We have written several articles about a seller’s duty to disclose, including articles about the consequences of failure to disclose material facts. Most of these articles discuss physical defects, as these are the issues that most often result in lawsuits. However, a seller’s duty does not end there. ANY fact materially impacting the value of property must be disclosed.

A recent sale in New Jersey has been all over the news, with the buyers suggesting they will sue the sellers for failure to disclose. Many of you may have heard about it, as it is a creepy yet fascinating story.

Shortly after moving into their new home, a New Jersey family began receiving terrifying threats from someone identifying themselves as “The Watcher.” Specifics on the threats can be found here.

The threats were so bad that the buyers moved out. Understandable, as I would not want anything to do with these threats. The buyers now want to sue the sellers, claiming the sellers knew about the threats.

This would certainly be actionable in California. If the buyers could prove the sellers received similar letters or generally knew about this individual, this fact should have been disclosed. Disclosure duties are not limited to physical defects. Issues such as noisy neighbors, traffic, deaths at the property, and “The Watcher” do need to be disclosed. Put yourself in the buyer’s shoes, would those issues impact the value of the property to you?

If you are selling property and wonder if you should be disclosing something, the fact that you are wondering about it suggests it is significant to you, and thus should be disclosed.

If you have questions about disclosure duties, or real estate law in general, do not hesitate to contact us.

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Usually when we write about neighbor disputes, we discuss boundary disputes, a misplaced fence, or property rights gained or lost through adverse possession or easements.  In our previous article, we discussed Adverse Possession, Prescriptive Easements and Equitable Easements, with a brief description of the elements required to establish those claims. A review of those types of claims reveals they are heavily fact-based and can be difficult for the claimant to prevail.

However in a rare case this year, California courts gave a neighbor an “irrevocable parol license” over someone else’s property, a type of grant that we have never seen before.

In Marin County, two neighbors got into a dispute over a 30 foot wide easement down a 150 foot long road.  With property values being what they are in Northern California, this was a pretty costly strip of property.

The Poksays built their house in Novato in 1989.  Their driveway was constructed pursuant to an easement over 2515 Laguna Vista Drive, which was owned by the Schaefers.  The Schaefers had granted the Poksays an easement for access and utility purposes only.  Typically, that means ingress, egress, power lines and water.  However, the Poksays ended up improving this large easement with significant plantings, irrigation and electrical lighting.  Over a decade later, the Poksays sold the Property to the Donettis who then added further vegetation.  In 2004, the Francs purchased the Schaefer’s property which was subject to this easement in favor of the Donettis.  After 6 years of apparent neighborly tranquility, the Francs cut the power and irrigation lines, dismantled the water pumps, and sent a demand letter for the Donettis to remove all the landscaping.

In response, the Donettis sought an injunction, which was granted, to restore the irrigation system.  Further the Donettis sought the ultimate relief of an irrevocable parol license not only for themselves, but also for their successors in interest to maintain and improve the landscaping, irrigation and lighting within the easement.

The Donettis won and the Francs appealed.

On appeal, the Appellate court affirmed the lower court’s decision and gave its rationale, finding that it would be inequitable to terminate the permissive use that the Donettis had enjoyed and concluding the Donettis had an “irrevocable parol license” to maintain and improve the landscaping.

[Richardson v. Franc, 233 Cal. App. 4th 744 (2015)]

HERE’S WHY THIS CASE IS IMPORTANT: Licenses are usually revocable, so they have some duration at which they will end.  This license was irrevocable and was granted not only to the present owners, but also to their successor-in-interest.  That means that when the Donettis sell or transfer their property, the license is also tranferable to the new owner.  This is akin to a permanent right that runs with the land, the way an easement does.

This case only further muddies the waters and makes evaluation of each respective neighbor’s rights difficult.  The law was already scattered on boundary disputes, with findings swinging in either direction depending on the sympathies to the parties.  Hopefully, the Supreme Court will take a look at this issue and provide definitive clarity, especially with regard to rights that seem so permanent in nature, contrary to what a “license” is intended.

