Fri, February 5th, 2010
Short Sale Seminars in El Dorado Hills
We just had another short sale seminar at Old Republic Title in El Dorado Hills, sponsored by Intero Realtors of El Dorado Hills. Paul Norton and Jody Durkett did a great job of facilitating. We had a wonderful credit specialist as well as a title officer, an Certified Public Accountant (Sam Hoppe, one of the best around), and yes, me.
If you missed it, and live in the El Dorado Hills, Cameron Park, or Folsom areas, or even nearby areas such as Sacramento or Placerville, let myself or Jody Durkett know so that we can make sure you are informed of our next seminar.
Posted by Nick Yonano at 04:51
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Labels: Mortgage Default, el dorado hills, folsom, foreclosures, housing, real estate, short sale
Thu, February 4th, 2010
Avoiding a Foreclosure in Probate in California
Though some may consider the Probate Code an onerous set of rules restricting the path which a personal representative (or executor) must follow to complete a probate in California, I take a different viewpoint in believing that it is fair and cautious. Where it is considered unduly restrictive by some, the Probate Code provides a guiding light by allowing the probate judges in this state to determine whether something should take place, or not take place.
A good example of this which is important in today’s real estate climate, is where the estate has a security interest in real estate to cover a loan (by way of a promissory note) made by the decedent (that is still due and owing). Instead of requiring a foreclosure of the real property, the Probate Code allows the representative to accept a deed in lieu of foreclosure, but only upon approval by the court. In gaining this approval, the representative must file a petition and show to the court why it is advantageous to just accept the deed in lieu of foreclosure.
Probate Code Section 9850 is the statute requiring the petition, and it states that approval is only granted after clear and convincing evidence is presented to the court. Though acceptance of a deed in lieu of foreclosure is allowed in probate, it is only permitted when the judge is comfortable with the particular situation, and only on terms and conditions imposed by the judge.
Posted by Nick Yonano at 05:24
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Labels: Mortgage Default, deed in lieu of foreclosure, foreclosures, probate, real estate
Wed, February 3rd, 2010
Statute of Frauds and Business or Employment Contracts
In this post, I’m going to focus on what I believe is the most strict interpretation of the statute of frauds. That is, the situation where California courts are least likely to hold that a contract or agreement must be in writing to be enforceable. California Civil Code section 1624 requires that any contract that “by its terms is not to be performed within a year from the making thereof” is not enforceable unless the contract “or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by his agent.”
The case of White Lighting Company v. Wolfson, a 1968 case, reflects the reasoning of many other cases which have, for the most part, held that contracts which could have possibly been performed within one year are not subject to the statute of frauds. Much of the legal reasoning behind the “one-year” exception has evolved from employment contract cases, as in Wolfson, however, the same analysis would apply to most business contracts and real estate contracts.
The Wolfson court stated: “To fall within the words of the provision, therefore, the agreement must be one of which it can truly be said at the very moment it is made, ‘This agreement is not to be performed within one year’; in general, the cases indicate that there must not be the slightest possibility that it can be fully performed within one year.” The court went on to reason that when the employee’s employment relationship with the employer was terminated, the employee had completely performed, and the employer’s performance consisted of nothing more than compensating the employee. Interestingly, the oral agreement which the employee was attempting to enforce here, stated that he would receive a bonus for company profits over a certain amount in one year. The argument could be made, and was made, that by its terms it could not have been “performed” within one year, literally. The court, however, focused on the at-will nature of the relationship–since it could be terminated by either party within one year, it does not fall within the statute of frauds.
I’m not sure I agree with the reasoning. Nevertheless, the lesson holds true regardless of how the courts interpret the “one-year” exception–get the terms in writing ahead of time and avoid litigation over the validity of the agreement.
Posted by Nick Yonano at 05:57
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Labels: real estate
Mon, January 25th, 2010
When a Formal Agreement to Lease Property is Not Required
The statute of frauds requires most agreements to be in writing in order to be enforcable. California Civil Code Section 1624, which I mentioned in the last two posts, allows certain exceptions, mostly out of fairness to the parties who intended to have a formal agreement, but never really followed through with a written agreement. In my last post, I mentioned one exception. In this post, I describe another exception, one that applies only when the facts of a particular case support enforceability of an agreement.
In the case of Derrick v. C.W.R. Ford Co. , a lessee offered to lease real property upon certain conditions. The property consisted of a storefront and a basement in Oakland. The lessee wrote these terms down in a letter and sent it to the landlord. The landlord responded with a separate letter, with some new, rather minor, terms. Eventually, the parties agreed to the arrangement, which was for ten years. The minor term(s) included the requirement that the tenant pay for any alterations and obtain a bond in doing so. For three years, the tenant paid rent and leased the property. Then, the landlord sold the building. There never was a formal written agreement which any of us would refer to as “the lease agreement”. Just the letters, and receipts for rent payments.
The new owner subsequently attempted to increase the rent. The lessee didn’t agree, because it thought that it had a prior, enforceable agreement. The new owner then brought unlawful detainer proceedings (an eviction process). In the end, the appellate court was asked to determine if the back-and-forth of letters between the lessee and the original owner was sufficient to take the “agreement” out of the statute of frauds.
The court held that the statute of frauds did not apply here, since the parties clearly agreed to the arrangement laid out in the prior letters. The fact that there were minor variances from the letters was not significant since it is sufficient to have letters, receipts, and similar evidences of writing in order to establish an enforceable agreement in writing.
