REE4433 Final
Edlyn Associates proposed to build 80 homes on a 100-acre parcel it owned in Easton. The Easton Planning Board informed Edlyn Associates that 60 acres were regulated wetlands and could not be developed for residential structures. Edlyn Associates sued the Planning Board contending that the regulation obliterated the entire value of the 60 acres of wetland because it could not build on them.
A court would rule that in assessing the value of the land in a regulatory takings case, it would examine the parcel as a whole (100 acres). Because Edlyn Associates had 40 acres that it could develop, there was no "permanent obliteration" of the value of the parcel. If the court were so inclined, it might try to ascertain whether the 60 acres of wetland retained some economic value.
At closing, Fred Thomas, seller, is unable to produce any paid receipts for water bills for the last year. Frank Hander, purchaser, is wary of closing without an assurance that any unpaid bills will be borne by the seller. An escrow account is set up with $400 funded from the purchase price, an amount everyone agrees would be more than sufficient to pay any unpaid water bills for a year.
After closing, contact with the water company reveals an unpaid water bill of $90. The escrow agent will pay the amount out of the escrow funds and send the remaining $310 to the seller.
Jake Rubin owns 50 acres of farmland that has been on the market for two years, listed at $100,000. Lance Lane wants to buy the land but is unable to obtain financing from a lending institution. Rubin and Lane enter into a land installment contract whereby Lane pays a downpayment of $10,000 and agrees to pay the remaining $90,000 over nine years at 9% interest. Rubin executes the deed in favor of Lane and deposits it with Fidelity Trust Co., an escrow agent that is directed by the terms of the escrow agreement to deliver the deed to Lane upon receiving receipts showing that the purchase price has been paid in full. Rubin does not have control over the deed as long as Lane does not default on the terms of the installment contract. What buyer risks are there with a deed of trust?
After nine years of timely payments, Lane is entitled to the deed.
Oscar Fong defaulted on a loan from Portland Trust. The loan was secured by a mortgage on real estate owned by Fong. At the time of default, the outstanding indebtedness was $575,000. The mortgage was foreclosed and the property ordered sold. The selling price at the foreclosure sale was $570,000.
After this amount was credited, the bank commenced a personal action against Fong to collect the additional $5,000 plus all expenses.
Baum, as the original grantee of a subdivided parcel, covenanted in the deed to accept and pay for a seasonal water supply provided by the original grantor. Eagle Enterprises, the successor to the original grantor, sued Gross, the successor to the grantee Baum, to enforce the restrictive covenant relating to the supplying of water. Eagle Enterprises argues that the covenant attaches, or runs with the land, thereby binding all subsequent owners to pay for supplying the water. Gross responds that the covenant bound only Baum and did not run with the land. The court held that a restrictive covenant will run with the land if it meets three conditions: (1) the original parties must intend that it run with the land, (2) there must be privity of estate between the parties, and (3) the covenant must touch and concern the land.
Although the court found that this particular covenant was personal and did not "touch and concern" the land, any covenant that meets the threefold test will be held to run with the land.
Barry Martin sells property to Sheila Cable for $100,000, payable $25,000 down with the remainder to be paid over 15 years at payments reducing the principal $5,000 a year. Martin had previously purchased the property for $75,000. His gross profit is $25,000 ($100,000 contract price - $75,000 original purchase price). Cable pays the $25,000 down payment. The proportion of the gross profit to the total contract price is 25% (25,000 ÷ 100,000 = 25%).
Barry, by electing the installment method, needs to report as income in the year of sale only $6,250 (25% of $25,000 down payment) and $1,250 in each succeeding year (25% of $5,000).
Kevin Armstrong, who is afflicted with a serious kidney disorder, deposits a deed with an escrow agent before entering the hospital for surgery. Kevin instructs the depositary to deliver the deed to his sister "in the event I do not survive the operation; otherwise, I will pick it up after I am released from the hospital.
Because Kevin did not relinquish total control over the document, there was no legal delivery to the escrow agent.
As security for a $50,000 loan, Naomi Tilson executed a mortgage to the Pike County National Bank. After making two payments on the loan, she defaulted. At the time of her default, the market value of the property was slightly in excess of $50,000.
Because Naomi and her family were valued customers, the bank offered to accept a deed to the property instead of foreclosing. After discussing the consequences of this action with her attorney, Naomi agreed to convey the property to the bank.
