Keeping Current—Property

Keeping Current—Property offers a look at selected recent cases, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.

Keeping Current—Property Editor: Prof. Shelby D. Green, Elisabeth Haub School of Law at Pace University, White Plains, NY 10603. Contributor: Prof. Darryl C. Wilson.

Cases

ADVERSE POSSESSION: Mowing grass and similar activities on neighbor’s land not sufficient to establish adverse possession. The Hovets and the Dahls own neighboring tracts of land, with the record boundary passing through several rows of trees. A driveway built long ago west of the trees led to the Hovets’ house. The Hovets moved onto their property in 1979 and used and maintained the driveway. In

1985, they planted a row of shrubs that encroached on the Dahls’ land. They regularly mowed grass to the west of the driveway and cultivated the soil around the tree rows. In 2012, they added two stone markers north of the driveway. After a dispute between the neighbors arose, the Hovets filed a claim for title by adverse possession and boundary by acquiescence to a 0.24-acre tract of land that included the driveway, shrubs, and mowed grass. The lower court found for the Hovets, and the Dahls appealed. The supreme court reversed and remanded. The court noted the required elements for adverse possession as being actual possession that is visible, continuous, notorious, distinct, hostile, and of such character to indicate unmistakenly an assertion of claim of exclusive ownership by the occupant. Further, the applicable statutory period was 20 years, and possession of disputed land required protection by a substantial enclosure or the cultivation or improvement of the land. The Dahls argued that the Hovets’ use of the land failed to satisfy the hostility requirement. The court agreed with respect to some of the Hovets’ activities, stating that mowing grass is ordinary care and a harmless trespass as opposed to hostile use. Citing other jurisdictions, the court noted that mowing, planting flowers, maintaining a hedge, and like activities are based on the well-founded assumption that a neighbor will acquiesce and consent to such actions. The use of the driveway and the cultivated areas of trees and shrubs were of a different character, however, and sufficient to establish hostility. Although the placement of the stone markers was also hostile, it failed to satisfy the 20-year time requirement. The court rejected the claim of boundary by acquiescence as it was lacking in evidence of mutual mistake as to the boundary line. Hovet v. Dahl, 9 N.W.3d 699 (N.D. 2024).

CONDEMNATION: Racial discrimination claims under state constitution may be heard without first exhausting administrative remedies. Askew and Washington are African Americans who owned property in the predominantly black section of the city of Kinston. In 2010, Kinston began a program to condemn and raze unsafe properties. In 2017, it adopted a more targeted approach to improve the appearance of neighborhoods by removing dilapidated and blighted housing and buildings. The city came up with a “Top 50” list purportedly based on factors like dilapidation and proximity to heavily traveled roads. The plan further identified “clusters” and asked the city’s police department to identify especially problematic buildings. When Kinston’s city council met to review the Top 50 list, Kinston’s planning director acknowledged that the first cluster was in a predominantly black area. Askew and Washington, whose property was slated for demolition, objected to the plan as a scheme to take property in the black community and then resell it to high-end developers without paying compensation to the property owners. They brought suit in federal court alleging Fourteenth Amendment violations, but the case was dismissed for lack of subject matter jurisdiction. Thereafter, they sued in state court, which granted summary judgment for the city. The appellate court affirmed on jurisdictional grounds, holding that a court could not hear a direct constitutional suit unless the plaintiff depletes all avenues of administrative relief. Because the plaintiffs bypassed the city council review of the city’s condemnation action, they were not entitled to judicial consideration. The supreme court vacated and remanded because the lower court failed to disaggregate and examine the plaintiffs’ distinct constitutional claims and also wrongfully tied administrative exhaustion to subject-matter jurisdiction. The court relied heavily on its precedent regarding the right of citizens to bring direct action against state officials for violations of protections guaranteed by the state constitution. Corum v. University of North Carolina, 413 S.E.2d 276 (N.C. 1992). These Corum causes of action (here, substantive due process and equal protection by singling out black neighborhoods for condemnation) flow from the constitution, and exhaustion of administrative remedies does not dictate jurisdiction over such claims. Askew v. City of Kinston, 902 S.E.2d 722 (N.C. 2024).

