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Rockwell publishing real estate law chapter 2


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  • 1. Printable Lesson Materials Print these materials as a study guide These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two parts: graphic summaries of the content and a multiple choice quiz. Graphic Summaries This portion of your printable materials consists of dozens of frames that summarize the content in this lesson. The frames are arranged on the page to make it easy for you to study the material and add your own notes from your textbook or the online course. Quizzes Many students learn best from sets of questions, and this multiple choice quiz allows you to focus your review of the material to important topics. 13218 NE 20th Street Bellevue, WA 98005 425-747-7272 800-221-9347© 2009 Rockwell Institute
  • 2. California Real Estate Law Lesson 2: Resolving Legal Disputes © Copyright 2007 Rockwell Publishing, Inc.IntroductionThis lesson will discuss: l alternative dispute resolution l phases of litigation l enforcing judgments l appeal © Copyright 2007 Rockwell Publishing, Inc.Alternative Dispute ResolutionNegotiated settlementNegotiated settlement: parties might compromise l Parties meet, present initial positions l Negotiations, rounds of offers and counteroffers l If parties reach agreement, lawyer drafts settlement agreement l Quick, final, cheap © Copyright 2007 Rockwell Publishing, Inc. 1
  • 3. Alternative Dispute ResolutionMediationIf negotiations ? compromise, then parties may trymediation or arbitration.Mediation: negotiation with help of neutral thirdparty l Mediator helps negotiations move along l Not binding © Copyright 2007 Rockwell Publishing, Inc.Alternative Dispute ResolutionMediation costsCosts usually split by parties. l Volunteer mediators = free or cheap l Complex disputes need specialized mediators that cost more. © Copyright 2007 Rockwell Publishing, Inc.Alternative Dispute ResolutionArbitrationArbitration: formal hearing of case, lawyers on bothsides l Like a mini-trial w/o jury l Voluntary or involuntary l Arbitrators more conservative than juries in awarding damages © Copyright 2007 Rockwell Publishing, Inc. 2
  • 4. ArbitrationInvoluntary arbitrationInvoluntary arbitration: l required by statute or court order l nonbinding, parties can appeal © Copyright 2007 Rockwell Publishing, Inc.ArbitrationVoluntary arbitrationVoluntary arbitration: l agreed upon in contracts l also called mandatory arbitration l binding, can’t appeal unless misconduct © Copyright 2007 Rockwell Publishing, Inc.ArbitrationArbitrator misconductCourt overturns binding arbitrations if arbitrator’sdecision caused by: l fraud l corruption l other misconductComplaining party must show misconduct affectedarbitration award. © Copyright 2007 Rockwell Publishing, Inc. 3
  • 5. SummaryAlternative Dispute Resolution l Negotiation l Mediation l Arbitration © Copyright 2007 Rockwell Publishing, Inc.LitigationDifferent phases of litigation: l determining jurisdiction l beginning the lawsuit l discovery l motions l trial l enforcement l appeal © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialJurisdictionJurisdiction: court’s authority to make legally validjudgments on cases it hears.To hear a case, a court needs both personal andsubject matter jurisdiction. © Copyright 2007 Rockwell Publishing, Inc. 4
  • 6. Litigation: Pre-trialPersonal jurisdictionPersonal jurisdiction: court’s right to force defendantinto courtCourt has personal jurisdiction only if defendant: l committed some act in the state, or l has some connection with the state © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialSubject matter jurisdictionSubject matter jurisdiction: court’s right to issuejudgment over the type of caseCourts have either: l general jurisdiction l limited jurisdiction © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialGeneral and limited jurisdictionGeneral jurisdiction: court can hear all types ofcases l Example: Trial court hears civil and criminal casesLimited jurisdiction: court can hear only certain typeof case l Example: U.S. Tax Court © Copyright 2007 Rockwell Publishing, Inc. 5
