about the loan and must allow the claimant to apply to assume the loan and/or seek a foreclosure prevention alternative, Civil Code 2920.7(c)(d). Claimants remedies for violations for this new law include injunctive relief, attorneys fees and costs, Civil Code 2920.7(e).

  1. Landlord/Tenant Commercial Leasing.

Since 2013 commercial landlords have been required to state on every Lease form or Rental Agreement whether the premises comply with all construction related accessability standards as determined by a certified access specialist (CASp) pursuant to Civil Code 1938. Now to further force commercial landlords and prospective tenants to address accessability issues during lease negotiations that disclosure requirement has now been expanded pursuant to Civil Code 1938 as follows:

(a)        Every Commercial Lease form or Agreement signed after January 1, 2017, must state whether the premises have undergone a CASp inspection, Civil Code 1938(a).

(b)        If the premises have been inspected and meet all disability access requirements the landlord must give prospective tenants a copy of any CASp inspection certificate and report before the Lease is signed. If the landlord does not give the report to the tenant at least 48 hours before the Lease is signed the tenant can rescind the Lease on the basis of the information in the report within 72 hours after signing the Lease, Civil Code 1938(c). If the tenant did not receive the report before signing the Lease, the landlord must give the tenant a copy of it within 7 days after signing the Lease, Civil Code 1938(d).

Scott Souders is a real estate attorney who has practiced real estate law in excess of 40 years in Southern California.

Disclaimer: The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

Condo Homeowner Sued by HOA for Hardwood Flooring

REAL ESTATE LAW UPDATE: September 10, 2015

If for any reason you wish to review a law update for a case that has previously been cited,
law updates for the past year are on my website, Scottsouders.com. Enclosed herewith for your review are brief summaries of new cases.

Homeowners Association Successful in Obtaining An Injunction Against Owner

In the case of Ryland Mews vs. Munoz, 234 Cal App. 4th 705, the HOA sued Munoz for
Injunctive Relief and Nuisance among other causes of action when Munoz, without the HOA approval, installed hardwood floors in his condominium. The condominiums in this building all had carpeting rather than hardwood floors in order to mitigate sound transfer through the floors.

Munoz claims that his wife has a disability that requires hardwood floors because she has
a severe dust allergy. The owners claimed she cannot live in an atmosphere that has dust. They argued that the carpets collected dust. Therefore, it was a requirement based upon her disability and health that the hardwood floors be installed.

The downstairs neighbor could not handle the sound transfer through the floors claiming it
was a nuisance and the sound and noise became “greatly amplified” and “intolerable”. The
downstairs neighbor further claimed based upon the noise that it was difficult to relax, read book, watch television or sleep.

The HOA sued seeking an Injunction and Declaratory Relief declaring that the CC&R’s
prevented the Munoz’s from installing hardwood floors. The homeowner lost at the trial level and appealed to the Court of Appeal.

The court agreed that the HOA was reasonable in requiring that the Munoz’s mitigate their
sound damages. A modification/stipulation of the HOA to the owners to accommodate her claimed disability was to install throw rugs to be placed on 80% of the floors outside of the kitchen and bath areas.

The Appellate Court affirmed the Trial Court’s decision by allowing for the modification intermin solution by placing 80% of the area throw rugs. The Appellate Court determined that was not abuse of discretion by the Trial Judge.

Comment: Seems like the Munoz’s spent a great deal of oney being forced to comply with rules that were running with the and when they purchased their condominium. The only parties/entities that made out on this case was the condominium association’s attorneys and the Munoz’s attorneys.

J. SCOTT SOUDERS, P.C.
ATTORNEY AT LAW
13 CORPORATE PLAZA DR., SUITE 200
NEWPORT BEACH, CA 92660
(949) 718-3574
(949) 718-3582 FACSIMILE
scottsouders @ sbcglobal.net

REAL ESTATE LAW UPDATE: July 20, 2015

Appraiser Hired By Lender Owes No Duty to Borrower.

