Archive for the 'Real Estate' Category

How Banks Foreclose On a Home

The most common way for someone to buy a home is through a bank loan, also known as a mortgage. The bank fronts the homeowner money and they make monthly payments to the bank for between ten to forty years until the mortgage is paid off. Both the bank and the new homeowner expect everything to go smoothly from there, and it is great when that happens. Unfortunately, over ten to forty years things  change: the borrower may lose their job, encounter a financial crisis or countless other issues can arise.

When things go wrong, the bank forecloses on the home. This means the bank attempts to take the house back from the borrower through its rights in the contracts it entered into with the borrower. The typical mortgage contract is known as a Deed of Trust, which gives the bank the right to foreclose on the home. However, many people do not know how the foreclosure process works and both banks as well as  Foreclosurehomeowners make major mistakes in the foreclosure process, which can lead to major issues. This was seen recently when the mortgage crisis occurred, and property values plummeted, cities declared bankruptcy and crime spiked across the country.

How does foreclosure work? Each state has its own foreclosure laws. However, the foreclosure laws can be organized into two big picture foreclosure systems: (1) Judicial Foreclosure States and (2) Non-Judicial Foreclosure States. Judicial foreclosure states require that the party attempting to take the property obtains approval from a judge. A non-judicial foreclosure state does not require review or approval by a judge. As a result, non-judicial foreclosures have less oversight and are usually faster and less expensive for the foreclosing party. Not surprisingly, many of the states hit hardest by the foreclosure crisis, such as California, were non-judicial foreclosure states. Without judicial oversight, the foreclosure process is easier to abuse.

Regardless of whether a state is a judicial or non-judicial foreclosure state, a bank forecloses on a home by recording a Notice of Default. The Notice of Default alleges that the borrower has missed payments. Thereafter, if payment is not made, the Bank can sell the property at a Trustee’s Sale. Typically, a Trustee must wait between 30-90 days from the recording of a Notice of Default to schedule a Trustee’s Sale. A trustee’s sale or foreclosure sale is where the Bank sells the property at an auction, usually at a courthouse or city hall, to the highest bidder.

The Notice of Default is the triggering document and these documents were largely responsible for the mortgage crisis. When the housing bubble burst, banks recorded Notice of Defaults at a rapid pace. Many homeowners did not know their rights and abandoned their homes, which resulted in homes sitting vacant for years, also known as zombie foreclosures. Other banks simply recorded Notice of Defaults on the wrong property or listed the wrong amount owed. Due to these abuses, many states enacted what are known as Homeowner Bill of Rights, which are laws that require banks to contact borrowers before recording a Notice of Default to discuss loan modifications, repayment plans, and other options to avoid foreclosure.

In California, for example, banks must follow a detailed notice requirement prior to recording a Notice of Default. If the bank does not comply with the notice requirements, a homeowner facing foreclosure can file a lawsuit to obtain an injunction (a court order stopping foreclosure). Furthermore, if the courts grants an injunction, the homeowner can get attorney’s fees from the bank.

The foreclosure process is becoming a larger issue as regulatory laws become more complex, the housing market changes, and banks look for new ways to make a quick buck. If you receive a Notice of Default or Notice of Trustee’s Sale, you should immediately contact a real estate attorney to protect your rights as a homeowner.

When Are Halloween Displays Too Scary?

Corpses in the Front Yard

A Parma, Ohio family recently made the news by creating a Halloween display in their yard that was so scary and grotesque that it truly bothered their neighbors and scared elementary school children on the way to school. It included a realistic crucified body, a corpse hanging upside down from a tree, and several other disturbing elements. The Barrett family eventually took the display down after unwelcome visitors came into their yard late at night.

Can the Dead (or Undead) on Display Create a Private Nuisance?

Private nuisances are ongoing, unlawful (unreasonable), and cause some type of harm to others. Though neighbors can often effectively ask other neighbors to stop doing disturbing behaviors, in other situations nuisance lawsuits are the best option. However, courts have been very reluctant to call aesthetic problems with other people’s properties nuisances. While noise or even smell might be considered a nuisance, courts have a hard time drawing a line between “beautiful” and “ugly”… one court in Indiana upheld the rights of a neighbor who decorated his yard with a toilet seat nailed to a pole. So, this probably isn’t a private nuisance.

What About the Young Children’s Brains?