  • 7. Litigation: Pre-trialFederal court jurisdictionPlaintiff’s choice between state or federal courts.Federal courts à subject matter jurisdiction if: l U.S. government is a party l question of federal law l diversity of citizenship © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialFederal court jurisdictionU.S. government is a party l Example: prosecution of federal crimeQuestion of federal law l Example: claim made under U.S. ConstitutionDiversity of citizenship l Example: plaintiffs/defendants from diff. states © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialSmall claims courtSmall claims court: l Plaintiff’s claim < $7,500 (unless business) l No jury l Simplified procedure l No lawyers present l Quicker, cheaper © Copyright 2007 Rockwell Publishing, Inc. 6
  • 8. Litigation: Pre-trialBeginning a lawsuit l Complaint: document from plaintiff outlining case against defendant l Filing: plaintiff files complaint with clerk of the court l Service: plaintiff has copy of complaint served on defendant by nonpartyComplaint, answer, and other similar documentsare called pleadings . © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialBeginning a lawsuitDefendant must answer plaintiff’s complaint. l Often a denial of plaintiff’s assertions l In CA, defendant 30 days to answerNo answer à default judgment for plaintiff © Copyright 2007 Rockwell Publishing, Inc.Beginning a LawsuitAnswerDefendant’s answer is sometimes more than denial: l affirmative defenses: such as lack or jurisdiction, or the statute of limitations l counterclaims : defendant’s claims against plaintiff © Copyright 2007 Rockwell Publishing, Inc. 7
  • 9. Beginning a LawsuitStatute of limitationsStatute of limitations: l limited time to bring lawsuit l too much time à hard for witnesses to remember what happened l delayed discovery rule: statute of limitations starts running after reasonable chance to discover injury l limit can be set in contract also © Copyright 2007 Rockwell Publishing, Inc.Beginning a LawsuitJury demand l Jury demand: both sides have limited time to request jury l If no jury, then bench trial (judge decides) © Copyright 2007 Rockwell Publishing, Inc.Beginning a LawsuitLis pendensLis pendens: l plaintiff’s lawyer files notice warning that property involved in lawsuit l possible judgment may affect new buyer of that property l red flag scares off buyers © Copyright 2007 Rockwell Publishing, Inc. 8
  • 10. Beginning a LawsuitRemediesPlaintiff asks for remedies in complaint.Most commonly requested remedy: l compensatory damages © Copyright 2007 Rockwell Publishing, Inc.RemediesCompensatory damagesCompensatory damages reimburse for actualfinancial losses from other party’s actions.Examples: l lost wages l damage to property l medical bills © Copyright 2007 Rockwell Publishing, Inc.RemediesPunitive damagesVery flagrant or severe acts by defendant àpunitive damagesPunitive damages: l deter defendant and others from similar acts in the future l can be up to 10 times amount of compensatory damages © Copyright 2007 Rockwell Publishing, Inc. 9
  • 11. RemediesSpecific performanceSpecific performance: forces defendant to performcontract l when damages alone can’t satisfy plaintiff l only for unique subjects, like real estate © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialDiscoveryDiscovery: learning about opposing party’s case by: l interrogatories (written questions) l depositions (oral questions) l requests for production (document requests) © Copyright 2007 Rockwell Publishing, Inc.DiscoveryInterrogatoriesInterrogatories: written sets of questions l parties send to each other l gain useful information through written answers l parties answer as narrowly as possible © Copyright 2007 Rockwell Publishing, Inc. 10
  • 12. DiscoveryDepositionsDepositions: scheduled meetings for parties to askquestions in person l under oath l gauge personalities l sometimes more info is revealed in person than in written answers © Copyright 2007 Rockwell Publishing, Inc.DiscoveryRequests for productionRequests for production: written request to otherside asking for copies of documents relevant tocaseExamples: l medical bills l pay stubs © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialDiscoveryEach party required by law to respond to other’sdiscovery requests. l Each side has realistic view of likely outcome l Encourages settlement © Copyright 2007 Rockwell Publishing, Inc. 11
