Understanding Condominiums, Cooperative Ownership, And Lease Agreements

Common and Limited Common Area in Condominium Projects

Question:

Describe about the constitutional law and property law?

The common area and limited common area in condominium:

The common areas of the condominium are the areas that include the stair walls, elevators, walks, roofs, entryways etc. These areas are those areas of the condominium that are commonly and jointly owned by the condominium owners and are also maintained by them.

The limited condominium areas on the other hand refer to those areas that are limited and are used by one or by some of the condominium owners. These generally include the adjoining patios or the enclosed yards which are used by only some of the condominium owners. Even though these areas are used by only the selected owners they are owned commonly by all the owners in the condominium project.

Condominiums are the ones were the owners of the condominiums obtain their own financing promises the unit as a security for the loan whereas cooperative ownerships are the ones where the cooperative property which includes the common areas as well as the living units forms a blanket mortgage.

The payment of the blanket mortgage is dependent on the percentage he owns in the total cooperative (Spiers, 2008). A condominium owner can purchase units on lesser down payments but a cooperative owner may pay as much as one-third of the purchase price.

While entering into a lease with the landlord the tenant must keep in mind that the agreement allows the tenant full and quiet enjoyment of the said property. The tenant must ensure that the landlord keeps the property and the common area in a totally repaired condition. The landlord should pay the required taxes for the said property and the tenant should also ensure that said property and the common area are properly insured.

While entering into the lease agreement the landlord should also ensure that the tenant needs to pay proper rent to the landlord. The tenant should also pay a certain percentage of the real estate taxes. The tenant should also maintain the interiors and the exteriors of the property.

Further the tenants’ contents should be insured. In case of any sub-lease the landlord needs to be consulted and during the termination of the lease the said property should be given back in the same condition excluding the normal wear and tear.

Under lease agreement, if a tenant defaults there are a few remedies available to the landlord.

• Firstly, the landlord has the right to sue the tenant for performance of the contract.
• Secondly, the landlord can terminate the lease between him and the tenant and then sue him for damages.
• Also the landlord has the remedy to dispose of the tenant and then sue him for damages.

He first remedy is available to the landlord in case of any default by the tenant (Spiers, 2008). Where the landlord sues the tenant for damages, the damages are calculated based on the rent of the remainder of the term that could have been obtained by the landlord if he had released the premises. Further the landlord needs to serve a notice a termination to the tenant in these cases which should contain an option for the tenant to quit the premises peacefully and surrender it to the landlord.

The tenant has the right to sublease or assign or mortgage his or her property in a contract of lease. When a tenant assigns all the parts of the property and the rights and interests in the property and retains nothing with himself, such a transfer is called an assignment.

Difference Between Condominiums and Cooperative Ownership

When the tenant transfers only some portion of the rights and interests in the property to the sub-lessee and retains the other portions the transfer is called a sub-lease.

In contracts that mentions that subletting is prohibited it is to be assumed that assignment is permitted and in contracts that prohibit assignment, sub-letting is permitted.

Commercial lease covenants specifically mention that the tenant does not have the right not to pay rent or any right to offset. In such cases the tenants are left only with one remedy that is to sue the landlord. The tenant can sue the landlord for performance of the contract or for damages as a result of non-performance of the lease agreement.

A lease guaranty is an unconditional guaranty that requires the guarantor to perform all the duties of the tenant given in the lease (Hinkel, 2000). It includes most of the monetary obligations of the tenant including the payment of rent, maintenance etc. however, these guaranties can be limited in terms. 

For any landlord lease guaranties are required especially in the early years of tenancy when the risks of tenant defaults are more. In these cases most guarantors agree to pay all costs relating to collection and enforcement of guaranty.

Facts  

The given case stats that in the contract between the Landlord and the Tenant assignment was not permissible, the assignment is in violation of the lease and when the landlord accepts the rent from Alice who is the assignee he waives his right to declare the lease to be in default.

However, even in this case Toni, the original tenant remains responsible for the lease. In the case of assignments, the assignees are responsible for all rents as long as the assignee is in possession of the property. The assignee can be made liable only in case of any express agreement stating such a provision. In the cases of sub lease the sub lessee has no such responsibility to the original landlord and consequently is responsible only to the tenant.