One of the major complaints about the yard full of corpses was that it was near an elementary school and traumatized young children. Sometimes, the government can shield children from gory images even if it affects other people’s freedom of speech. In one 2012 case, for example, the Colorado court system upheld an injunction against anti-abortion protesters, who waved signs with “mutilated fetuses and dead bodies” outside of services held at a particular church. The court found that graphic images could cause psychological harm to young children who attended church services, and that there was a compelling interest in protecting them. Halloween Display

However, in general, “violence is not part of the obscenity that the Constitution permits to be regulated.” For example, California tried to restrict selling violent video games to children where people kill, maim, or assault opponents in the video games. The court in this case declared the law unconstitutional, and noted that other gory materials are often given to children to read for fun: “Grimm’s Fairy Tales, for example, are grim indeed. As her just deserts for trying to poison Snow White, the wicked queen is made to dance in red hot slippers “till she fell dead on the floor, a sad example of envy and jealousy.” Cinderella’s evil stepsisters have their eyes pecked out by doves. And Hansel and Gretel (children!) kill their captor by baking her in an oven.”

Therefore, it is hard to know if a zoning law or some other type of regulation that protected children from violent “speech” near a school would be upheld.

So, Can My Neighbor Keep Their Corpses?

Yes, probably so. Neighbors might be able to persuade others to tone down Halloween decorations that are too scary… but, ordinarily, even if they scare the children, the dead bodies stay.

For more Halloween cases, see The Top 3 Silliest Halloween Lawsuits. Happy Halloween!

Update on Proposed Fines for California Drought Water Usage

California Lawmakers Crack Down in the Face of a Monstrous Drought

For the past four years, the state of California has suffered through one of the worst droughts in history. A historic and unprecedented lack of rain has created the need for some very immediate and systemic changes regarding water usage.

As Governor Brown and state officials urge California residents to cut back, local county and city governments have begun passing ordinances that restrict water usage. These restrictions often ban residents from washing their cars and doing other activities involving water. Some neighborhoods are prohibited from watering their lawns while other neighborhoods have placed residents on a schedule, permitting sprinkler usage on only one day a week.  Droughtful

Thankfully, these restrictions, as well as awareness of the issue, have led to an impressive 35% cut in California’s water usage.

Celebrities Among the Most Egregious Offenders

Many California residents have allowed their lawns to go brown in order to conserve water while others have transformed their yards using zeroscaping. Unfortunately, many of Hollywood’s elite have eschewed the water restrictions and have continued to operate their sprinklers, enjoying lush, rolling lawns while their surrounding neighbors have dead grass.

Each individual water district is responsible for policing its residents. As such, uniform policies have failed to develop. For instance, Las Virgenes Municipal Water District is patrolling wealthy Calabasas neighborhoods for violators and has issued many violation letters to famous residents. Some of these individuals were fined.

However, it appears many water districts are not being vigilant about the issue. In Los Angeles, only 9 people were fined despite thousands of warning letters for violations. In Beverly Hills, where some of the more outrageous violations have occurred (and where the largest yards exist), no fines have been levied yet.

California Spring Usage Limited During Drought

California is home to many natural springs. Water bottle companies like Nestle and Sugar Pine contract with the California government to pump water from the springs for bottling and resale. In January of 2014, the governor announced a state of emergency. In response, the California Water Resources Control Board ordered Sugar Pine Spring Water Company to stop diverting water from the Sierra Nevada spring to its bottling facility. Despite this order and numerous warnings, Sugar Pine continued to divert water and was recently slapped with a whopping $225,000 fine.

Reversing Zombie Foreclosures

As a result of the mortgage crisis and the collapse of numerous banks, many homeowners were threatened with foreclosure. However, many of these homeowners were unaware of their rights and assumed a Notice of Default meant their home was lost to foreclosure. In reality, a Notice of Default is merely the first step to a foreclosure. Abandoning the property before the foreclosure is complete means that the homeowners remain on title to the property for years, even though nobody is living on the property.  Recieveship 1

Many people abandoned their homes under the mistaken belief that their home had been foreclosed, but unbeknownst to them, they remained the record property owner. The scenario when a homeowner abandoned the home, but remains on title, is known as Zombie Foreclosure. Zombie foreclosures have plagued many communities, particularly in lower-income areas.

Why don’t the banks complete the foreclosure? This is a question with no official answer. After the foreclosure crisis, banks were either bankrupt, seized by the government, or were handed $700 billion dollars for their incompetence. The dust has still not settled on many of these loans. There is no official answer to the zombie foreclosure epidemic, but below are three common theories.

