Volume 4, Number 4

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  March 2009  

 


Special Message

        
Dear Members,

For your convenience, we have added a summary of some of the new laws affecting the real estate industry
Thanks to Tina Esrailian at Garrett & Tully for her efforts.  She has promised a second installment for next month’s Newsletter.
    
Certainly one of the most important events in Southern California for real property attorneys and professionals, the          Benjamin S. Crocker Symposium on Real Estate Law and Business is open to the public. 
     
You can register today for the event on Tuesday, May 5, 2009, at the Los Angeles Convention Center. 
Please visit the symposium Web site (
www.crockersymposium.com).

We encourage everyone to attend.

The State Bar Real Property Law Section Annual Retreat:
“Real Estate in Turbulent Times,” will be held May 15-17, 2009,
at the Resort at Squaw Creek, Lake Tahoe. For additional information please visit: 
www.calbar.ca.gov/rpsection

Sincerely,

Norm Chernin, co-editor, Real Property Newsletter


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Recent Cases

Cases from February 1 through February 28

-Construction Law-
-Deed Restriction-
-Eminent Domain-
-Landlord and Tenant-
-Landlord and Tenant-
-Purchase and Sale Agreements-
-Rent Control-
-Rent Control-
-Real Property Sales-
-Subdivisions-
-Title Insurance-

-Construction Law-
Home builder’s ownership of property prior to its sale to plaintiffs did not preclude builder from asserting statute of limitations as a defense to plaintiff’s later construction defect cause of action where alleged defects occurred during construction. Where plaintiffs' statement of undisputed material facts established they were made aware of all alleged defects, and builder refused to make any repairs before statute of limitations expired, builder was not equitably estopped from asserting a timeliness defense.
     Gundogdu v. King Mai, Inc. - filed February 11, 2009, ordered published February 20, 2009, First District, Div. Three
     Cite as A120323
     Full text

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-Deed Restriction-
Where deed restriction was recorded stating intent to require that all units within a housing development be affordable to very-low, low- and moderate-income households before plaintiffs obtained grant deeds to properties within development, such restriction served public policy of providing adequate housing for such citizens, and recording of restriction served as constructive notice to subsequent purchasers that their properties, if sold, had to be affordable to persons of very-low-to-moderate income. Where deed restriction was generally applicable to a subdivision, deed need not set out specific descriptions of every lot within subdivision. Deed restriction imposing a continuing affordability requirement for the benefit of future low-to-moderate-income homeowners was not an unreasonable restraint on alienation because restriction was not perpetual in that restriction would lose effect if there were not further need for affordable housing, and restriction was not uncertain because it clearly required each unit to be affordable to very-low-income households. Deed restriction requiring owners to sell their homes at affordable prices did not prohibit refinancing; therefore, allowing owners to refinance did not bar defendants from enforcing restriction. Plaintiffs did not need to allege each occasion on which an agent of defendants could have disclosed restrictive deed and failed to do so in support of their claims of concealment and failure to disclose to afford defendants adequate notice. Although defrauded buyers will not be deemed to have constructive notice of public records, this does not insulate them from evidence of their actual knowledge of contents of documents presented to them or from being charged with inquiry notice based on those documents. A purchaser who receives and reads a preliminary title report revealing existence of a deed restriction has actual notice of its existence and is on inquiry notice of nature of that restriction. A seller’s nondisclosure of state of a property’s title, unaccompanied by affirmative misstatements about that title, should not blind a reasonably prudent buyer from reading a document that purports to describe state of title of property he is about to acquire. Recording of deed restriction served to bind subsequent purchasers, including plaintiffs, but restriction’s recording did not relieve defendants from their duty as sellers of realty to disclose its existence, and plaintiff’s constructive notice of restriction by virtue of its recording did not preclude them from seeking damages based on allegation that they were induced to labor for months by defendants’ failure to disclose its existence. Plaintiffs who received actual notice of deed restriction in their grant deeds discovered defendants’ alleged fraud when they received their deeds for purposes of statute of limitations, and dates of those grant deeds were when those plaintiffs’ cause of action for breach of an implied contract accrued as well; remaining in possession of property did not excuse those plaintiffs’ failure to file a complaint earlier.
     Alfaro v. Community Housing Improvement System & Planning Association, Inc. - filed February 19, 2009, Sixth District
     Cite as 2009 SOS 969
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-Eminent Domain-
Resolution stating that condemned parcel was "necessary for the public project"; "the Proposed Project consists of the acquisition of additional land in conjunction with potential development" in a specified area; that the area was a "catalyst site" that was "consistent with" redevelopment of project area in which it was located; that by assembling the condemned property and adjacent properties into a single parcel, "irregularly shaped and undersized lots can be eliminated or minimized, permitting development of a larger and economically feasible use"; and that "the Proposed Project" was an integral component of "revitalization and redevelopment" and would "complement other revitalization and redevelopment activities recently completed or that are now being implemented or planned in the Downtown area," failed to place property owner and public on notice of the public purpose for which the property was condemned. Condemnation is unlawful where resolution authorizing it fails to state a public purpose on its face, so trial court erred in relying on post-resolution events to rule that property was lawfully condemned for public purposes. Where city condemned property in face of owner’s meritorious objection, but put it to public use, most equitable remedy was to allow city to adopt new resolution of public necessity, but to award litigation expenses to property owner.
     City of Stockton v. Marina Towers LLC - filed February 13, 2009, Third District,
     Cite as C054495
    
