MERS denied standing to receive notice of foreclosure

/ Mortgages

Millions of mortgages are recorded in the name of “MERS” – Mortgage Electronic Registration System – which holds mortgages as a “nominee” or stand-in for the real owner of the mortgage. MERS was created to make it easier to transfer mortgages electronically on a central computer system without having to re-record the mortgage. This was useful for mortgages that were securitized and resold many times but some courts are beginning to find the system inconsistent with recording requirements. One court in Kansas has denied MERS standing to receive notice of a foreclosure on the ground that it does not own the mortgage and is not the real party in interest in the transaction. Landmark National Bank v. Kesler, 2009 WL 2633640 (Kan. Ct. App. 2009). read opinion This strategy has been used to protect homeowners from having their property foreclosed and it may undermine the business model relied on by MERS. read …

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Limitations placed on developer’s power to alter covenants

/ Servitudes

The Restatement (Third), §  6.21 provides: “A developer may not exercise a power to amend or modify the declaration in a way that would materially change the character of the development or the burdens on the existing community members unless the declaration fairly apprises purchasers that the power could be used for the kind of change proposed.” In North Country Villas Homeowners Ass’n v. Kokenge, 163 P.3d 1247 (Kan. Ct. App. 2007), the court adopted this Restatement rule, holding that a developer’s power to “amend” the covenants limiting land to single-family or  duplex homes did not include the power to “revoke” them entirely by building four-unit housing.

Constitutional Limitations on Takings in Oregon & Arizona

/ Takings

On Nov. 2, 2004, the voters adopted a state law known as Measure 37 that required compensation when any regulation “restricts the use of real property” and is enacted after an owner or a family member acquires title to land if the regulation “has the effect of reducing the fair market value of property” unless the regulation restricts activities “commonly and historically recognized as public nuisances under common law” or protects “public health and safety, such as fire and building codes, health and sanitation regulations, solid or hazardous waste regulations, and pollution control regulations.” Or. Stat. §195:305; Michael C. Blumm & Erik Grafe, Enacting Libertarian Property: Oregon’s Measure 37 and Its Implications, 85 Denv. U. L. Rev. 279 (2007). The measure applied both to statutes and to zoning ordinances. See Or. Stat. §195.305 to 195.314. Because the law applies to any regulations passed after an owner (or a family member) …

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Legislative Responses to Kelo

/ Takings

In response to the Kelo decision, almost all states have passed legislation or constitutional amendments that limit the power of municipalities to take property for economic development purposes. Elisabeth Sperow, The Kelo Legacy: Political Accountability, Not Legislation, Is the Cure, 38 McGeorge L. Rev. 405, 418-422 (2007). The legislation limiting eminent domain powers falls into several categories; some states passed laws in just one of these categories and others passed more than one type of limitation. First, some states repudiated Kelo by prohibiting the use of eminent domain to take property from one person to transfer it to another person if the taking is for economic development purposes, such as increased tax revenue or additional jobs. See, e.g., Alaska Stat. §§09.55.240(d), 29.35.030; 735 Ill. Comp. Stat. 30/5-5-5(c); Me. Rev. Stat. tit. 1, § 816; N.H. Rev. Stat. § 162-K:2(IX-a)(b); Vt. Stat. tit. 12, § 1040(a). Second, some states adopted Justice …

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No taking to prevent construction on a floodplain

/ Takings

The Supreme Judicial Court of the Commonwealth of Massachusetts held that it was not a taking to prevent an owner from building a house on a floodplain when construction would exacerbate flooding to neighboring property. Gove v. Zoning Bd. of Appeals of Chatham, 831 N.E.2d 865 (Mass. 2005).

Palazzolo remand

/ Takings

On remand, the Rhode Island trial court found that development of Palazzolo’s salt marsh land south of a shallow, tidal pond would constitute a public nuisance because it would inhibit the “valuable filtering system regarding water runoff containing pollutants and nitrogen from adjacent land.”  Palazzolo v. State, 2005 WL 1645974, at*3 (R.I. Super. Ct. 2005). The court also found that half of the property was below the mean high water line, making it tidal land subject to the public trust doctrine which defines such lands as owned by the public and not subject to private development at all. Finally, the court found that, although one upland site could be developed, almost none lower lots could ever have been profitably developed because of the extraordinary engineering costs involved in draining the site and preparing the site to support structures. Thus, there was no taking of property

Designation of land as “park” or “plaza” in recorded plat creates appurtenant easement in neighbors

/ Servitudes

A developer sold properties in a subdivision on the island of Martha’s Vineyard in Massachusetts, after recording a map of the area showing the lots and the streets. Three irregularly-shaped areas that wereabout five times the size of the lots on the map were labeled as”parks” and one was called a “plaza.” Those properties were never developed and remained wooded over the years. The lots were all sold but not in the manner envisioned on the map; many lots were grouped together so that the average parcel is now about the size of the parklots. Fifty years later, an owner of the “plaza” lot sought to sell it to an buyer who wanted to build a single-family home on it. The neighbors sued, arguing that the designation of the property as a plaza meant that they owned an negative easement prohibiting development of the lot for residential purposes and an …

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Subprime mess deters property development

/ Mortgages

Costco CEO Jim Sinegal complains that it is hard for the company to buy new real estate to open new stores because “in many instances nobody knows who owns the land anymore.” read article

Trespass and the right to roam

/ Trespass

We generally take for granted that owners have the power to exclude non-owners from their land. But at one time in the United States,unenclosed and undeveloped land was open to the public for the purpose of hunting, gathering kindling and berries, and walking. Eric Freyfogle, The Lost Right to Roam, in On Private Property: Finding Common Ground on the Ownership of Land 29 (2007). Today, about half the states still allow hunting on private land unless the owner has posted “no trespassing” signs. Mark R.Sigmon, Hunting and Posting on Private Land in America, 54 Duke L.J. 549(2004). Moreover, owners who wanted to protect their fields from wandering cattle originally had to fence them out; they had no right to complain that a trespass had occurred when cattle wandered onto their property. Nor could railroads insist that cattle owners prevent them from intruding on train tracks. See, e.g., Nashville & Chattanooga Railroad Co. v. Peacock, 25 Ala.229 (1854); Macon & …

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