Articles Posted in real estate law

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The requirements to the establishment of a prescriptive easement in California are well settled. The party claiming such an easement must show the use of the property which has been open, notorious, continuous and adverse for an uninterrupted period of five years. However, there is a statute in California that applies to the use of land by the public for recreational purposes. If the subject qualifies under the statute, prescriptive rights can never be established – this is to encourage public use for recreational purposes. In a recent decision out of Mendocino County, a party claimed a right to an easement to access some coastal sand dunes, something the public would appreciate. The court found that this claimed use was for the benefit of the claimant and his property, and not the public. A prescriptive easement had been established.

sacramento-easement-attorneyIn Ditzian v. Unger, the parties owned neighboring parcels in Mendocino County. The scenic sand dunes of MacKerricher State Park are behind the parcels, and Ditzian historically accessed the dunes via a path that runs along the parties’ property line, then crosses appellant’s property, and then crosses the parcel of another neighbor. The prior owners used the same access at least as early as 1998.

In July 2015 Ditzian started renting the property to vacation renters through Airbnb; Ditzian testified that in September or October 2015, while he and his wife were on their honeymoon, Unger built a fence that blocked the path providing access to the dunes from respondents’ parcel. Never before had there been any obstructions to using that path to the dunes, nor “no trespassing” signs and Ditzian had never been told he could not use the path. You can see what happened – once they started renting to vacationers, the neighbor got tired of the strangers. The Trial court determined that Ditzian had established a prescriptive easement.

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Generally, one who is unjustly enriched at the expense of another is required to make restitution. The law has created this remedy d to restore the aggrieved party to his or her former position by the return of the thing or its equivalent in money. However, if the benefits are conferred on another by unjustified interference in the other’s affairs, the interferer is not entitled to restitution. It must ordinarily appear that the benefits were conferred by mistake, fraud, coercion, or request; otherwise, though there is enrichment, it is not unjust. In a recent decision, a party who was aware of a benefit conferred on a property owner acquired the property in foreclosure but acted surprised when the plaintiff sought restitution.

Sacramento-unjust-enrichment-attorneyIn Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc, the plaintiff (“Tax Appeal”) pursued property tax refunds on behalf of commercial property owners, on a contingency fee basis. If it is successful, it is entitled to a percentage of the property taxes saved. Plaintiff entered a contract with Victory Glen to reduce its taxes property on Victory Blvd in Los Angeles. They were successful, reducing taxes over $140,000, and were owed over $41,000. But Victory Glen went into default and the property was foreclosed.

Defendant obtained title to the property, paid the delinquent taxes, and benefited from the reduced property tax. Before they did that, they investigated the property, were aware of the past due taxes and the obtained records indicating that the tax valuations had been challenged by the property owner.

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An easement in California is a right to use someone’s property which right is something less than a full right of ownership. The right of use is restricted to that in the original grant of easement, though parties often consult Sacramento real estate attorneys regarding what that right really is. In the case of a grant of a “general” easement the courts may look to the parties’ original intent, plus the historic use of the easement. However, in a recent decision, the plaintiff discovered that the easement he had granted was not general; instead, the language was clear enough to interpret, and in addition the court recognized that it could allow for the normal future development of the property.

Sacramento-easement-lawyerIn James Zissler v. Patrick Saville, a property owner in Montecito granted an easement to a neighbor for access to the rear of neighbor’s property. The grantor claims that he intended the easement be used sparingly and infrequently, and not for construction access. He also intended that no “‘heavy vehicles’ ” would be allowed on the easement. By “heavy,” he meant “‘anything much bigger than a pickup truck.’ ” It was only used for the gardener’s access to maintain the property. Both parties sold their lots, and the plaintiff bought from the grantor. The defendant paid $4.7 million, and intended to develop the property, which required paving the easement and construction access. Plaintiff filed this action claiming that defendant had a General Easement, and as such its use was limited by the intent of the parties and its actual historic use.

LANGUAGE OF EASEMENT

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Most Settlement Agreements require parties to dismiss existing lawsuits with prejudice. Ending litigation is the goal of settlement. The agreements also include provisions to recover attorney fees in the event someone has to go to court to enforce the settlement. Lastly, they include provision for the court to retain jurisdiction to enforce the agreement (by a CCP § 664.6 motion), which allows making a motion in the original action to enforce it. Another approach to enforcement would be to file an entirely new action, and seek attorney fees as damages. I am unaware of the benefit of such approach over the CCP 664.6 motion. In a recent case the plaintiff filed a new action and sought attorney fees as damages. The court might have awarded such damages, but the plaintiff never proved that he had incurred them.

