Reverter clause requiring property to be used for church purposes not an invalid restraint on alienation

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

The Virginia Court held that a future interest requiring forfeiture of title if property was not used to church purposes was a valid possibility of reverter, and was not an invalid or unreasonable restraint on alienation of land. Canova Land & Inv. Co. v. Lynn, 856 S.E.2d 581 (Va. 2021). The court said that a liberal interpretation should be granted to deeds involving land granted for charitable purposes because limiting property to charitable uses is consistent with public policy.

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Reverter clause requiring property to be used for church purposes not an invalid restraint on alienation

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

The Virginia Court held that a future interest requiring forfeiture of title if property was not used to church purposes was a valid possibility of reverter, and was not an invalid or unreasonable restraint on alienation of land. Canova Land & Inv. Co. v. Lynn, 856 S.E.2d 581 (Va. 2021). The court said that a liberal interpretation should be granted to deeds involving land granted for charitable purposes because limiting property to charitable uses is consistent with public policy.

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Surplus proceeds from tax foreclosure sales belong to the property owner

/ Real Estate Transactions, Takings

The Michigan Supreme Court has held that when property is taken by the government to be sold to pay off unpaid property taxes, the proceeds of the tax foreclosure sale cannot be retained by the government if they exceed the amount of taxes that were due; the excess belongs to the homeowner. Rafaeli, LLC v. Oakland Cnty., 952 N.W.2d 434 (Mich. 2020).

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Not a regulatory taking and no compensation due when a town acquires an easement by prescription

/ Adverse Possession, Easements

The Supreme Judicial Court of the Commonwealth of Massachusetts held that a town can acquire an easement by prescription and that, if it does, no just compensation is due because no regulatory taking has occurred. Rather, the landower failed to object by suing for trespass or to give permission so the statute of limitations for ejecting the intrusion passed and the owner’s right to exclude was limited by statute and the doctrine of easement by prescription. The town did not “take” the property; the owner lost property rights by failing to take steps required by law to preserve those rights. Gentili v. Town of Sturbridge, 140 N.E.3d 391 (Mass. 2020).

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Commercial lease disclaimer of liability for negligence held to be enforceable

/ Leaseholds

A California appeals court has found a disclaimer of liability for negligence in a commercial lease to be enforceable and not to violate public policy even though a state statute made them invalid as to cases involving fraud, willful injuries, gross negligence, or violations of law. Garcia v. D/AQ Corp., 271 Cal. Rptr. 3d 861 (Ct. App. 2020). This case did not fit in those categories since the tenant hit his head on a low beam at the top of a flight of stairs and the landlord had not engaged in an intentional tort or willfully caused the injury. Since none of the statutory categories applied, and this involved a commercial lease, the court held that the parties had the freedom to agree to the disclaimer of tort liabilty and that this did not violate public policy under either the statute or the common law.

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Judicial foreclosure is not “debt collection” under FDCPA

/ Mortgages

The Ninth Circuit held, in Barnes v. Routh Crabtree Olsen PC, 963 F.3d 993 (9th Cir. 2020), that judicial foreclosure is not a form of “debt collection” covered by and regulated by the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692e-g. The court relied on the Supreme Court’s decision in Obduskey v. McCarthy & Holthus LLP, 139 S. Ct. 1029 (2019) that a law firm that brings nonjudicial foreclosure proceedings is not a debt collected under the FDCPA.

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Tenant not entitled to damages under the implied warranty of habitability for injuries from slipping on an icy driveway

/ Leaseholds

The Supreme Judicial Court of the Commonwealth of Massachusetts held, in Goreham v. Martins, 147 N.E.3d 478 (Mass. 2020), that a landlord is not liable for injuries to a tenant who slips on ice in the driveway under the implied warranty of habitability because such claims are, in effect, strict liability claims and injuries to the body in the context of landlord-tenant law are governed by the law of negligence. In this case, because the jury found the tenant to be more at fault than the landlord, there could be no recovery for negligence either under state law. The court also held that the warranty of habitability only applies to conditions inside the dwelling unit, that the landlord did not violate any provisions in the housing code, and that the tenant could have used the front entrance (rather than the rear entrance where the accident happened) and avoided injury.

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Physical partition denied when the sale value significantly exceeds the value of the separate parcels despite a co-owners attachments to the land

/ Concurrent or Common Ownership

The Nebraska Supreme Court held that partition by sale is preferred to physical partition if the fair market value of the land as a whole exceeds the market value of separate parcels even if a co-owner objects to the sale because of sentimental attachments to the land. FTR Farms, Inc. v. Rist Farms, Inc., 942 N.W.2d 204 (Neb. 2020). A somewhat similar case came out the opposite way in Ark Land Co. v. Harper, 599 S.E.2d 754 (W.Va. 2004)

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Two court reject impossibility defense to tenant rent obligations under government shutdown orders while one abates rent under the wording of the force majeure clause

/ Leaseholds

When Governor Cuomo ordered most businesses to stop serving the public during the COVID-19 pandemic, some could not generate the income needed to pay rent. Some have argued that the impossibility of earning profits to pay rents should constitute a defense to the contractual obligation to pay rent. Two courts in New York have now rejected that argument, including the federal Southern District and a state supreme court. In Backal Hospitality Group LLC v. 627 West 42nd Retail LLC (N.Y. Sup. Ct. 2020), the court noted that a lease term provided that if “the fixed rent [shall] become uncollectable by virtue of any law, governmental order or regulation, or direction of any public officer or body, Tenant shall enter into such agreement … as Landlord may request,…to permit Landlord to collect [rent].” Because this clause provided for negotiated settlement if a government order made rent “uncollectable,” the parties had bargained for a

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Loan modification agreements unenforceable unless in writing

/ Mortgages, Statute of Frauds, Title Issues

An appellate court in California has held that the state’s statute of frauds require loan modification agreements to be in writing to be enforceable. Reeder v. Specialized Loan Serv., LLC, 2020 WL 4345001 (Cal. Ct. App. 2020). This is an expected application of the statute of frauds but it does not mean that some courts, in other factual settings, might make exceptions if the lender engaged in fraud (made a false statement that induces reliance on the part of the borrower), or estoppel (a lender statement that the borrower reasonably relies on in changing their behavior), or that there might be a consumer protection claim for deceptive business practices if something short of fraud but nonetheless deceptive communications wind up hurting the borrower.

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