Beverly Bank owns two lots in the Village of Flossmoor, located in the Butterfield Creek floodway. The 100-year floodway is a model based on a statistical projection of the land that would be flooded by the worst storm likely to occur within any 100-year period. The lots are zoned for single-family use. In 1988, the bank's application for an extension of a construction permit was denied because state law (§ 18(g)) prohibits all new residential construction in the floodway. The bank sued for the right to obtain the permit for the new construction and was successful in the lower court.
Beverly Bank owns two lots in the Village of Flossmoor, located in the Butterfield Creek floodway. The 100-year floodway is a model based on a statistical projection of the land that would be flooded by the worst storm likely to occur within any 100-year period. The lots are zoned for single-family use. In 1988, the bank's application for an extension of a construction permit was denied because state law (§ 18(g)) prohibits all new residential construction in the floodway. The bank sued for the right to obtain the permit for the new construction and was successful in the lower court.
Bowers and a number of other real estate firms in northwest Detroit conducted solicitation campaigns in northwest Detroit involving flyers, telephone calls, and door-to-door canvassing. As part of their campaign, flyers were allegedly delivered to "Resident." One flyer contained the legend, "We think you may want a friend for a neighbor . . . know your neighbors." Another mailing also addressed to "Resident" purported to carry "neighborhood news." It announced that a real estate agency had just bought a house at a specific address in the recipient's neighborhood, that the named sellers had received cash, and that the recipient might receive the same service.
Blockbusting. The recipients lived in changing neighborhoods. This conduct was judged to be illegal.
In May 2004, Isabel Luna attempted to rent an apartment from New Cambridge Apartments. New Cambridge informed Luna that because the apartment she was interested in would require her children of the opposite sex to share a room, it was not available. New Cambridge had a policy of requiring children of the opposite sex to sleep in separate bedrooms. During a subsequent investigation, it was also revealed that New Cambridge had a policy banning children from living on the fourth floor of the apartment complex.
Both policies were found to constitute familial status discrimination, and New Cambridge was ordered to pay Luna $15,000.
Wayne and Lucille Hickox entered into a written agreement for the sale and purchase of 864 acres of real estate with Barbara and Billy Bell. The purchase price was $700,000, payable $50,000 as a down payment and the remainder in installments. Under the contract, the purchasers had the option, as payments were made, to have the sellers sign a warranty deed in favor of buyers to such land as paid for based on $815 per acre. The Bells faithfully made payments the first four years and then assigned the contract to the Hesses, who made payments thereafter. The Bells requested that the Hickoxes execute a warranty deed conveying 83.67 acres based on the amount of principal paid to date. The Hickoxes refused to credit any amount of the payments made by the Hesses because it was not paid by the Bells. How would a court rule?
Finding in favor of the Bells, the Illinois Appellate court said: [W]hen a valid assignment is executed, the assignee (1) acquires all of the interest of the assignor in the property that is transferred and (2) stands in the shoes of the assignor. . . . [We] find that the money paid by the Hesses under the contract is to be credited to the Bells as payment under the contract."
In 1968, Patrick Gilbertie constructed a house on a one-acre parcel. He conducted a plumbing repair and supply business from his residence, which was a legal use under the town regulations in existence at that time. In 1972, the town regulations changed to prohibit the combined residential and business use. By 1988, Gilbertie's business was booming, and the town ordered him to cease operations because his legal nonconforming use was now illegal because the amount of business being done had significantly increased.
Gilbertie sued and the court found for him. The court determined that the type of nonconforming use had not materially changed, and the fact that the amount of business had increased was not an illegal expansion of the nonconforming use.
Fleming, a prospective tenant, visited a property owned by Fredricy. While showing the rental property to Fleming, Fredricy stated that her children would be prohibited from playing outside in the front yard. Fleming filed a complaint. After conciliation failed, Fleming opted to sue Fredricy in federal court claiming that the remark was familial status discrimination.
In June 2003, the federal court found that the policy prohibiting the children from playing in the front yard was discrimination and awarded $23,064 in damages.
Anders Plumbing Inc. owned a valuable building. The company needed money and desired to sell stock to Lance and Jean Billingham. To induce the Billinghams to purchase the stock, they were given a mortgage on the property.Lee Sickles, a contractor, made improvements on the property. When he was not paid, Sickles attempted to enforce a mechanics' lien. The Billinghams argued that their mortgage had priority over the lien. Was the mortgage ruled VALID?
