Real Estate Questions
Real Estate Questions
Q. What is an easement and how is it created?
A. Generally, an easement is a right to use the property of another. Many properties have easements, often laid out when the subdivision was created. These easements may be for public utility or power lines, phone lines, water pipes, sewers pipes, gas lines and often cable TV. The easement may also be created by agreement or use, such as a defined space, a road or driveway, boundary lines and, in some narrow situations, view (though there is not an inherent right to a view).
Easements are usually created by conveyance in a deed, or some other written document such as a will or contract. Creation of an easement requires the same formalities as the transfer or creation of other interests in land -- typically: a written instrument, a signature, and proper delivery of the document. In limited circumstances, a court will create an easement by implying the existence of the easement based on the circumstances. Two common easements created by implication are easements of necessity and easements implied from quasi-easements. Easements of necessity are typically implied to provide access to a landlocked piece of property. Easements implied from quasi-easements are based on a landowner's prior utilization of part of his or her property for the benefit of another portion of his land. Other methods of establishing easements include prescriptive use (i.e. by the routine, adverse use of another's land), estoppel (a legal doctrine involving reliance on the words or actions of another person), custom, public trust, and condemnation.
The transferability of easements must also be considered when undertaking a real estate transaction. An easement's transferability depends on its nature (i.e. whether it is appurtenant or in gross). In general, an easement appurtenant is transferred with the dominant property even if this is not mentioned in the transferring document. But, the document transferring the dominant estate may expressly provide that the easement shall not pass with the land. Because easements in gross are treated as a right of personal enjoyment for the original holder, they are generally not transferable. Recreational rights such as hunting, camping and fishing are the most common examples of nontransferable easements in gross. However, several states have enacted statutes designed to facilitate the transfer of easements in gross. The transfer of easements in gross for commercial uses such as telephones, pipelines, transmission lines, and railroads is often permitted.
In sum, easements give an easement holder the right to use or to prevent the use of property he or she does not own or possess. This places the easement holder and the possessor of the servient estate in the unique position of simultaneously utilizing the same piece of land. The prevalence of easements and their nonpossessory nature creates a unique set of considerations in drafting, interpretation and implementation. It is essential to have a basic understanding of the manner in which they are created, their scope, transferability, and methods of termination. Whether an individual or a business wishes to create an easement, purchase property burdened by an easement, or determine the nature of a property interest, the assistance of a land use attorney can be an invaluable asset.
Q. What is an unlawful detainer?
A. If the tenant does not voluntarily move out after the landlord has properly given the required notice to the tenant, the landlord can evict the tenant. In order to evict the tenant, the landlord must file an unlawful detainer lawsuit in superior court.
In an eviction lawsuit, the landlord is called the "plaintiff" and the tenant is called the "defendant."
Recent laws designed to abate drug dealing and unlawful use, manufacture, or possession of weapons and ammunition, permit a city attorney or prosecutor in selected jurisdictions to file an unlawful detainer action against a tenant based on an arrest report (or other action or report by law enforcement or regulatory agencies) if the landlord fails to evict the tenant after 30 days notice from the city. The tenant must be notified of the nature of the action and possible defenses.
An unlawful detainer lawsuit is a "summary" court procedure. This means that the court action moves forward very quickly, and that the time given the tenant to respond during the lawsuit is very short. For example, in most cases, after the landlord gives proper notice and files and serves the lawsuit, the tenant has only five days to file a written response to the lawsuit after being served with a copy of the landlord's summons and complaint. Normally, a judge will hear and decide the case within 20 days after the tenant or the landlord files a request to set the case for trial.
The court-administered eviction process assures the tenant of the right to a court hearing if the tenant believes that the landlord has no right to evict the tenant. The landlord must use this court process to evict the tenant; the landlord cannot use self-help measures to force the tenant to move. For example, the landlord cannot physically remove or lock out the tenant, cut off utilities such as water or electricity, remove outside windows or doors, or seize (take) the tenant's belongings in order to carry out the eviction. The landlord must use the court procedures.
If the landlord uses unlawful methods to evict a tenant, the landlord may be subject to liability for the tenant's damages, as well as penalties of up to $100 per day for the time that the landlord used the unlawful methods.