In the case of Willemsen vs. Mitrosilis, 230 Cal App. 4th 622, the Court of Appeal affirmed
the trial court’s decision that the appraiser hired by the lender owed no duty to the borrower. Therefore, the borrower could not sue the appraiser for negligence or negligent misrepresentation. [Read more…]

New Smoke Alarm Laws Take Place on July 15, 2015

The exemption that currently exists for battery powered smoke alarms installed prior to July 1, 2014, expires shortly on July 15, 2015.

Here are the new laws that you must abide by or else risk legal exposure if there is a fire:

  1. Battery operated smoke alarms must be replaced with those that contain a sealed battery and is rated to last at least 10 years. All hard wired smoke alarms must comply with provisions that have a label showing the date of instillation and manufacturer.

Product Requirements

  1. Can be hardwired with a battery backup or solely battery powered, but must contain a nonremovable battery that is rated 10 years.
  2. Must display the date the product was manufactured and must have a place to display the date it is installed on the smoke alarm.
  3. Must have a built in hush feature.Places Where One Must Have Smoke Alarm 
  4. Every bedroom
  5. Hallways leading to bedrooms that are centrally located outside sleeping areas.
  6. Every level/floor including basement.
  7. If mounted on the ceiling should be at least 4 inches from the wall.
  8. If mounted on the wall should be 4-12 inches from the ceiling.

    Landlord Requirements

  9. All of the above mentioned requirements pertain to landlords. In addition, the landlord cannot make the tenant responsible for testing or maintaining the smoke alarm. It is now the landlord’s responsibility.

Scott Souders is a real estate attorney who has practiced real estate law in excess of 39 years in Southern California.

Disclaimer: The Real Estate Law Update cites cases or statutes which are summarized and
should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

J. SCOTT SOUDERS, P.C.
ATTORNEY AT LAW
13 CORPORATE PLAZA DR., SUITE 200
NEWPORT BEACH, CA 92660
(949) 718-3574
(949) 718-3582 FACSIMILE
scottsouders @ sbcglobal.net

Legal Update: Sellers’ Remorse & the Courts

REAL ESTATE LAW UPDATE June 8, 2015

From the office of real estate attorney Scott Souders:

Superior Court Clerk Signs Grant Deed and Escrow Documents on Behalf of Reluctant
Seller In Order to Close Escrow.

In the case of Blueberry Properties, LLC vs. Chow, the Court of Appeal affirmed the
Superior Court’s Order appointing the Clerk of the Court to execute all transfer documents on behalf of the reluctant seller. [Read more…]

REAL ESTATE LAW UPDATE April 17, 2015

Restaurant Can be Held Liable for Failure to Have Sign Warning of Dangerous Condition of Entering Public Highway.

In the case of Annocki vs. Peterson Enterprises, LLC, 232 Cal App. 4th 32. Geoffrey’s Restaurant on PCH in Malibu was sued. It’s customer, Terry Turner, left the parking lot at the restaurant and turned onto PCH. The entry onto PCH is on a hill and the view of the highway is slightly impaired when exiting. Rather than turning right with the flow of the traffic to head South, Turner drove across the lanes of traffic and tried to turn left heading North on the other side of the highway. There were paddles in the median of PCH that divided the lanes of traffic. The paddles were installed to prevent Turner from turning left into the flow of traffic and across the lanes heading North.

When Turner discovered that the paddles blocked the left hand turn after he had exited onto the highway, he attempted to back up from the highway back onto the premises to get out of the lanes of traffic. However, a motorcyclist came up and over the hill and struck Turner’s car. The motorcyclist died and his parents sued the restaurant claiming that the restaurant had a duty to warn customers of the dangerous conditions of the highway. The superior court judge dismissed the case, claiming the business had no duty to warn customers. The court of appeal reversed the holding, stating that Geoffrey’s Restaurant’s failure to post signs on it’s own parking lot stating customers could only turn right out of the parking lot driveway and that left turns were not possible exposed the public to unreasonable risk of injury.

Comment: You would think that if the median on PCH has paddles that prevent motorists from crossing the lanes to turn left that those paddles would be enough notice to the public that it would be dangerous to attempt such a maneuver. Turner’s conduct not only killed an innocent motorcyclist, but now it causes owners to have to post signs on their premises to prevent stupid maneuvers such as what Terry Turner tried to pull off by turning leftagainst traffic.

