Rockwell publishing real estate law chapter 17

Printable Lesson Materials

13218 NE 20th Street Bellevue, WA 98005 425-747-7272 800-221-9347 www.rockwellinstitute.com

Print these materials as a study guide

This portion of your printable materials consists of dozens of

frames that summarize the content in this lesson. The frames are

arranged on the page to make it easy for you to study the material

and add your own notes from your textbook or the online course.

Graphic Summaries

Many students learn best from sets of questions, and this multiple choice quiz allows you to focus your review of the material to important topics.

Quizzes

These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two parts: graphic summaries of the content and a multiple choice quiz.

© 2009 Rockwell Institute

1

California Real Estate Law

© Copyright 2007 Rockwell Publishing, Inc.

Lesson 17:Private and Public Restrictions on Land


Introduction

This lesson will discuss:

l private restrictions on land use

l public restrictions on land use


Private Restrictions on Land Use

Private restrictions also known as restrictive covenants.

Restrictive covenant: land use limitation imposed on property by a private party (as opposed to a government agency)

2



Private restrictions often used to:

l limit property to residential use

l prevent property from being subdivided into small lots

l prohibit the planting of certain types of trees

l require certain types of fencing or shrubbery

l set maintenance standards



If certain conditions are met:

l private restrictions run with the land

l last indefinitely

Run with the land: all future owners of the property will have to comply with restrictions



Estimated: one in six American homeowners subject to private restrictions on their land

3



Private restrictions can be created by:

l deed

l declaration

l contract

Creating private restrictions


Creating Private Restrictions

Restrictions affecting single piece of property:

l usually created in deed

l when ownership changes hands

Example: “The property described in this deed to be preserved as undeveloped wilderness.”

By deed


By Deed

Restriction imposed in deed may be either:

l covenant

l condition

Covenants vs. conditions

4


By Deed

Condition in deed makes grantee’s title conditional.

l grantee owns in fee simple defeasible

If condition is violated:

l grantee’s title may be terminated by grantor



By Deed

Covenant in deed doesn’t make grantee’s title subject to termination.

If covenant is violated:

l grantee may be ordered to stop violation and pay damages

l but grantee won’t lose title



By Deed

Whenever possible, courts interpret restrictions as covenants rather than conditions.


5



Most restrictions apply to entire neighborhood, rather than just one property.

l typically created with declaration of restrictions (instead of in deed)

Declaration of restrictions: document prepared and recorded by subdivision developer to create blanket set of restrictions affecting all lots in subdivision

l also called CC&Rs (“covenants, conditions, and restrictions”)

By declaration



When developer begins selling lots, deed to each lot references declaration of restrictions.

Example: “This deed is subject to declaration of restrictions, recording no. 991035939.”

By declaration


By Declaration

Purpose of CC&Rs:

l maintain standards throughout neighborhood

l limit conduct that might have negative impact on community

Purpose of CC&Rs

6


By Declaration

Procedures for changing or adding CC&Rs may be included in:

l declaration of restrictions

l homeowners association bylaws

Changes usually require majority vote of homeowners.

l may require supermajority (such as 80% approval)

Changing the CC&Rs


By Declaration

Homeowners associations may impose rules without vote.

l known as operating rules

Operating rules: like CC&Rs, address matters such as property use or aesthetic and architectural review of proposed alterations

Changing the CC&Rs


By Declaration

In early 2000s, California began limiting power of homeowners associations.

l homeowners can now vote to repeal board-passed rule by vote

l association prevented from readopting rule for at least one year

Changing the CC&Rs

7



Landowners may agree to private restriction by contract.

Example: Morgan lives next to Tom; trees on Morgan’s property block Tom’s view of ocean. In return for cash payment from Tom, Morgan agrees to cut down blocking trees and keep any new trees from blocking view.

By contract



Restrictions that provide benefits add to property value.

l add even more value if they bind future owners, not just current owners

So most property owners want private restrictions to run with the land.

Restrictions that run with the land



Under Civil Code, restrictions that will burden future owners must:

l include legal description of property

l express intent to bind future owners

l relate to property’s use, repair, or maintenance; co-owner partition rights; orpayment of taxes and assessments

l be recorded

Restrictions that run with the land

8



Private restrictions on certain matters are illegal and unenforceable.

Example: Older deeds in certain areas often contained restrictions against selling property to African-Americans, Jews.

Federal and state laws now require title companies to strike offensive provisions from title documents.

Illegal restrictions



California prohibits restrictions against race, religion, sex, sexual orientation, marital status, familial status, national origin, ancestry, disability, or source of income.

Other statutes prohibit

l restrictions forbidding pets

l restrictions prohibiting solar energy systems

l restrictions against flags, for-sale or political signs

Illegal restrictions



Property owners can sue other owners who violate restrictions.

