Real Estate Transactions

Landlord may be liable for fair housing violation if no response to one tenant’s racial harassment of another

/ Antidiscrimination Law, Fair Housing Act, Real Estate Transactions

In the case of Francis v. King’s Park Manor, Inc., 2019 WL 6646495 (2d Cir. 2019), a tenant engaged in a vicious campaign of abuse and intimidation of another tenant, coming to his door and threatening to kill him and repeatedly yelling at him and calling him the “n-word” and “fucking Jews.” The victim called the police several times and notified the landlord of the harasser’s behavior, which persisted. The victim sued the landlord, claiming that it failed to investigate or attempt to resolve the problem and allowed the harasser to continue to live in his unit without reprisal. The harasser was convicted of the crime of harassment in violation of New York Penal Law §240.26(1). The Second Circuit agreed with other Circuits that have addressed the question that post-acquisition claims are cognizable under the federal Fair Housing Act (FHA), 42 U.S.C. §§3601 et seq.. Section §3604(b) prohibits discrimination in the “terms, …

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Eighth Circuit issues confused ruling turning recourse mortgages into non-recourse mortgages

/ Mortgages, Real Estate Transactions

In a surprising development, the Eighth Circuit has held that mortgage debts are extinguished by foreclosure. CitiMortgage, Inc. v. Equity Bank, 2019 WL 5778343 (8th Cir. 2019). While some states, like California, generally prohibit deficiency judgments (claims against borrowers when the foreclosure sale does not garner enough to pay off the debt), most states allow lawsuits against the borrower to get an order to pay the rest of the debt agreed to by the original note. The promise to repay the loan is embodied in the “note” and the right to foreclose is embodied in a separate agreement (the “mortgage” or “deed of trust”) and the contractual obligation usually persists after foreclosure unless either state law or the contract language provide otherwise. The Eight Circuit ignored these traditional distinctions in CitiMortgage, and decided that the foreclosure ended both the contractual obligation and the lien on the property. The case involve the sale of 500 …

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Proceeds of partition by sale divided according to ownership interests without any credit given to co-owner whose funds were used to buy the property

/ Concurrent or Common Ownership, Estates and Future Interests, Real Estate Transactions

Because the Texas partition statute requires the proceeds of a partition sale to be divided “according to [the owners’] just rights therein,” joint tenants were entitled to 50% of the sale proceeds even though one of the co-owners had used his own funds to purchase the property. Gallagher v. Townsend, 443 P.3d 847 (Wyo. 2019). At the same time, the court would be entitled to adjust the amounts each party received to reflect the fact that one co-owner had paid more of the property taxes.

California limits enforceability of private transfer fees

/ Estates and Future Interests, Real Estate Transactions, Restraints on Alienation, Servitudes

California passed a statute prohibited private transfer fees unless used exclusively to support the encumbered property or cultural, education, charitable, recreational, environmental, conservation, or similar activities. Cal. Civ. Code §1098.6 (2018 Cal. Stat. ch. 306). Note that the Federal Housing Finance Agency and the Federal Housing Administration are prohibited from dealing in mortgages on properties encumbered by private transfer fee covenants that do not provide a “direct benefit” to the real property encumbered by the covenant.12 C.F.R. §1228.1.

Nonjudicial foreclosure requires appraisal to ensure foreclosure price is close to fair market value

/ Consumer Protection, Mortgages, Real Estate Transactions

The Massachusetts Appeals Court has held that nonjudicial foreclosures must be conducted in a fair manner and that the burdens on the party who is foreclosing are greater precisely because the auction sale is not be supervised or conducted by judicial officials. Prop. Acquisition Group, LLC v. Ivester, 2019 Mass. App. LEXIS 44, 2019 WL 1716436 (Mass. App. Ct. 2019) held that the owner cannot be evicted from the property after foreclosure when the mortgagee failed in its duty of good faith and reasonable diligence by taking no steps before foreclosure to determine the fair market value of the property. “The mortgagee must get for the property as much as it can reasonably be made to bring and do what a reasonable person would be expected to do to accomplish that result…Where Massachusetts…allows foreclosure without judicial oversight, it is imperative that the foreclosing mortgagee know or ensure that efforts are taken …

