Tag: Real Estate Attorney Los Angeles; Los Angeles Real Estate Lawyer; Real Estate Litigator Los Angeles; Real Estate Trial Attorney Los Angeles

Our Los Angeles Real Estate Attorneys have briefed an issue in one of our real estate fraud and nondisclosure cases as to whether defects of a technical nature, (i.e., not visible to buyer or through inspection), as opposed to physical defects that are visible to a buyer, are the responsibility of the buyer to have knowledge or investigate.

Based upon the cases we have researched, it appears that California courts are well settled that a buyer of real estate is not charged with investigating matters of a technical nature as to which the seller has full knowledge and the buyer none. In Hefferan v. Freebairn, (1950) 34 Cal. 2d 715, the California Supreme Court affirmed a judgment in favor of a plaintiff buyer of a coffee shop and against a defendant seller. The buyer inspected the books and records of the coffee shop prior to entering into the purchase contract. Id. at 717-18. The inspection revealed a discrepancy between the coffee shop’s records regarding its profitability and the seller’s representations about profitability. Id. The defendant seller attempted to rely on Carpenter v. Hamilton, (1936) 18 Cal. App. 2d 69, 71, arguing that the buyer could not rely on the seller’s representations since he had conducted his own investigation.

The Supreme Court rejected the seller’s argument, holding that the exceptions set forth in Carpenter governed the outcome of that case, not the general rule:

“In the Carpenter case, however, the defects in the property conveyed were immediately visible upon the most cursory inspection by one taking possession of the realty. The misrepresentations of earnings in the present case fall into a category for which the Carpenter case makes a specific exception, i.e., ‘that a buyer is not required to employ experts to investigate matters of a technical nature as to which the seller has full knowledge and the buyer none, and if for this reason the investigation is incomplete, he may show that he relied upon the representations as to matters which he did not investigate.”

Hefferan supra at 720. (Emphasis added.) See also Brownlee v. Vang, (1965) 235 Cal. App. 2d 465, 478 (noting that Carpenter “has been held applicable only to visible defects”); see also Sanfran Co v. Rees Blow Pipe Manufacturing Co. (1959) 168 Cal. App. 2d 191, 203; see also Stanley v. Limberys (1958) 74 Nev. 109, 112 (refusing to apply Carpenter, and noting that “[b]y inspecting the premises the purchasers cannot be held to have satisfied themselves that the structural condition of the building was such as to meet the city requirements.” (Emphasis added.)

Thus, based on the cases cited herein, it would appear that California courts distinguish defects that are of a physical nature and those that are of a technical nature, i.e., defects not visible such as city requirements or the profitability of a business. Of course, as sound as legal arguments may be, trial court judges can and do interpret the case law and facts differently from court to court.

Our Los Angeles Real Estate Attorneys have seen Transfer Disclosure Statements (“TDS”) in litigation left blank with only the words “REO” or “As Is” written across the TDS form. Despite an “as is” sale wherein the buyer takes the property in its present and observable condition and without any warranty by the seller, California law mandates the TDS to be filled out. Cal. Civ. Code § 1102.1(a) states “It is also the intent of the Legislature that the delivery of a real estate transfer disclosure statement may not be waived in an “as is” sale, as held in Loughrin v. Superior Court (1993) 15 Cal. App. 4th 1188.”(Emphasis added.) In Loughrin, the Court of Appeal reversed the trial court’s order granting summary adjudication in favor of a seller of real estate on a cause of action based on the seller’s failure to make appropriate disclosures of defects in the property as required by Cal. Civ. Code 1102 et. seq. Id. at 1191.

Buyers should know that foreclosures and other types of transfers are exempt.

Thus, the prudent Real Estate Agent should fill out the TDS even in an “as is” sale.

Private nuisances can be permanent or temporary in nature. A nuisance can result from odors, pests, noise or another type of property right infringement. California law has long recognized a property owner’s right to bring a private nuisance claim to protect individual property rights. Our Los Angeles Real Estate Attorneys were recently asked to discuss the damages allowed by law for nuisance related claims where the nuisance complained of is not permanent in nature but continuing. The law generally allows for (1) loss of value; (2) discomfort, annoyance and distress; and (3) exemplary damages where proven.

Loss of value – Loss of use is a recognized measure of continuing nuisance damages. See Shamsian v. Atlantic Richfield Co., (2003) 107 Cal.App.4th 967, 982; see also Cal. Civ. Code § 3479. The measure of damages for the loss of use is the difference in the rental or use value of the premises before and after the injury caused by the nuisance. See Qualls v. Smyth, (1957) 148 Cal. App. 2d 635, 638; see also Ingram v. City of Gridley, (1950) 100 Cal. App. 2d 815, 821 (“Loss of rental value is not a part of the damages recoverable where there was permanent injury to the land itself. But where the property is not directly affected or depreciated by physical injury, but the value of its use only is affected, it has been held that the measure of damages is the depreciation in the rental value of the property.”)