  • 13. Litigation: Pre-trialMotionsA party can make a motion: a formal request for aparticular order. l Both sides present arguments about requestMost common: summary judgment motion l Asking court to rule on validity of legal issue or claim before trial © Copyright 2007 Rockwell Publishing, Inc.Litigation: Pre-trialSummary judgmentCourt won’t grant motion for summary judgment iffactual issues exist (unanswered questions aboutthe facts). l Factual issues require trial (witness testimony) © Copyright 2007 Rockwell Publishing, Inc.SummaryLitigation: Pre-trial l Jurisdiction l Complaint l Answer l Remedies l Discovery l Motion © Copyright 2007 Rockwell Publishing, Inc. 12
  • 14. LitigationTrialTrial structure: l jury selection (if not a bench trial) l opening statements l testimony l closing arguments l jury instructions l verdict © Copyright 2007 Rockwell Publishing, Inc.TrialJury selectionJudge/lawyers ask potential jurors questions,looking for any bias. Also called voir dire. l Judge may dismiss jurors (for cause) l Lawyers may dismiss limited number of jurors without cause (peremptory challenge) © Copyright 2007 Rockwell Publishing, Inc.TrialOpening statementsOpening statement: begins trial, plaintiff’s lawyerdescribes argument intends to makeDefendant’s lawyer gives separate openingstatement against plaintiff’s statement. © Copyright 2007 Rockwell Publishing, Inc. 13
  • 15. TrialTestimonyWitness on each side: l fact witnesses testify on what they saw, can’t offer opinion l expert witnesses offer opinion based on education or experience (doctors, engineers, etc.) © Copyright 2007 Rockwell Publishing, Inc.TrialClosing argumentsA lawyer’s closing argument: l sums up the evidence l emphasizes key points for the judge or jury to consider during deliberation © Copyright 2007 Rockwell Publishing, Inc.TrialJury instructionsAfter closing arguments, judge instructs jury (if thereis one) about law relevant to case, such as degreeof proof necessary to reach verdict. © Copyright 2007 Rockwell Publishing, Inc. 14
  • 16. TrialVerdictVerdicts differ, depending what kind of case: l CA civil cases need at least ¾ of jurors to agree l criminal cases need unanimous verdictsHung jury if the jurors can’t agree à forces new trialwith different jury © Copyright 2007 Rockwell Publishing, Inc.SummaryLitigation: Trial l Jury selection l Opening statements l Testimony l Closing statements l Jury instructions l Verdict © Copyright 2007 Rockwell Publishing, Inc.Enforcing JudgmentsWinning judgment ? automatic money l Plaintiff has 10 years to collect judgmentMost common enforcement methods: l judgment liens (foreclosure) l garnishment (wage withholding) © Copyright 2007 Rockwell Publishing, Inc. 15
  • 17. Enforcing JudgmentsJudgment liensJudgment creditor (plaintiff) can secure award withlien on real property owned by judgment debtor(defendant). l Judgment creditor can foreclose on property l Proceeds from sale satisfy judgment © Copyright 2007 Rockwell Publishing, Inc.Enforcing JudgmentsGarnishmentJudgment creditor can collect judgment fromdebtor’s pay. l Earnings withholding order l Employer withholds and passes to creditor l Amount to survive can’t be garnished © Copyright 2007 Rockwell Publishing, Inc.AppealUnhappy litigant can appeal (within 30 days): l first, to the appellate court l next, to the supreme courtAppeals to supreme courts are typicallydiscretionary: court can refuse to hear appeal. © Copyright 2007 Rockwell Publishing, Inc. 16
  • 18. AppealCourts of reviewProper appellate court determined by geographyzone. l Six appellate courts in CA l CA appellate courts handle appeals from superior courts in same district l U.S. appellate courts called circuit court of appeals: 11 federal appellate courts © Copyright 2007 Rockwell Publishing, Inc.AppealProcessAppellant: party filing appealRespondent: party arguing against appeal (alsocalled the appellee)Appellate court reviews written arguments and trialrecord (transcript of original trial). Lawyers for eachside also present oral arguments and answerquestions. © Copyright 2007 Rockwell Publishing, Inc.AppealIssues on appealMost appeals limited to trial court record. No newevidence or legal issues introduced.Rulings based on: l questions of fact à usually not overturned l questions of law à sometimes overturned © Copyright 2007 Rockwell Publishing, Inc. 17
