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A camper was riding a bicycle in a National Forest in California. A forest service employee hit him with his car. The camper sued the U.S. for damages.

The trial court said that the government was immune from liability to a recreational user of the land, due to Civil Code section 846. This provides that landowners owe no duty of care to recreational users. The purpose of this law was to encourage owners of of rural property to allow recreational use, and not fence their land. The camper appealed.

The California Supreme Court found for the camper, saying that when an landowner using their property engages in “active conduct,” they can be liable for negligence which causes injuries to recreational users.

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California Civil Code section 2923.5 requires that, prior to recording a Notice of Default (the first step in a non-judicial foreclosure), the lender must contact the borrower to assess their financial situation and explore options to prevent foreclosure.

An Orange County homeowner filed suit against the lender for recording a notice of default without contacting them. The judge gave them a restraining order stopping the foreclosure.

The lender argued that the Civil code was preempted by federal law. The concern is that when there is federal law regulating federally chartered lenders, state law cannot be enforced if it impacts an important part of the mortgage contract.

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A commercial lease specified an address for service of notices. Here was a default, and the landlord sent notice to the tenant’s leasing agent (by mail, fax, and email), who was not at the address specified in the lease. The agent acknowledged receiving notice by email.

In the eviction action, the court ruled, in a slam-dunk decision, for the tenant because the notice went to the wrong address. First, although the leases’s notice provision varies from the unlawful detainer statutes, that is allowable in commercial leases.

Secondly, the landlord also emailed the notice to the agent. The landlord argued that, as email is not mailing address specific, it could have been received at the designated address. The court points out that this is a problem of the lease language, which does not indicate an acceptable electronic notification address.

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Bingo Investments was in the business of making mezzanine loans in real estate matters. In a mezzanine loan, the borrower owns an entity (i.e. an LLC) that owns real property. The borrower does not actually own the real property, just the LLC. The mezzanine lender takes a security interest not in the real estate, but in the LLC that owns the real estate.

Bingo hired Greenlake Capital to find financing sources for Bingo’s loans. They were successful, and Bingo got a line of credit for $150 million. The credit line was secured by Bingo’s assets, likely Bingo’s equity interest in mezzanine borrowers (not the underlying in real property). But Bingo then refused to pay Greenlake its fee of $3 million, 2% of the funding. It claimed that Greenlake could not collect, because this arrangement required Greenlake to have a California real estate broker’s license to get paid. (California Business & Professions Code section 10131(d).

Greenlake argued that it only negotiated a credit facility that itself did not make any loans, and Bingo had yet to present a qualifying loan to the lender. The lower court ruled for Bingo.

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Some southern California brokers listed a home for $749,000 to $799,000. A buyer entered a contract to buy for $749,000, and proceeding to sell their own house so they could pay for the new house.

The Brokers knew, but did not tell potential buyers, that there were loans against the property for over one million dollars, and the sale would never close unless they solved a little $392,000 problem by getting a short sale approved or the buyers throwing more cash at the deal.

The court first noted that when a seller knows of facts materially affecting the value or desirability of the property which are known to only him and not easily discoverable by the buyer, the seller has a duty to disclose. Where the broker knows of these facts, he is under the same duty.

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Al’s siblings were put on title to Al’s property so that it would pass to them if Al died. Al decided to create a trust, and have the trust be on title, so the siblings conveyed title back to Al, and Al conveyed the property to the trust. But, Al did not create the trust until 13 days later. The deed from Al to the trust was then recorded, and Al died shortly thereafter.

Al’s siblings claimed that the transfer to the trust was ineffective, because the deed was signed before the trust was created. The Court said it was effective, and the trust owned the property. The question has never appeared in a California published decision, so the court looked at the law in other states. It agreed with the general rule that a deed to a corporation made before its organization is valid between the parties, though void if asserted against third parties. It found that here, Al the individual granted the property to Al the trustee, anticipating the creation of the trust. Therefore, the deed was effective between them.

Luna v. Brownell (2010) 185 Cal.App. 4th 668.

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To set aside a default judgment in California, either the judgment must be void on its face, or the motion brought within two years of entry. In a recent case the motion was filed more then two years after the judgment was entered. The trial court found that the evidence showed that there was no actual service on the defendant, and set aside the default judgment.

The appellate court reversed, finding that on a motion filed more than two years after entry of default judgment, the trial court was precluded from considering evidence offered in support of motion. It also found that proof of service on “John Doe, co-resident” was not void on its face. People in apparent charge of businesses and residences often refuse to give their true legal names. For this reason, it is an accepted practice to name such a person as “John Doe” or similar fictitious name, or by description.

In this case (successfully argued on appeal by this blogger) it is likely that the defendant did know about the attempts to serve his, but did not do anything about it until the effort to collect the judgment more then two years later. Things often do not go well for those who sleep on their rights.

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Buyers bought a home in Southern California using the standard CAR purchase agreement, in which they initialed the requirement to arbitrate any disputes. Before they moved into the home, they learned it had extensive structural damage which was not disclosed. The buyers sued their broker, claiming that they knew about the damage. The brokers moved the lawsuit to arbitration, as the purchase Contract allowed them to do- big mistake for the broker.

The Arbitrator awarded the Buyer damages based on the benefit of the bargain” measure, which is applicable to damages not arising from a contract. The Brokers sought to set aside the award, claiming he should have used the “out of pocket” measure of damages (Civil Code 3343).

The Broker argued that the Arbitration provision requires the arbitrator to render an award in accordance with California substantive law; thus, this departs from the general rule of non-reviewability of arbitration awards. However, the court disagreed. Citing DirectTV, a provision requiring arbitrators to apply the law leaves open the possibility that they may apply it incorrectly.

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Under California law, a Grant Deed contains two implied covenants- these are promises that are not written into the deed itself.

In deed language, the “grantor” is the person or entity who grants the property and signs the deed; the “grantee” is the one who receives the interest in the property.

First is the implied covenant that, prior to this deed, the grantor has not conveyed the same interest in the property to anyone else. In other words, I grant this property to you, and I guarantee that I have not already given it to someone else. It is not a guaranty that I have good title.

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Homeowners in Discovery Bay, California, sought in 2007 to refinance their mortgage through GMAC. They provided the loan officer will accurate income information. It turned out, however, that the loan application prepared for them had a fabricated, inflated income. They were not given the application to review. They could not afford payments on the new loan, and lost the house through foreclosure. The homeowners sued GMAC and other defendants.

In the published opinion, the court dealt only with their claim of fraudulent misrepresentation. The homeowners’ attorney creatively argued that, in giving them the loan, GMAC falsely misrepresented that the homeowners could afford the loan based on their true income-the income information they provided to the loan officer. The homeowners claimed this told them that GMAC thought they could afford the loan.

The court said no; GMAC’s position that they qualified for the loan is not a representation that they could afford the loan. The lender’s efforts to determine the ability of the borrower to repay a loan is for the lender’s protection, not the borrower.

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