Annoyance & Discomfort – Damages for discomfort, annoyance, and mental distress suffered by the plaintiff as the result of a nuisance are recoverable, but not merely as an alternative to or to the exclusion of damages for depreciation of the plaintiff’s property in rental value. See Spaulding v. Cameron, (1954) 127 Cal. App. 2d 698, 706. Annoyance and discomfort damages are intended to compensate a plaintiff for the loss of his or her peaceful occupation and enjoyment of the property. The annoyance and discomfort for which damages may be recovered on nuisance claims generally refers to distress arising out of physical discomfort, irritation, or inconvenience caused by odors, pests, noise, and the like. See Kelly v. CB&I Constructors, Inc., (2009) 179 Cal. App. 4th 442, 456-57.

Exemplary Damages – When the facts warrant it, exemplary or punitive damages may be recovered in a nuisance case. See Hassoldt v. Patrick Media Group, Inc., (2000) 84 Cal. App. 4th 153, 168.

Generally a real estate broker applicant needed to acquire experience by working as a salesperson under a licensed broker for at least two years prior to applying for a broker’s license.  There was however, a college degree exception to this work experience requirement.  The existing law requirement for the college degree exception has been loosely interpreted to include any degree.  Assembly Bill 1718, a bill sponsored by the California Association Of Realtors® now requires that the college degree exception apply only to degrees of a major or minor in real estate.

Effective January 1, 2013, the Homeowner Bill of Rights aimed at helping Californians who are struggling with the turbulent California housing market, avoid foreclosure where possible and prevent the devastating effects of foreclosures on California communities. The law as written will attempt to prohibit certain lender practices, streamline contact between borrower and lender and also provide borrowers with the right to sue lenders for material violations of the law. The full text of the Homeowner Bill of Rights can be found here under Assembly Bill 278 and Senate Bill 900.

The law’s legal remedies for borrowers include the right to stop or enjoin a trustee’s sale until the lender and/or mortgage servicer has corrected the material violations of the law. Actual monetary damages are recoverable and for intentional and reckless violations, a borrower may recover treble damages or $50,000.00, whichever is greater. Attorney fees are also recoverable. Our State Legislature clearly intended for borrowers to have some significant legal “hammers” at their disposal.

Meant to be a component of the recently signed California Homeowner Bill of Rights, California lawmakers are prepared to force owners of foreclosed properties (e.g., banks) to pay for upkeep of foreclosed, abandoned and/or distressed properties in order to avoid, minimize and remedy economic blight.  As California neighborhoods and economies struggle to deal with the boom and bust of housing, economic blight resulting from an increase in foreclosed and abandoned properties, is a problem that is both real and detrimental to local residents.  The California Health and Safety Code Section 33030 defines a blighted area as an area in which the physical conditions that cause blight is so prevalent and so substantial that it causes a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical and economic burden on the community that cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment.  Section 33031 defines blight to include but are not limited to buildings in which it is unsafe or unhealthy for persons to live or work; conditions that prevent or substantially hinder the viable use or capacity of buildings or lots; adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area; depreciated or stagnant property values; abnormally high business vacancies, abnormally low lease rates, or an abnormally high number of abandoned buildings.  Hopefully, such a law could help keep neighborhood home prices up even though a particular neighborhood may have a large number of foreclosures.

Our Los Angeles business and real estate attorneys are constantly evaluating cases and claims to determine whether the Firm is going to take on another good fight. Part of the process is to evaluate the merits of a claim to determine whether liability exists. Another element of case evaluation is to determine whether damages exist. A case can have all the liability in the world but without damages, there is no cause of action in California. Another important factor in evaluating damages is to determine whether any statutes of limitations (the period of time to file a timely lawsuit) have run their course.

The situation often arises when there may be liability but damages have not accrued. In such a case, California law mandates the accrual of damages before a claim or cause of action is legally ripe for filing. See C.C.P. § 312. Under California law, a cause of action does not accrue until the damages have been sustained. See City of Vista supra 84 Cal. App. 4th at 886 (“When damages are an element of a cause of action, the cause of action does not accrue until the damages have been sustained.”) (Emphasis added); see also McAllister v. Clement, (1988) 75 Cal. 182, 184 (“But it is clear that no action will lie to recover damages if no damages have been sustained.”); see also Allen v. Gardner, (1954) 126 Cal. App. 2d 335, 340; see also Vaca v. Wachovia Mortg. Corp., (2011) 198 Cal. App. 4th 737, 743 (“[I]t is often stated that the statute commences ‘upon the occurrence of the last element essential to the cause of action.’”) (Internal citations omitted.); see also Pooshs v. Phillip Morris USA, Inc. (2011) 51 Cal. 4th 788, 797 (“A cause of action accrues ‘when [it] is complete with all of its elements’—those elements being wrongdoing, harm, and causation.”) (Emphasis added) (Internal citations omitted.)