COMMENT: Why were the Donettis entitled to such a big win?  Neighbor disputes fundamentally come down to fairness and balancing the equities.  Here, the courts concluded that the fee simple owner of the land (the “servient tenement”) was benefitting from letting the easement holder (the “dominant tenement”) do all the work and pay for all the decades of landscaping and water bills.  The opinion had a pretty lengthy description of the many different varieties of plantings and the way the mature landscaping enhanced the visual appeal (and hence property value) of the property.  The license is for landscaping which now begs the question, what if the Donettis or the successors one day stop paying the water bill, the gardeners and let it all go to seed?  Could the Francs compel the Donettis to maintain the property? Could the Francs seek a termination of the license at that juncture?

If you need legal help with regards to neighbor disputes, boundary disputes, or easements, you can contact our firm here.

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“I do not want them in the house, I do not want them on my blouse, I would not like them in my car, I would not like them near or far, I do not want them here, nor there, I do not want them anywhere!”  With great apologies to Dr. Seuss.

Yesterday, a Maryland couple filed a $2 million lawsuit against their REALTOR® after they found a severe snake infestation in their recently-purchased home.

Sellers in California are required to disclose all facts that would be material to the transaction.  A snake infestation would be material to most, if not all buyers.  In this case, if there was an inspection report disclosing the defect that the seller or the listing agent had possession of, then the buyers may have a solid claim for punitive damages because of active concealment.

California law requires you to fill out and provide the Transfer Disclosure Statement. In addition to the TDS, many buyers would like the Seller’s Supplemental Checklist, however it is optional. I recommend that sellers use the supplemental disclosure to help them remember what repairs and property conditions that they should disclose to the buyer. After so many years of owning a home, it’s easy to forget all the little repairs you have made. Remember, you must disclose anything that would be material to the buyers.

For example, if the window leaked this past winter and you repaired it in the summer but it hasn’t rained yet, you don’t know if it still leaks. Sellers often forget to disclose things they “fixed” which can lead to problems later.

That’s what appeared to have happened to these unfortunate buyers in Maryland, that they purchased their home when snakes were dormant (presumably during cold weather) but “as the weather grew warmer, the family discovered the snake infestations”.

Here in the Bay Area, we haven’t had much rain since there has been a drought and so a property that looks dry as a bone in the summer months could have a serious drainage or flooding issue when the rains resume.  If the sellers are aware of that possibility, they must disclose it.

We have written about the seller’s duty to disclose numerous times:

“Past Litigation is a Material Fact that Sellers are Obligated to Disclose”

http://www.brewerfirm.com/articles/article-052709b.html

Do I have to Tell Them Everything? By Simon Offord, Esq.

http://bayarearealestatelawyers.com/real-estate-law/do-i-have-to-tell-them-everything/#.VXDaa89VhBd

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The recent case of City of Pasadena v. Superior Court dealt with a situation whereby a city-owned tree fell on a private residence during a windstorm, causing damage.  The insurer for the homeowner paid benefits to the homeowner, and then sued the City for inverse condemnation and nuisance based on the damages caused by the tree.

The City filed a motion for summary adjudication, arguing that the tree was not a work of public improvement and that the insurer failed to submit evidence establishing negligence by the City.  The trial court denied the motion, and the City sought a writ of mandate.

THE DECISION

The appellate court denied the City’s petition for a writ of mandate.  The Court concluded that there were triable issues of material fact as to whether the tree was a part of work of public improvement.  The was evidence that showed that the tree was a street tree that was part of a city program to enhance its residents’ and visitors’ quality of life.  Moreover, the Court held that the city failed to meet its burden on summary adjudication to establish that it had fulfilled its duty of care.  As a result, the burden never shifted to the insurer to raise a triable issue of fact as to whether the City had been negligent in its maintenance of the tree.

WHY THIS DECISION IS IMPORTANT

Article I, Section 19 of the California Constitution provides that private property “may be taken or damaged for a public use and only when just compensation . . . has first been paid to the . . . owner”.  Therefore, this case clarifies that it is possible for a homeowner (or its assign, as here, the insurer) to seek to recover damages under an inverse condemnation theory when a home is substantially damaged.  Typically, we think of inverse condemnation cases being limited to some sort of explicit taking, such as taking land for the construction of public transportation or roads.

