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ALERT! SUMMARY OF RECENT CASES AND CODE SECTIONS |
AFFECTING REAL ESTATE
The following are just a few examples of recent Virginia cases and Code changes that may affect your real estate practice. This Summary is not all encompassing, but merely contains excerpts for your information. Reading the complete case or Code Section is required to determine if it actually applies to the facts or circumstances of your situation. This summary was prepared by the law firm of Shreves, Schudel, DeVol, Saunders & Jackson, PLLC, for RGS Title, LLC. It is not intended as legal advice but rather, for informational purposes only.
RECENT CASE DECISIONS
Q: Can a Home Inspector Be Found Liable for Undisclosed Defects?
A: Maybe
Peterson v. Bass, 48 Va. Cir. 206, Warren County (February 22, 1999)
The Circuit Court for Warren County found that for a home inspector to be found liable, the Plaintiff has to prove that there were material deficiencies not disclosed by the inspection report or that the home inspection report was false.
The Purchasers in this case closed on a sales contract to purchase a house after the home inspection company had discovered numerous defects in the property during the home inspection. After moving into the house, the Purchasers discovered among other things, extensive water damage and structural defects. The Purchasers sued the sellers and the home inspection company, BDI. As to the sellers, the Court stated that if a Purchaser is given or secures enough information to excite suspicion by a reasonable or prudent person, then the purchaser is under a duty to investigate and cannot rely on a seller’s representations. As to BDI, the Court ordered that the Purchasers file additional information detailing evidence supporting that material deficiencies were not disclosed or that the home inspection was false.
Q: Is An Oral Contract for Commission Enforceable?
A: Yes, if the facts fit.
Pardoe & Graham Real Estate, Inc. v. Schulz Homes, Corp., Record No. 990531, Va. March 3, 2000.
The Virginia Supreme Court declared that an oral contract to pay a commission to a broker for procuring a construction contract was enforceable.
A Pardoe broker entered into an oral commission agreement with Schulz Homes, Corp., if the broker could facilitate a construction contract between Schulz and the owner of a tract of land. The broker was able to negotiate with the landowner for Schulz to construct a home. Thereafter, Schulz refused to pay the broker the agreed upon commission claiming it wasn’t in writing and therefore not enforceable. In determining whether an oral contract for commission was barred by the Statute of Frauds, the Virginia Supreme Court looked to the definition of “real estate” under Virginia Code Section 1-13.1. The Virginia Supreme Court found that the definition did not include a building that had not yet been built and therefore was not “attached” to the land. Because the definition of “real estate” did not include construction contracts, the commission agreement was not required to be in writing and was therefore enforceable.
Q: Can Leasing Agent Commission be terminated upon assignment:
A: No, if facts fit.
Bagby v. Pierce Arrow, LLC., 521 S.E.2d 761 Va . (November 5, 1999).
The Virginia Supreme Court found that the sale of leased property was an assignment and that under the leasing agent contract, commissions were due and payable to a leasing agent for tenant leases procured by the leasing agent.
The Virginia Supreme Court found that an assignee of a tenant procurement contract was required to pay to the leasing agent, commissions on any leases to tenants that the leasing agent had procured. The leasing agent entered into a contract with an owner of an apartment building to procure tenants for the owner. The owner agreed to pay the agent 6% of monthly rentals for each lease the owner entered into with the tenants procured by the agent. The terms of the contract provided that no sale, assignment, or other transfer affected the contract. The owner sold the property to the defendant. The defendant thereafter continued to pay the commission but let the leases expire. The defendant then entered into new leases with the same tenants but refused to pay the agent because these were “new” leases.
Q: What Can Happen if a Seller Commits Fraud in Disclosures?
A: Negative Easement
Prospect Development Co. v. Bershader, 515 S.E.2d 291, Virginia Supreme Court (June 11, 1999).
The Virginia Supreme Court established a scenic easement on a tract of land adjacent to Purchasers’ lot as a remedy for the vendor committing actual and constructive fraud during the sale of a lot and home construction to Purchasers.