In a suit by Sickles, the court would hold the mortgage invalid because it was NOT given as security for a debt.
Established in 1969, Playa de Serrano's declaration provides that each purchaser is to receive a deed to an individual town house. The declaration further provides that an association will own and control the common areas, and it states that it shall be "an adult town house development. Wilson and his mother purchased a town house in the Playa de Serrano community. Thereafter, she transferred her interest to her son. Subsequently, in 2002, the owners passed an amendment to the bylaws declaring that Playa de Serrano is an "age-restricted community." The management then interviewed the interest holders to determine whether they were age 55 or older. Wilson sued, seeking a declaration that the age restriction was invalid. The trial court ruled against him, and he appealed.
In reversing the decision, the appellate court noted: The declaration does not expressly restrict occupancy to persons 55 years of age or older. Nor does it expressly grant the Board the power to impose such a restriction.
Metcalf contracted to sell property to Lay for $49,000. The property was encumbered with a $40,000 mortgage. The contract did not mention the existing mortgage because Lay anticipated financing without it. This financing did not materialize, and the salesperson for the seller suggested that Lay merely purchase the equity. Lay agreed. Lay never talked with the seller, and no express assumption was discussed. At the closing, the price of the property was clearly shown as $49,000 with a $40,000 credit for the mortgage. The deed to Lay excepted the existing mortgage. When the debt was not paid, the mortgagee foreclosed. Not realizing enough from the sale to pay the debt, the mortgagee sued Metcalf, who in turn sued Lay.
Lay would be held personally liable, although he had not assumed the mortgage, if the court applied the doctrine of implied assumption.
Lon Luebel, escrow agent, delivers a deed to Mike Lerman, grantee, prior to the deposit of the $170,000 purchase price, a precondition of the instructed delivery.
Lon is liable to Kim Sipe, the grantor, for damages because he acted contrary to the escrow instructions.
Jim Ferguson, seller, enters into a land installment contract with Bill Hodd, buyer, whereby Ferguson is to tender a free and unencumbered deed to 20 acres of farmland designated as the Hill property, on Hodd's completion of 60 monthly payments of $300 each. At the time the contract was entered into, Ferguson possessed only a leasehold interest. Thereafter, however, he acquired the property in fee simple absolute from the lessor.
On completing the last installment payment, Hodd is entitled to the fee under the doctrine of after-acquired title.
Seth Nathan, unmarried, executes a deed and deposits it in escrow. The escrow agent is directed to deliver the deed to the buyer when the buyer secures financing and deposits the purchase price. Before the deposit of the purchase price, Seth marries; thereafter, the buyer deposits the purchase price. Seth's wife refuses to release dower interests in the property. Is the agent required to deliver the deed free of any spousal interests of Nathan's wife?
Regardless, the escrow agent is charged with conveying the deed to the grantee, who takes possession free of spousal interests pursuant to the doctrine of relation back.
Midge and Tony McLaughlin, a young married couple, executed a $75,000 mortgage to United National Bank for funds advanced to purchase a small house. Midge and Tony planned to have a family and knew that additions would have to be made to the house. When they explained this to the loan officer, he suggested an open-end mortgage. A provision was included in the mortgage requiring the bank to lend them additional funds up to the original amount of the loan.
Several years later, Midge and Tony requested those additional funds. During the intervening years, a judgment had been entered against Midge as a result of an automobile accident. Despite this judgment, United National advanced the money; the original mortgage provided security for the additional funds.
Susan Wilson purchased a grocery store in an area subsequently zoned residential. As residential development occurs, Wilson will enjoy a virtual monopoly as a grocer because residential zoning has excluded grocery competition.
Susan will not be able to expand her store under current zoning.
The purchaser failed to provide evidence of fire insurance before an escrow closing, contrary to the terms of the escrow agreement. Nonetheless, the escrow agent closed the transaction, delivering the deed to the buyer and the money to the seller. The lender objected to the closing and sought damages. The property did not burn. Would a court make the escrow agent pay damages?
The California Court of Appeals, finding for the defendant, affirmed language of the trial court, which said: "The court cannot find that the failure to comply with the written instructions [resulted in any [damages].