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Statute of frauds does not prevent recognition of a resulting trust

/ Real Estate Transactions, Statute of Frauds

When one person pays for real property but title is transferred to another, some courts will create a resulting trust. The Massachusetts Appeals Court defined the doctrine this way: “A resulting trust is implied when a transfer of property is made to one person and the purchase price is paid by another; in such a case a trust results in favor of the person who furnished the consideration. Such implication is based on the natural presumption that, in the absence of anything to show the contrary, he who supplies the purchase price intends that the property bought shall inure to his own benefit and not that of another, and that the conveyance is taken in the name of another for some incidental reason. A resulting trust must arise, if at all, at the time of the execution of the deed. The statute of limitations for a resulting trust claim is …

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Discovery rule tolls statute of limitations for enforcing a right of first refusal

/ Estates and Future Interests, Real Estate Transactions, Restraints on Alienation

The Texas Supreme Court held that the owner of a right of first refusal was not too late in asserting it because the statute of limitations did not start running until the owner knew or reasonably could have known that the right had been triggered. Carl M. Archer Trust No. Three v. Tregallas,566 S.W.3d 281 (Tex. 2018). The sellers of a surface estate granted the buyer a right of first refusal to purchase the mineral estate within 60 days after being given notice of an intent to sell those rights. The right of first refusal was recorded. Without giving such notice, the owner of the mineral estate sold that estate to a third party in 2007. Four years later (and outside the statute of limitations), the owner of the right of first refusal found out about the conveyance of the mineral estate and immediately sued to nullify it. The statute of …

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To avoid engaging in discrimination, Facebook changes its policy that had allowed advertisers for housing, employment, and credit to select which users could see their ads

/ Antidiscrimination Law, Fair Housing Act, Leaseholds, Mortgages, Real Estate Transactions

Responding to a lawsuit filed by the National Fair Housing Alliance and others that alleged discrimination against families with children, women, persons with disabilities, and on the basis of national origin, Facebook announced changes in its policies to avoid engaging in discriminatory advertisements. Brakkton Booker, After Lawsuits, Facebook Announces Changes to Alleged Discriminatory Ad Targeting, Mar. 19, 2019. See also Tracy Jan & Elizabeth Dwoskin, HUD is reviewing Twitter’s and Google’s ad practices as part of housing discrimination probe, Wash. Post, Mar. 28, 2019.

California beachfront owner temporarily denied power to place a gate limiting public access to the beach

/ Easements, Real Estate Transactions, Takings, Trespass

The Supreme denied certiorari from a California court that interpreted California statutes to ensure public access to the beach and that prohibited a beachfront owner from installing a gate to prevent such public access. Surfrider Foundation v. Martins Beach 1, LLC,221 Cal.Rptr.3d 382 (Ct. App. 2017). The court did not rule on the owner’s claim that the state law requiring him to allow access across his property effected a taking of property without just compensation. It found the regulation to be temporary since state law merely required the owner to seek a permit before closing access to the beach when permissive access had previously been given. It did not consider the order to allow access to constitute a temporary taking since it preserved the status quo before the owner’s action (installation of the gate) that triggered the state permitting requirement.

Supreme Court holds that nonjudicial foreclosure is not “debt collection” under the Fair Debt Collection Practices Act

/ Mortgages, Real Estate Transactions

Obduskey v. McCarthy & Holthus LLP, U.S., 139 S.Ct. 1029 (2019) resolved a conflict among federal courts on the question of whether those who pursue nonjudicial foreclosure of real property are “debt collectors” regulated by the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692a(6). The Court held that they are not and therefore immune for that statute’s regulatory requirements.

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