Author: ft Editorial Staff

Time to perform

This article sets out the enforceability of one party’s right to cancel a transaction when the other party fails to perform by an appointed date. Time is of the essence The short, seemingly harmless time-is-of-the-essence provision stands alone amongst the boilerplate provisions of some, but not all, purchase agreement forms used to buy and sell real estate in California. By its plain words, the time-essence provision gives notice to the buyer and seller that compliance by the date scheduled for performance of an act or the occurrence of an event called for in the purchase agreement or escrow instructions is essential to the continuation of the transaction.   The time-essence clause “stacks the odds” of losing a transaction against the buyer. Thus, the bargain built into the purchase agreement by the presence of the time-essence provision gives the buyer or seller the right to immediately cancel the transaction on the failure of the other party to act or cause an event to occur by the appointed date. By virtue of the multiple number of tasks a typical buyer undertakes to close a transaction, contrasted with the very few tasks imposed on a seller to close, the time-essence clause “stacks the odds” of losing a transaction against the buyer, even though he acted with diligence at all times. Further, for a vast majority of listing and selling agents who work...

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Private road maintenance costs

This article discusses the obligation of owners to share in the maintenance and repair of private roads. Repairs: who pays and how much? Several homeowners share a private road located on an easement for ingress and egress to their residences. The private road is in need of repair. Who is responsible for the repair and maintenance of the private road? All the easement owners! [Calif. Civil Code §845] However, the following points need to be considered when a private road repair issue arises: who has the maintenance responsibility; allocation of costs and arbitration; secondary easements for maintenance; and buying property burdened by a road easement. Maintenance responsibility In the case of a larger development like a condominium project or other common area development, maintenance provisions for the common area easement are included in the covenants, conditions and restrictions (CC&Rs). Owners of appurtenant easements and easements in gross have the duty to maintain the easement they hold on other property. The owner of a private right-of-way easement is responsible for its maintenance, not the owner of the property subject to – burdened by – the easement. [CC §845(a)] Co-owners (users) of an appurtenant easement may enter into an easement maintenance agreement. No standard form maintenance sharing agreement exists.   The maintenance of an easement includes snow removal if the task is necessary to provide access to the property by way...

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Civil rights and fair housing laws

This article outlines the federal and California anti-discrimination laws and how the laws affect the rental of residential property. Property rights cannot be based on status All citizens of the United States have the right to rent real estate, regardless of race. [42 United States Code §1982] Further, all persons within the United States, legally or illegally, have the same rights to make and enforce contracts (rental and lease agreements), sue, be sued, and enjoy the full benefits of the law. All are subject to the same punishments, penalties, taxes and licenses, regardless of race. [42 USC §1981] The Civil Rights Act applies to racial discrimination on the rental of all types of real estate, both residential and nonresidential. Thus, the right to lease real estate is protected by giving all persons the right to make and enforce contracts, regardless of race. Thus, racially motivated activities in any real estate leasing transaction are prohibited. The Civil Rights Act protects against racial discrimination in all activities between persons, and is much broader than the protection under the Federal Fair Housing Act, which is limited to dwellings. Anti-discrimination legislation for residential property The Federal Fair Housing Act (FFHA) prohibits unlawful discrimination in the rental or advertisement of dwellings for rent. [42 USC §§3601 et seq.] A dwelling includes any building or structure that is occupied, or designed to be occupied, as...

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Seniors-only housing

This article covers acceptable and unacceptable age discrimination in California housing. California’s fair housing laws A landlord of an apartment complex with an adults-only rental policy enters into a lease with a pregnant tenant. The lease contains a provision stating no person under 18 years of age can reside in the leased unit. The tenant gives birth prior to the expiration of the lease.   Civil rights and fair housing laws prohibit landlords from practicing discrimination when locating tenants for a property. The landlord immediately serves the tenant with a 3-day notice to remove the child from the premises or vacate. The tenant does neither. The landlord files an unlawful detainer to evict the tenant since the tenant remains in possession and has failed to perform under the notice. The tenant claims she cannot be evicted since the adults-only policy is an unlawful discriminatory practice and violates the child’s civil rights. Can the tenant avoid the landlord’s adults-only policy agreed to in the lease? Yes! The landlord cannot refuse to rent based on age unless the person can be excluded under senior citizen housing laws. The landlord’s adults-only policy violates California’s Unruh Civil Rights Act. [Marina Point, Ltd. v. Wolfson (1982) 30 C3d 721] Civil rights and fair housing laws prohibit landlords, property managers and leasing agents from practicing any discrimination (which is prohibited because of the protected status...

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Due-on waiver and the carryback seller

This article discusses the need for carryback sellers to negotiate a waiver of the senior lender’s due-on clause on a sale subject to its trust deed loan. Prior planning prevents a call A seller of real estate encumbered with a first trust deed lists the property for sale with his broker. The trust deed contains a due-on clause. Later, the broker presents the seller with a purchase offer from a buyer on terms which include: a cash down payment; an assumption of the existing first trust deed by the buyer; and a carryback note executed by the buyer in favor of the seller for the balance of the purchase price, to be secured by a second trust deed on the property. The seller accepts the offer, and a sales escrow is opened. As part of their instructions, escrow then requests a loan assumption package from the lender who holds the note secured by the existing trust deed.Before the close of escrow, the lender approves the sale on one condition: the buyer assumes the loan obligation and agrees to a modification of the interest rate and payment schedule in the note.   By consenting to the conveyance of secured property, the lender has, by its conduct, waived its rights under the due-on clause. The buyer agrees to the lender’s demands and signs a loan assumption and note modification agreement. The...

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Zestimates are great conversation starters with sellers and buyers. Zillow has done more for our bottom line than NAR ever has or will. Don’t fight the current of the river, learn to run with it. Disruption is inevitable in any industry that is fragmented or inefficient. Granted, it does feel like armchair experts and platforms are plentiful in real estate these days, but when the tide rolls out we will see the value proposition of the truest professionals in this industry shine once again.

Justin Bonney, on Zillow’s impact on the real estate industry

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