Blackwell, a white, refused to sell his house to a black couple (Herrons). Instead, Blackwell leased the house to a white couple. The Herrons filed a complaint with HUD. The ALJ found for the Herrons, granting them $40,000 in actual damages and granting $20,000 to the white couple who leased the house for their embarrassment and economic loss; he also assessed a civil penalty of $10,000 against Blackwell.
The Eleventh Circuit upheld the ALJ on all the relief granted. This is the first case decided by an ALJ under the 1988 Fair Housing Amendments Act enforcement procedures. Notice the flexibility the ALJ has in granting relief.
The zoning ordinance in the Town of Concord required a minimum lot size of one acre along existing roads and three acres on the interior. Kit-Mar Builders was denied a request to rezone its property lots smaller than mandated by the code. Kit-Mar sued Concord, contending that the large-lot zoning was an unconstitutional taking of its property.
The Pennsylvania Supreme Court held that a zoning provision of this type is unconstitutional if either its purpose or its result is exclusionary. The only exception would be where the municipality can show some extraordinary justification for requiring large lots. An extraordinary justification would be where the natural conditions of the soil, for instance, cannot handle denser population and there is no other reasonable, nonexclusionary method of resolving the problem. Most Pennsylvania communities would be hard-pressed to satisfy the judicial burden of proving extraordinary justification.
First Escrow, Inc., does real estate closing services for banking institutions, title insurance companies, and others. It completes preprinted forms of documents, including deeds, notes, affidavits, settlement statements, IRS 1099 forms, and property inspection certificates. All forms are prepared or approved by a licensed attorney. It does not make any changes to the forms without an attorney's approval. It does fill in the blanks on the forms based on information from the real estate contract, attorneys, title insurers, lenders, and the buyer and the seller involved in the transaction. First Escrow charges a flat fee whether documents are prepared or not. A question arose as to whether this constituted the practice of law in violation of the prohibition to do so without a license.
The Supreme Court of Missouri reasoned that under the relevant statute in Missouri, it did not constitute the unauthorized practice of law where the closing agent completes simple, standardized forms of documents, which do not require the exercise of judgment or discretion, under the supervision of and as agents for a real estate broker, a mortgage lender, or a title insurer who has a direct financial interest in the transaction or a licensed attorney who represents one of the parties in the transaction.
The owner of Grand Central Terminal in New York City petitioned to the New York Landmark Preservation Commission to build a 55-story office building above it. The Commission rejected its request. New York City's law did provide owners of landmark sites additional opportunities to transfer development rights to adjacent parcels on the same city block. Because the terminal owner was not permitted to fully develop the historical site, the owner was entitled to exceed zoning limits on the development of other parcels of land.
The U.S. Supreme Court decided that New York City's law did not prevent the owner from realizing a reasonable return on its investment. However, the Court did not clearly state that the law amounted to a taking and thus required just compensation satisfied by conferring the TDRs. It only stated that the TDRs mitigated the impact of the historical landmark preservation regulation.
The Village of Bellwood and six individuals brought suit against two real estate firms for steering black homebuyers to one area of the Village, and white homebuyers to another area. The real estate firms argued that the Village and the individuals, who were admittedly testers and not prospective homebuyers, were not economically injured and could not sue under the Fair Housing Act.
The U.S. Supreme Court held that the conduct of the real estate firms was illegal steering under the Fair Housing Act and that the plaintiffs' contention that they were being denied the opportunity to live in an integrated community was adequate economic injury to bring the suit.
Teleprompter placed a one-foot-wide cable television box on the rooftop of a building owned by Loretto. The cable television company obtained the authority to do this from a state law permitting the placing of cable boxes and wires on private land. Loretto challenged the law as an unconstitutional regulatory taking of a part of her land.
The U.S. Supreme Court ruled for Loretto, stating that a "permanent physical occupation authorized by government is a taking without regard to the public interest it may serve." It is noteworthy that the rule applies only to permanent physical occupations; it is a per se rule, however, applying regardless of the extent of the public interest served by the state law or the slight degree of economic injury to the landowner.
Teal executed several mortgages to Walker on farmland and property in Portland, Oregon. The mortgages contained provisions allowing Teal to retain possession of the land but permitting Walker to take possession on default. When Teal defaulted, Walker demanded possession of the properties. Teal refused to yield possession, collecting earnings from the property until ousted from possession by a foreclosure sale. As the proceeds of the sale fell far short of paying the debt, Walker sued for the rents collected after Teal's refusal to surrender possession.