Caregiver Loses Her Case Trying to Take House From Estate.

In the case of Jenkins vs. Teegarden, 230 Cal App. 4th 1128, Teegarden is the caregiver for a senior citizen. She talks senior citizen into curing the default on the foreclosure of her house. He agrees to sell her house back to her with an oral option. Later, not being able to exercise her oral option, she talks him into building a house on the lot that he owns next door to his house. She will live in that house and continue to take care of him, which she is receiving approximately $10,000.00-$15,000.00 a year for her services. The owner borrows against the house that Teegarden previously owned and builds a house next door to his on his lot. Teegarden puts in $100,000.00 of her own money towards the construction of this house. The house is worth about $500,000.00.

As part of Teegarden’s plan, she goes to a stationary store, obtains a Quitclaim Deed, fills out the Quitclaim Deed and has the owner sign the Deed. She records the Deed. However, the Deed has errors. She screwed up on the vesting of title. The owner, individually, did not own the house, but he owned it as trustee of his living trust. She also screwed up on the legal description, which was not accurate. As a result of these errors the title of the property remained in the trust.

Approximately four years later the owner dies. The trustee of the owner’s trust files a petition in probate court to declare that the Quitclaim Deed recorded by Teegarden was void as a violation of Probate Code Section 21380.

This Probate Code Section states that a donative transfer of significant value of real property to a transferee who is unrelated is invalid unless the deed has either been reviewed by an independent attorney or approved by a court. This is true even if the transferee proves that the deed is not as a result of fraud, menace, duress or undue influence.

In this case, the transferee did give consideration. Therefore, it was not a donative transfer. The caregiver argued that she gave the owner consideration for the Quitclaim Deed in that she released the oral option to buy her old home back, she gave the owner $100,000.00 towards construction of the home and she continued to provide care to the owner. Based upon this evidence the trial judge ruled for the caregiver and ruled that the Quitclaim Deed was not void, but was valid. The judge also corrected the errors in the Quitclaim Deed.

The court of appeal reversed stating that the Quitclaim Deed was void as a donative transfer. The court of appeal further stated that the Quitclaim Deed was not for adequate consideration. The release of the oral option was worth nothing because the caregiver could never prove that she had the money to buy back the property. The $100,000.00 the caregiver gave to the owner was no benefit to the owner because the property was used by the caregiver who moved into the house. Finally, the care giver was paid $10,000.00-$15,000.00 a year for care.

Comment: This is one of the first cases that holds that a donative transfer under 21380 of the Probate Code can also include a Deed for consideration if the consideration is unfair or inadequate.

Every year I receive at least one or two phone calls wherein a senior citizen or one their heirs or relatives claims that the senior citizen has been taken advantage of by their caregiver. Financial Elder Abuse cases are more prevalent.

Scott Souders is a real estate attorney who has practiced real estate law in excess of 39 years in Southern California.

Disclaimer: The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

J. SCOTT SOUDERS, P.C.
ATTORNEY AT LAW
13 CORPORATE PLAZA DR., SUITE 200
NEWPORT BEACH, CA 92660
(949) 718-3574
(949) 718-3582 FACSIMILE
scottsouders @ sbcglobal.net

Real Estate Law Update: Reneging on a Commission Sharing Agreement

Real Estate Agent May Proceed With Lawsuit Against Agent for Reneging on a Commission Sharing Agreement.

On February 26, 2015, the Court of Appeal, 2nd District, ruled that a real estate agent may proceed with his lawsuit against his ex-partner for reneging on a commission sharing arrangement in the case called Sanowicz vs. Bacal, 2015 DJ DAR 2300. [Read more…]

Real Estate Law Update: New Laws for 2015

1. Listing Broker Successful In Obtaining Commission From LLC Members.

In the case of CB Richard Ellis vs. Terra Nostra Consultants, 230 Cal App. 4th 405, the Court of Appeal affirmed a Judgment against individual members of the Limited Liability Company based upon the liability company distributing all of its assets and dissolving after the sale of its primary asset, a $12 million dollar property, in Murrieta, California. [Read more…]