For Sale by Owner?

As the real estate market improved after the crash, many sellers elected to forgo the use of traditional real estate brokerage services and instead market their properties alone.  Zillow, Craigslist, and other well-established online marketing outlets are competing with the multiple listing service (MLS) and other marketing outlets utilized by real estate marketing professionals.  For sale by owner (FSBO) signs are appearing online and in front yards.  As demand and prices increased, it became easier to locate qualified buyers.  Sellers are usually motivated by the 5-6% savings in commissions paid to the listing agent.

 A qualified real estate agent will help to prepare and market your property.  By law, a licensed real estate agent can prepare contracts, addendums, and disclosures.   Even in today’s market, a commercial property with a limited number of potential buyers can benefit from the use of real estate agent that has contacts and knows how to manage these more complex transactions.  Attorneys will also be involved in these transactions as there are many moving parts – negotiation of terms, timelines, environmental inspections, approval of tenant leases, estoppel certificates, meeting loan conditions, satisfying title insurance contingencies, and more.

 Far more residential sellers are forgoing the use of real estate agents and going FSBO.  Legal costs for handling the transaction are significantly lower than a 5-6% commission.   For example, commissions on the sale of a $300,000 home at 5% would be $15,000.  Barring extraordinary circumstances, legal costs should be under $3,000.

 If the seller is satisfied with the contract price and does not require aggressive marketing to find a qualified buyer, there is no need to incur commissions costs. The real estate attorney can handle all other aspects of the transaction: contract, disclosures, transfer affidavits, title commitment review, deed preparation.   Note, however, that the more expensive your home is, the smaller the number of qualified buyers.  Luxury homes present unique marketing challenges.  The real estate agent can advise as pricing, marketing, and strategy.

 Residential buyers can benefit from the use of a buyer’s agent who knows the market, and can quickly identify and contract for homes that meet the buyer’s needs and specifications.   From a seller’s perspective, it is advisable to allow for payment of commissions to a buyer’s agent.   This can be up to 2.5%, but can be lower.  This insures access to more potential qualified buyers and offers.  From a buyer’s perspective, there should always be title insurance; the title insurance company will usually serve as the escrow agent for closing.  This insures that all contract conditions are satisfied prior to closing, and that good and marketable title is transferred from seller to buyer.

 Contact Mark at:  mark@markhofgardlaw.com

www.markhofgardlaw.com

(623) 327-3719

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Easements and Rights of Way (Arizona)

Slightly less than one-half of the land in Arizona is privately held.  However, there remains huge swaths of undeveloped, sometimes partially subdivided, and mostly vacant land throughout the state.  I have been involved in many purchase/sale transactions in which the parties are surprised to learn that one or more parcels lacks legal access.   The problem usually arises when the title insurance company will not insure that there is legal access to the property.  Obviously, this makes the property virtually unusable for building or living on and greatly reduces the fair market value.

There are two types of access that a buyer of vacant land should be concerned about.  The owner must be able to access the property by foot and vehicle (ingress/egress).  There must also be a utility easement in place for power, and if needed, cable, sewer, and water. When a property goes through the subdivision process, these easements are created and established.  Raw, vacant, and unsubdivided land many lack legal access or utility easements or both.

It is the public policy of Arizona to allow reasonable access to private property:

“Notwithstanding any other law, reasonable access to private property shall not    be denied by this state or any political subdivision of this state.”  A.R.S. § 33-2401.

“An easement is a right to use the land of another for a specific purpose…Once an easement is recorded, it runs with the land and burdens the servient estate’s successors [citations omitted].”  Scalia v. Green, 229 Ariz. 100, 102, 271 P.3d 479, 481 (Ct. App. 2011).  The “servient estate” is the property over and under which the easement is located.  The property served by the easement is called the “dominant estate.”

There are four possible ways to establish a right of ingress/egress, or right of way. First, an express easement may be created with a written instrument reflecting the intention of the parties.  The owner of the servient estate grants to the owner of the dominant estate a right to use a portion of the property for access.  Once the easement is recorded, it provides notice to all parties.  A.R.S. § 33-411(A).

Creation of an express easement is by far the fastest and least expensive proposition for establishing access to a property.    The dominant and servient estates should be surveyed to establish the location of the easement and to create a legal description for the recorded document.