Discussion

Depending on the above provisions in this case due to the breach of the contract, in terms of the landlord can sue the tenant Toni for damages since he is responsible being the original tenant of the property. The landlord cannot sue the assignee Alice since in general cases the assignees are not held liable for damages and only case when they are liable is in the presence of any expressed provision in the lease agreement. Since there was no such lease agreement to make the assignee liable she cannot be held for damages (Spiers, 2008). Further, in sub-letting the sub-lessee is never liable to the original landlord hence Samantha will also not be liable to pay damages from the landlord. The landlord can recover all his costs from the original tenant Toni.

The sub-lessee is responsible only to the tenant according to the terms of the lease, who in this case is the assignee, Alice. Rights and liabilities of Alice were towards only the landlord till she had possession of the property since the landlord had waived all the rights to declare the lease in default by accepting the rent. And finally Toni had all the rights and liabilities intact even though he was not in possession of the property since he was the original tenant. 

Key Provisions in Lease Agreements

There are three types of land descriptions in the United States namely:

• Government Rectangular Survey Restriction,
• Platted Description
• Metes and Bounds Description

There are number of states in America including Alabama, Alaska, Arizona, Florida, Oklahoma, Nebraska and many other states that uses this rectangular survey system. The system is based on two hypothetical lines which are principal meridians and base lines. The principal meridian runs from north to south through any particular state. These lines are identified through the degrees, minutes and seconds. There are thirty five principal meridians in the country. The base line is also known as the surveyor’s line that moves from east to west. Each principal meridian is crossed by one base line. The township lines are those hypothetical lines that run at an interval of 6 miles parallel to the base lines (Hinkel, 2000).

Further, for the identification of the township squares the requirements are the location of the township strips, the designation of the range strips and the name and number of the closest principal meridian.

The Platted Description refers to the piece of land referred by a recorded survey or plat. Firstly a plat is prepared with the dimensions and boundaries of the land and later this plat is recorded in the county records with the location (Hinkel, 2000).

The Meets and Bound description provides the boundary lines of the land where the direction in which the boundary line moves is a course and the length of the boundary line is the distance. Sometimes the meets and bounds description includes the curved land boundary. When the land description requires a curve, the requirements will include arc distance and radius distance of the curve, the chord course and the distance of the chord.

The type of land description that is commonly used in residential subdivision is platted description (Hinkel, 2000). For the platted description the requirements include the land lot, the district, county and the state. It should also contain the name, lot, block and the unit members of the subdivision and plat book and page number of the recorded reference. Platted descriptions are also used for other places such as condominiums and industrial parks.

The general methods used by the government authority for enforcing zonal regulations commences with the following:

• the issue of notice
• After the notice, a hearing needs to be held before the passing of the zonal regulation.
• The notice given may be in the form of a sign on the property or a notice in the newspaper (Hinkel, 2000).
• The landowners are given an opportunity to speak in the hearing held. Then the governmental authorities need to produce evidence for the zonal classifications.
• The land owners also have the right to appeal to the court against the governmental decision of the zonal classification.
• The zoning is then enforced by injunction by the public authorities.

The injunction may be such as to restrict the property owner from continuing the business. In case such owner continues with the business, the owner will be held for contempt of court and might face fine and imprisonment.

The federal government along with the state and the local government have an exclusive right to take private property for public usage. However, the government cannot use the power of eminent domain until and unless it provides evidence that the property taken is to be used for public purpose and the private owner has been paid proper compensation for the said property (Hinkel, 2000).

There are a number of legal issues related to the proceedings for the power of eminent domain. Firstly, the owner of the property is supposed to receive a notice followed by a hearing before the process for acquiring the private property commences.

During the hearing the property owner has the opportunity to represent himself through a counsel and provide sufficient evidence on the facts that the acquirement of the property was not for public usage or that the proper compensation was not paid to the owner of the property in exchange of the said property (Hinkel, 2000).

The public usages for which the government property can be taken includes construction works of public streets, sewer facilities, government buildings, re-developmental projects, governmental buildings, forest reserves and also for other recreational purposes such as building of parks, wildlife reserves etc.

However, one of the most vital issues regarding the power of eminent domain is relating to the compensation that is awarded by the government to the owner of the property. In all cases the owners of the property are entitled to receive an appropriate amount of compensation equal to the fair market value of the property.

