Year in Review Property & Real Estate Propery Real...Year in Review Property & Real Estate ....

Vermont Bar Association Seminar Materials

Year in Review Property & Real Estate

September 27, 2013 Lake Morey Resort

Fairlee, VT

Faculty:

Jim Knapp, Esq. Hal Miller, Esq.

Real Estate Law Update 2013

Jim Knapp

Hal Miller

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Slide 2 New Cases

Shattuck v. Peck , 2013 VT 1

Marsh v. McGillvrey, 2013 VT 6

Vincent v. DeVries, 2013 VT 34

Ayer v. Hemingway, 2013 VT 37

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Slide 3 New Cases (2)

• In re Estate of Maggio 2012 VT 99

• Farrell v. Vermont Electric Power Co. and Vermont Transco, LLC 2012 VT 96

• Prue v. Royer, Sr., and Department of Liquor Control 2013 VT 12

• Kellogg v. Shushereba 2013 VT 76

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New Cases (3)

• Lesage, McNeil and Mostrom v. Colchester, Marchelewicz v. Colchester, in re Colchester Leased Lands 2013 VT 48

• Vanderminden,A Family LTD Partnership v. Town of Wells 2013 VT 49

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Slide 5 New Cases

Shattuck v. Peck , 2013 VT 1

BF buys property.

Property conveyed to BF and GF as Joint Tenants (Donative intent for estate planning).

After property improved by BF, GF conveys her interest to BF to protect Disability benefits.

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Slide 6 Shattuck v. Peck

BF and GF have a falling out, GF gets a Relief from Abuse Order and is awarded sole possession of Property.

BF moves to evict GF, and is successful.

No Partnership; No fraudulent misrepresentation; No Constructive Trust for any “sweat equity”

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New Cases

Marsh v. McGillvrey, 2013 VT 6

Zoning Restrictions v. Private Restrictive Covenants.

Plaintiff obtained necessary Zoning Permit to reconfigure lots. Affirmed by Environmental Court.

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Slide 8 Marsh v. McGillvrey

Plaintiff also brought a DJ action in Civil Division, but that court concluded the lot reconfiguration violated the private restrictive covenants.

Supreme Court affirmed (Action for breach of covenants accrues upon breach of the covenant)

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Slide 9 Marsh v. McGillvrey

Two separate actions in two different courts.

Interesting interplay between the two courts.

Argument for consolidation of actions.

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New Cases

Vincent v. DeVries, 2013 VT 34

Legal Malpractice action arising out breach of a Purchase and Sale Agreement.

4th decision rendered by VSC arising out of this transaction.

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Slide 11 Vincent v. DeVries

Plaintiff (82 yrs old) and sister contract to sell home for $52,000 in 2003.

Sister died shortly before closing. Plaintiff then backs out of sale.

Buyers sued for specific performance and Defendant represented Plaintiff. (probably not a good idea)

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Slide 12 Vincent v. DeVries

Buyers were successful on Summary Judgment.

With a new attorney, Plaintiff reach a settlement with Buyers that allowed him to keep the home for payment of $103,000.

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Vincent v. DeVries

Plaintiff then sued his original attorney for malpractice and was awarded the $103,000.00 AND $80,000.00 for emotional distress.

Justice Robinson – Affirmed damages for $103,000.00 but reversed the emotional distress award.

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Slide 14 New Cases

Ayer v. Hemingway, 2013 VT 37

Foreclosure of an “expired” Judgment lien

Another long-litigated case that started in 2001.

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Slide 15 Ayer v. Hemingway

Ayer got a default judgment against Defendants in February 2001 (faulty construction) for $6,830 plus costs

In 2004, Plaintiffs filed for a possessory writ of attachment against Defendant and parties reached a settlement in January 2006 and court issued an Amended Judgment for $11,400.

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Ayer v. Hemingway

2008 – Ayer recorded Notice of Judgment Lien

2010 – Unrelated claimant (Harris) against Defendant and as a result of settlement, Defendant conveys property to Harris.

2011 – Ayer starts foreclosure against Defendant and Harris based on 2006 lien.

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Trial Court rules in favor of Harris, who asserted the Judgment Lien was created in 2001 and expired. The 2006 Order was NOT a new and separate action under 12 VSA Section 506.

There is no provision in Vermont law to renew by Motion. (Nelson v. Russo)

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Vermont Supreme Court affirms, however Justice Robinson has a lengthy dissent.

She agrees there is no provision to renew or amending a judgment by motion for purpose of “updating”.

However, Defendants stipulated to the 2006 amendment.

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Farrell v. Vermont Electric Power

• Facts

– 1976 Easement for electric utility lines taken by condemnation (Queen City Tap).

– Utility line constructed

– 2005 Northwest Reliability Project undertaken

• 2008 Additional line constructed within ROW

• 1976 line reconstructed – configuration changed

– 2005 poles taller and the wires were configured to run vertically rather than horizontally

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Slide 20 Farrell v. Vermont Electric Power

• Claim – the new use was not authorized by the original taking and the new easement overburdened the easement.

• Court Rules– The original taking contemplated the construction

of lines of poles with wires or cables for the transmission of electricity – which meant more than one was OK

– The use was consistent with the original taking so the 2005 activity was not an overburdening

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Slide 21 In re Estate of Maggio

• Silas and Daniel Maggio operate a partnership in Connecticut

• Silas acquires property in Holland, puts title in Silas and Maggio as – tenants in common

• Silas and Maggio wind-up partnership, no transfer of Holland property

• Silas and Maggio widow in dispute over whether Maggio retains interest in Holland property

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In re Maggio (2)

• Issue – does winding up of partnership require a written transfer of property held as partnership property?