If there is no written agreement, a right of access must be established by the Superior Court.  The landowner seeking access may be able to establish that he/she has an implied way of necessity.  This is not really an easement, but rather is a presumption arising from the conveyance of parcels previously owned by the same party:

“A way of necessity results from the application of the presumption that whenever a party conveys property he conveys whatever is necessary for the beneficial use of that property and retains whatever is necessary for the beneficial use of the land he still possesses... All that is required is that there be a reasonable necessity…a way of necessity can be implied only when the necessity existed at the time of the original severance of the estates.”  Bickel v. Hansen, 169 Ariz. 371, 374, 819 P.2d 957, 960 (Ct. App. 1991)(emphasis supplied).

By way of example, say Ms. Seller owns three 5-acre parcels.  There is one parcel that is accessed by a dirt road over the other two parcels.  Ms. Jones sells that parcel to Mr. Buyer and retains the two parcels over which the access road runs.  Mr. Buyer has an implied way of necessity over the two parcels retained by Ms. Seller.

The third way to acquire a right of access through the courts is by prescription.  Pursuant to A.R.S. § 12-526A, “[a] person who has a cause of action for recovery of any lands, tenements or hereditaments from a person having peaceable and adverse possession thereof, cultivating, using and enjoying such property, shall commence an action therefor within ten years after the cause of action accrues, and not afterward.”  This is one of Arizona’s several “adverse possession” statutes.  There are hundreds of cases that have established the parameters of adverse possession, including right of access.  While this blog can’t go into further detail, the basic scenario establishing an easement by prescription is one in which the owner of one parcel has used the property of another for access for over 10 years, in plain sight, and without the permission of that owner.

The fourth way to acquire a right of access is also the way to acquire a utility easement: a private way of necessity.  In effect, this is a private condemnation action that requires payment of the fair market value of the property taken for access or utility purposes. A.R.S. § 12-1202(A) provides:

“An owner of or a person entitled to the beneficial use of land, mines or mining claims and structures thereon, which is so situated with respect to the land of another that it is necessary for its proper use and enjoyment to have and maintain a private way of necessity over, across, through, and on the premises, may condemn and take lands of another, sufficient in area for the construction and maintenance of the private way of necessity.”

This statutory right of condemnation “comes into existence only if no other access exists by common law implication.’” Bickel, supra, at 169 Ariz. 375, 819 P.2d 961. Thus, if there is an implied way of necessity or easement by prescription, the statutory right cannot be used.  However, the mere fact an alternative route is available does not, however, bar a lawsuit seeking to condemn a private way of necessity. Coll. Book Centers, Inc. v. Carefree Foothills Homeowners’ Ass’n, 225 Ariz. 533, 543, 241 P.3d 897, 907 (Ct. App. 2010).

Contact Mark at:  mark@markhofgardlaw.com

www.markhofgardlaw.com

(623) 327-3719

Expiration of the Statute of Limitations and Rule 120 (Part 2)

In the last blog we learned that, if foreclosure action is not filed within six years of the date the underlying promissory note becomes due, the deed of trust securing that promissory note is extinguished by law.  The entire amount under the note becomes due only if A) it is a note with a fixed maturity date and that date has passed, or B) the note has been accelerated.

Scenario “A” is straightforward.  The terms of the promissory note state a maturity date.  If the date it is due has come and gone, the statute starts running.  BEWARE: partial payments, negotiations with the creditor, and even representations regarding the validity of the promissory note may be taken into account by the court in assessing the applicability of the statute of limitations defense.

Under Scenario “B” there must be further inquiry.  Has the creditor – or the creditor’s predecessor in interest – made a written acceleration of the debt?  Most standard form deeds of trust require prior notice of default before the note can be accelerated, followed by a written acceleration.  Hopefully the borrower has retained copies of all correspondence, and has proof of acceleration.

I see many cases in which the fact of, or the date of, acceleration is at issue.  One way to prove acceleration is through prior recordings of the Notice of Election and Demand (NED) by a creditor seeking to enforce the deed of trust.  The filing of the NED to initiate a foreclosure proceeding also accelerates the note.  “[C]ommencement of a foreclosure action was sufficient to accelerate the obligation secured by the deed of trust.” Kirk v. Kitchens, 49 P.3d 1189, 1192 (Colo.App 2002).   A mortgage statement showing the entire amount due may constitute acceleration, but this argument has not yet been tested in the courts to my knowledge.

Without a valid and exercisable power of sale contained in a deed of trust, the main argument is that the Rule 120 court lacks jurisdiction to hear the case.  Because there is no power of sale at all, there is no valid instrument under which the court can issue an order authorizing sale.  The power of sale has been extinguished and is not enforceable in the courts.