In an unlawful detainer lawsuit, the court holds a hearing at which the parties can present their evidence and explain their case. If the court finds that the tenant has a good defense, the court will not evict the tenant. If the court decides in favor of the tenant, the tenant will not have to move, and the landlord may be ordered to pay court costs (for example, the tenant's filing fees). The landlord may have to pay the tenant's attorney's fees, if the rental agreement contains an attorney's fee clause and if the tenant was represented by an attorney.
If the court decides in favor of the landlord, the court will issue a writ of possession. The writ of possession orders the sheriff to remove the tenant from the rental unit, but gives the tenant five days from the date that the writ is served to leave voluntarily. If the tenant does not leave by the end of the fifth day, the writ of possession authorizes the sheriff to physically remove and lock the tenant out, and seize (take) the tenant's belongings that have been left in the rental unit. The landlord is not entitled to possession of the rental unit until after the sheriff has removed the tenant.
The court also may award the landlord any unpaid rent if the eviction is based on the tenant's failure to pay rent. The court also may award the landlord damages, court costs, and attorney's fees (if the rental agreement or lease contains an attorney's fee clause and if the landlord was represented by an attorney). If the court finds that the tenant acted maliciously in not giving up the rental unit, the court also may award the landlord up to $600 as a penalty. The judgment against the tenant will be reported on the tenant's credit report for as long as seven years.
Q. In California, after a private foreclosure sale or a short sale, do I have personal liability for the deficiency?
A. Not according to California's anti deficiency and short sale protection laws. On September 30, 2010 Governor Arnold Schwarzenegger signed Senate Bill 931, which provides additional protections to short sellers who are seeking to short sell a residential property that contains one to four units. Pursuant to the new legislation, starting January 1, 2011, a seller's first trust deed lender will be prohibited from obtaining a deficiency judgment against the seller after an approved short sale. In other words, if the first trust deed lender provides written consent to a short sale, the lender will be obligated to accept the sales proceeds as full payment and discharge of the remaining amount owed on the first trust deed. This law applies only to: (1) first trust deeds on (2) owner-occupied and residential investment properties that are one to four units and to (3) loans that are purchase money loans, refinanced loans, or hard money loans. This law does not, however, preclude the lender from seeking damages for fraud, or waste, from the borrower. Also, there may be tax liability for debt forgiveness.
Again, this new law only applies to mortgages in the first lien position. If a borrower has a first and a second mortgage, the borrower will still need to get the second lien holder’s written agreement to waive any future deficiency on the second in a short sale.
Q. What is the difference between a private sale and judicial foreclosure?
A. When a home buyer seeks to purchase a property, the buyer will often get a loan (execute a promissory note and deed of trust). The deed of trust contains a clause that gives the Trustee (the lender) the power to sell the borrower’s property (the collateral) if the borrower fails to make the loan payments to the lender. This is called a private right of sale, which is often the easiest, most economical, and fastest way for the lender to foreclose on a property. When a lender uses this private right of sale to foreclose, the lender is often precluded under California’s anti-deficiency laws set forth in California Civil Code of Procedure Sections 580(a)-(d) from seeking a deficiency judgment against the borrower and instead must accept the collateral (the property) as full satisfaction of the debt.
As an alternative, the lender may also opt to forego its private right of sale, and seek instead judicial foreclosure. Under a judicial foreclosure, the bank will file a lawsuit (summons and complaint) in Superior Court asking the court to foreclose on the loan, sell the property at a public auction, and issue a judgment against the borrower for the difference between the "fair market value" of the property and the outstanding loan balance (the deficiency judgment) in favor of the lender. The lender can then seek to enforce that deficiency judgment by attaching the borrower’s other assets (e.g. other real estate, bank accounts, wages, etc.). The problem here for most lenders is that in California a lender cannot obtain a deficiency judgment under California’s Anti-Deficiency Laws if the underlying debt comes from a loan used to acquire (purchase) owner-occupied residential property up to four units.