The U.S. supreme court determined that the mortgagee was entitled to rents and profits only if actually in possession.
Hal Zenick owned a home encumbered with a $385,000 mortgage at 7% interest. The mortgage was held by the Harper Hill Savings and Loan Association (Harper Hill). Hal, who had purchased the property for $398,000, had lived there for about a year when he was transferred and forced to sell. During the year, interest rates rose considerably in Hal's area, and the broker with whom he listed the property suggested that Hal might sell his home more quickly and for a better price if the mortgage were retained.
The buyer would not have to finance at the higher interest rates and might save in other ways.
Jaurel and Edna Fincher entered into a land contract whereby Lester Stacey and his wife agreed to purchase a one-half acre tract of land from the Finchers. The purchase price was $1,200, payable $200 down with the remainder payable in installments of $47.50 per month. Paragraph 7 of the contract provided that the "buyers may not assign their rights hereunder in whole or in part." Later, the Staceys entered into an agreement with Miles Homes to purchase a precut home for erection on the tract for $6,378. The Staceys made a down payment and signed a promissory note for the balance due. The note was secured by a mortgage on the tract of land purchased. Miles Homes delivered the materials to the site in accord with the contract. The Staceys made payments to the Finchers but defaulted after the death of Mrs. Stacey. Similarly, the Staceys defaulted on their obligation to pay Miles Homes. The Finchers canceled the contract (with the consent of Lester Stacey), reacquired possession of the land, and sought a judicial order determining that the Miles Homes' lien was invalid.
The court concluded that the prohibition against assignment did not prohibit the Staceys from entering into a valid mortgage and that the Finchers owned the property subject to the Miles Homes' lien.
William and Mae Pelster filed suit to enjoin the Millsaps from constructing a house on a lot in the plaintiffs' neighborhood. A restrictive covenant prohibited owners from subdividing their lots. The lot that Millsaps proposed to build on was a subdivided lot. The Millsaps argued that the character of the neighborhood had substantially changed over time because many of the original lots had been subdivided. The court stated that a restrictive covenant is unenforceable if clear and convincing evidence exists that (1) a substantial change in the character of the neighborhood existed, (2) enforcement of the restriction would not restore the neighborhood to its prior character, and (3) enforcement would impose greater hardship on the Millsaps with minimal benefit to the Pelsters.
The court decided that the restrictive covenant in this case was unenforceable because numerous lots had been split previously, many current residents favored the splitting of this lot, and the Millsaps had signed a house construction contract unaware at the time that the restrictive covenant existed.
The Laufmans, a white couple, purchased a home in a predominantly black neighborhood. When financing was denied by the Oakley Building and Loan Company, the Laufmans sued. They argued that the defendant had redlined areas in the community in which minority group families were concentrated. The defendant moved for summary judgment.
The court denied the motion. In denying the motion, the court stated that "although not altogether unambiguous, we read this [Sec. 3604 and 3605 of the Civil Rights Act of 1968] as an explicit prohibition of 'redlining.'"
Lone Star Development Corporation entered into a contract with Michael Miller and David Cross to sell certain realty in Pueblo County, Colorado, for $588,000. One thousand dollars was paid at the time of the agreement, and the remaining amount was to be paid at the closing on September 16, at which time Lone Star was to deliver a warranty deed and furnish a marketable title. There was an unpaid lien on the property in the amount of $479,756.71, of which all parties were aware. Lone Star intended to satisfy the lien out of the proceeds of the purchase price. Miller and Cross refused to tender the purchase price, maintaining that the unsatisfied lien rendered the title to the property unmarketable. Lone Star sued Miller and Cross for damages for breach of contract.
The court held in favor of Lone Star and said that "a lien on real property which is going to be paid off from the proceeds of the sale of the property is not to be regarded as failure or inability to furnish a marketable title."
In April 1967, the Allens (purchasers) entered into a land installment contract with the Ulanders (sellers) for the purchase of real estate. Under the terms of the contract, the Ulanders agreed to convey the real estate to the Allens after payment of $9,700 at the rate of $85 or more per month at 7% interest per annum. The contract further provided for forfeiture in the event the purchasers failed to make timely payments. Over a period of 7½ years, the Allens paid more than $7,500 in principal and interest and built up an equity of $1,583. They also made improvements to the property, adding two bedrooms, a bathroom, and paneling. The Allens failed to make five payments in 1974 and 1975, and the Ulanders instituted an action in forfeiture. The court, applying equitable notions, allowed the purchasers 30 days to deposit with the court a sum equal to five months' payments to avoid forfeiture.