Besides lacking jurisdiction or power to authorize the sale, there is another reason why the Rule 120 court should not issue the order.  The creditor seeking the order is not a real party in interest.   Without a properly exercisable power of sale contained in a deed of trust, the creditor is not a proper party to the proceeding.  C.R.C.P. 17(a) requires that “[e]very action shall be prosecuted in the name of the real party in interest.”  C.R.C.P. 120 establishes judicial supervision of public trustee foreclosures. Princeville Corp. v. Brooks, 533 P.2d 916, 918 (1975).    “Once a debtor in a Rule 120 proceeding raises the ‘real party in interest’ defense, therefore, the burden should devolve upon the party seeking the order of sale to show that he or she is indeed the real party in interest.”  Goodwin v. Dist. Court In & For Sixteenth Judicial Dist., 779 P.2d 837 (Colo. 1989).  Further, as the Goodwin court held, the debtor may raise questions concerning waiver and estoppel in the Rule 120 proceedings.

Many District Court judges are understandably reluctant to denying a motion for order authorizing sale on the basis of expiration of the statute of limitations.  After all, someone borrowed a lot of money on the property, had the use of that money, and did not pay it back.  In most cases, however, it is not the original creditor that is seeking to foreclosure.  It is more than likely a collection company, hedge fund, or other investment fund that has purchased hundreds or perhaps thousands of old, delinquent loans for pennies on the dollar.  When these mortgages are considered as a whole, the ability to foreclose and sell these properties represents hundreds of millions of dollars in pure profit.

The running of the statute of limitations has been held to be tolled, or stopped from running, during the pendency of a bankruptcy action.  This is the likely result at least until the creditor obtains a lift of the automatic stay imposed on enforcement actions by the Bankruptcy Code.  Other actions taken by the debtor may toll the running of the statute, and may even start the running of the statute over again.  This can be a very tricky analysis, and does not always produce a crystal-clear answer.  The facts of each case must be analyzed in the context of prevailing Colorado law.

Of course, if you lose the Rule 120 hearing and there is a strong argument in favor of enforcing the statute of limitations, it is still possible to pursue other judicial remedies (e.g., Rule 105, declaratory relief, and some others that are not addressed here).   This is best accomplished by filing the lawsuit prior to the foreclosure sale and seeking a temporary restraining order.

Contact Mark at:  mark@markhofgardlaw.com

www.markhofgardlaw.com

(623) 327-3719

Expiration of the Statute of Limitations and Rule 120 (Part 1)

I have previously written about the use of a Rule 105 Quiet Title proceeding to address the expiration of the statute of limitations applicable to enforcement by foreclosure (February 2016 post “Quiet Title Actions”).    This two-part blog will address the application of the statute of limitations rules to a C.R.C.P. Rule 120 proceeding concerning a motion for order authorizing sale.

Let’s review the rules concerning expiration of the statute of limitations for enforcing the lien:

C.R.S. § 38-39-207 provides that the lien created by any instrument (including deeds of trust) are extinguished at the same time that the right to commence a suit to enforce payment of the indebtedness secured by the lien is barred by any statute of limitation in the state.

C.R.S. § 13-80-103.5 provides that actions to recover liquidated debts and enforcement of rights set forth in any instrument (like a promissory note) or any instrument securing payment of or evidencing any debt shall be commenced within six years after the cause of action accrues.

C.R.S. § 13-80-108(4) provides that a cause of action for debt, obligation, money owed, per performance accrues on the date such debt, etc. becomes due.

The Colorado Supreme Court is very clear on the effect of these statutes:

“If a party does not commence suit on a promissory note within six years of default, the deed of trust is extinguished because the six-year limitations period in section 13-80-103.5(l)(a), 5 C.R.S. (2002), would bar enforcement of the promissory note; therefore, the lien would be extinguished under section 38-39-207, 10 C.R.S. (2002).”  Mortgage Investments Corp. v. Battle Mountain Corp., 70 P.3d 1176, 1186 (Colo. 2003).

The Colorado Court of Appeals has likewise been very clear on what happens:

“By its plain terms, this statute does not merely affect a creditor’s ability to enforce a lien. It destroys the lien.”Rossi v. Osage Highland Dev., LLC, 219 P.3d 319, 322 (Colo.App.2009).

“If after a debtor defaults on a promissory note, a creditor fails to sue to enforce the note within the six-year limitations period, the creditor’s right to foreclose on the deed of trust lien is extinguished.” Tidwell v. Bevan Properties, Ltd., 262 P.3d 964, 967 (Colo. Ct. App. 2011).

