A look at recent court cases affecting real estate.
Ordinance did not constitute illegal taking
A county enacted an ordinance that designated a parcel of land as open range land for the grazing of livestock. The ordinance did not require owners of property located within the range to allow neighboring cattle to graze on their property, giving owners the right to “fence out” cattle. A buyer bought property within the range, but refused to fence his property, claiming a fence would diminish the productive use of his property. The unfenced property was damaged by grazing cattle. The owner of the property sought compensation for his losses from the county, claiming the ordinance constituted a taking since it required the owner to keep range cattle out of his property by building a fence, which constituted a physical occupation of his property and diminished his productive use of the property. The county claimed the ordinance did not constitute an illegal taking and did not interfere with the owner’s economic and beneficial use of the property since he was not required to allow cattle on his property and had the right to fence out cattle. A California appeals court held the ordinance did not constitute an illegal taking since the ordinance did not interfere with the owner’s economic and beneficial use of the property as the owner was not required to allow cattle on his property or to fence his property.
Also at issue in this case:
Minimum grazing rental fee is not illegal commercial rent control
A county enacted an ordinance that designated a parcel of land as open range land for the grazing of livestock. The ordinance entitled owners of unfenced property located within the range to a minimum rental fee from anyone who allowed their livestock to graze on the owner’s land. An owner’s unfenced property was damaged by his neighbor’s livestock. The owner sought compensation from the county for his losses, claiming the ordinance constituted illegal commercial rent control since the rental fee provided by the ordinance hindered his ability to negotiate for a fee dictated by market conditions. The county claimed the ordinance did not control rents since it set only a minimum, and not a maximum, rental fee and did not restrict the owner’s right to negotiate for a higher rental fee. A California appeals court held the ordinance did not constitute illegal commercial rent control since it only provided a floor, not a ceiling, for the rental fee and did not diminish the owner’s right to negotiate for a higher rental fee. [Herzberg v. County of Plumas (2005) 133 CA4th 1]
Fee transfer subject to a lease triggers reassessment
An owner of property entered into a ten-year lease with options for two five-year extensions. The lease agreement required the tenant to pay the property taxes and stated the tenant owned the improvements which were to remain on the property when the lease expired. On the death of the owner during the term of the lease, the property was transferred to his grandchild. The grandchild applied to the county assessor for a grandparent-grandchild tax exclusion on reassessment of the property due to the change of ownership. The county assessor reassessed both the land and the improvements and applied the dollar amount of the grandchild’s exclusion. The grandchild sought to have the reassessment limited to the land, claiming only the land was transferred since the improvements were owned by the tenant under the lease. The assessor claimed the improvements were properly reassessed since the property transferred on death included both land and improvements, subject to the lease. The California supreme court held the transfer of the property from the grandparent to the grandchild triggered reassessment of the land and the improvements, with credit for the grandparent-grandchild exclusion, since the fee ownership of the entire property was transferred, subject to the tenant’s leasehold estate. [Auerbach v. Assessment Appeals Board No. 1 for the County of Los Angeles (2006) 39 C4th 153]