Property Law Developments—Joseph William Singer

Washington state passed the Foreclosure Fairness Act, 2011 Wash. Legis. Serv. 58, requiring telephone notification and a 60-da6 opportunity to meet with the lender before foreclosure proceedings can begin. read article

Statutes have been passed in Pennsylvania, South Dakota, Virginia and Washington prohibiting transfer fee obligations which requires payments of fees to a prior seller every time the property is sold. 2011 Pa. Laws 8; 2011 S.D. Sess. Laws 196; 2011 Va. Acts 706; 2011 Wash. Legis. Serv. 36.

The Vermont Supreme Court held, in RBS Citizens v. Ouhrabka, 30 A.3d 1266 2011 VT 86 (Vt. 2011), that creditors cannot attach tenancy by the entirety property unless both spouses agreed to the debt. This appears to be the majority rule in the country although some states disagree.

The Texas Supreme Court has issued a somewhat confusing opinion holding that landowners own the groundwater beneath the surface of their land. In Edwards Aquifer Auth. v. Day, No. 08-0964 (Feb.24, 2012), the Texas Supreme Court held that a water regulation commission may have taken an owner’s groundwater rights without just compensation under the Penn Central test when it limited an owner’s groundwater rights to the amounts of water he had historically taken from the land. The court found a state law that defined the amount of groundwater one can withdraw based on historical uses to be a potential taking of property because it believed an owner should not lose the right to withdraw vested rights in groundwater just because the landowner had failed to exercise his right to withdraw it in the past. The court did not overturn the state’s free use or absolute ownership rule for groundwater that allows owners to withdraw water without liability to neighboring owners whose wells are dried up or whose water amounts are reduced. It did hold that the landowner “owns” the groundwater beneath the surface and that use of several factors, including but not limited to historical uses, might constitute a legitimate regulatory measure. The court remanded for a determination of whether the state statutes, as applied to this owner, constituted a taking of property under the multi-factor Penn Central test. The case leaves groundwater regulation in Texas in a state of great uncertainty since the allowable parameters of regulation of groundwater are now in doubt. The Court cautioned that it did not believe its ruling would be disruptive and the legislature remained empowered to enforce environmental laws regulating water withdrawal without violating the takings clause. At the same time, it suggested that environmental regulation of water might require compensation of owners whose rights to withdraw water are restricted.

Banks that have obtained title to foreclosed properties traditionally would sell them quickly but the current real estate malaise resulting from the subprime crisis has made it difficult for them to do so. The result is that many properties remain on the books of the banks. Under state property law, the banks have the obligations all landowners have to comply with housing codes and the warranty of habitability. But many banks do not have established procedures for keeping track of all the individual properties they own, especially when the mortgages to those properties were securitized, making the owner of the trust that owns those mortgages the effective landlord of thousands of homes. Both localities and tenants are having to deal with the failure of banks to comply with regulations mandating maintenance of rental properties. read article.

Governor Christine Gregoire of Washington State signed Senate Bill 6239 on Feb. 13, 2012 authorizing same-sex marriage in the state of Washington. Wash. Sess. Laws 2012 ch. 3. The bill is effective as of June 7, 2012. Governor Martin O’Malley will sign a similar bill in Maryland, called the Civil Marriage Protection Act, House Bill 438, on March 1, 2012. Both laws may be subject to repeal by referendum votes by the citizens of the respective states. New Hampshire’s legislature is talking about repealing its same-sex marriage legislation but Governor John Lynch has vowed to veto any such bill. read article

The Ninth Circuit ruled in Fair Housing Council of San Fernando Valley v. Roommate, LLC, 2012 U.S. App. LEXIS 1971 (9th Cir. 2012), that the Fair Housing does not regulate roommate choices or advertisements expressing preferences with respect to roommates, dismissing a claim against Roommate.com, a website that allowed individuals to place ads stating preferences based on sex, sexual orientation, religion, and familial status in connection with roommate searches. The opinion by Judge Alex Kozinski noted that the Fair Housing Act regulates “dwellings” which are defined to include “any building, structure, or portion thereof which is occupied as, or designed or intended for occupancy as, a residence by one or more families.” 42 U.S.C. §3602(b)(emphasis added by this editor). Despite the “or portion thereof” language, the court noted that the constitution protects rights of intimate association and that it would be unconstitutional to restrict roommate choices so the statute should be read to preclude such regulation if possible. Since the statute could be interpreted to regulate only the transfer of an “independent living unit” rather than shared space, and doing so would avoid constitutional problems, that is how the court interpreted the “portion thereof” language. The court also held that advertisements that express preferences that would otherwise be discriminatory are lawful in the roommate context since §3604(c) prohibits ads that “indicate any [discriminatory] preference…with respect to the sale or rental of a dwelling” and “dwelling” does not include shared living space, there is no prohibition against discriminatory roommate ads. This suggests that it is lawful to place an ad that expresses racial preferences as well as preference with respect to sex, sexual orientation, religion or familial status as long as the space is shared rather than transferred. At the same time, that fact situation was not addressed by the court because Roommate.com does not seek such information.