According to Rosati (2013) property taxes are used as a principle source of revenue for most of the local governments of USA.  The reports produced by the Legislative Analyst’s office California provides information about the different procedures of paying property taxes. Individual country assessor for each country maintains the real and the personal property tax in California. As per the Californian tax law the land and land developments are categorized under real property and movable property are categorized under personal property for instance vehicles.

Types of taxes and charges included in a property bill: The general property tax bill circulated within the citizens of California consists of many taxes and charges including the 1% rate, parcel taxes, mello-roos taxes, voter approved debt rates and total tax assessments. The 1% rate is the uniformly available tax rate on the property in the city. The constitution of California also sets out the process for determining a property’s taxable value. According to Schutzer (2010) this helps the novice citizens to check the taxable balance of their property. The report also indicates that the tax like the 1% value and the debt rates are only applicable on the taxable amount of the property.

Property tax acts as a source of revenue: As per the financial reports, the Californians pay more for the property taxes compared to that of personal taxes contributing to the largest state general fund revenue source. In the year 2010-2011 the local governments of California has collected about $43 billion only from the sources of property taxes. Apart from the general property tax the other taxes included within the property tax report also generates around $12 billion as an additional source of revenue.

Diverse bases for property tax: The 1% rate of the property tax generally comprises of the owner occupied residential properties, investments and vacation residential properties and commercial properties (Esquenet and Weinberg, 2009).The norms of the property tax also provides that certain properties like the property owned by government, hospital property, religious institutions and property owned by charitable organizations are exempt from the block of 1% tax rate. Residential properties accounts for around 39% of the total tax revenue and commercial properties accounts for around 28% of the total tax revenues.

Revenues from property tax allocated to local government: The rules of the USA states that the revenues collected from the property taxes are exclusively used by the government. The revenue is mostly used by the K-14 districts.

Separate assessment of property improvements: If the property owner makes improvements within the assets by making additions, remodeling, expansions or up gradations then according to California State law the value of the property is assessed at the present market value. However, the unimproved portion is assessed at the past acquisition value.

Limitations of the property tax allocation system:  The system of 1% property tax allocation is a difficult and non transparent system. Although the system has been generated with the overall consent of the Californian citizens however any changes or additions to the system will make it difficult for the state to regulate the system. Although it is a source of high revenue for the citizens however the use of the 1% system may result in different treatment of similar tax payers.

Assessment of taxes: By using the 1% system the local property is assessed at acquisition value and adjusted upward each year. The propositions in section 13 provides for the calculations in this regard. The proposition also provides details of the amendments done by the voters to exclude certain property transfers from generating of reassessments. For instance section 60 of the proposition allows the homeowners over the age of 55 to transfer their existing properties to a new property of equal or lesser value within the same country.

Facts: In the year 2000, the City of London approved a development project that aimed to create employment in excess of 1000 jobs and help in increment of the tax and other revenues. The major reason behind approval of the development project by Supreme court is to revaitalize an economically distressed city. For the reason of establishing this project the city purchased property from unwilling owners.

The issue: The case was generated when the Supreme Court declared New London as an economically declined city. To revive the position of the economy and to generate around 1000 employments the State planned to introduce state park and private development and alos build a Fort Trumbull area. The Fort Trumbell Area was planned including waterfront conference hotel, 80 new residencies, office space, state park and retail space.  According to Hames and Ekern (2013) this was a plan to revitalize the downtown area and make the city more attractive. However the major issue for the case was:

• Can a city condemn private land under Takings clause with intent of giving that land directly to private developers to encourage economic development?
• Does the plan made have an economic purpose?

The rule: The rule of the law states that the court will judge the issues based on two major facts namely

• Firstly, the property thus taken id reasonably necessary for enhancement of the city and the public
• Secondly the property takings were done for some reasonable future needs

The analysis: For assembling of the land needed for the development project the agent purchased the properties from willing sellers and remainder of the property form the unwilling sellers in exchange of compensation. As per 5-4 opinion delivered by Justice John Paul Stevens, the majority of the court held that the acquirement of the private property for the purpose of sell is qualified as a public use. Hence the meaning of the land under the Takings clause is valid. The majority of the court has argued that the city was not taking the land for development of a particular group rather the plan was meant for an overall economic development. However Esquenet and Weinberg (2009) stated that the project plan did not include any circumstances where the land is to be used by the public. However the action qualified under the Taking clause despite the fact that the land is not going to be used by the public (www.findlaw.com , 2014).