Finally, the rule regarding the date of accrual of the entire amount of the promissory note is set forth in Hassler v. Account Brokers of Larimer Cty., 274 P.3d 547, 553 (Colo. 2012):

“[I]f an obligation that is to be repaid in installments is accelerated … the entire remaining balance of the loan becomes due immediately and the statute of limitations is triggered for all installments that had not previously become due.”

How do you know if the loan has been accelerated, and what can you do about it?  I’ll address this further in the next blog.

Contact Mark at:  mark@markhofgardlaw.com

www.markhofgardlaw.com

(623) 327-3719

What Compensation Can a Goodyear Personal Injury Attorney Help Me Receive for My Injuries?

If you have been injured in an automobile accident, slip and fall, or in an accident at work, a Goodyear personal injury attorney can help you understand what compensation you may receive. At the Law Offices of Mark Wm. Hofgard, Esq., our compassionate lawyers realize that negotiations with an insurance adjuster can be stressful and upsetting. Ultimately, you just want to be reimbursed for your injuries. Fortunately, a personal injury attorney can work on your behalf to negotiate with the insurance company and manage your case. Not only does this allow you to focus on recovering from your injuries, but you may even receive a larger settlement. In fact, a study by the Insurance Research Council (IRC) found that injury victims represented by a personal injury attorney receive insurance payments an average of 3.5 times higher than those without representation. Although the process involves a myriad of variables, there are certain types of compensation that are considered during insurance company negotiations.

Medical Expenses: Possible medical expenses include the charge for the ambulance, emergency room fees, x-rays and scans, surgery expenses, braces or crutches, medications, and physical or other therapy. If your physician determines that you will require ongoing or future medical treatment as a result of your injuries, that cost is considered part of your medical expenses claim as well.

Property Damage: If your car was damaged or totaled in the accident, you can receive compensation for the cost of the repairs or the value of the vehicle, if damaged beyond repair.

Lost Wages: Lost wages compensation reimburses you for any loss of earnings as a result of your injuries. This includes time recovering from your injuries, time away from work for medical care and appointments, and even lost wages that result from moving to a different position to accommodate any physical limitations stemming from your injuries.

Pain and Suffering: It is difficult to determine a value for your pain and suffering. Legally, however, there are several methods that are used to calculate a fair value. The multiplier method takes the cost of your medical expenses and multiplies it by between 1 and 5 to determine a pain and suffering value. The multiplier can vary based on the severity of the injury or the nature of the accident. Another method, the “per diem” method assigns a value for each day and multiplies that value by the number of days it takes to achieve maximum medical improvement. Other methods are used as well. Your Goodyear personal injury attorney can help you determine a fair value for your pain and suffering.

Although these represent the most common damages associated with an accident, your attorney can help determine if other forms of compensation are appropriate in your case. If you have been injured in an accident, contact Mark Hofgard online or by phone at 623-327-3719 for a free consultation! Remember, our experienced Goodyear personal injury attorney puts you first and never charges legal fees unless we recover compensation in your case!

Boundary Disputes (continued)

During real estate booms raw land can become more of a speculative commodity.  I have personally been involved in scores of transactions involving large tracts of land on the edge of the development envelop.   Since haste makes waste, I have encountered legal descriptions based upon surveys that were hurriedly conducted without regard to established surveying principles.   Surveying is a fairly exact science and utilizes well-established principles.  I am not an expert in that field, and regularly work with highly qualified and well-respected surveyors.  Most of the issues are based upon surveys that were prepared decades ago when a particular parcel was first subdivided.

If the legal description does not start at a defined point and end at that point, it violates the “four corners rule.”  This means that the property is not described sufficiently and has a patent conflict.  If the legal description does in fact create a closed boundary, it can still contain latent conflict.  An example of this kind of defect occurs when a particular “call” (portion of the legal description) results in two different results.  When the legal description of the end point of a boundary can be construed to be at two different places, we have a problem.  This can occur when the metes and bounds description refers to two different reference points: a monument (on the ground) and the aliquot (fractional portion) of the section of land.  These sections were generally established by government survey are frequently used in legal descriptions.

The courts have resolved these types of problems by giving priority to fixed monuments and natural objects.  Here are some of the rules:

Lines marked on the ground by monuments stand highest in determination of true boundaries of conveyed land, ranking above statements of directions, distances, or area. United States v. Weyerhaeuser Co., 392 F.2d 448 (9th Cir. 1967).