CONDOMINIUMS: Condominium association can be liable for injuries to unit owner occurring on common elements. Janini, an owner of a unit in a condominium complex, slipped and fell on a snow and ice-covered sidewalk, sustaining a brain injury. The condominium bylaws expressly placed the responsibility for maintenance of the complex’s common elements, including the sidewalks, on the condominium association. Janini sued the association for breaching its duty to maintain the sidewalk by not timely removing snow and ice. The trial court denied Janini’s motion for summary judgment, and the appellate court reversed. The supreme court agreed with the appellate court. The court explained that it was wellsettled that an owner, occupier, or possessor of land owes a duty of care to invitees, but what was undecided was whether a condominium unit owner has the status of an invitee. The court thought yes. Even though Janini was a co-owner of the common elements, the declaration of condominium and the bylaws allocated rights and duties over them to the condominium association. Janini did not enjoy the exclusive control that one typically associates with land possession. This meant that the condominium association owed a duty of care to Janini as to the common elements. To clarify the law going forward, the court declared that the proper inquiry when considering the duty owed in a premises liability context is who holds possession and control over the land where a person was injured, not merely who owns the land. Janini v. London Townhouses Condo. Ass’n, 2024 Mich. LEXIS 1279, 2024 WL 3381445 (Mich. July 11, 2024).

COVENANTS: State can enforce covenant in gross for public benefit. In 1974, the owner of a ski resort donated it to the state, along with abutting land and easements benefitting the conveyed property. The state ran the ski resort until 1986, when it sold it to Big Squaw Mountain Corporation (BSMC), hoping to encourage private investment for maintenance and improvements to the ski resort. The conveyance was subject to restrictive covenants, including one that prohibited the harvesting of timber with limited exceptions and one that granted the public rights of access and use. Moosehead Mountain Resort, Inc., acquired the ski area in 1995 from BSMC’s bankruptcy estate. Moosehead closed the ski resort from 2009 to 2012, and during that time, it engaged a logging company to harvest timber on more than 170 acres of the abutting land. The state sued to enforce the timber harvesting and public use covenants. The trial court granted summary judgment to the state. On appeal, Moosehead argued that the state lacked standing to enforce the restrictive covenants because it did not own or use a parcel of land benefitted by the restrictive covenants. The supreme court affirmed, first noting the position of the Restatement (Third) of Property: Servitudes § 8.1 that ownership of land intended to benefit from enforcement of a covenant is not a prerequisite to enforcement, only that the person who holds the benefit must establish a legitimate interest in enforcing the covenant. The court explained that even as certain servitudes in gross other than covenants are enforceable under the common law, the question of the enforceability of covenants in gross was an issue of first impression in Maine. Acknowledging some of the compelling reasons against enforcement—including that restrictions in gross limit the value of one parcel without increasing the value of the other land, they extend the power of the dead hand to limit use in perpetuity, and it may be difficult to locate the beneficiary of the covenant— the court nevertheless allowed the state to enforce the covenants, even though no specific land is benefitted. In particular, the state can enforce the covenants on behalf of the public, and the state is a known and easily locatable entity. State v. Moosehead Mt. Resort, Inc., 319 A.3d 1060 (Me. 2024).

EMINENT DOMAIN: Purchaser of tax certificate is liable to former property owner for unconstitutional taking without compensation when value of property exceeds tax debt. After Nieveen failed to pay property taxes, the county foreclosed and sold a tax certificate for her property to a purchaser. Three years later, the county issued a tax deed to a purchaser. Nieveen filed suit against the county and the purchaser, alleging that her property had an assessed value of $61,900 yet her tax debt was under $4,000. Nieveen claimed that the issuance of the tax deed amounted to a taking for a private purpose or, in the alternative, was a taking for a public purpose without just compensation in violation of the US and Nebraska constitutions. The district court dismissed the constitutional claims, and the state supreme court affirmed. Nieveen appealed to the US Supreme Court, which vacated and remanded the lower court’s decision in light of its recent holding in Tyler v. Hennepin County, 598 U.S. 631 (2023). There, the Court found plausible a takings claim when a Minnesota county seized the petitioner’s condominium unit to satisfy a $15,000 tax debt, sold the property for $40,000, and kept the proceeds. On remand, the state supreme court affirmed the prior finding that no private taking occurred but reversed and remanded on the issue of the public taking. The court noted that it initially relied on Nebraska law that did not recognize a protected property interest in a former property owner who lost title to her home pursuant to a property tax conveyance. In light of Tyler and state statutes, however, the court reconsidered its previous position and announced a new rule: a holder of a tax certificate commits a taking by requesting and obtaining a tax deed if the value of the property exceeds the tax debt. Further, the tax certificate holder engages in state action and thus can be liable to pay just compensation. The state court did not consider the effect of its ruling on the conduct and efficacy of property tax sales. Nieveen v. TAX 106, 10 N.W.3d. 365 (Neb. 2024).