The court held that "where a purchaser under an installment land contract has acquired a substantial equitable interest in the property, the court has discretion to utilize a remedy similar to that permitted in foreclosure actions."
Benjamin Chertok entered into a contract to purchase realty from Aroosiag Kassabian. Chertok made a deposit and agreed to pay the remainder in cash at the closing. At closing, Chertok tendered a third person's certified check to Kassabian. Kassabian requested that he cash the check, and Chertok refused. After Kassabian refused to tender the deed, Chertok sought a return of his deposit.
The court held that Chertok's tender was not the equivalent of payment in cash, and consequently he was in breach and not entitled to a return of his deposit.
Birdie H. Fuqua executed a contract for the sale of a 50-acre tract of property to Selected Lands Corporation (SLC). Shortly thereafter, she signed a deed and placed it in escrow. Under the terms of the agreement, the escrow agent was to deliver the deed to SLC when SLC's attorney approved the closing papers. Before the approval, Fuqua died. Thereafter, the attorney approved the papers. Does the death of the grantor invalidate the deed?
The court held that the death of the grantor did not invalidate the instrument and that, on the occurrence of the condition, the grantee was entitled to the deed. Under the doctrine of relation back, title would be deemed to pass as of the date of the first delivery.
The Town of Hampstead's zoning ordinance prohibits residential buildings higher than 1½ stories. The purpose of the regulation is to retain the view of and from the lake and to maintain the beauty and countrified atmosphere of the town. Alexander applied for a variance to put an additional full story on his one-story home. His variance application was denied by the town, and he sued to overturn the denial.
The court held that the denial of the variance was based on protecting the lake view and was therefore not arbitrary. It went on to state that to obtain a variance, the applicant must prove the following: (1) no reduction in the value of surrounding properties would be suffered, (2) granting the permit would benefit the public interest, (3) denial of the variance would create unnecessary hardship for the applicant, (4) granting the permit would do substantial justice, and (5) the use must not be contrary to the spirit of the ordinance.
In August 2004, the owners of a mobile home attempted to sell the home to a couple with children. Rennels Property Management, the owner and manager of Marlin Court where the mobile home was located, informed the couple that Marlin Court was an adults-only community. The sale fell through, and the mobile homeowners were unable to buy their intended new home.
The court ordered Rennels Property Management to pay the mobile homeowners $32,000 because they were the indirect victims of familial status discrimination.
Frederick defaulted on an installment of his $80,000 mortgage loan. The mortgagee, Northwest Bank, brought a foreclosure action and notified Frederick of its option to accelerate the entire debt. The notice stated that if Frederick paid the amount past due plus interest, he could cure the default. Frederick made no payment within the 30-day period. However, during the trial, he proffered payment of the delinquent installments plus interest. Northwest refused to accept the amount, and Frederick moved to dismiss.
The court refused to do so, holding that the notification of acceleration matured the entire debt, which was no longer payable in installments.
Sowin Associates applied to the planning and zoning commission for subdivision approval of a plan for 11 lots on a 10-acre parcel. The parcel was zoned residential. The commission denied subdivision approval because the development could cause off-site traffic congestion, decrease property values, and was in disharmony generally with the area. Associates' plan was apparently in conformity with the town's subdivision regulations. Sowin Associates sued to reverse the commission's denial.
The court reversed the commission's denial because Sowin Associates' plan conformed to the town's subdivision regulations. It stated that traffic congestion, decrease in property values, and area disharmony are relevant considerations in a zoning matter determining the use of the land but not in a subdivision matter.
Union Market National Bank held a $9,800 mortgage on property owned by Missak Derderian. The mortgage was in default, and the bank advertised a sale under a power included in the mortgage. The advertisement stated, in addition to a $500 cash down payment at the time of sale, "other terms to be announced at the sale." At the sale, the auctioneer announced a $500 deposit would be required of anyone prior to that person's bid being accepted. This was a very unusual condition, and Derderian's brother, who was planning to bid, refused to comply. The auctioneer, as a result, refused to accept his high bid of more than $10,000 and sold the property to the mortgagee for $8,500. All parties at the sale knew that Derderian's brother was financially responsible. When Derderian challenged the sale as improperly conducted, an appellate court agreed with him.