However the arguments were generated stating that in the name of economic development majority of the properties are presently transferred to private owners. However the fifth amendment of Takings clause suggests that literal public use of the property may not be present in certain cases and in those cases a broader interpretation will also act as a source of information.

The outcome: The final outcome of the case was that Justice Kennedy gave a concurring opinion for making a more detailed review on the economic development initiated by the project. Thus the project was put on hold and the land was used as a dumping ground in the future. The private developer was also unable to obtain finance and hence abandoned the project and the case was closed finally.

The performance of a title examination is essential since it helps to ensure that the seller has the capability to convey a good title to the buyer at the time of the transfer to property or that the borrower has a good title to the property that is being pledged as a security for the loan. The conduct of the examination also ensures that there are no adverse interests that have been recorded against the property that is in question.

There are a number of common defects and problems relating to title. However, there are also potential solutions for such problems.

• One of the problems is that the seller is not the recorded title holder but has been in possession of the property. Under such a situation, one solution can be to obtain quitclaim deed from all the parties that have possible interest in the property.
• The second problem that might arise is that there may be errors in the prior recorded deed in the chain of title. However, any error is not of much significance as long as the mortgage deed is paid and is released before the closure (Aalberts and Siedel, 2009).
• The third problem that might arise is regarding changes in the names with regard to spelling errors. In such cases a single affidavit is enough to solve the problem.
• The fourth problem that might arise is the missing power attorney. Under such circumstances the defect may be rectified by recording a corrective deed or a quitclaim deed from the previous owner.
• And finally there may be a notice of any pending suit that may affect the title of the property. Under such circumstances, it is essential that the suit for which there is a lis pendens needs to be settled or may be dismissed with prejudice.

The bona fide Purchaser for value rule states that any such person who purchases any property with good faith and for a valuable consideration and without any notice of claim or interest in the said property by any other person, such a person would be considered as a bona fide purchaser and such a person can take the property clear of any claims or interests in the property by any other party. However, it is essential that a bona fide user pays a valuable consideration for the property. But the consideration paid may not be equal to the market value of the property.

When reviewing the recorded documents in a chain of title, the title examiner must look into the following aspects.

• The examiner must review the identity of the parties, the date of the instrument and the filing date.
• The examiner must further check properly the signatures and the requirements regarding the witnesses.
• The examiner must also not the type of estate that is being conveyed.
• And finally the examiner must also look in with details the covenants and all other requirements that have been set out in the instruments.

For assuring that there is a good title to the property, there are three safeguards.

• Firstly, a general warrantee deed of conveyance in one safeguard to ensure that the property is safe.
• Secondly, title of the deed should be examined properly by the examiner before it is conveyed and finally it should have title insurance.
• Title insurance is a contract which is required to indemnify the insurer against any loss with respect to any defect in the insured property or in case of any encumbrances which may in any way affect the insured title when the policy is being issued.

In accordance to the ALTA Owner’s Policy there are four risks that are covered. 

• Primarily, the policy insurers that the title to the estate or any interest as described under Schedule A vests in the insured (Aalberts and Siedel, 2009).
• Secondly, the policy further gives insurance against any debt or any encumbrances or any lien on such title.
• Thirdly, the policy gives insurance that the title given is a marketable title and finally, the policy also insures that the property has access to the public road.

In accordance to the rules of property law, that real property can be sold either “subject to” or “in assumption” to an existing mortgage. Hence when any person buys any real property that is ‘subject to’ any existing mortgage, such a person will not have any liability with regard to the payment of the debt in the mortgage.

The new owner is in obligation to protect the real property and make the necessary payments for the loan. Any lender who is ‘subject to’ sale can foreclose and sell the real property under such circumstances when the debt is not paid. Also the lender also has the right to sue the original mortgager for paying the debt since according to the laws even when the real property is sold the original mortgager is not released from the debt.

Nonetheless, in the case of assumption of the real mortgage when any purchaser purchases the real property and assumes the mortgage, he will be personally liable for the debt. In such cases where the loan is default, the lender has a number of options (Aalberts and Siedel, 2009). He can foreclose the real property or he can also sue the new owner of the real property who had assumed the mortgage or he can also sue the original mortgager.

Under no circumstances is the original mortgager relieved from the debt of the mortgage. When the deed contains the terms ‘assume’ or ‘agree to pay’ it implies that there is an assumption on the existing mortgage and the new owner can be held liable for the payment of the mortgage debt.