HOME INSPECTIONS: Provision limiting homeowner’s assertion of all tort and contract claims to one year from date of inspection does not violate public policy. The Omsteads hired BPG Inspection, LLC, to inspect a home that they had contracted to purchase. The home inspection contract included a one-year limitation on the bringing of lawsuits of any kind. After the initial inspection and a follow-up, the Omsteads bought the home. Several months later, Mr. Omstead discovered defects in a retaining wall, and when he later tried to capture images of the wall to post on social media, it collapsed and killed him. Neither of the earlier inspection reports mentioned any issues with the wall. Omstead’s wife filed suit against BPG for breach of contract, wrongful death, and other counts. The trial court found for Omstead, concluding the contract’s time limitation did not apply to personal injury and wrongful death claims and, to the extent they did, was void against public policy. The appellate court reversed, directing the trial court to enter summary judgment in favor of BPG. Omstead appealed, and the supreme court affirmed. Applying the cardinal rule of contract construction, the court endeavored to ascertain the intention of the parties, noting the plain language expressly applied the time limitation to all tort and contract claims. The court looked to Black’s Law Dictionary and ruled that the term was not an exculpatory clause, which in any case would not have excused gross negligence and willful and wanton conduct. The term limited only the time within which a suit must be brought but otherwise did not purport to provide immunity from liability. The supreme court further noted that it had long-enforced contractual provisions setting a time period to file an action shorter than the statute of limitations. Moreover, nothing statutorily imposed a duty on home inspectors to conduct inspections with a particular standard of care, such as statutes governing dentists and other medical professionals. Omstead v. BPG Inspection, LLC, 903 S.E.2d 7 (Ga. 2024).

LANDLORD-TENANT: City may recover costs from landlord for relocating residential tenants displaced by fire set by arsonist. Landlord owned a three-story apartment building with 40 residential units. A third party, later convicted of arson, started a fire on the second floor of the apartment building. The ensuing blaze caused water, smoke, and fire damage, rendering the apartment units uninhabitable immediately and for the foreseeable future. Less than one hour later that same day, the City of Hartford served the landlord a “Notice Violation/Emergency and Order to Abate,” which stated that the city was condemning the property and ordered all residents to vacate their units until the apartment building was repaired. The city placed a placard on the property declaring the building “Unfit for Human Occupancy.” The city provided shelter and relocation services to the residents and then filed a lien for $274,564 on the landlord’s property, pursuant to the Uniform Relocation Assistance Act, Conn. Gen. Stat. §§ 8-266 to 8-282. The lien provided that it was “for all reimbursable relocation assistance expenses,” including temporary housing (hotel rental fees), moving, storage and insurance of personal property, and replacement housing due to code violations. In addition, the city asserted a claim against the proceeds of the landlord’s casualty insurance policy and later sent the landlord a letter demanding reimbursement for all relocation costs related to the displaced tenants. The landlord objected, arguing that it did not violate any code requiring enforcement by the city; instead, the structure was rendered unsafe as a result of the criminal action of a third party. The landlord filed an application to discharge the city’s lien. The trial court ruled the lien was invalid on the ground that the arson led to the displacement of the tenants, not municipal code enforcement activities based on the landlord’s violations. On appeal, the supreme court first considered whether the tenants were “displaced persons” under the act, defined as “any person who so moves as the direct result of code enforcement activities . . . .”, Conn. Gen. Stat. § 8-267(3), and concluded that they were. In the court’s view, the city’s enforcement of building codes triggers the act’s protections, regardless of the nature of the underlying cause that brought about the need for building code enforcement. The act’s definition of “displaced person” does not concern itself with fault but instead focuses on the status of the tenants. Here, even though a third party’s arson left the landlord’s property in a state that violated the building codes, once the city issued the condemnation order, the residents became displaced as a “direct result of code enforcement activities.” As such, the lien was appropriate. PPC Realty, LLC v. City of Hartford, 324 A.3d 780 (Conn. 2024).