Q. What are Anti-Deficiency Laws?
A. In California if you (the borrower) acquired a first and second mortgage to purchase (as opposed to refinance) a residential property of up to four units, you are protected under California’s anti-deficiency laws set forth in California Civil Code of Procedure Sections 580(a)-(d). These anti-deficiency laws prohibit a secured lender (including a seller with a carry-back loan) from suing the borrower for a deficiency judgment when (1) the borrower acquired the loan to Purchase (as opposed to a refinance) owner occupied residential property of up to four units; (2) the lender foreclosed; and (3) the proceeds from the foreclosure sale are less than the borrower's secured debt (the "deficiency"). For example, if a borrower secured a mortgage from two lenders to buy a $500,000 home, each taking back a Deed of Trust or mortgage (first for $400,000 and second for $100,000), the borrower defaults, the holder of the first deed of Trust forecloses, the property sells at auction for $350,000 leaving a deficiency of $50,000 to the first mortgage holder and a deficiency of $100,000 to the second mortgage holder. Under California Code of Civil Procedure §580b, the holders of the first and the second deed of trust will both be barred from seeking relief directly against the borrower for the deficiency. See, Brown v Jensen, 41 C.2d. 193 (1953).
California Code of Civil Procedure § 580(d) further prohibits deficiency judgments from otherwise unprotected borrowers, when a lender has foreclosed upon the secured property by a private, "power-of-sale" foreclosure proceeding, pursuant to the terms of the deed of trust. If a lender wishes to obtain a deficiency judgment against an unprotected borrower for an unpaid loan balance, California Code of Civil Procedure Section 580(d) requires the lender to initiate a judicial foreclosure, as set forth by statute, through the California court system. Lenders have long avoided the judicial foreclosure process because civil lawsuits are time consuming and expensive (require the retention of an attorney, often involve numerous procedural delays which can last upwards of four years, and may subject the lender to cross claims). However, with the decline in property values lenders will only seek a judicial foreclosure if: (1) a private sale will not yield sufficient funds to pay off the entire balance of the loan; and if (2) the loan was not a “purchase money loan” (loan secured for the purchase of a residential property of up to four units).
California historically has had a strong public policy against deficiency judgments. The primary purpose of the anti-deficiency statute is to prevent the overvaluation of property by placing the risk of inadequate security on the lender. By placing the risk on the lender, the legislature hoped to discourage risky lending practices and precarious land schemes. See, Spangler v. Memel, 7 Cal.3d 603 (1972). To further the purpose of the anti-deficiency statutes, the California courts have long held that home buyers cannot waive the anti deficiency protections afforded to them under California Code of Civil Procedure §580(b) either when the loan is made, or in a forbearance agreement. See, Jackson v. Taylor, 272 Cal. App. 2d 1, 5, (1969); Palm v. Schilling, 199 Cal.App.3d 63, 69 (1988) and Thompson v. Allert, 233 Cal.App.3d 1462, 1466-67 (1991).
Under certain circumstances, however, a California home buyer can lose his or her anti-deficiency protection. First, if a home buyer after purchasing a property later acquires a home equity line of credit (a.k.a. HELOC), the anti-deficiency statutes will not apply to the second loan. Second, if the home buyer enters into a short sale without the pre-written approval of the lender, the anti-deficiency statutes will not apply. Third, if the home buyer refinances the original purchase money loan, the home buyer may be at risk of losing the "anti-deficiency" protection previously guaranteed. It is also important to note that an otherwise protected borrower might still be subject to a lawsuit brought by the lender after foreclosure for such things as fraud (e.g. intentionally lying on the loan application) and waste (e.g. malicious, intentional, or reckless failure to physically maintain the property).
In sum, if the loan(s) on a property are the ORIGINAL purchase money loans that the borrower obtained AT THE TIME THE BORROWER PURCHASED THE PROPERTY, then California’s Anti-Deficiency Laws will apply and the lender (whether a bank or a seller carry-back) will be prohibited from suing the borrower for the deficiency if the lender forecloses, or if the lender provides written preapproval for a short sale. The lender will, however, still have the option of bringing a lawsuit against the borrower for fraud and/or waste.
Q. What are some common neighborhood disputes and what are some considerations for resolution?
A. Trees, views, fences, boundary disputes, loud music/dogs and water intrusion are common problems faced by homeowners. Of course, the best way to resolve disputes is by communication. There are various mediation services that can assist the parties as well. Sometimes, a lawsuit is the only remedy. Please note that the following mostly addresses living situations other than homeowners associations, which typically have their own rules and regulations. However, some of the following apply generally to all situations.