The court stated that: "[a] mortgagee with the power to select the methods of sale must act as a reasonably prudent man would to obtain a fair price... If the conditions announced at the sale.... operate to prevent free bidding, it is the mortgagee's duty to change them."
McCormick owned 39 acres of land on Oseetah Lake in the Adirondack Mountains. McCormick applied to the Adirondack Park Agency (APA) for a permit to develop 32 lots on the tract. The APA granted the permit subject to a restriction against placing any boat houses on the shoreline of the lake. The sole basis for the restriction was that boat houses would interfere with the rustic or aesthetic quality of the area. McCormick protested the restriction in court.
The court upheld the APA decision, affirming a previous position that aesthetics alone could substantiate a zoning regulation. The court noted that a "regulation in the name of aesthetics must bear substantially on the economic, social, and cultural patterns of the community or district."
John Hines signs a deed and delivers it into escrow. The deed is not witnessed at the time of delivery. State law requires that the grantor "acknowledge the signing of a deed to be his or her voluntary act before two witnesses.
The deposit of the deed will not operate as an escrow because it lacks the appropriate attestation. The deed is subject to recall by Hines.
Anna Skibosh entered into a land contract with Auto Acceptance for the sale of her premises. Two days later, Auto Acceptance assigned its interest in the land contract to Interstate. Interstate then executed a quitclaim deed in favor of Joseph Sorce and delivered it to Auto Acceptance with an attached letter stating that the deed would be held in trust by Auto Acceptance until Sorce paid off certain debts owed to Auto Acceptance.
The land contract was fulfilled, and Skibosh conveyed the property to Auto Acceptance, which conveyed it to Interstate. Sorce's creditors claimed that Sorce was the owner of the property. The court disagreed and stated as part of its rationale that the escrow of a deed to real estate must be accompanied by an agreement that satisfies the statute of frauds and that the letter attached to the deed was insufficient for that purpose.
Norma Livingston sells real property to Howard Kessler on a land installment contract for $120,000, payable $20,000 down and $5,000 principal annually thereafter, plus 10% interest for 20 years. After five years, Livingston desires to borrow money and gives a mortgage in the property to the Second National Bank as security for the loan. Livingston may mortgage the property up to $75,000, the balance due on the installment contract. In addition, the buyer may be contractually safeguarded against the consequences of a seller defaulting on a mortgage by inclusion of a clause similar to the following:
The seller shall keep any mortgage on the property in good standing, and if the seller defaults on any mortgage, the buyer may pay the delinquency and receive credit toward payment due under the terms of the contract.
ABC Savings and Loan has an agreement with Alfred Hillman, attorney, whereby for every person ABC refers to Hillman for legal services in connection with real estate transactions, Hillman pays ABC 10% of the fees generated.
This is an illegal kickback under RESPA. In addition, Hillman would be violating the attorney's code of ethics and would be subject to disciplinary measures.
Toble sold Randomacre to Hillside on land contract. Hillside mortgaged the property, and when he defaulted, he owed $40,000 on the land contract and $20,000 on the mortgage. The property was foreclosed and sold at public auction for $70,000. The proceeds were distributed as follows:
Toble: $40,000. Mortgagee: 20,000. Hillside: 10,000. Total: $70,000
Junior Wells, a resident of California, owns farmland in Kentucky that he wants to sell. Senior Johnson, a resident of Kentucky, desires to buy the farmland. The cost of Wells's appearance at a closing in Kentucky is prohibitive. The parties enter into a purchase contract for the sale of the farmland and agree to close in escrow. Wells mails a fully executed deed for his Kentucky farm to Kentucky Loan & Trust Co., which is instructed to deliver the deed to Johnson on receipt of the purchase price.
When Johnson delivers the purchase price, Kentucky Loan & Trust, as previously instructed, delivers the deed to Johnson.
Rachel assembles a four-by-six-foot metal shed on her property to store her lawnmower and garden tools. Although the building is prohibited (without permission) by the restrictive covenant in Rachel's deed, it is common in her subdivision to own these sheds; in other words, everyone ignores the covenant. The courts may not enforce the restrictive covenant on request by a neighbor because the homeowners have acquiesced in this noncompliance. However, there are instances where Rachel will clearly be subject to the restrictive covenant and probably to a building code.
