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Does a California Title Company’s Preliminary Report Govern, Or Is It Only The Final Policy That Matters?
Posted: February 16, 2011 Filed under: real estate | Tags: preliminary report, real estate, title insurance 1 CommentA Preliminary Title Report (“Prelim”), issued by a title company before issuing title insurance, has long been held by the courts as only an offer to provide insurance. The Prelim is not a contract itself, nor is it something which can be relied on.
The Buyers were purchasing property in Solano County. The Prelim identified it by two tax assessor parcel numbers, as well as a legal description. However, the final title insurance policy identified the property by the legal description, but did not reference the parcel numbers. A map was attached to the final policy which depicted the two parcels.
The grant deed which was recorded described only one of the parcels. After the sale, the County tax Assessor assessed the new owners for both parcels. Years later, a neighbor built on one of the parcels, and the Buyers brought an action for trespass. They ultimately figured out that the Buyer did not own the 2nd parcel, so the Buyer made a claim on his title policy, which was denied. The Title Company pointed to the final Policy, which was for only one parcel.
The Court fond that the Buyers had a reasonable expectation that a title insurance policy covered two adjacent parcels rather than only one, when the preliminary report could be reasonably construed as an offer to insure both parcels, since the policy was ambiguous. The Prelim is an offer, and the Buyer can expect the Policy will be consistent with that offer.
This is the reasonable conclusion. The Buyer usually does not get a copy of the final Policy until after the sale has closed. If the Buyer was sophisticated in real estate matters, they might have spotted the problem, but they would still in the same position- making a claim, and having to sue the title company. The Buyer accepted the offer to provide title insurance, and the insurance must conform to the offer.
Oral Settlement in Court- The Party Must Be In Court, Their Attorney’s Statement Is Not Enough.
Posted: February 13, 2011 Filed under: real estate | Tags: real estate, settlement Leave a commentIn a recent California case, a homeowner sued their community Homeowner’s Association (“HOA”) for failing to enforce the Conditions, Covenants, and Restrictions (CC&Rs). They also sued other homeowners, who supposedly violated the restrictions.
Apparently the parties had tentatively reached a settlement outside court just before the day of trial, so on the day of trial, the parties appeared in court to put the settlement on the record by reciting it orally in court (As allowed by Code of Civil Procedure §664.6). However, the HOA representative did not appear- their attorney was there to represent them. Later, the homeowners decided they did not like the terms of the settlement, and would not agree to it, so the HOA sued to enforce it.
Section 664.4 states “If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement.” The question was what the legislature meant when it used the term ‘parties.’ The court noted that in other contexts the term party includes the litigant’s attorney, but settlement is such a serious step that ends the lawsuit, and requires the client’s express consent. It thus restricted the meaning of party to be the actual litigant themselves. As there was no authorized representative of the HOA in court, the settlement was unenforceable.
Tough luck for the HOA board, who were probably all volunteers, and did not want to take a week of work for the trial.
Critzer v. Enos (2010) 187 CalApp. 4th 1242.
Law Office of James J. Falcone
Fannie Mae & Freddie Mac – Sending Our Cash to Wall Street. Is the End Near?
Posted: February 10, 2011 Filed under: real estate | Tags: fannie mae, freddy mac, loan, mortgage, US Treasury Leave a commentFannie & Freddy were given a blank check by the US Treasury at the end of the financial crisis. As reported here, they are using that money to buy mortgages from Wall Street. These are bad loans sheets, probably at inflated prices. This is what “Tarp” was supposed to do, but now it is out of the public eye. The taxpayers are funding this program , out of the public eye.
Meanwhile, Treasury is set to announce a plan to deal with Fannie & Freddie, possibly reducing their role in the housing finance system. The purpose of these organizations was to make money available for homeowners, not holding loans for their own account; but that’s what made money for the management. Now that the government owns them, they are money launderers. Their current role is very cozy for Treasury.
Mortgage Lender Gets Borrower to Drop Bankruptcy With Promise To Negotiate, Then Forecloses. Was The Lender In The Wrong, & What Is Promissory Estoppel?
Posted: February 3, 2011 Filed under: real estate | Tags: foreclosure, mortgage, promissory estoppel, real estate Leave a commentA California woman got behind on her mortgage, and the Lender recorded a Notice of Default, so the borrower filed a ch 7 bankruptcy. She intended to convert to a Ch. 13 to pay the arrears and save her house. U.S. Bank, trustee for the lender, told her that, once she was out of bankruptcy, the bank would work with her on a mortgage reinstatement and loan modification. In reliance on that promise, she did not convert the case, nor oppose the lender’s motion to lift the automatic stay. She submitted documents to the bank for review.
The bank scheduled the foreclosure sale for January 9, 2009. There was no negotiation, but on the day before the foreclosure sale, the bank’s attorney made an oral offer to modify the loan, but refused to put the terms in writing. The borrower lost the home, received a three-day notice, and served with an eviction action.
The court ruled for the borrower, finding that she materially changed her position based on the bank’s promise- the doctrine of “promissory estoppel.”
The elements are 1) a clear and unambiguous promise; 20 reliance on the promise; 3) the reliance must be reasonable and foreseeable; and 4) the party must be injured by his reliance on the promise. The elements were all present here. The last minute oral offer of a modification was a unilateral offer, but the promise was to negotiate to attempt to reach an agreement. The borrower changed her position by not converting to Ch. 13, instead allowing the motion to lift the automatic stay be granted.
The conduct of the bank, luring a distressed borrower out of bankruptcy before taking their house is not new- I have seen it happen. Finally an California appellate decision is published to support borrowers, and help make their argument in the trial courts.