If there is homeowners association, three choices:

l sue neighbor for violating restriction

l ask homeowners association to sue or enforce

l sue association if board refuses to act

Enforcing restrictions

9



Lawsuit can result in:

l injunction: court order directing defendant to stop or fix violation

l damages: if violation caused financial loss

Enforcing restrictions



Restrictions that run with land will continue indefinitely, unless owners of properties agree to terminate.

Restrictions can also terminate by:

l waiver

l changed conditions

l expiration

Terminating restrictions


Terminating Restrictions

If homeowners routinely fail to enforce restrictions, they may be held to have waived right to enforce.

l courts interpret waiver narrowly

Waiver

10



Example: Subdivision has view protection restriction that prohibits roof-top flags. Many homeowners fly flags anyway and association has ignored them.

l New home is built that violates view protection restriction; association orders modification

l New owner sues, arguing association has waived view protection restriction by allowing flags

l Court will likely say association has only waived flag provision in restriction—not entire view protection restriction

Waiver



Court may refuse to enforce restriction if general character of neighborhood has changed and enforcement serves no real purpose.

Example: Subdivision is limited to single-family residences. Over time, it’s surrounded by commercial and multi-family development.

l If lot owner wants to build commercially, court will likely find subdivision has lost single-family character, so enforcing restriction serves no real purpose

Changed conditions



Most modern CC&Rs don’t contain expiration dates.

l some older sets of CC&Rs do

l homeowners associations usually vote to extend expiring restrictions

Expiration

11

Summary



l Restrictive covenant

l Declaration of restrictions

l CC&Rs

l Operating rules

l Waiver

l Changed conditions

l Expiration


Public Restrictions on Land Use

Public restrictions include:

l comprehensive planning

l zoning

l building codes

Public restrictions must meet constitutional requirements.



Public restrictions must serve public purpose.

l can be imposed under police power

Police power: government’s power to adopt laws and regulations to protect public’s health, safety, morals, and general welfare

Land use laws that aren’t reasonably related to police power: unconstitutional and unenforceable.

Constitutional requirements

12



Public restrictions:

l cannot violate Equal Protection Clause of Fourteenth Amendment

l must apply in same manner to all property owners similarly situated




Public restrictions:

l cannot violate Fifth Amendment

l cannot reduce property’s value so much that it amounts to uncompensated taking of private property




Shift of population from cities to suburbs has caused problems:

l loss of agricultural land/open space

l automobile congestion

l pollution

Comprehensive planning

13



General plans: plans developed by cities and counties to control how and where local development takes place

l usually designed by a local planning commission

l adopted by city or county council or board of supervisors

l subject to public hearings

l also known as master plans, city plans, or comprehensive plans




l land use

l transportation

l housingl conservation of

natural resources

l open space

l noise

l safety (protection against natural hazards)


In California, state law requires every local government to have a general plan that addresses:



Some states have enacted growth management laws to help coordinate and unify local general plans.

California has no state-wide law, but some counties have enacted growth management laws.

Example: urban growth boundary laws imposed in Ventura County to manage urban sprawl


14



Zoning ordinances: public restrictions enacted by city or county councils, usually after one or more public hearings

l split city or governmental unit into zones that are limited to particular uses

Zoning



Basic zoning categories include:

l agricultural

l residential

l commercial

l industrial

Zoning



Categories contain many subcategories.

For example, within residential category:

l R-1: only single-family homes allowed

l R-2: duplexes also allowed

l R-3: condominiums and apartment buildings also allowed

Zoning

15



Purpose of zoning:

l preserves basic character of neighborhoods

l keeps incompatible uses from bumping up against each other

Zoning



Zoning also regulates development aspects within each zone:

l setbacks

l square footage

l height

l business hours

l noise levels

l parking

Zoning


Zoning

Zoning ordinances must:

l be consistent with general plan

l further goals of general plan

Zoning and the general plan

16


Zoning

Zoning ordinances help general plan goals by:

l concentrating growth

l protecting wetlands

l preserving open space, etc.

Zoning and the general plan


Zoning

Exceptions to zoning:

l nonconforming uses

l conditional uses

l variances

Exceptions to zoning rules


Exceptions to Zoning Rules

Nonconforming use: when area is zoned for first time (or rezoned) and existing use no longer conforms to new rules

l usually “grandfathered in”

l can remain in operation, with limits

l usually can’t be enlarged or replaced if destroyed

Nonconforming uses

17



Conditional use: may be permitted if proposed use satisfies unmet community need

Examples: church, school, hospital in residential zone

Conditional uses



Conditional use permit typically contains conditions.

l condition must be related to relieving burden caused by project

Example: hospital can build in residential zone, but must provide underground parking

Conditional uses



Variance: allowed departure from zoning requirements concerning setbacks, building heights, parking, etc.

l only allowed for minor departures from zoning

l owner must show property has special characteristic justifying variance

Example: topography of lot makes it impossible to obey setback requirements

Variances

18



Use variances: prohibited by law

Example: allowing variance for industrial use in residential zone

Variances


Zoning

Rezone: not just permit or exception to rules, but change in zoning ordinance

Spot zoning: rezone that imposes requirements on a particular property that are different (stricter or looser) from those that apply to surrounding properties

l illegal; violates constitutional right of equal protection

Rezones


Zoning

When zoning conflicts with private restrictions, property owners generally must obey stricter requirement.