When Rachel decides to build a second house on her lot, the covenant is violated and a building permit is required. The building inspector, to offer some measure of protection to other residents, oversees her plans. The building code, rather than the restrictive covenant, will probably become the enforcement mechanism.
Rocky Hayes owns a five-acre tract of land in Florida and is interested in selling his land and moving to Colorado. Johnny Ruskin owns a five-acre tract of land in Colorado and is interested in moving to Florida. A real estate broker brings the two together, and they agree to an even exchange of property. Hayes deposits his deed to the Florida property with Jerry Bloom, a third party, on condition that the Florida deed be delivered to Ruskin on receipt of the deed to the Colorado property.
When Ruskin deposits the deed to the Colorado property, Bloom will deliver it to Hayes and deliver the deed to the Florida property to Ruskin, thus completing the escrow transaction.
Whitehouse desires to pull out $25,000 of equity from his residence. He currently has a 4% loan. The current market rates are 6%. Financial Services is willing to extend a second mortgage for the new amount of $25,000 by assuming the existing mortgage and charging 5% interest on the combined loan.
Whitehouse is better off taking this option instead of refinancing the whole loan at 6%. Financial Services will service the old loan and in effect receive an additional 1% of interest for doing that while extending the additional $25,000 loan at 1% less than market interest.
Ray Adams wished to go into business for himself as a plumbing and heating contractor. He planned to hire one or two employees and open up a small showroom from which to sell plumbing fixtures. Although Ray had saved enough money to get started, he was advised by some of the manufacturers whose lines he wished to carry that he should have a line of credit with a local bank. Ray's bank was willing to give him a $65,000 line of credit; as security, the bank asked for a mortgage against rental property that he owned. Does ABC Bank have a valid mortgage against the rental property since the line of credit was for Ray's plumbing business?
Yes this is a valid mortgage. Mortgages may apply to rental income, life estates, estates for years, remainders, reversions, as well as other property rights. Mortgages are also used sometimes to secure obligations that are quite unrelated to the property mortgaged.
Jane, a resident of California, owns farmland in Kentucky that she wants to sell. Sam, a resident of Kentucky, desires to buy the farmland. The cost of Jane's appearance at a closing in Kentucky is prohibitive. The parties enter into a purchase contract for the sale of the farmland and agree to close in escrow. Jane mails a fully executed deed for her Kentucky farm to Kentucky Loan & Trust Co., which is instructed to deliver the deed to Sam on receipt of the purchase price. When Sam delivers the purchase price, Kentucky Loan & Trust, as previously instructed, delivers the deed to Sam. Is this a valid type of escrow closing?
Yes, with the use of the escrow closing device, the closing is less likely to fail because an independent third party is charged with carrying out mechanical details of the transaction! (Sometimes it is simply INCONVENIENT for parties to be at closing)
Sharon and Daniel Kruse resided in an apartment in Ballwin, Missouri, which Defendants owned and managed. Over the years, the Kruses suffered from numerous respiratory problems. The Kruses discovered what they believed to be mold in the apartment, and they moved out. Believing that mold had caused their respiratory problems, the Kruses filed a petition against Defendants alleging negligence and other causes of action. In finding that the case should be tried, the court said: As noted, proof of causation in cases involving exposure to a toxic substance typically requires a certain degree of scientific expertise. This is because "[t]he diagnosis of disease induced by environmental factors is essentially 'a scientific undertaking' requiring proof which 'the scientific community deems sufficient for that causal link."
[T]he testimony of Mr. Behrmann and Dr. Hand, and the reasonable inferences drawn therefrom, establishes the requisite evidence of causation necessary to avoid summary judgment. Mr. Behrmann's testimony sufficiently demonstrates that the Kruses were exposed to high levels of mold, which was capable of producing mycotoxins. Dr. Hand opined to a reasonable degree of medical certainty that the Kruses' exposure to this high level of mold contributed to and worsened their respiratory problems. Based on his observations in the course of the Kruses' treatment and review of their medical records, Dr. Hand concluded that these effects were consistent with the Kruses' exposure to harmful mold given that both Daniel's and Sharon's medical conditions improved after vacating the apartment