Real Estate Attorney James J. Falcone
Developer Cannot Enforce Arbitration Provision in California CC&Rs
Posted: January 20, 2011 Filed under: real estate | Tags: arbitration, CC&Rs, real estae Leave a commentA condominium developer in Southern California got sued by the Association for construction defects. The developer filed a motion to compel arbitration under the provisions of the CC&Rs. The court said no!
Recorded CC&Rs are made binding in disputes between owners, or owners and the association, because of their shared interest in the common interest development. CC&Rs are equitable servitudes which bind the owners and association. CC&Rs are not a contract between the developer and the owners association. There was no opportunity for “actual notice and meaningful reflection.” The association springs into existence on the sale of the first lot of the project. Maybe there is an argument that there is a meeting of the minds between the developer & the first buyer; but the rest of the buyer have no choice but to accept the CC&Rs.
So rarely do we see courts refuse to enforce unbargained for arbitration provisions (such as here) that it is an event worth celebrating.
Villa Vincenza HOA v. Nobel Court Develop. LLC (2010) 5th Distr. # D054550.
Sacramento Real Estate Attorney James J. Falcone
Is the Title Company Liable? You Get What You Pay For with Abstracts and Preliminary Reports.
Posted: January 10, 2011 Filed under: real estate | Tags: abstractof title, foreclosure, preliminary report, real estate, title company Leave a commentAn a foreclosure sale investor had an oral arrangement with an agent at a California title company. He would ask the agent if the loan being foreclosed was the senior loan; he only wanted a yes or no answer. He asked about an Encino property, was told ‘yes’, and so bid and bought the property for one million dollars. Turned out the answer was no, and the investor ended up losing a million.
He sued the title company for “abstractor” liability. An abstract of title describes all documents in the chain of title. The investor only wanted to know about one lien, but he thought it was in the nature of an abstract.
The court disagreed. Under California law, An abstract of title is a written representation as to documents affecting title. This investor never paid for an abstract; he just sought quick one-word answers.
Nor could there be liability based on a claim of a faulty “preliminary report.”
A preliminary report is merely an inducement to purchase a title policy, which in California shall not be construed as a representation as to the condition of title. Liability only attaches if one buys title insurance, and the condition of title is not a represented.
You get what you pay for with title companies, and if you have not paid for anything, you rely on their information at your own risk.
Soifer v Chicago Title Company (2010) 187 Cal.App. 4th 365
California Averaging 1 Year Before Foreclosure
Posted: January 4, 2011 Filed under: real estate | Tags: default, foreclosure, real estate 1 CommentLenders on California properties are averaging 367 days from the first late payment and a foreclosure referral, as reported by The Big Picture. This is the time before the notice of default is recorded.
The standard used to be three months of late payments before the lender referred the loan to the foreclosure department. Is this solely due to the volume of properties in default, and under staffing by servicers & lenders? I suspect the volume of real estate owned by lenders to be a factor for another reason. Given the flood of foreclosed properties for sale, to pick up the pace would only place more properties on the market and drive properties down. Meanwhile, efforts at loan modification while the loan is in default generates some cash to the lender.
Association Liable to Owner for Damage From Sewer Pipes Which Are Not Exclusive Use Common Area
Posted: December 26, 2010 Filed under: real estate | Tags: association, CC&Rs, condominium, real estate 1 CommentA California condo owner sued his association for repair costs In plaintiff’s suit against the homeowner association for repair costs to his condo aused by a leaky sewer pipe beneath the concrete slab underlying plaintiff’s condominium. The association argued that the sewer pipes were exclusive use common areas, so the owner was responsible for repairs.
The Davis-Stirling Act (sec. 1351) defines “exclusive use common area” as a portion of the common areas for the exclusive use of one or more, but fewer than all, of the owners of the separate interests and which is or will be appurtenant to the separate interest or interests. This includes fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest.
The court held that interconnected sewer pipes couldn’t really be said to be the “fixtures” of any particular unit. A sewer system is a series of interconnected pipes which ultimately feed into one common line. Differentiating parts of that interconnected system is unreasonable. The portion of piping coming from one unit is no more affixed to that unit than it is to the sewer system and other pipes or piping within that system. The court affirmed the award of about $17,000 is affirmed as, under a natural reading of the CC&R’s, the sewer pipe was a genuine common area to be maintained and repaired by the association.
Features such as the patio, deck, or window boxes are truly features designed to serve the single separate interest. The association took a big risk in deny responsibility and losing the suit.
Dover Village Ass’n v. Jennison, No. G042741
The Solar Shade Control Act- California’s Protection For Homeowners Installing Solar Collectors
Posted: December 12, 2010 Filed under: real estate | Tags: nuisance, real estate, soar Leave a commentCalifornia’s Solar Shade Control Act gained some notoriety in 2005 when some homeowners were criminally convicted of a violation, requiring them to prune their trees. As a result the law was revised to eliminate criminal prosecution and make it more workable for homeowners.
The Act provides that, once a solar collector is installed, the neighbors cannot allow any subsequently planted vegetation cast a shadow over more then 10% of the collector surface at any one time between 10:00 am. and 2 pm. (Cal. Pub. Res. Code section 25982.) The Act also provides for a voluntary Notice to be mailed to neighbors containing statutory language regarding the installation of a solar collector, and the requirements of the act. (Cal. Pub. Res. Code section 25982.1.)
Rather than allowing criminal prosecution, the revised Act provides that improper shading is a private nuisance, allowing the homeowner to take civil court action.
If you are a homeowner installing solar, it is a good idea to send the office notice. If you are a homeowner and see your neighbor installing solar, you should photograph your vegetation to document that it was in place before the solar. If you are a homeowner and your neighbor does not yet have solar, get and trees you might want in the ground now; you can always take them out later if you choose, but you can’t plant if the neighbor installs a solar collector.
California Real Estate & Business Law 