• Issue – when property is held in the name of the partners, not the partnership, is the deed language identifying the tenancy as “tenants in common” conclusive?

• There were a bunch of evidence questions and an issue about the application of Connecticut law

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Slide 23 In re Maggio (3)

• Court –– “No” – the interest in partnership real estate

when held by the partnership is personal property and can be transferred without complying with statute of frauds

– Reference to “tenants in common” not dispositive

– Key – property was purchased with partnership funds

– Same result under either Connecticut or Vermont Law

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Slide 24 Prue v Royer et al.

• The case starts with a contract providing that the Prues would purchase the property and setting out a payment schedule.

• The contract was a “real estate broker” contract form, modified to provide for time payments.

• At best contract was ambiguous

• Trial Court concludes that the contract was a contract for deed giving purchasers an equitable interest

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Prue v Royer (2)

• Agreement recited it was a lease with option to purchase (hand written in, payments classified as option payments)

• Issue – was the agreement a contract for deed (transfer of title with equitable mortgage as security) or a lease with option to purchase

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Slide 26 Prue v Royer (3)

• Court– Compares the elements of a contract for a deed

and lease with option

– Contract for deed – occupancy, bilateral obligations, payments apply to purchase price

– Lease with Option – lessor bound to sell, purchase at option of lessee, lease payments do not apply to purchase price

– In this case, the Court finds that the ambiguous agreement was a contract for deed

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Slide 27 Kellogg v Shushereba

• Complex fact pattern– Oren (not a party) makes an unwritten

arrangement to purchase Kellogg’s property

– Shushereba moves in with Oren, makes a significant downpayment ($41,000+)

– No written purchase agreement

– Kellogg signs a deed and delivers a mortgage and note Shushereba (only – Oren still a party)

– Deed is not recorded (can’t afford transfer tax), mortgage and note not signed

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Kellogg v Shushereba (2)

• Oren moves out

• Oren files suit (separate case) seeking to be declared owner of half the property – not successful

• Shushereba stops making payments, does not pay taxes, but does make some repairs

• Kellogg sues for back rent, taxes; Shusherebaclaims Kellogg unjustly enriched by payments

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Slide 29 Kellogg v Shushereba

• Court– Not a landlord-tenant case

– Oral agreement was a contract for a deed – but unenforceable because there was no writing

– Reclassifies the case as an ejectment and action for mesne profits (the value lost to the party that had wrongful possession of the property)

– Functionally similar to unjust enrichment

– The Court did not allow for Shushereba’s recovery of the downpayment because the percentage of downpayment forfeited was not enough.

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Slide 30 A Little Extra

Daniels v. The Elks Club of Hartford, Vermont and The Human Rights Commission et al., 2012 VT 55 (2012)

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A Little Extra

Foreclosure action with an interesting fact pattern:

1989 – Mortgage From Corporation to Bank ($700,000)

1989 – Shortly after the mortgage, the corporate charter was revoked

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2004 – Pre-Judgment Attachment

2006 – Additional advance by Bank on 1st Mortgage

March 2008 – VT Supreme Ct affirm Judgment

May 2, 2008 – Corporate Charter reinstated

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June 2008 – Daniels buys note and mortgage from Bank (Borrows money and collaterallyassigns mortgage back to bank

Nov. 2008 – Non-Judicial Foreclosure was unsuccessfully brought by Daniels

January 2009 – Judicial Foreclosure started.

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A Little Extra

April 2009 – Judgment lien ($446,000) filed that relates back to the 2004 Writ of Attachment.

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3 Foreclosure Issues

1. What is the effect of a collateral assignment of a mortgage?

2. Merger?

3. Priority of Future Advance?

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Collateral Assignment

Defined by citing the Title Standards

The Court allowed Daniels to foreclose because he was supported by the bank (collateral assignee)

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A Little Extra

Merger?

The court held there was no merger:

a. no uniformity of interests due to other members

b. There must be “intent” to merger the interests when mortgages are involved.

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Priority of Future Advance (See 27 VSA Section 410)

“Knockout” notice does NOT have to come from Junior lienholder

No specific objection to future advances needed

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Property Tax Appeals

Lesage, McNeil and Mostrom v. Colchester, Marchelewicz v. Colchester, in re

Colchester Leased Lands 2013 VT 48 [Filed 05-Jul-2013](2012-196, 2012-300 and

2012-392)

http://info.libraries.vermont.gov/supct/current/op2012-196.html

Vanderminden,A Family LTD Partnership v. Town of Wells 2013 VT 49

[Filed 28-Jun-2013] (2012-092)


Attorney Malpractice

Vincent v. DeVries 2013 VT 34 [Filed 24-May-2013](2012-026)


Easements

Farrell v. Vermont Electric Power Co. and Vermont Transco, LLC 2012 VT 96

[Filed 07-Dec-2012] (2011-377)


Evidence/Partnership Property vs. Tenants in Common

In re Estate of Maggio 2012 VT 99 [Filed 30-Nov-2012](2011-433)







Judgment Lien

Ayer and Ayer v. Hemingway, Hemingway Construction and Harris 2013 VT 37

[Filed 24-May-2013] (2011-431)


Covenants/Zoning – Interaction between public and private restrictions

Marsh Inter Vivos Trust v. McGillvray et al. 2013 VT 6 [Filed 01-Mar-2013]

(2012-060)


Real Estate Contracts/Contract for Deed

Prue v. Royer, Sr., and Department of Liquor Control 2013 VT 12 [Filed 15-Feb-

2013](2011-417)


Shattuck v. Peck 2013 VT 1 [Filed 11-Jan-2013](2011-145)


Kellogg v. Shushereba 2013 VT 76 [Filed 06-Sep-2013] (2011-355)







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