Sacramento-Settlement-AttorneyIn Copenbarger v. Morris Cerullo World Evangelism (“MCWE”), MCWE had a ground lease on property in Newport Beach. MCWE subleased the property and sold the improvements on the property. To finance the deal, the new tenant obtained a $3 million dollar loan from the Plaintiff, secured by a 1st deed of trust against the Sublease and Improvements. The tenant borrowed an additional $1 million from Plaza, secured by a second. The subtenant defaulted, and MCWE started an unlawful detainer. Plaintiff intervened, on the grounds that, if the Subtenant was evicted and the Sublease terminated, plaintiff would lose its security.

The parties entered a settlement agreement resolving the dispute. It included an attorney fee provision for any action to enforce the agreement. Importantly, it required MCWE to dismiss the unlawful detainer.

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Partition is the right of any co-owner to require a court-ordered split of real estate, or its sale and a split of the money. A right of first refusal is a contractual right that, in this context, gives the co-owner the right to buy out his co-tenant before the cotenant can sell to a third party. It has been argued that the right of first refusal implies a waiver of the right to partition. The courts have concluded that it does at first, but if the owner who is not selling is offered the right buy out their partner and declines, the other owner has done all that was required and may seek partition. That was the case in a decision involving a property in Carnelian Bay, on the shore of Lake Tahoe. A belligerent co-owner refused to buy out their partner, the third-party buyer backed out, and the seller filed for partition.

Partition-attorney-sacramentoIn LEG Investments v. Boxer, LEG was the selling co-tenant who was fed up with the other owner. The Plaintiff claimed that The Boxlers or their guests often failed to clean the Property and the Boxlers refused to pay for reasonable and necessary landscaping, maintenance, cleaning and repairs. In 2003, LEG offered to sell its interest in the Property or purchase the Boxlers’ interest for $750,000. The Boxlers declined both offers.

Next, C.R. Gibb, a real estate investor with many years of experience in the Lake Tahoe real estate market, offered to buy LEG’s interest in the Property for $1.4 million, subject to his approval of the Boxlers as co-owners. As required by paragraph 6.1 of the TIC agreement, LEG transmitted Gibb’s offer to the Boxlers and offered them a right of first refusal to purchase LEG’s interest on the same terms. The Boxlers declined. The critical language: “We will not be exercising our right of first refusal for your bona fide offer of $1,400,000.00.” Gibb figured out that these people were not good roommates, did not approve them, and the deal collapsed. LEG filed for partition.

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An easement owner cannot claim another party has trespassed on their easement, because trespass involves interference with the plaintiff’s exclusive possession. Easement holders do not have a right to exclusive possession. They may claim nuisance, but only if the interference is substantial and unreasonable. But they can enlarge their rights by claiming prescriptive rights if they can show that they used the easement in a way that exceeded the use authorized in the grant of easement. These were the conclusions drawn by the court in a recent decision out of Napa County.

Sacramento-Easement-rights-attorneyIn McBride v. Smith, McBride owned a landlocked parcel in a residential neighborhood in St. Helena, Google map here. She was the beneficiary of two recorded easements that run parallel to each other: the Secondary Access Easement encumbering the Smiths’ property; and the Driveway Easement located on property “owned by 1660 Spring Street,” which “remains in full force and provides access to the alley that connects both easements to Spring Street.”

The Smiths were not pleased. First, they constructed “wood dividers” along the “entire length” of the easement. Second, the Smiths erected a heavy chain and large pole at the end of the easement, with the chain extending the entire width of the easement. Third, the pole was bolted to the ground and could not be removed without special tools or a high amount of strength. Fourth, “[b]oth the pole and chain as they exist now obstruct Plaintiff’s access. Even if the chain was removed, the pole would still block Plaintiff’s access.”

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In my last post regarding dedication of land I discussed how land may be dedicated for public use in a process is described as implied by law if the public has openly and continuously used the property for five years. Implied by law is similar to the process for a prescriptive easement, but it is not the same. The requirements were established by the series of court decisions up until the legislature took action, enacting new law effective in 1972. The possibility of dedication by use prior to 1972 is still controlled by the common law, but for uses beginning in 1972, the statutes apply. If a party is not sure about the public’s rights to use private property relative to the timing pre and post 1972, based on five years of use prior to 1972, they should contact a Sacramento commercial real estate attorney.

Sacramento-land-dedication-attorney-2The decision in Gion discussed in Part 1 resulted in a lot of hubbub due to perceived changes in the law. Previously there was a presumption that public use was by way of a license granted by the owner. But Gion held that the court would not rely on such a presumption. In addition, there was no requirement the use be “hostile” and “adverse” in the sense of a prescriptive right – the public did not have to use the property under color of title or claim of right. Nor is it required that the owner be aware of the public use.

