Real Estate Transactions

Arizona Supreme Court holds that the implied warranty in new home sales cannot be disclaimed

In an important decision, the Arizona Supreme Court held that buyers of new homes have a nonwaivable right to a warranty of fitness. Zambrano v. M & RC II, LLC, 254 Ariz. 53, 517 P.3d 1168 (Ariz. 2022). The court explained that allowing waivability would mean the end of the implied warranty since all builders would include such...

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Tax foreclosures violate the takings clause if they government entity retains proceeds beyond the unpaid taxes

In an important case, the Supreme Court held in Tyler v. Hennepin County, 143 S.Ct. 1369 (2023), that it violates the takings clause for a municipality to foreclose on property for nonpayment of property taxes and to retain the value of the property that exceeds the unpaid taxes (with costs). The purpose of a tax foreclosure is to pay off the taxes owed....

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Vermont Supreme Court denies reserved easements implied from prior use unless they are strictly necessary

While owners can generally get an easement by necessity to obtain access to landlocked land over remaining lands of the grantor, most states also recognize easements implied from visible, continuous prior use before the parcels were separated if the access is helpful ("reasonably necessary") to the dominant estate. The prior use doctrine rests on the right to reform a deed because of mutual mistake.

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Implied warranty of workmanship & habitability in new housing cannot be waived

The Arizona Supreme Court has held in Zambrano v. M & RC. II LLC,, 517 P.3d 1168 (Ariz. 2022) that the implied warranty of workmanship and habitability in new housing cannot be disclaimed or waived. The involved a sales contract with a detailed express warranty that disclaims any obligation to comply with common law obligations under the implied warranty as defined in... Read more about Implied warranty of workmanship & habitability in new housing cannot be waived

Texas Supreme Court interprets life estate as a fee simple because the remainders were subject to divestment

In Jordan v. Parker, 2022 WL 17998227 (Tex. Dec. 30, 2022), the Texas Supreme Court held that a conveyance of a life estate actually conveyed a fee simple since the remainders were subject to alteration or even complete divestment by the life estate owner. In this case, a man devised his entire estate to his widow for life with remainders in their children, but the devise...

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Bank with actual knowledge of intent to create homeowners association bound by covenants even though the mortgage was recorded before the homeowners assocation declaration

An appellate court in New Jersey held that a bank that received a mortgage on a piece of property was bound by a later-recorded homeowners association covenants because it had actual knowledge that the developer planned to subject the property to the declaration. Fulton Bank of N.J. v. Casa Eleganza, 473 N.J. Super. 387, 281 A.3d 252 (N.J. App. Div. 2022). This was the case even though New Jersey...

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Commercial rent acceleration clause invalid if it is a "penalty"

The Massachusetts courts say that there is no duty to mitigate damages in commercial leases but they sure look like they recognize such a duty when a lease has an acceleration clause (requiring the full remaining rent for the rest of the lease to be paid if rent payments are missed). In the case of Cummings Props., LLC v. Hines, 2022 WL 17409280 (Mass. App. Ct. 2022), a commercial tenant...

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Short-term rentals do not violate “residential use only” covenant

The Mississippi Supreme Court has held that short term rental of property is not a commercial use that would violate a covenant limiting land to residential purposes. Lake Serene Prop. Owners Ass’n v. Esplin, 334 So.3d 1139 (Miss. 2022). There has been some disagreement among state courts on this question because the use of property as an Airbnb or other short term...

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Real estate purchase and sale agreement enforceable against the estate of the seller

A contract of sale signed by the seller could be enforced by the buyer against the estate of the seller when the seller died after signing the contract but before the closing. Liberty Hill, LLC v. Fernald (Mass. Super. Ct. 2022) (Civ. Action No. 2281CV00480). State statutes provided for specific performances of real estate contracts when the owner dies prior to conveyance. Mass. Gen. Laws ch. 204, §1.