COMMENT

The most interesting take-away from this case may be the fact that the prevailing party in an inverse condemnation action may be awarded their attorney fees (C.C.P. § 1036).  Therefore, by filing suit under an inverse condemnation theory, the plaintiffs here have given themselves an additional sword to wield in negotiating a settlement.  One would assume that the legislature did not envision that a homeowner would prevail on an inverse condemnation case when damage occurred because of a broken tree, however this decision suggests such a result is possible.

City of Pasadena v. Superior Court, 228 Cal. App. 4th 1228

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Larry and Cheryle Jesinoski (“Jesinoskis”) refinanced their loan on February 23, 2007 with Countrywide Home Loans, Inc. (“Countrywide”).  Three years later, they sent a written letter to rescind the loan pursuant the Truth in Lending Act (“TILA”).  A year later, after Countrywide refused to rescind the loan, the Jesinoskis filed suit to rescind.  Under TILA, a borrower has the right to rescind their loan within 3 days for any reason.  After that, they have three years to rescind the loan if the lender failed to provide required disclosures.

At the trial court level, the court agreed with Countrywide’s argument that the Jesinoskis were required to file suit to rescind the loan within three years, not just send a written notice.  Accordingly, the trial court dismissed the law suit.  On appeal, the Eight Circuit Court of Appeals concurred with the trial court noting that although there was a split in authorities at the appellate level, their previous decision required a borrower to file a lawsuit within three years also.  The case was then appealed to the United States Supreme Court.

THE DECISION:

The United States Supreme Court overturned the lower court’s decision and remanded the matter back to the appellate court.  In Jesinoski v. Countrywide Home Loans, Inc., the Supreme Court held that TILA required only written notice of rescission to be given within three years of obtaining the loan.  The Court reasoned that the plain reading of the statute only requires notice, not a lawsuit.

WHY THIS DECISION IS IMPORTANT:

Prior to this decision, it was unclear just how much time a borrower had to rescind a loan.  Depending on the state, borrowers could have had substantially more time.  However, this case resolves the split.  The ruling was largely unsurprising as the statute seemed clear that only written notice was required.  In fact, even in the Eight Circuit, two of the judges noted that if they had a clean slate, they would have ruled the other way.  However, since a previous holding had required a lawsuit to be filed, they were required to rule in favor of Countrywide.  In the shortest opinion of the year, the Supreme Court unanimously overturned the lower court’s decision and resolved the dispute.

COMMENT:

This decision could pave the way towards substantial liability for lenders who fail to provide the required disclosures.  While a rescission under TILA requires a borrower to return the money received, that requirement triggers only after the lender reconveys the deed of trust.  It will be interesting to see if any creative borrowers attempt to circumvent the repayment by filing for bankruptcy protection when the lender is an unsecured creditor, resulting in borrowers owning the property free and clear.

Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015)

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The recent case of Huntington v. Miller confirmed again that a HOAs must accept partial payments and are limited in their ability to foreclose on an assessment lien when such lien is for less than $1,800.00.

In Huntington, an owner of a unit in an HOA became delinquent in payment of their regular assessments.  The HOA recorded an assessment lien for all delinquent payments, late charges etc.  The owner established a payment plan with the HOA to cure the delinquency, on which the owner later defaulted. The owner made a partial payment which brought the amount of delinquent assessments, exclusive of fees and charges, to less than $1,800—the threshold for collecting delinquent assessments through judicial or nonjudicial foreclosure. The HOA rejected the partial payment and moved to foreclose on the owner’s property.

THE DECISION

The Appellate Court held that an association must accept partial payment made by an owner and must apply that payment in the order prescribed by statute.  This obligation continues after a lien has been recorded.   The Court reasoned that the plain language of Civil Code § 5655(a) permits partial payments and requires the association to accept such payments.  Moreover, nothing in the statute states that these requirements end upon the recordation of a lien.  As Civil Code § 5720 protects owners from foreclosure for delinquent assessments of $1,800 or less, and the rejected partial payments would have brought to amount owed under $1,800, judicial foreclosure was not allowed.

WHY THIS DECISION IS IMPORTANT

This decision makes clear that an HOA must accept partial payments of delinquent assessments even after a lien has been recorded, and affirms the prior decision made.  The purpose of such rule is to follow the Legislature’s goal of preventing foreclosures and loss of one’s home over a small overdue assessment.