Two things to remember. One, this line of reasoning does not only apply to real estate contracts or arrangements, but to other commercial agreements as well. Two, it is not wise to ever assume that a court will enforce an informal exchange of writings in the same manner as a formal agreement. As I mentioned earlier, this exception is fact-intensive. Here, it was sufficient. In many circumstances it is not.
Most importantly, getting to the point where a court must make this determination is rather expensive. It’s much less expensive to have the agreement drawn up first, with all essential terms agreed to at the outset.
Posted by Nick Yonano at 05:31
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Labels: Uncategorized
Fri, October 30th, 2009
Statute of Frauds and Real Estate Improvements
As I mentioned in my last post, there are exceptions to the Statute of Frauds.
California Civil Code Section 1624 provides a list of contracts which must be in writing to be enforceable. Subsection (d) of that section states the following as included in that list: “An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.”
This subsection is well-known for requiring real estate contracts to be in writing. What it does not require, however, is that every contract which involves real estate, in any manner, to be in writing. Take the 1961 California Supreme Court case of Pollyanna Homes, Inc. v. Berney, 56 Cal.2d 676, where the court held that a contract for the installation of off-site improvements adjacent to real property that was also being purchased, did not come within the statute of frauds, since it was not for the sale or leasing of real estate, and it was not to be performed within one year.
In that case, there was a related obligation for the purchase and sale of property, which in my opinion made it a close call for the court. However, the rule is often strictly interpreted when it comes to real estate. Keep in mind that in most cases where there is a written, long-term lease of real estate, which is often the case in commercial as well as residential lease arrangements, the statute of frauds may come into play under Section 1624.
Posted by Nick Yonano at 04:13
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Labels: Uncategorized, real estate
Fri, October 23rd, 2009
Get It in Writing! The Statute of Frauds Requires It
In looking back at many of the cases I’ve litigated over the past few years, I note a common theme: the absence of some critical fact in a contractual relationship that was not agreed to in a signed writing. In real estate, as well as most other types of contracts, there is a law which in legalspeak is referred to as the statute of frauds. It requires material terms of an agreement to be in writing. There are exceptions, which I will address in subsequent posts. However, the central focus of the statute of frauds is that a contract involving real estate, or the sale of goods over $500, or similar agreements of a binding nature, must be in a signed writing.
Why is there litigation if the contract was not in writing? Often one of the parties, and sometimes both parties, claim that the writing was not necessary or that there was a written agreement but certain terms were not made part of that agreement because the parties understood the agreement to include that term. That may be the case in some instances (this is a separate topic I’ll discuss later, called the parol evidence rule), but not always.
If you are contemplaing an agreement with someone to buy or sell real estate, or to do anything involving property, get it in writing. It’s not a bad idea to always have an experienced attorney look at the agreement or perhaps draw it up for you. It can save you a great deal of money later if there is ever a question of what you and that other person really meant.
Posted by Nick Yonano at 05:16
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Labels: real estate
Mon, September 28th, 2009
The Great Foreclosure Mistake
Some would say that everything about a foreclosure is a mistake. Others wisely recognize that if you are a lender and you’re simply not getting reimbursed, a foreclosure may be your only, and best option. So what mistake am I talking about?
I’m referring to the mistake of NOT naming all persons or entities with a subordinate interest as defendants. In a judicial foreclosure, a common mistake made by some attorneys is to leave out the name of a person who holds a junior interest.
Many attorneys will order a litigation guaranty from a reputable title company; others rely on doing their own property title search prior to filing the complaint. Still, there are a few who don’t even bother. Now, if an attorney doesn’t search before filing, the easiest way to proceed is to search in the course of discovery and amend the complaint to properly add the new defendant. If there is no prejudice to the defendants or the proposed defendant, this would and should resolve the dilemna. But there are some who fail to conduct simple due diligence even at this point.
What’s the damage if an interested person is not named? That lien survives the foreclosure. That is, the plaintiff (on a credit bid, or a subsequent buyer, takes title subject to this “forgotten” lien. Not a pretty mistake. Not a pretty outcome.
Posted by Nick Yonano at 08:06
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Labels: Mortgage Default, foreclosures, real estate
Mon, August 10th, 2009
Seller CarryBacks–No Deficiency in California
Just as with standard purchase money loans, California law does not allow a deficiency judgment against a borrower who buys real property from a seller who also finances (carries back) the financing. This, of course, assumes that the financing was used for the purchase of the home and the borrower occupies the home. You can read more about this by looking at California Code of Civil Procedure Section 580b.
Posted by Nick Yonano at 03:56
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Labels: Mortgage Default, foreclosures, real estate, trustee sale
Sat, August 1st, 2009
Short Sale Seminar Review
Great seminar Wednesday night. Intero and Old Republic Title are planning additional seminars in August and September. I think everyone learned about short sales and the process, including myself. For more info on future seminars, contact Old Republic Title in El Dorado Hills or you may contact me as well.
Posted by Nick Yonano at 08:38
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Labels: Uncategorized
Mon, July 27th, 2009
Short Sale Seminar in El Dorado Hills
For those in the Folsom. Placerville, and El Dorado Hills area, who are interested in learning more about short sales, there will be two seminars held in El Dorado Hills at the Town Center, at Old Republic Title. The seminars are on Wednesday evening from 6:30 to 8:30 p.m., and Saturday morning from 9:30 to 11:30 a.m.
I will be speaking at the seminars as part of an expert panel. Other experts include a C.P.A., a credit specialist, title officers, and real estate agents, all with short sale experience. For more information, contact Jody at Intero in El Dorado Hills.
Posted by Nick Yonano at 01:18
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Labels: el dorado hills, folsom, real estate, short sale
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