The legislature responded by enacting Civil Code section 1009 (set out in full below), which provides that no use of property by the “shall ever ripen to confer upon the public or any governmental body or unit a vested right to continue” to use the property unless the owner made an irrevocable order of dedication that had been accepted by the governing body. Hence, the idea of implied dedication for public use is dead for uses after 1972.

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Land may be dedicated for public use, as a road for example, by express dedication, or it may be implied. The process is described as implied in fact if the public uses the property and the acts of the owner indicates that they consent; or implied by law if the public has openly and continuously used the property for five years. Implied by law is similar to the process for a prescriptive easement, but it is not the same. What was required was established under the common law (court decisions) up through the Gion decision, which resulted in the Legislature passing new law to protect landowners. However, the new legislation acted prospectively, meaning that, for uses occurring up through 1971 when the law was passed, Gion governs implied dedication. If a party wants to establish the public’s rights to use private property based on five years of use prior to 1972, they should contact a Sacramento real estate attorney. My next post, Part 2, will cover the 1972 legislation and what is now required to establish an implied by law dedication to the public,

Sacramento-property-implied-dedication-to-public-lawyerGion v. City of Santa Cruz involved an old roadbed on the seaward side of West Cliff Drive, between Woodrow and Columbia Streets in Santa Cruz, that had been quitclaimed to the owner and developer of the surrounding property by the city. Most of the area, however, had never been used for anything but the pleasure of the public. Since at least 1900, various members of the public parked vehicles on the level area and proceeded toward the sea to fish, swim, picnic and view the ocean. The city had filled in small amounts of the land and placed supporting riprap in weak areas. The city also put an emergency alarm system on the land and in the early 1960’s paved the parking lot.

Sacramento-property-dedicsion-to-public-attorneyThe trial court found that :

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Co owners of real property in California are entitled to bring an action for partition of the property, in which the property is either divided between the owners or sold and the proceeds split. The split goes by percentage of ownership interest – two equal coowners get 50% each. However, they are each entitled to an accounting for charges and credits upon their respective interests. Such items as improvements or payment of taxes are included in the calculation. In a decision out of the Third District Court of Appeal, the court clarified that an owner may be credited for what their predecessor in interest had done. Thus, when the father who was a co-owner who made improvements and then conveyed his interest to his daughter, she got credit for his improvements. However, she entered the property as a tenant, and the lease was not terminated when she became an owner. The improvements she made herself were governed by her lease, and she did not get credit in the partition.

Sacramento-partition-attorneyIn Wallace v. Daley the Third District Court of Appeal faced a partition of property in Arbuckle. The plaintiff started as a tenant; her father was a co-owner with the defendant. The property included an almond orchard, house, and outbuildings. When the plaintiff moved in the house was infested with rats; the septic tank overflowed, and sewage flowed over the ground; the back porch of the house had rotted to the ground from termite damage the roof of the bunkhouse had caved in, the barn was “totally useless.”

When his daughter moved in, she and her father laid a new foundation and built a new bathroom. A septic tank was added, the electrical wiring was renovated, and the burned-out barn and the bunkhouse were removed. The barn was replaced with a concrete and metal building, the chimney and well were repaired and the roof of the house was replaced. During plaintiff’s tenancy, a horse barn and corrals were built and the tank house was renovated.

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Contracts related to real estate transactions often have arbitration provisions included, requiring the parties to submit their disputes to an arbitrator rather than the court. Some standard forms, such as the CAR forms, have optional arbitration provisions that apply if accepted by all parties. Commercial Brokerages often require binding arbitration in the representation agreements. The argument for arbitration is that it is faster and cheaper. This may be true in low-dollar transactions, but otherwise, I believe it is a myth. Also, arbitrator decisions are not appealable, even if erroneous. I’ve written before about alternatives to arbitration, namely judicial reference and general reference, which allow hearings by a referee and oversight by the court. However, in a recent decision, a contract required binding arbitration under AAA rules (with a panel of 3 arbitrators) and the large brokerage was well on its way to bankrupting the plaintiff due to the cost of the proceeding. The court rescued the plaintiff, finding that if they could not afford the arbitration, the matter could be heard by the court.

Sacramento-real-estate-arbitration-attorney-1In Weiler v. Marcus & Millichap Real Estate Investment Services Inc., the plaintiffs hired Marcus & Millichap to advise them regarding a 1031 exchange of their Las Vegas Properties for a commercial property in Texas with a Red Robin restaurant, supposedly worth $4.1 million. They claim that M&M represented that this was a solid income producing property, and that the tenant was required to pay the property taxes. Shortly after the deal closed the tenant became delinquent in rent and property taxes. The plaintiffs lost money and eventually sold the property for $2.1 million less than they had paid.

The plaintiffs filed suit, but their contract with M&M required binding arbitration through the American Arbitration Association (AAA). M&M had the court order the case to arbitration. The court retained jurisdiction for monitoring the arbitration.

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