Under the property laws, a borrower has been given the right to mortgage the real property a number of times, unless, there are expressed terms to forbid such a right in the mortgage. The borrower can mortgage the real property to the lender as long as he is willing to consider the property as a security for the loan (Warda, 2005). However, with regard to the second mortgage loans there are quite a few risks that are present. The most important risk is that the first mortgage is not to be paid. Hence when the first mortgage has not been paid and the mortgage goes in default and is sent for foreclosure, then the second mortgage would be terminated during the foreclosure sale. Under such circumstances normally the lenders of the second mortgage receive estoppels certificates from the lenders of the first mortgage after considering the outstanding debt. With the help of the estoppels certificate the first mortgage lender will not be able to foreclose the loan until he provides a notice of default to the second mortgage lender and also giving the second mortgage lender enough time for correcting the default.

Additionally, the second mortgage lender can also present in the mortgage that any default under the prior mortgage will result in the default in the second mortgage. The second mortgage lender can also have the right to cure any defaults under the previous mortgage and later add the cost for curing the defaults in the debts as has been secured by the second mortgage.

A promissory note can be considered as a legal document that contains within a promise by one party to pay a certain amount of money to another party. On the other hand, a guaranty is a legal document that puts an obligation on the maker of the legal document to pay the debt to another person. In case of guaranty the mortgage lender is given the right to sue the shareholders for the payment of the note and the mortgage holder also right to recover the debt from the personal assets belonging to the shareholders.

In case of promissory notes the parties are the maker or the payor who promises to pay the money and payee who is the party to whom the promise is being made. Further a promissory note can be either negotiable or non negotiable (Epstein, 2007). When the note is negotiable it means that the note can be transferred from one payee who was the original payee to another person who can be referred to as the holder. In case of guaranty the person who signs the guaranty promising to pay the debt to another person is the guarantor. A guaranty can be either payment guaranty or collection guaranty.

 The most important difference between a promissory note and a guaranty is that in promissory note one person on his own promises to pay money to another person and in case of guaranty the maker has the obligated by the law to pay the debt.

Other than foreclosure there are some other remedies available to the real estate lender in case of default under the mortgage. These other remedies include taking possession of the mortgage property or getting a receiver to take possession of the property.

In most of the cases, the mortgages give the mortgage holder in case of any default the right to take possession of the real property (Epstein, 2007). This right of possession becomes even more essential when the real property in question is income producing. For instance in cases of apartment projects the holder of the mortgage has the opportunity to collect the rents from the tenant.

The other method available to the mortgage holder is that a receiver is appointed by the court in order to take possession of the real property when the mortgage has defaulted. Under such circumstances, the receiver is required to take care of the real property and also collect the rents and all other incomes from the property and take care that the money received from these are utilized for the payment of the debt or for up keeping the property.

However it must be noted that the appointment of the receiver is made by the court and it is essential that the holder proves that the mortgage is in default and a right to appoint receiver has been given under the mortgage agreement. The work of the receiver is the same as the mortgagee in possession of the mortgage.

The given case states that the owner of the property is T. Sawyer who has obtained a title insurance policy of the owner. Due to the presence of this policy the owner is free from any kinds of encumbrances, or liens that are attached to the property previously. Later the given case states that H. Finn who owned the property before T. Sawyer had attached a mortgage to the said property. Since T. Sawyer had purchased the property and had a title insurance policy with the property he is free from any liabilities that are attached to the property due to the mortgage. However, when B. Thatcher purchased the property from T. Sawyer he did not obtain a title insurance policy over the property.

For the given reasons, B. Thatcher would be liable for the mortgage. Further, any claims against the title insurance purchased by the previous owner T. Sawyer cannot stand due to the reason that T. Sawyer has a title insurance policy that will protect him from any previous encumbrances. As a result, B. Thatcher would be liable for the mortgage on the property.

According to the property law, rules with regard to the title insurance policy it has been stated that the title insurance policies generally tend to protect the insured against any title defects that has not been excluded from the coverage and those that are created or has been attached before the effective date of the policy (Epstein, 2007).

An owner can receive an issuance of the title insurance policy only after the owner has full ownership of the property. With the help of a title insurance commitment, the purchaser or the lender is assured that the when he complies with the terms of the commitment, closes the transaction, pays the necessary required premium, the insured will obtain the title insurance policy.