Example: Zoning says no buildings over 25 feet in height; subdivision restriction says no building over 20 feet in height.

l landowner must obey subdivision restriction

Conflicts with private restrictions

19



Building codes govern:

l design

l materials

l construction methods

l electrical wiring

l plumbing

l etc.

Building codes



Purpose of building codes:

l protect public’s health and safety by requiring minimum construction standards

l promote energy efficiency

l make buildings accessible to disabled

Building codes


Building Codes

In some states, building codes are local laws.

California has statewide building code.

l California Building Standards Code, contained in CA Code of Regulations, title 24

Statewide codes

20


Building Codes

Local governments may establish more restrictive construction standards.

l must be reasonably necessary due to local climatic, geological, topographical conditions

Statewide codes


Building Codes

Building permit required for new construction and most remodeling.

Process:

l property owner applies for permit

l planning or building department reviews plans

l large projects may require public input

l inspectors will inspect construction at various points to ensure compliance

l final certificate of occupancy

Permitting process


Building Codes

Building codes change periodically to account for new and improved construction methods or materials

l new rules apply to new construction

l some rules retroactive (especially if safety concern)

New requirements

21

Summary



l Police power

l General plans

l Zoning ordinances

l Nonconforming uses

l Conditional uses

l Variances

l Rezone

l Building codes

Legal Aspects of Real Estate Lesson 17 Cumulative Quiz

1. The state government's constitutional power to adopt and enforce laws for the protection of the public health, safety, morals, and general welfare is called:

A. inverse condemnation B. police power C. enactment power D. power of eminent domain

2. To be constitutional, public land use restrictions cannot:

A. apply in the same manner to all similarly situated property owners B. address aesthetic issues C. reduce the property's value so much that it amounts to an uncompensated taking D. be based on long-term development goals

3. Which of the following cannot be regulated by zoning ordinances?

A. Building size B. Building shape C. Building location on a lot D. All of the above may be regulated

4. A land use that violates current zoning ordinances, but was legal under earlier law, is a/an:

A. nonconforming use B. conditional use C. spot zone D. illegal use

5. To get a variance, a property owner must show:

A. major inconvenience B. financial loss C. undue hardship D. public benefit

6. Spot zoning is:

A. common in rural areas B. common in urban areas C. illegal D. None of the above

© 2009 Rockwell Publishing 1

7. Which of the following uses is not likely to qualify for a conditional use permit?

A. School B. Church C. Hospital D. All of the above will likely qualify

8. Property owners can challenge a zoning classification by filing a petition for a:

A. deregulation B. rezone C. downzone D. spot zone

9. When a building passes a final inspection after construction is complete:

A. a building permit is issued B. a certificate of compliance is issued C. a certificate of occupancy is issued D. None of the above

10. Which of the following is not one of the ways in which private restrictions can be created?

A. Contract B. Declaration C. Lawsuit D. Deed

11. Which of the following is needed for private restrictions to run with the land?

A. The street address of the affected property B. Payment of money C. An intent to bind future owners of the property D. Notice to neighboring property owners

12. Comprehensive plans are implemented by:

A. the judiciary B. planning commissions C. the police D. legislatures


13. A set of CC&Rs requires all houses in the subdivision to have tile roofs. Over the past twenty years, a number of property owners have replaced their roofs with asphalt shingles. When the homeowners association tries to prevent another owner from changing her roof, the restriction may be terminated because of:

A. changed conditions B. injunction C. expiration D. waiver

14. Which of the following are the typical categories of land use for zoning purposes?

A. Agricultural, rural, commercial, industrial B. Commercial, industrial, residential, special C. Agricultural/rural, commercial, industrial, residential D. Commercial, familial, residential, agricultural/rural

15. A variance allowing a commercial use in an industrial zone is:

A. downzoning B. an illegal use variance C. a nonconforming use D. All of the above

16. Which of the following is not a way in which private restrictions can be terminated?

A. A vote to repeal the restriction by the homeowners B. Changed conditions C. Agreement by the owners of the affected properties D. Nonconforming use

17. Applying modern building requirements to an older building is called:

A. retroactive conversion B. bringing it up to code C. minimum safety D. comprehensive planning

18. Private restrictions:

A. limit the use of a property B. can be either covenants or conditions C. usually run with the land D. All of the above


19. Which of the following isn't a residential use subcategory?

A. Mobile homes B. Apartments C. Storefronts D. Duplexes

20. CC&Rs are an example of:

A. zoning B. comprehensive planning C. private restrictions D. police power


Rockwell publishing real estate law chapter 17

Education

Transcript of Rockwell publishing real estate law chapter 17