COMMENT

The interesting take away from this case is that an owner can delay judicial foreclosure if he or she continues to make partial payments that keep the amount owing under $1,800.  Therefore, HOAs need to be cognizant of their other remedies.  The Civil Code allows the HOA to pursue a small claims action to recover the debt while maintaining the lien.  Moreover, an association may foreclose a lien securing assessments in any amount that are over 12 months delinquent.  Thus, although a clever owner may be able to dodge foreclosure by keeping the delinquent assessments under $1,800 and less than 12 months in age, the Court’s interpretation of the Code was that the Legislature chose to accept that risk in order to protect owners from foreclosure.

You can read the full decision by clicking the link below:

Huntington Continental Town House Association, Inc. v. Miner (2014) 230 Cal.App. 4th 590

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The recent case of Belle Terre Ranch, Inc. v. Wilson clarified that in order to recover attorney fees in a trespass on land for “cultivation” or raising livestock under Code of Civil Procedure § 1021.9, you must obtain an award for property damages.

In Belle Terre, both Plaintiff Belle Terre and Defendant Wilson were using a road. After Wilson began some renovations, Belle Terre complained that trucks using the road were becoming disruptive and damaging grapes on Belle Terre’s land. Belle Terre sued to quiet title to the road and for trespass. Belle Terre did not allege any actual injury to its property and did not present evidence on damages at trial. In addition, Belle Terre sought attorney fees under Code of Civil Procedure § 1021.9.

After hearing testimony from surveyor-expert witnesses, the Trial Court quieted title in favor of Belle Terre and granted a permanent injunction. The Trial Court also awarded $1 in nominal damages, and in turn awarded Belle Terre $116,920.00 in attorney fees. Wilson appealed, arguing that since there was no proof on property damage, the attorney fee provision in Code of Civil Procedure § 1021.9 did not apply.

THE DECISION
The Appellate Court reversed the Trial Court’s award of attorney fees. The Court determined that the dispute was primarily one over property lines, not truly “an action to recover damages to personal or real property resulting from [trespass],” for which the law was intended. As there was no evidence of property damages, the Court refused to award attorney fees.

WHY THIS DECISION IS IMPORTANT
This decision clarified that Code of Civil Procedure § 1021.9 requires property damage in order to recover attorney fees. Nominal damages alone were not sufficient to invoke the award of attorney fees. The Court determined that the statutory language required the damages to be explicitly awarded for damages to property, not “symbolic” nominal damages. Thus, in order to recover fees, the litigants must prove some actual tangible harm to property.

COMMENT
I have always wanted to bring an action under this code section as it is one of the few non-contractual ways a real estate attorney can add leverage by seeking recovery of fees. However, this case proves it is critical for attorneys to understand the statutes under which they are filing suit. A review of the case suggests there may have been some property damage, and thus had Belle Terre presented evidence of such damage, the result may have been different.

Belle Terre Ranch, Inc. v. Kenneth C. Wilson (2015) 232 Cal. App. 4th 1468

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Court Whacks Lender for Failing to Get Consent from All Borrowers

by Henry Chuang January 29, 2015 Lending/Lender Issues
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In March, 2009, Sally DaVincenzo (“Sally”) and John DeVincenzo (“John”) were borrowers on a promissory note (“Note”) secured against a property in Wasco, California (“Wasco Property”) and a property in Shafter, California (“Shafter Property”).  The Wasco Property was community property while the Shafter Property was the sole and separate property of Sally.  At some point […]




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California’s Spite Fence Laws – Trees, Hedges, and Shrubs, Oh My!

by Julia Wei January 26, 2015 Boundary Dispute
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California has had a spite fence law since 1885, and until very recently, the courts did not consider whether trees could be a “fence”. 841.4.  Any fence or other structure in the nature of a fence unnecessarily exceeding 10 feet in height maliciously erected or maintained for the purpose of annoying the owner or occupant of adjoining property […]




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Investment Property Blog Series

by Camille Rogers October 10, 2014 Landlord/Tenant Disputes



The Law Offices of Peter N. Brewer put together an “Investment Property Blog Series.” We hope you find the information in this series to be informative as it covers important infomation surrounding investment properties. If you find yourself needing real estate legal counsel, don’t hesitate to contact our office at (650) 327- 2900 x 10 […]




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