Nonetheless, if the given case had been slightly different and if B. Thatcher had inherited the property from T. Sawyer after the death of T. Sawyer instead of purchasing the property from T. Sawyer, the circumstances would have been different. Under the given conditions, B. Thatcher would not have been subject to the claims of the mortgage.

Conclusion

It must be noted that T. Sawyer had a title insurance policy on the said property the insurance policy after the death of T. Sawyer would pass on to the inheritor who in this case would be B. Thatcher. Hence B. Thatcher would also be protected by the title insurance policy and would be exempted from the mortgage claims for the property.

The given case states that when Mary had purchased the apartment complex from Sam, the mortgage securing the debt of $100,000 was not recorded. However, the mortgage was mentioned in the deed. Later when Mary sold the apartment complex to John, the unrecorded mortgage was not conveyed to him. According to the property law rules, it is essential that any instrument must be recorded.

Constructive notices are the ones which are also given for unrecorded instruments which have been previously referred in any recorded instrument. The case states that John while purchasing the property must be exercising reasonable prudence and diligence for ascertaining about the unrecorded mortgage because he might be responsible for paying the debt that has been secured by the mortgage (Spiers, 2008). The only way to protect the instrument was to keep proper records of the instruments. This will put the future purchasers in constructive notice of the encumbrances. However, since in the case the record was not kept of the mortgage and hence no constructive notice was given to John regarding the mortgage. Under such circumstances, Sam cannot enforce the mortgage against the apartment complex. This is mainly due to the fact that the mortgage while the recording of the deed was not recorded alongside. Also due to the lack of a constructive notice later purchaser John is not subject to the mortgage.

The given case shows that the endorsement between Acme and Wherever has been ‘without resource’ Acme can be liable only for warranty liabilities and not for contractual liabilities. The endorsement between Wherever Life Insurance Company and Harrison Holder was ‘without recourse and warranty’. Hence, Wherever Life Insurance Company would not be liable for any contractual liabilities or any warranty liabilities.

With regard to promissory notes, these notes can be transferred often by the payees. The process of transfer and selling of notes is known as endorsement. All endorsers have warrantee liabilities to the new owners of the note. The following things are warranted for any endorsers who sell the note by endorsement.

Firstly, the endorser should have a good title;

secondly, the signatures in the endorsement should be genuine and authorized,

thirdly, the note should not be altered,

fourthly, there are no defenses for the payment of the note and finally there is no knowledge of any bankruptcy proceedings against the endorser (Hetland, 1965).  

After maturity when Harrison Holder presents the note to Margo Maker, it is mostly likely that Margo maker would refuse to pay the amount. Once the Margo Maker refuses or fails to pay the amount to Harrison Holder, a notice of dishonor would be sent to the endorser within three days of the date of dishonor. After these steps are performed the endorser would be liable to pay the note. However, in the given case, since the endorsement from Acme was a ‘without recourse’ endorsement, Acme will not be liable contractually but it will have warranty liability. Hence due to the materials being altered in the note Harrison Holder will have the right to recover damages from Acme.

An endorsement can be ‘without recourse’ endorsement and ‘without recourse and warranty’ endorsement. In the case of any ‘without recourse’ endorsement there is no contractual liability but there exists warranty liability on the endorser (Spiers, 2008). Any endorser who makes a ‘without recourse’ endorsement gives warranty that he is not aware of any defenses to the payment of the note.

With regard to endorsements with ‘without recourse and warranty’ the endorser is not responsible for any contractual or warranty liabilities.

Regarding the Wherever Life Insurance Company, the endorsement was a ‘without recourse and warranty’ endorsement. Hence the company cannot be held liable for any contractual or warrantee liability. Under the given circumstances, Harrison Holder will not have the right to recover from Wherever Life Insurance Company.

The right to foreclosure can be claimed when the holder of the mortgage does not receive the payment of the debt. Hence when the landowner is in default of the mortgage the mortgage holder can claim for foreclosure.

In the given case, the loan that was to be paid to First Bank and Trust goes in default. Hence according to the property laws the Bank has the right to sue for foreclosure of the home. Other than for default a foreclosure can take place even for selling the property without the permission of the mortgager.