LANDLORD-TENANT: “No rental offset” provision does not preclude tenant’s termination of lease for landlord’s material breach. Hto7 LLC leased two floors of office space to Elevate LLC for a term of eleven years. The lease set a payment schedule with escalating levels of rent. Section 5.1 of the lease required Elevate to provide Hto7 a security deposit of $115,000. At the end of the second lease year, Hto7 was obligated to refund one-third of this amount within 30 days of receiving a written request from Elevate. A “no rental offset” provision stated: “in the event… Tenant shall have a claim against Landlord, Tenant shall not have the right to deduct the amount allegedly owed to Tenant from any rent …, it being understood that Tenant’s sole method for recovering upon such claim shall be to institute an independent action against Landlord. . . . The obligation to pay rent under this Lease of Tenant is an express independent covenant of Tenant.” The lease also included a catch-all provision, which stated that remedies were cumulative and in addition to any other right or remedy existing by agreement, applicable law, or in equity. During the early stages of the COVID-19 pandemic, Elevate sent a letter requesting that Hto7 refund one-third of its security deposit, which it was entitled to per § 5.1 of the lease. Hto7 acknowledged receipt of the request later that day but did not provide the refund within the required period. Thereafter, Elevate emailed Hto7 a notice of default with a demand to cure. After an additional 30 days had passed with no response from Hto7, Elevate mailed a notice of termination to Hto7, stating that it was terminating the lease “for cause” because Hto7 failed to refund the security deposit. Elevate asserted that Hto7’s failure was a material breach and demanded the return of its entire security deposit. Three days later, Hto7 responded with a letter contesting Elevate’s right to terminate the lease, citing the “no rental offset” provision. Elevate vacated the space, and Hto7 sued Elevate for breach of contract. The trial court concluded that Elevate breached the lease agreement when it stopped paying rent and vacated the premises. The court of appeals disagreed, finding that the “no rental offset” provision did not waive Elevate’s common-law right to cease performing under the lease agreement in the event of Hto7’s material breach. Instead, the provision, by its plain terms, served an entirely different purpose; it precluded Elevate from engaging in just one particular type of self-help—withholding rent to offset any damages. Terminating an agreement because of a material breach was neither expressly nor implicitly covered by the “no rental offset” provision. Moreover, § 20.5 of the lease specifically preserved all other remedies available in law or equity. Under the common law, a party has a right to terminate a contract in the event of the other party’s material breach. The court concluded that if the parties here meant to extinguish that right, via the “no rental offset” provision or otherwise, that intent had to be apparent from the face of the contract, but it simply was not. Hto7, LLC v. Elevate, LLC, 319 A.3d 368 (D.C. Aug. 2024).

LANDLORD-TENANT: Tenant may recover damages for landlord’s termination of lease without complying with lease provision on notice and opportunity to cure. The Crouches leased their farmland to the Coopers for five years for pasturing cattle and growing crops for feed. The lease required the Coopers to employ best management practices, including maintaining the irrigation system and applying fertilizers and herbicides. The lease also provided that any default by either party could be cured within 90 days upon written notice. More than a year before the lease was to expire, in November 2020, the Crouches sent the Coopers a letter stating they were terminating the lease, effective February 15, 2021, on account of the Coopers’ failure to adhere to best management standards. The Coopers vacated the premises and thereafter sued the Crouches for breach of contract. The trial court ruled for the Coopers and awarded damages, and the supreme court affirmed. The court explained that the purpose of the notice requirement in the lease was to inform the Coopers of any alleged default, why the Crouches were taking such action, and how the Coopers could remedy the default. The November 2020 letter purported to terminate the lease without allowing the Coopers to cure the alleged default. Instead, the Crouches’ letters and actions, including rejecting a rent payment tendered by the Coopers, left them with no information as to how they could cure and led them to believe they were being kicked off the property and needed to obtain alternative feed and pasture for their cattle. The Crouches were thus in breach and could not rely on the Coopers’ alleged prior default to excuse non-compliance with the notice provisions. Crouch v. Cooper, 556 P.3d 199 (Wyo. 2024).