Boundary Dispute. The law concerning adverse possession and prescriptive easements allow continued use of another's property to the same extent that it has been occupied/used for at least 5 years. Additional requirements are that the possession by the non-owner be open, notorious, and hostile. For the non-owner to obtain actual ownership, he usually must also pay the property taxes on the occupied land. Alternatively, if it can be proven that both neighbors (or the prior owners) had agreed that the fence was the boundary line, after 5 years, the common boundary theory makes it so. On the other hand, an agreement to permit the non-owner to use the land of another will not, in most cases, result in a permanent easement.
Fences. Good neighbors will agree on splitting the cost of the repair. Civil Code section 841 requires that owners contribute to maintain fences between them, unless one of them chooses to let his land lie unfenced; if he later fences his property, he then is responsible for payment of a proportional share of the value of the fence. There is also statutory authority (applicable under some circumstances) to allow one neighbor to seek a court order to remove a neighbor’s fence (or other fence like structure), and seek damages, when the fence or other structure in the nature of a fence unnecessarily exceeds 10 feet in height and was maliciously erected or maintained for the purpose of annoying the owner or occupant of adjoining property. See Civil Code section 841.4.
Trees. Tree issues are sometimes complex, but the following provides some general principles. Traditionally, a property owner had full right to all of his property, from the center of the earth to heaven. Although you may cut tree limbs and remove roots from your neighbor's tree where they cross over the property line, you may not be able to do so if it will damage the continued viability of his tree. There may, however, be damage claims, even if you cannot cut the limbs or roots. On the other hand, the offending neighbor could have possibly obtained easements rights, so you should use caution and seek an attorney’s advice before taking any action. If a tree limb appeared precarious and the owner failed to maintain the tree after warnings, he is responsible for resulting damage when a storm, or other circumstance causes the limb to fall. If the tree was well maintained and a storm knocked it down onto your roof, the neighbor may not be responsible.
If the neighbor’s tree has grown, encroaching (whether limbs or roots) onto your property or compromises your fence or wall, this might be considered a continuing trespass and the neighbor must remove his tree (regardless of how long it has been encroaching) and may have to pay damages, including, but not limited to, the cost of repair.
View. In California, there is no right to view/sunshine/air circulation, unless a local ordinance has been passed or the properties are governed by deed restrictions and/or covenants, conditions and restrictions. Additionally, as mentioned above, the “spite fence” doctrine may provide some relief in some circumstances.
Water Intrusion. In California, natural runoff is not actionable. However, natural runoff rarely exists in urban areas. Any neighbor who alters the grading or building altering the natural runoff will be responsible to remedy the situation and/or for damage.
Noise. Music, dogs, obnoxious smells etc. may create an action for nuisance. Local laws control noise. The police might quiet a noisy event under criminal disturbance of the peace laws; private (civil) remedies exist only for a continuing nuisance. Civil Code section 3502 provides that a person injured by a private nuisance may abate it by removing, or, if necessary, destroying the thing which constitutes the nuisance, without committing a breach of the peace, or doing unnecessary injury.
Most nuisances must be abated by court action, not self help. You might also have a right to obtain a restraining order.
Junk. What remedies exist when the neighbor parks his ugly boat/RV, or 15 cars or broken cars, or trailers on public streets or in front of your house; or, the neighbor keeps old appliances or car parts, etc. in the front yard or fails to maintain his house or yard? Local ordinances, traffic, health and safety rules apply, if any exist. Additionally, you may have a claim for private or public nuisance.
Harassment. Under California law (CCP §527.6), a person who has suffered harassment may seek a temporary restraining order and an injunction prohibiting harassment. A Civil Harassment Restraining Order may apply to a neighbor, roommate or stranger. You may seek protection if you are worried about your safety because you are being:
3. harassed, or
4. sexually assaulted.
Pursuant to California Code of Civil Procedure section 527.6(b), the course of conduct must be such as would cause a reasonable person to suffer substantial emotional distress and must actually cause substantial emotional distress to the victim. The restraining order can include preventing personal conduct by the harasser, order the harasser to stay away from the victim, the victim's family, the victim's home/work and/or children's school, and other miscellaneous orders. Typically, you can do these orders yourself but we would be happy to assist, if appropriate (See www.sdcourt.ca.gov for forms and instructions).