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-Landlord and Tenant-
Question of whether lease permitted lessor to pass through costs of lessor’s LLC taxes and fees to lessees was a question that could be resolved by examining lease language under de novo standard of review. Where lessor reserved right to charge tenants with all costs relating to ownership and operation of shopping center, but lease listed examples of expenses chargeable to tenants that pertained directly to physical existence of shopping center, LLC fees and taxes did not qualify as costs relating to ownership and operation of shopping center. Because LLC fees and taxes are a cost of conducting business in a particular legal form that would be assessed against LLC regardless of the LLC’s business, and fact that LLC was created for sole purpose of owning and operating shopping center, did not change nature of fee and tax as a cost of maintaining shopping center or alter terms of lease to include such business costs based solely on lessor’s decision to organize as an LLC. Lease language allowing lessor to pass through costs of real property taxes referred to payments directly applicable to property, not form in which lessor chose to operate its business. Fact that LLC was involved in business of leasing property did not make fees and taxes that it paid real estate taxes. Substantial evidence supported trial court’s ruling that tenants’ willingness to overlook lack of detail in annual statement of tenants’ share of communal expenses during preceding year waived claims for a more detailed accounting and that lessor’s provision of later detailed statement was sufficient to address tenants' concerns and thus comply with the contract requirement where tenants did not object to additional information provided. Landlord could not delay onset of statute of limitations indefinitely merely by agreeing to wait for tenant to perform tenant's contractual obligation.
     Tin Tin Corporation v. Pacific Rim Park, LLC - filed February 2, 2009, Sixth District
     Cite as 2009 SOS 684
    
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-Landlord and Tenant-
Where landlord sued commercial tenant for declaratory relief based on tenant’s alleged wrongful appropriation of portions of common parking areas behind tenant’s store for tenant’s exclusive use by placing storage containers in areas, trial court did not err in concluding tenant’s use of loading dock area for additional storage during holiday season was not at issue. Where lease permitted tenant to use parking area for "loading and unloading of merchandise," but tenant left items that were undisputedly used for loading and unloading items, delivering items to store, or packing items up for repair and recycling in parking spaces beyond any time associated with the actual loading and unloading of merchandise, tenant’s actions wrongfully appropriated parking spaces to exclusion of anyone else and was not permissible under lease.
     Muzzi v. Bel Air Mart - filed January 28, 2009, ordered published February 23, 2009, Third District
     Cite as C055430
    
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-Purchase and Sale Agreements-
Contract that allowed plaintiff at its discretion to complete purchase of four parcels of real property if parcels were made into a legal parcel by recording a final map or if plaintiff "waived" recording of final map was void upon inception because waiver provision violated Subdivision Map Act--which prohibited sale of a parcel of real property until a parcel map has been filed unless sale contract was "expressly conditioned" upon approval and filing of a final map--since contract would allow sale before final map had been filed.
     Sixells, LLC v. Cannery Business Park - filed December 29, 2008; publication ordered January 23, 2009, Third District
     Cite as 2009 SOS 524
     Full text

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-Rent Control-
Where landlord successfully evicted long-term tenant from rent-controlled apartment--ostensibly to free unit for occupancy by landlord’s daughter, but daughter never moved in--and tenant sued landlord for fraud and unlawful eviction, and failure to pay relocation expenses, trial court erred by granting landlord’s special motion to strike under Code of Civil Procedure Sec. 425.16 because tenant’s claims--which were based on landlord’s violation of rent control laws, not on actions in furtherance of right of free speech or petition--did not arise from a protected activity.
     Clark v. Mazgani - filed January 7, 2009, ordered published February 5, 2009, Second District, Div. One
     Cite as B198309 
    