LANDLORD-TENANT: Landowner may be liable for injury to adjacent property based on negligence. PHWLV, LLC owned and operated the Planet Hollywood Resort and Casino on the Las Vegas Strip and an adjacent shopping mall, where it leased space to two tenants who sold footwear and clothing. The landlord maintained a fire-suppression system above the retailers’ stores and the rest of the mall. A pressurized fire-suppression pipe separated from another pipe at its coupling, allowing water to escape and flood a service corridor within Planet Hollywood before leaking into the mall. The water caused extensive damage to the resort, mall, and the tenants’ stores and inventory. The tenants sued the landlord for negligence. The trial court granted summary judgment to the tenants, finding that there was no genuine dispute over the elements of duty or breach—that the landlord, as a property owner, had a legal duty to ensure that whatever was on its property did not invade or otherwise damage the property of others. The parties proceeded to a jury trial on the elements of causation and damages. At the close of evidence, the trial court entered a directed verdict for the tenants, and the jury awarded damages of $3,133,755 to one tenant and $411,581 to the other tenant. On appeal, the supreme court agreed that the landlord had a legal duty to the tenants because it owned and occupied the land, and the tenants were lawful entrants on that land. Because the landlord controlled the fire suppression system on its premises, it had a duty to exercise reasonable care under the circumstances to avoid injury to other persons. Whether the landlord exercised reasonable care under the circumstances, specifically whether it breached its duty by the system malfunction, which created a risk of damage to the mall tenants, was a case-specific determination that should be determined by the jury. The trial court erred by describing the landlord’s duty in absolute terms. Its formulation of duty lacked the crucial principles underlying the law of negligence, specifically, whether the actor exercised reasonable care under the particular circumstances. The trial court’s directed verdict on liability based on the incorrect description of the landlord’s duty made causation essentially indisputable. PHWLV, LLC v. House of CB USA, LLC, 554 P.3d 715 (Nev. 2024).

Literature

LAND USE: Should legislative exactions and special assessments be subject to the same standard of judicial review? Prof. Christopher Serkin addresses this question in Exacting Assessments: Sheetz and the Problem of Stategraft, Symposium on “Stategraft.” 2024 Wis. L. Rev. 641 (2024). In Sheetz v. County of El Dorado, 601 U.S. 267 (2024), the Supreme Court held that the constitutional rules applying to administrative development exactions also apply to legislated exactions. Despite this pronouncement, Prof. Serkin finds that courts defer much more to legislative rather than administrative decisions. He argues that political and distributional risks offer a partial explanation of this different treatment, relying on the lens of stategraft, a term coined by Prof. Bernadette Atuahene, A Theory of Stategraft, 98 N.Y.U. L. Rev. 1 (2023), to describe the government’s illegal use of its regulatory power to raise money from the poor and politically powerless. Prof. Serkin considers which of these contexts raises the greater likelihood of illegal burdens, especially on vulnerable populations, and to see who is more likely to bear the costs of different financing mechanisms: taxes, assessments, and exactions. He warns that ratcheting up the constitutional scrutiny of one is likely to shift the government’s use to the others and that they will not have neutral distributive consequences. The essay offers a thoughtful analysis of Sheetz and provides valuable insight into what maneuvers local governments might adopt, with effects felt more severely by those least able to withstand them.

PROPERTY INSURANCE: As storms become more severe, the numbers and amounts of casualty insurance claims also have risen to the point that more and more private insurance companies have stopped serving some coastal states. Taken together, the consequences of declining availability and increasing costs constitute a coastal property insurance crisis. In The Coastal Property Insurance Crisis, 54 Env’t L. Rep. 10443 (June 2024), a recounting of a roundtable discussion hosted by the Environmental Law Institute, Jeffrey Peterson, Alice Hill, Jessica Dandridge, Carolyn Kousky, and Dave Jones give a stark depiction of the looming crisis. These experts describe how high insurance costs are forcing many owners to forgo insurance altogether; others, if they have the means, will relocate. They offer advice on what programs and policies insurance providers and governments could adopt to best guide the coastal property insurance market toward desired national goals, including initiatives toward more reliable and sustainable insurance markets, better promotion of risk-mitigation practices, more standard coverage packages, more affordable premiums for low-income people, and better protection of federally guaranteed mortgages.