Moreover, the threat of future harm, not yet realized, is not enough to trigger the running of a statute of limitation. See United States Liab. Ins. Co. v. Haidinger-Hayes, Inc., (1970) 1 Cal. 3d 586, 597 (“Mere threat of future harm, not yet realized, is not enough…The cause of action must be matured so that a suit can be based upon it…No action will lie to recover damages if no damages have been sustained…Basic public policy is best served by recognizing that damage is necessary to mature such a cause of action.”) (Emphasis added.) (Internal citations omitted.); see also Walker v. Pacific Indem. Co., (1960) 183 Cal. App. 2d 513, 517 (“It is clear that mere possibility, or even probability, that an event causing damage will result from a wrongful act does not render the act actionable…”); see also McAllister supra 75 Cal. at 814.

Our Los Angeles Real Estate lawyers were required to determine and analyze whether a listing price of a real property could evidence actual or market value. After briefing motions and oral arguments at the trial court level, the answer is simply “NO.” A listing price can never be offered as evidence of the actual or market value of a property.

Under California law, the listing price can never represent actual value. See Simone v. McKee, (1956) 142 Cal. App. 2d 307, 316 (“Moreover, section 3343 provides that the defrauded person is entitled to recover ‘the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received.’ ‘Actual value’ is not the listing price.”) (Emphasis added.) Additionally, “actual value” has been held by California courts to mean and refer to “market value.” See Nece v. Bennett (1963) 212 Cal. App. 2d 494, 497; see also Bagdasarian v. Gragnon, (1948) 31 Cal. 2d 744, 753. Market value, under California law is defined as

“The fair market value of the property taken is the highest price on the date of valuation that would be agreed to by a seller, being willing to sell but under no particular or urgent necessity for so doing, nor obliged to sell, and a buyer, being ready, willing, and able to buy but under no particular necessity for so doing, each dealing with the other with full knowledge of all the uses and purposes for which the property is reasonably adaptable and available.” See C.C.P. § 1263.320(a). Market value under California law is what a willing and able buyer would pay, and not what a seller decides to list the property at. If Defendant was allowed to state damages based on a listing price, principles governing property valuation in real estate fraud, partition actions and eminent domain proceedings would be completely turned on their respective heads.

Indeed, our State’s Legislature codified this principle with respect to the admissible evidence pertaining to property values. See Cal. Evid. Code § 822(a) (Listing price or offers cannot be used to establish value in eminent domain proceeding.); see also Cal. Evid. Code 822(b) (“In an action other than an eminent domain or inverse condemnation proceeding, the matters listed in subdivision (a) are not admissible as evidence, and may not be taken into account as a basis for an opinion as to the value of property, except to the extent permitted under the rules of law otherwise applicable.”) (Emphasis added.) California law is clear in that listing prices or offers cannot be used to establish the value of real property no matter what the circumstance may be.

Thus, the listing price will never evidence actual or market value of property under well-settled California law.

Our Los Angeles Real Estate Attorneys recently litigated the issue of whether an oral revocation of an offer is legally sufficient to revoke a written counter-offer. This issue came upon a decision at the trial court level and the trial court judge ruled that, as a matter of California law, oral revocations are good enough to revoke a written offer.

We represented a real estate broker who’s earned commissions were withheld based on a claim by the client that the broker did not revoke a certain counter-offer in writing, as opposed to the oral revocation completed by the broker. Our real estate lawyers briefed the issue and after some motion practice and oral arguments, the trial court ruled in our client’s favor.

California law is well settled that an oral revocation of a written contract is sufficient. See Cal. Civ. Code § 1587; see also Bellasi v. Shackelford, (1962) 201 Cal. App. 2d 265, 267-68 (“An offer is revoked by communication of notice of revocation… An oral communication meets this requirement.”) (citing Cal. Civ. Code §§ 1581, 1587); see also Brown v. Labow, (2007) 157 Cal. App. 4th 795, 817 (“It is well established that a written offer may be orally revoked.”) Thus, regardless of the use of standard real estate contract forms such as CAR forms (California Association of Realtors forms), an oral revocation communicated to the offeree will suffice to revoke an offer or counter-offer.