When Purchasers bought their property from Prospect they were told by Prospect and the sales agent that the adjacent property, “Outlot B,” would never be developed because it had failed percolation tests. This was important to the Purchasers because they were naturalists and they wanted a lot with natural woodland development. After the Purchasers bought their lot for a premium price because the adjacent property was preserved land, Prospect began to clear Outlot B for a house to be constructed. The Purchasers sued to stop the development. Based on the evidence presented at trial, the Circuit Court for Fairfax County found that Prospect had done percolation tests, had intended all along to construct a home on Outlot B, and as a result, had committed actual and constructive fraud against the Purchasers. Prospect appealed to the Virginia Supreme Court. The Virginia Supreme Court agreed with the lower court and ruled that because of the vendor’s fraud, the Purchaser’s had a negative easement by estoppel over Outlot B, that resulted in a scenic easement. Prospect therefore was precluded from constructing a house on Outlot B.
Q: Who is responsible for house maintenance under an oral lease?
A: Tenant
Wohlford v. Quesenberry, Record No. 990320, Va., January 14, 2000
The Virginia Supreme Court ruled that under the Uniform Statewide Building Code (BOCA) and Section 36-97 of the Virginia Code, because a tenant is the person in control of the leased premises, the tenant is the “owner” of the property and therefore responsible for its maintenance.
A landlord and tenant entered into an oral lease providing for the month to month rental of a residence. Nothing was said in the oral lease about who would maintain the premises. Subsequently, the roof leaked and the furnace malfunctioned. As a result of these defects the tenant stopped paying rent. Accordingly, the landlord sued to evict and the tenant countersued stating that the landlord was responsible for repairing the roof leak and furnace under BOCA and the National Property Maintenance Code (NPMC). The Virginia Supreme Court found that the BOCA and Virginia Code encompassed the common law (as opposed the Virginia Residential Landlord And Tenant Act), rule that the "owner" has the responsibility to repair and defined “owner” by who has control of the premises. Since the tenant and not the landlord had "control" of the premises, the tenant was considered the "owner."
Q: Do all the elements of adverse possession have to be proved?
A: Yes
Kim v. Douval Corp., No. 991092, Fairfax County Cir. Ct. (April 21, 2000)
The Fairfax County Circuit Court ruled that a person seeking to establish title by adverse possession must prove that the possession was: actual, hostile, exclusive, visible, and continuous under a claim of right for 15 years..
This case involved a claim for adverse possession of a 414 square foot tract of land. The owners of a car wash claimed that they were the owners by adverse possession, having used the property for a period in excess of 15 years. The court stated that to establish title by adverse possession in Virginia, a claimant must prove ”actual, hostile exclusive, visible and continuous possession, under a claim of right, for the statutory period of 15 years." In this case although the claimant met all the other requirements, it was unclear whether or not they (or their predecessors in title) had received permission for their initial use of the property. Since they could not establish that they had occupied the property under a "claim of right" for the statutory period, they were not granted adverse possession.
RECENT LEGISLATIVE CHANGES
Eminent Domain:
SB 452 and HB 1123 - Commonwealth Transportation Commissioner; eminent domain
Bill permits the owner of the improvement to present evidence of the fair market value of such improvement in condemnation valuation proceeding. Owner and fair market value are defined.
Environmental:
HB 856 - Community Development Authorities
Under this bill, community development authorities are permitted to purchase development rights that will be dedicated as open space, conservation easements, or other purposes under the Open-Space Land Act.
Insurance:
SB 456 - Cancellation of insurance policies
Currently, individuals who purchase insurance from lending institutions, bank holding companies, savings holding companies or their subsidiaries, may cancel the insurance within ten days of its purchase and receive pro rata premium refund. This bill repeals that right but prohibits lenders from conditioning the availability of credit upon the purchase of insurance from the lender.
Landlord Tenant:
HB 1315 - Virginia Residential Landlord and Tenant Act
This bill amends the Virginia Residential Landlord and Tenant Act by among other things, distinguishing between application fee and security deposit, defining “managing agent,” clarifying what constitutes “notice” under the Act, providing that no unilateral changes to terms of a rental agreement are valid unless given in accordance with agreement and has mutual consent of parties, and clarifying a landlord’s acceptance without reservation of a rent payment with knowledge of material noncompliance by tenant constitutes a waiver of landlord’s right to terminate rental agreement.
Real Estate Taxes:
HB 1216 - Sale of real estate for delinquent taxes; process
Cities are given authority to adopt an ordinance to sell real estate that has been tax delinquent for 12 months and gives right to rehearing on delinquent tax sales within 90 days of entry of confirmation of sale. Local governing bodies authorized to adopt ordinance waiving tax liens for purchaser under certain circumstances.
Trusts:
HB 1503 - Tenants by the Entirety; Revocable Trust
Revocable intervivos trusts for husbands and wives may hold property as tenants by the entirety.