 Where a deed contains a conflict in the description of boundaries to land, references to fixed monuments and natural objects control over distances. Bird v. Noon, 9 Ariz. 37, 76 P. 592 (1904); 12 Am.Jur.2d Boundaries, s 67.

 …adjacent boundaries are regarded as monumentsQuality Plastics, Inc. v. Moore, 131 Ariz. 238, 240, 640 P.2d 169, 171 (1981).

Where land patents contained descriptions referring to fractional parts of the rectangular survey system, reliance could not be placed on acreage described in patents.  United States v. Reimann, 504 F.2d 135 (10th Cir. 1974).

If monuments cannot be located, they may be reestablished from survey field notes, and if they can be so reestablished they will not be considered “lost” monuments. United States v. Reimann, 504 F.2d 135 (10th Cir. 1974).

Contact Mark: mark@ruffattohofgardlaw.com

www.ruffattohofgardlaw.com

(623) 327-3719

Adverse Possession (Arizona)

Most people have some idea of what this term means in the field of real property law.  There is some kind of legal principle that allows one party to acquire title to the property of another by occupying or using the other’s property for a period of time.  At common law, adverse possession was defined as:

 The enjoyment of real property with a claim of right when that enjoyment is opposed to another person’s claim and is continuous, exclusive, hostile, open, and notorious.

ADVERSE POSSESSION, Black’s Law Dictionary (10th ed. 2014)

In order to acquire title to that property and prevent ouster by the record title owner, these elements must be present over a period of typically 18 years.   The adverse possessor was then entitled to quite title to the property in his/her name.

Each of the common law elements had specific meaning.  Continuous possession could be proven by living on the property, fencing, or cultivating it.  Exclusive possession meant that the adverse possessor must hold the property out to others as his/her own and have sole physical occupancy.  Hostile, open, and notorious meant that the occupancy was not hidden from view and was in opposition to the record title owner’s rights. If the adverse possessor leaves and abandons the land before the statutory period is complete, the claim to adverse possession is defeated.  If the record title owner of the land re-enters with intent to remain in possession, the claim to adverse possession is interrupted.  If all of the elements are met and the record title owner fails to bring an action for ejectment within the applicable time period, the adverse possessor may quite title in his/her name.

Arizona recognizes most elements of the common law approach to adverse possession in A.R.S. § 12-521:

In this article, unless the context otherwise requires: 

“Adverse possession” means an actual and visible appropriation of the land, commenced and continued under a claim of right inconsistent with and hostile to the claim of another.

“Peaceable possession” means possession which is continuous, and not interrupted by an adverse action to recover the estate.

“Real property” includes mines and mining claims.

“Peaceable and adverse possession” need not be continued in the same person, but when held by different persons successively there must be a privity of estate between them.

Notice that the possession of the property need not be by the same person.  This is called “tacking.”  When one adverse possessor conveys his/her purported title to another, there is privity of estate and the second possessor may rely upon the first possessor’s running of the statutory period.

Most states have adopted statutory schemes embodying some or of the statutory elements of adverse possession.  These laws codify issues concerning “color of title,” payment of real estate taxes, and various periods for running of the statutory limitations period.   In Arizona, there are five separate statutes addressing several scenarios.  Notice that these periods are significantly shorter than the common law period:

-A.R.S. § 12-522 requires that the record owner file an action to eject the adverse possessor within two years when such claim is based solely on possession.

-A.R.S. § 12-523 provides for a three year period where the possessor claims color of title.  This term has specific meaning within the statute, and utilizes arcane common law language.

-A.R.S. § 12-524 provides for a five year period where the possessor has a recorded deed to a city lot and pays the real estate taxes.

-A.R.S. § 12-525 provides for a five year period where the possessor has a recorded deed pays the taxes (as long as the deed is not forged).

-A.R.S. § 12-526 provides for a ten year period for someone “cultivating, using and enjoying” such property up to 160 acres.

A.R.S. § 12-527 states the remedy for the adverse possessor:

When an action for recovery of real property is barred by any provision of this article, the person who pleads and is entitled to the bar shall be held to have full title precluding all claims.

Litigation utilizing these statutes frequently arises when one party claims an easement over another’s property.  One may acquire an easement over another’s property by meeting the statutory requirements for continuous use.  This topic will be explored in a later blog.

Contact Mark: mark@ruffattohofgardlaw.com

www.ruffattohofgardlaw.com

(623) 327-3719