Real Estate Transactions

Time-barred claim in bankruptcy held not to violate Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act, 15 U.S.C. §§1692e, 1692f, probibits debt collectors from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt. §1692e, as well as prohibiting any “unfair or unconscionable menas to collect or attempt to collect any debt,” §1692f. In Midland Funding, LLC v. Johnson, 197 L.Ed.2d 790 (2017), the Supreme Court, in an opinion by Justice Breyer, held that it was not unfair, deceptive, misleading, or unconscionable to make a claim in a bankruptcy proceeding based on a debt when the statute of limitations has run on the claim. The majority argued that the Bankruptcy Code allowed presentation of any “claim” and did not qualify that by saying “enforceable claim.” The Court noted that such a claim might be unfair in an ordinary civil suit but distinguished the bankruptcy process partly because it treats untimeliness as an affirmative defense and because …

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Supreme Court rules that a city has a claim against a bank for the consequences of discriminatory subprime mortgages

In Bank of America Corp. v. City of Miami, 137 S.Ct. 1296, 197 L. Ed. 2d 678 (2017), the Supreme Court held that the City of Miami was an “aggrieved person” within the meaning of the Fair Housing Act, 42 U.S.C. §3602(i), and that it could sue the Bank of America (and other banks) for lost tax revenue and other municipal expenses resulting from alleged discriminatory grants of subprime mortgages to Miami residents that resulted in mass foreclosures and vacancies. While it violates the FHA to deny mortgages on the basis of race, it also violates the FHA to target a racial group for disfavored terms. The Court noted that it had been previously held that white persons have a claim under the FHA when they are deprived of the benefits of interracial associations when discriminatory rental practices kept African Americans out of a rental complex (citing Trafficante v. Metropolitan Life Ins. Co., 409 …

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Electricity easement held not to encompass use for fiber-optic cable

While most courts have held that utility easements for electricity or telephone purposes can be used for cable television and other such purposes, see. e.g., Henley v. Continental Cablevision of St. Louis County, Inc., 692 S.W.2d 825 (Mo. Ct. App. 1985), a small number have gone the other way on the ground that easements are limited rights to use the land of another and that the use cannot exceed the scope of the original grant, see, e.g., Marcus Cable Assocs. v. Krohn, 90 S.W.3d 697, 699 (Tex. 2002).  The Eighth Circuit recently took the minority approach in Barfield v. Sho-Me Power Elec. Coop., 852 F.3d 795 (8th Cir. 2017), holding that a rural electric cooperative’s easements did not allow use of fiber-optic cable installed alongside electrical lines to serve the general public. The court emphasized that an easement is a “right to use land for particular purposes,” and interpreted a statute that …

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Retroactive restraints on leasing in homeowners associations

The courts continue to divide over the question of whether it is fair to allow homeowners associations to impose retroactive restraints on leasing on existing owners who purchased with no notice of the restriction. While most states allow this, a few do not, and the Restatement (Third) of Property (Servitudes) §6.10(2), §6.10 cmt. g, takes the position that such major changes in property rights can only be accomplished prospectively unless there is a unanimous vote to alter those rights. The Idaho Supreme Court recently adopted what appears to be the majority approach, authorizing a homeowners association to retroactively prohibit existing owners from agreeing to short term rentals of less than six months. Adams v. Kimberley One Townhouse Owner’s Ass’n, 352 P.3d 492 (Idaho 2015). In contrast, the Supreme Court of Washington refused to allow retroactive restraints on short term rentals in Wilkinson v. Chiwawa Commties. Ass’n, 327 P.3d 614 (Wash. 2014), requiring unanimous approval for such …

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Distinguishing between a right of first refusal and a restraint on alienation

The Massachusetts Land Court decided an interesting case interpreting a conveyance that reads like a right of first refusal but can be interpreted as a broader restraint on alienation giving discretion to a nonprofit entity to refuse absolutely to any transfer of the land. Gottlieb v. Girl Scouts of E. Mass., 2016 WL 3523859 (Mass. Land Ct. 2016). The conveyance stated that “before [charitable organization A] shall sell, transfer, or otherwise dispose of the [land, it] shall first offer said land to [charitable organization B] as an unencumbered gift, sale or otherwise to be used by [charitable organization B] for any charitable or civic purpose…” The court found that the clause was not a use restriction but a limit on transfer and thus a restraint on alienation. It also found that it was not a right of first refusal because it did not require purchasing the property at fair market value or matching a bona fide third party …

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Fee simple absolute found despite language of “in trust” and “for the uses, purposes” of the YWCA

In a standard application of traditional estates doctrine, the Massachusetts Appeals Court has found a fee simple absolute despite language in the grant to the YWCA stating that the property was given “in trust, nevertheless, for the uses, purposes and trusts aforesaid.” Young Women’s Christian Ass’n, Inc. of Boston, Inc. v. Young Women’s Christian Ass’n of Philadelphia, Inc., 90 Mass. App. Ct. 1119, 2016 WL 7162737 (Table) (Mass. 2016). Traditionally any language in a conveyance of a fee simple that explains the “purpose” of the transfer or the “use” to which it is to be put, is interpreted as precatory language that has no legal effect on the title that is conveyed. The interpretive principle of the “presumption against forfeitures” suggests that any retained future interest or right of control in the grantor must be created explicitly and unambiguously. Some courts interpret this language to create an implied trust, or a fee simple …

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Town cannot impose greater parking requirements for a mosque than for churches or synagogues

A town violated the Religious Land Use-Institutionazlied Persons Act (RLUIPA), 42 U.S.C. §§ 2000cc to 2000cc-5, when its planning board required a mosque to provide off-street parking for every single member as a condition of receiving a building permit when it had not imposed similar requirements for churches and synagogues. Islamic Soc’y of Basking Ridge v. Twp. of Bernards, 2016 U.S. DIst. LEXIS 180568 (D.N.J. 2016). The town had reasoned that, because religious services were on Friday afternoons, almost every person would be using a car to attend services while the same would not be true for churches and syanagogues. The court found this reasoning to be discriminatory since the proposed mosque plan was subjected to unprecedented individualized inquiry that had not taken place for other non-Islamic religious institutions in the past. That constituted a RLUIPA violation because it violated the “equal terms” provisions which prohibit “impos[ing] or implement[ing] a land use regulation in …

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Town’s extension of an easement to the general public overburdens and exceeds the scope of the easement

The Massachusetts Appeals Court has held that opening an easement to the general public may overburden it when the easement had not previously been used in that manner, giving the owner of the servient estate the chance to prove that the increased use interfered with his retained property rights in the underlying land and exceeded the scope of the rights included in the easement. Goff v. Town of Randolph, 56 N.E.3d 893 (Table), 2016 WL 4258381 (Mass. App. Ct. 2016).

An easement cannot be used to reach land to which it is not appurtenant

The Massachusetts Supreme Judicial Court has held that an easement cannot be extended even for a short way to access land to which it is not appurtenant. When an easement is created to enable access to a particular parcel of land, it can be used only for that purpose and not to access other parcels of land even if continguous. Taylor v. Martha’s Vineyard Land Bank Comm’n, 60 N.E>3d 319 (Mass. 2016).

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