USURY: Prof. Adam J. Levitin, in The New Usury: The Ability-to-Repay Revolution in Consumer Finance, 92 Geo. Wash. L. Rev. 425 (2024), describes the erosion of traditional usury laws and advocates for the concept of “New Usury” to fill the regulatory gap. New Usury emerges from two new doctrinal approaches to protecting consumers in financial transactions: a revived unconscionability doctrine and ability-to-repay requirements under federal and state laws. As he explains it, the New Usury represents a shift from traditional usury law’s bright-line rules to the fuzzier standards of unconscionability and ability to repay. Some courts have held loan contracts unconscionable based on excessive price terms, even if otherwise not in violation of codified usury limits, while other credit products are governed by statutory or regulatory requirements that, before making a loan, creditors determine the consumer’s ability to repay. Prof. Levitin notes that the ability-to-repay rules vary widely, and unconscionability, by definition, is a fluid concept. Although some constraints on lenders’ ability to craft financial transactions in their self-interest are necessary, the New Usury, as it now stands, may not be up to the task. Instead, he calls for a more comprehensive and coherent approach to consumer credit price regulation through a federal ability-to-repay requirement for all consumer credit products along with product-specific regulatory safe harbors. This combination, he believes best balances consumer protection and business certainty.

ZONING: In Nationalize Zoning, 72 U. Kan. L. Rev. 565 (2024), Prof. Stephen Clowney identifies a host of distortions in the housing market, from higher home prices to low inventory, many of which he attributes to local zoning laws. He calls for the wholesale dismantling of local zoning laws, which affect construction and housing access. Zoning rules that divide municipalities into districts and designate permitted uses for each place have caused a pernicious set of problems; he names urban sprawl, environmental degradation, homelessness, economic inequality, and even loneliness and obesity. Zoning also accounts in part for continuing racial segregation and its enduring socioeconomic impacts. Prof. Clowney sees the nationalization of zoning as a radical but necessary intervention. The piecemeal adjustments to public land use regulation over the past century have proven largely ineffective in remedying effects that invariably spill over borders and into the housing markets. He rejects the arguments that land use regulation, i.e., zoning, is quintessentially local and not amenable to national oversight. He sees at first a limited set of substantive interventions at the federal level, under the Commerce Clause, to tamp down the worst abuses of parochial local governments and tackle some of the barriers that relegate poor and minority residents in low-opportunity neighborhoods. These interventions include prohibiting governments from banning apartments in single-family zones, eliminating largelot requirements that invariably drive up housing prices with no attendant benefits, and legalizing accessory dwelling units. Although many would agree that certain zoning practices are indeed pernicious, the real task seems to be getting Congress to undertake the challenge of dealing with them.

Legislation

CALIFORNIA amends its Affordable Housing and High Road Jobs Act of 2022 on affordable housing development. For housing projects entitled to streamlined, ministerial processing by local governments, the amendments change project area maximums, prescribed distances from freeways, and density limits. The amendments also define eligibility for access to such housing. 2024 Cal. Stats. ch. 272.

CALIFORNIA amends landlord-tenant law to prohibit certain charges to residential tenants. A landlord may not charge a tenant a fee for serving, posting, or otherwise delivering any notice or for paying rent or security by check. Service members may not be charged a higher than standard or advertised security deposit unless the landlord explains in writing, on or before the date the lease is signed, the amount of the higher security and why the higher security amount is being charged. The act requires the landlord to return the additional amount of security to the tenant after six months of residency if the tenant is not in arrears for any rent due during that period. 2024 Cal. Stats. ch. 287.

MICHIGAN enacts law on unclaimed property. The law contains a presumption of abandonment of property unclaimed for more than three years after funds become payable or after checks have not been cashed. Notice requirements are specified. 2024 Mich. P.A. 101.

NEW HAMPSHIRE amends landlord-tenant law to establish procedures for unauthorized occupancy evictions. A hearing on a petition by an owner must be held within 48 hours. If the court finds the occupancy to be unauthorized, it may order immediate removal and award actual damages or $1,000, whichever is greater. An owner may dispose of the occupant’s personal belongings as she sees fit and without notice, and the person may be arrested for trespass. 2024 NH ch. 370.