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-Rent Control-
Portions of city ordinance placing burden of proof on landlord in eviction action to prove compliance with enumerated grounds for eviction--requiring proof of applicability of exception from ordinance, and providing that landlord's failure to allege and prove exemption from ordinance shall be defense to any action for possession--were not conflict-preempted by Evidence Code Sec. 500, which places burden on landlord to show existence or nonexistence of facts essential to claim for relief in unlawful detainer action. Ordinance provision presumptively validating tenant's claim of wrongful eviction in event of an owner move-in eviction where landlord moved out of unit within 36 months of evicting tenant was preempted by state law that required tenant to bear burden of proof to show landlord's wrongdoing to recover damages based on owner move-in cause for eviction. Requirements of good faith and proper motive imposed by ordinance were permissible substantive limitations on eviction that did not conflict with procedural purpose served by unlawful detainer statutes. Because ordinance language providing that landlord cannot recover possession of rental unit absent at least one of enumerated grounds for recovery and that ground was landlord's "dominant motive" for recovering possession did not bar all multiple ground evictions, such provision was not facially invalid and was not preempted. A city ordinance may authorize award of attorney fees. Ordinance provision prohibiting owner move-in evictions of tenants who have lived in unit for five years or more and are 60 years of age or older were not preempted by Fair Employment and Housing Act because such provision was not general prohibition on age discrimination in housing, did not have same purpose as FEHA, and did not occupy same field. Warning notice requirements in ordinance limiting landlord's right to initiate eviction due to certain tenant conduct by requiring that specified conduct continue after landlord has provided tenant written notice to cease regulate substantive grounds for eviction, rather than procedural remedy available to landlord once grounds for eviction have been established, and therefore were not preempted; warning notice provisions were not void for vagueness because ordinance did not specify time tenant must be provided to cure violation before landlord may commence eviction because requirement that tenant be given reasonable time to cure could be implied. A local rent control ordinance may permissibly eliminate ground for eviction specified in Code of Civil Procedure without creating conflict with unlawful detainer statutes. Ordinance provision creating cause of action in favor of tenant based on landlord's attempts to recover possession or recovery of possession in violation of certain enumerated grounds for eviction was not preempted by litigation privilege and did not violate constitutional rights of landlords to petition for redress of grievances. Invalid provisions of ordinance were grammatically, functionally, and volitionally severable from remaining provisions because such provisions could be removed without affecting wording of other provisions, and removal of invalid provisions simply reduced number of remedies or presumptions that assist tenants alleging violation of ordinance and did not affect ordinance's overall purpose.
     Rental Housing Association of Northern Alameda County v. City of Oakland - filed February 26, 2009, First District, Div.
     Three
     Cite as A114855
    
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-Real Property Sales-
Where plaintiff condominium purchasers sued seller for failure to disclose facts relating to water intrusion, and undisputed evidence established that defendant disclosed the existence of previous water intrusion but that he did not disclose the existence of two lawsuits relating to that water intrusion, a triable issue of fact remained as to whether the prior litigation was a material fact which should have been disclosed.
     Calemine v. Samuelson - filed February 17, 2009, Second District, Div. Two
     Cite as B194461
    
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-Subdivisions-
Contract that allowed plaintiff at its discretion to complete purchase of four parcels of real property if parcels were made into a legal parcel by recording a final map or if plaintiff "waived" recording of final map was void upon inception because waiver provision violated Subdivision Map Act--which prohibited sale of a parcel of real property until a parcel map has been filed unless sale contract was "expressly conditioned" upon approval and filing of a final map--since contract would allow sale before final map had been filed.
     Sixells, LLC v. Cannery Business Park - filed December 29, 2008; publication ordered January 23, 2009, Third District
     Cite as 2009 SOS 524
    
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-Title Insurance-
Where title insurance policy limited coverage to named insured, a limited liability company, or company's successor in interest named by operation of law, and plaintiffs, who were sole members of company transferred company's real property to themselves as trustees of a revocable family trust then dissolved company, plaintiffs as trustees did not succeed themselves as individual members of company by operation of law and thus coverage did not continue.
     Kwok v. Transnation Title Insurance Company - filed February 10, 2009, Second District, Div. Two
     Cite as B207421
    
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Los Angeles County Bar Association
2009 Real Property Section Newsletter
REAL PROPERTY SECTION REVIEW
Daniel L. Goodkin, Editor    *   Norman A. Chernin, Co-Editor

SECTION OFFICERS
Chair
Donald C. Nanney

First Vice-Chair
Michael S. Klein

Second Vice-Chair
Pamela L. Westhoff

Treasurer
Gregg J. Loubier

Secretary
Theresa C. Tate

Immediate Past-Chair
Timothy M. Truax

Chair Emeritus
Norma J. Williams,

Section Administrator
Terrina Scott

EXECUTIVE COMMITTEE MEMBERS

Eric Altoon
Nedra E. Austin
Susan J. Booth
James L. Brat
Norman A. Chernin
Brant H. Dveirin
Daniel L. Goodkin
Rebecca H. Lessley

Peter J. Niemiec
D. Eric Remensperger
David C. Sampson
Michael G. Smooke
Linda E. Spiegel
Sarah J. Spyksma
Valerie Wisot
Andrew J. Yamamoto


SUB-SECTION CHAIRS
Commercial Development & Leasing, Marcia Z. Gordon
Construction Law, Brian Ostler
Land Use Planning & Environmental Law, Claire Hervey Collins
Real Estate Finance, Caroline Dreyfus
General Real Estate Law, Nadav Ravid
Title Insurance, David M. Marcus

 

Readers are advised that changes in the law may affect the accuracy of this publication or the functionality of links after the publication date.