The Pipes, The Pipes Are . . . Frozen! (Or, Who Is Liable For Property Damage While Home Buyer And Home Seller Wait For The Final Check To Clear?)

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Although the temperature today is supposed to reach 90 degrees, this post is about frozen pipes. More specifically, pipes in a house that is under contract for sale that freeze and cause property damage after the scheduled, but not completed, closing, but before the buyer takes possession of the home. In a case like that, who is liable for the damage?

In Bianchi v. Ladjen, plaintiff was under contract to buy a home. It was an all cash sale, no mortgage was involved. The closing was scheduled for New Year's Eve. Plaintiff performed a walk through on the morning of the closing and reported no damage to, or issues with, the home. The closing could not be completed as scheduled, however, because plaintiff did not wire the balance of the purchase price to the title company prior to the closing as he had been instructed to do. Instead, plaintiff brought a certified check to the closing. As a result, the parties entered into an escrow agreement, which provided that the title company would hold "all closing proceeds" and the "Deed & Keys" in escrow until the check cleared.

This is where it gets tricky.

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Renting Our Way To A Housing Recovery?

by: Peter J. Gallagher

News about a housing recovery usually focuses on home sales, but Bloomberg ran a story this week, "U.S. Can Rent Its Way To A Housing Recovery" (h/t/ Land Use Prof Blog) that suggests that this focus may be off. The author suggests that the Obama Administration should allow a tax write-off for investors who buy empty properties and rent them out. The author claims this would help with two of the biggest problems with the housing market – the large amount of owner-occupied houses on the markets, which pushes prices down, and the millions of homes with negative equity: “Dealing with excess inventory by shifting vacant properties into the rental market would help to stabilize prices and thereby mitigate, to some degree, the negative-equity issue — although additional action would also be warranted to attack such ‘underwater’ situations." The ideas expressed in the article are obviously not without controversy, however, as even a cursory glance at the comments posted about the article make clear.

Slip Sliding Away: NJ Supreme Court Rules That Condominium Has No Duty To Clear Snow And Ice From Public Sidewalks

by: C. John DeSimone, III

It has long been settled common law that commercial landowners have a duty to clear snow and ice from public sidewalks abutting their land, but that residential landowners have no similar duty (Stewart v. 104 Wallace Street). In Luchejko v. City of Hoboken, decided on July 27, 2011, the New Jersey Supreme Court described the commercial/residential dichotomy as a bright-line rule. Commercial landowners have a common law duty to clear snow and ice from abutting public sidewalks, residential landowners do not. The Luchejko Court held that a residential condominium building, because it is residential, does not have a common law duty to clear snow and ice from abutting public sidewalks. The Court found that the form of the property ownership, in this case, a corporate condominium entity, did not subject the Association to the same liability that would have fallen on a commercial landowner. In doing so the Court affirmed the dismissal of the plaintiff's personal injury action at summary judgment. The Court also held that the management company, as the agent of the Association, owed no duty to the plaintiff and affirmed its dismissal.

You Got A Better Idea?!? Government Opens Suggestion Box For Ideas On How To Rent Out Foreclosed Properties

by: Peter J. Gallagher

The New York Times is reporting that the government is soliciting ideas for turning its glut of vacant, foreclosed houses into rental units that could be managed by private parties or sold in bulk ("U.S. Seeks Ideas On Renting Out Foreclosed Property"). The goal of the program would be to "stabilize neighborhoods where large supplies of empty, foreclosed properties have hurt property values" and "clear the nation’s balance sheet of real estate holdings that, because they have been difficult to sell individually, have hung over the housing market and stunted sales of existing homes and new construction." The request for ideas comes from the Federal Housing Finance Agency, the Department of Housing and Urban Development, and the Treasury Department, and you can click here to submit your ideas.

As the article notes, the percentage of homes owned by the government that are currently in foreclosure is somewhat staggering:

Of the 248,000 homes owned by Fannie Mae, Freddie Mac and the F.H.A. at the end of June, 70,000 were listed for sale, said Corinne Russell, a housing finance agency spokeswoman. The remainder were not yet on the market or the agencies had already received an offer from a prospective buyer.

But it is possible that hundreds of thousands of more homes that are now in the foreclosure process could come into the possession of the federal government in the next few years, housing experts say.

The government is now looking for a few good men ideas for how to deal with this crisis. Among those already proposed are "rent-to-own programs, in which previous homeowners or current renters could lease properties as a path to ownership, and ways in which the properties can be used to support affordable housing."

If you have any thoughts, be sure to let us know when you let the government know.

How To Get A $300,000 Home For Just $16!!

by: Peter J. Gallagher

A Texas man has moved into a $300,000 home in a "well-manicured" section of Flower Mound, Texas and it only cost him $16 to do so. As the Daily Mail recently reported ("Man Uses Obscure Law To Obtain Ownership Of $300K Home In Upscale Texas Town . . . for just $16"), the man took advantage of an "obscure" Texas law that permits residents to take ownership of abandoned homes through adverse possession. Although apparently not too popular with his new neighbors, the man is the envy of extreme couponers and bargain hunters everywhere.

As the article notes, the house was abandoned after being hit with a trifecta of mortgage crisis phenomena: (1) the mortgage company foreclosed upon the property; (2) the owners simply walked away from the mortgage and the property; and (3) the mortgage company went bust. Enter Kenneth Robinson. After doing "months of research," Robinson filled out some paperwork, paid the $16 filing fee, and moved his belongings into the home. Robinson is now seeking to take ownership in the home under a law that the paper described as follows:

Under the law, if someone moves into an abandoned home they have exclusive negotiating rights with the original owner.

If the owner wants them to leave, they have to pay off the mortgage debt on the home and the bank has to file a complicated lawsuit to get them evicted.

Mr Robinson believes that because of the cost required to move him out, he will be able to stay in the house. Under occupancy laws, if he remains there for three years he can ask the court for the title.

Staying three years may prove difficult though, as the home currently does not have any water or electricity. Nonetheless, Robinson appears undeterred.

Not surprisingly, the neighbors have not welcomed Robinson to the neighborhood with open arms. In fact, since moving in, Robinson has put up "No Trespassing" signs after his neighbors called the police to have him arrested for trespassing. However, according to the police, Robinson cannot be arrested or removed because home ownership is a civil matter. Judging by the comments from the neighbors, it does not appear that the matter will stay civil for much longer.