  1. Banks are manipulating the housing market by not taken possession of the homes.
  2.  The lack of oversight due to the creation of the private entity known as the Mortgage Electronic Registration System (MERS), which was created to circumvent County Recorder Requirements, allows banks to freely assign loans from one bank to another. This results in an entity like THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2005-IM3 owning the loan. Figuring out who even has the right to the loan in the above situation is difficult.
  3. Many owners also declared bankruptcy, which prevents banks from foreclosing on homeowners as a result of the automatic stay.

These abandoned homes become drug dens, squatter residences, or become so dilapidated that they burn down. These dilapidated homes attract more serious criminal elements, thereby further harming the surrounding community. What is particularly frustrating in these scenarios is that nobody takes responsibility. The homeowner doesn’t think they own the home, the bank will say it is the homeowner’s responsibility or the bank will claim the loan was assigned to another bank. This leaves everyone pointing the finger at someone else and the community plagued by a dangerous home.  Recievership 2

However, there is a remedy to zombie foreclosures in California known as Health & Safety Receivership. This allows an enforcement agency, tenant, or tenant’s association to request the court to take over a property that endangers the Health and Safety of the surrounding community. If the receivership request is successful, then the court takes the property over and will authorize a private receiver to take control of the property and rehab under court supervision.

This remedy is not the same as eminent domain, because the private receiver takes the risk of managing the property, not the government. If the receiver successfully rehabs and sells the property, then they are paid a court-awarded fee and whatever is left from the sale is given to the bank and homeowner.

This remedy is slowly gaining popularity in California and becoming a more common tool utilized by government agencies, tenants and tenant associations to combat zombie foreclosure.

Impact of California’s Drought on Water Rights

California is in the midst of its fourth year of one of the most severe droughts on record. A drought State of Emergency has been called by Governor Brown and imposed strict conservation efforts statewide. While water conservation efforts have been monopolizing the headlines in most local and state newspapers, the fight over water rights, both surface and ground, have been garnering more and more attention.Empty

Riparian rights determine how water is allocated among those who possess land along its path. Typically, the rights belong to landowners whose property the natural waterway runs, whether it’s a stream, creek, or river. In California, riparian rights are determined by a doctrine known as “prior appropriation.” Under this doctrine, the first person to take a quantity of water from a water source for agricultural, industrial, or household use, has the right to continue to use that quantity of water for that purpose.

In mid-June, the state of California reduced the water usage of farmers with rights to California water dating back more than one-hundred years. In an average year, agriculture use in California amounts to about eighty percent of all of the water consumed on the state. Since the drought began, farmers in the Central Valley have had their water usage drastically reduced incrementally each year.

However, this cut could have devastating consequences for farmers who rely on water to feed their crops and support their businesses. Only once in the history of California have people with the most senior water rights been affected by droughts. Farmers have anticipated that this may happen and as a result have been digging new wells for groundwater. Despite the stress it will put on farmers, California has no choice. Litigation is expected by farmers to fight for their most senior water rights as we move into fall with no rain in sight.

Marijuana Could Destroy California’s Water Supply

While there is no doubting that the California drought affects all of its citizens, environmentalists are scrambling to protect precious and valuable ecosystems that are slowly being destroyed by water diverting tactics of marijuana growers. The marijuana industry in California produces up to seventy-percent of the marijuana consumed in the United States.

However, the marijuana industry remains largely unregulated. There are few protections to ensure that illegal water diversions for marijuana growing farms don’t dry up rivers, destroy salmon and steelhead habitats. Although not legal, the debate over whether or not to legalize marijuana is more amplified as marijuana growers develop extensive plots along California’s most sensitive habitats. A single marijuana plant demands substantial water to grow and since this industry is unregulated, most water to feed the plantations is taken illegally. These diversions have drastically reduced many parts of California, including stretches of the Eel River and many of its tributaries affecting salmon and steelhead habitats, as well as affecting the water supply that wildlife in the area rely on. The diversions have become so extensive that even legal water users in the area don’t have enough water because of marijuana poachers.

While legislation regarding water rights and marijuana growing is making its way through the legislature, environmentalists and concerned citizens are hoping for a more expeditious solution to the problem before marijuana growers permanently destroy sensitive habitats forever.