Under the given circumstances it needs to be noted that when Thomas sells the home to Kendall the mortgage held by the First Bank and Trust is assumed by him. Secondly, when Kendall subsequently sells the home to Murphy the purchase is made subject to the loan held by the First Bank and Trust. Hence every time the selling and purchase was made the loan to First Bank and Trust was not hidden. Under such circumstances, the First Bank and Trust can sue Mark Murphy for the debt. Since, John Kendall and Ruth Thomas while selling the property had mentioned about the mortgage loan that was to be paid to First Bank and Trust, they cannot be held liable and First Bank and Trust cannot recover the amount from Kendall or Thomas.

However, in the event that Ruth Thomas pays the debt in full to the First Bank and Trust, there are some claims from Murphy and Kendall. Also it is required to be mentioned that Thomas will not have any remedy against the real property since according to the laws of property, after a foreclosure sale the debtor has no right over the property. With regard to the claims against Mark Murphy since while purchasing the property the mortgage debt was along with the purchase, Thomas has the right to recover from Murphy.

Conclusion

Similarly with regard to John Kendall, since during the purchase of the property, the mortgage loan held by First Bank and Loan was assumed by John, Thomas has the right to recover from John Kendall as well.

Name of the movie: Pacific Heights

Duties of the landlord and the tenant and the breach regarding the duties

According to the property laws in the country the landlord has certain duties regarding the contract of tenancy and towards the tenant residing on the property.

• The foremost duty is to deliver possession of the property at the commencement of the lease.
• The second important duty is that since most of the leases in America come with the covenant quiet and peaceful possession.
• Further the covenant provides that the landlord has no right to interfere with the possessory rights of the tenant.

Hence accordingly, the rule of imminent peril states that if the landlord has brought about the danger through his own negligence then the law does not spare him.

In the given movie scenario, it can be observed that the landlords Drake and Patty had the duty to allow the tenant Hayes to reside in the premises after getting permission from the tenant.

According to the property laws in America the tenant also has a number of duties with regard to the agreement between the landlord and the tenant. The foremost duty of the tenant is to preserve the premises in a very good condition. Most of the leases in the country have limited covenants. Hence the tenant has the duty to not commit nuisance and destroy the landlord’s property. The tenant further has the duty to keep the rented property vacant and make proper use of the property.

In the given movie it is observed that both the landlord and the tenant had breached their duties. Firstly, the landlords Drake and Patty had cut off the cut off the electricity and heat connections to the apartment of the tenant. Hence this was a breach of the duties of the landlord. Landlord is to provide the basic necessities that are required by the apartment to the tenant.

On the other hand, the tenant too breaches a number of duties.

• The tenant has the duty to operate in the premises of the rented property.
• The tenant is not allowed to keep a rented property vacant with making proper use of the property.
• The third and the most important duty of the tenant are to pay the rent on a regular basis.

This duty of the tenant has recently gone through a number of changes and according to the new rules the tenant is to pay the rent only when the landlord has fulfilled his duties with regard to the covenants of repairs and warranties.

• Firstly, the tenant with the pseudo name Carter Hayes was supposed to pay the rent to the tenant with the help of wire transfer. However the money for the rent was never transferred to the account of the landlords even a couple of months after it was supposed to be transferred.
• Further, the duties of the tenant also includes in not destroying the properties of the landlord. This duty was breached by the tenant Carter Hayes. This is because Hayes involves in loud hammering and drilling inside the premises of the property and he also changes the locks of the doors. All these acts are against the landlord and tenancy laws of the country and hence he is entitled to be held for breach of duty as a tenant.
• Later he again breaches his duties as a tenant by deliberately infesting the house with cockroaches and creating nuisance in the house. This act forces the landlord to move out of the house.
• Further the tenant takes control of the house illegally.

All these acts of the tenant is against the property laws of the country and under the rules of property laws the tenant Carter Hayes can be held liable for the breach of the duties of the landlord. Hence all these depicts that the tenant has breached the duties as a legal tenant.

The given contract is a contract between Danial B. Farris and Acme Inc. we know that a paralegal is a person who is responsible for real estate transactions and will be required to review properly the document and prepare checklist for the documents that would be essential for the purchaser and seller for closing the deal.

References

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Kelo v. City of New London [2005]U.S. 545, p.469.

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Spiers, D. (2008). Property Law Essentials. Edinburgh: Edinburgh University Press.

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www.findlaw.com (2014) Kelo v City of new London. Available at www.findlaw.com [accessed on 27.12.2014]