  • 19. AppealIssues on appealQuestions of law : involves interpreting a statute orcase law l Example: Were the required elements of fraud present?Questions of fact: no legal analysis involved l Example: Did the defendant sign the contract? © Copyright 2007 Rockwell Publishing, Inc.AppealPrejudicial vs. harmlessAppellate court overturns only if lower court’s rulingbased on prejudicial error. l Prejudicial error: affected trial’s outcome in way that harmed appellant l Harmless error: error that didn’t affect outcome © Copyright 2007 Rockwell Publishing, Inc.AppealDisposition of the appealIf reviewing court finds reversible error, it can: l issue new ruling/verdict l remand case back to lower court l order new trial © Copyright 2007 Rockwell Publishing, Inc. 18
  • 20. SummaryEnforcement and Appeal l Judgment liens l Garnishment l Issues on appeal l Prejudicial vs. harmless error © Copyright 2007 Rockwell Publishing, Inc. 19
  • 21. Legal Aspects of Real Estate Lesson 2 Cumulative Quiz1. Which of the following is the least expensive method of dispute resolution? A. Arbitration B. Mediation C. Negotiation D. Trial2. A dispute resolution method in which a neutral third party facilitates discussion between parties, butdoes not impose a decision, is: A. arbitration B. defenestration C. mediation D. negotiation3. A contract requires the parties to use binding arbitration for any disputes that arise in connection withthe contract. This is known as: A. involuntary arbitration B. mandatory arbitration C. voluntary arbitration D. Both B and C4. All of the following determine whether a court has jurisdiction, except: A. the amount of money at issue B. the type of claim at issue C. what state the parties reside in D. whether the parties want the case decided by a judge or jury5. If a plaintiff brings suit in the federal court system, the case will first be heard in a: A. Circuit Court B. District Court C. Superior Court D. Supreme Court6. A federal court always has jurisdiction over a case in all of these instances, except when: A. the amount in controversy is $7,500 or less B. the federal government is a party C. there is a question of federal law D. there is diversity of citizenship (and at least $75,000 at issue)© 2009 Rockwell Publishing 1
  • 22. 7. The plaintiff initiates a lawsuit by filing a/an _____, which describes the cause of action and makes arequest for relief. A. answer B. complaint C. deposition D. lis pendens8. A defendant in California superior court has this many days to file an answer to a complaint: A. 15 B. 30 C. 60 D. 1809. A patient finds out three years after having surgery that her complications were caused by the surgeonserror. She would: A. be barred from filing suit because of the statute of limitations B. need to file suit within four years of finding out about the mistake C. need to file suit within four years of the surgery D. need to file suit within two years of finding out about the mistake10. A document filed with the recorders office that provides notice of a pending lawsuit that may affecttitle to a particular property is a: A. judgment lien B. lis pendens C. writ of attachment D. writ of execution11. A plaintiff incurs $10,000 in medical expenses because of the defendants negligence. At trial, theplaintiff is awarded $10,000. This would be considered: A. a civil penalty B. compensatory damages C. punitive damages D. specific performance12. Once the complaint and answer have been filed, the parties will gather information during the _____phase of the lawsuit. A. appellate B. discovery C. preliminary D. voir dire© 2009 Rockwell Publishing 2
  • 23. 13. A defendants attorney interviews the plaintiff under oath prior to trial. This is a/an: A. deposition B. interrogatory C. request for production D. voir dire14. A defendant moves that the judge rule, pre-trial, on one of the plaintiffs claims for which there is nofactual dispute. This is known as a motion for: A. default judgment B. deficiency judgment C. judgment n.o.v. D. summary judgment15. Who of the following would be limited to acting as a fact witness, rather than an expert witness, in alawsuit concerning a real estate transaction? A. Appraiser B. Managing broker C. Neighbor D. Real estate lawyer16. In California, which of the following is true? A. Both civil and criminal verdicts must be unanimous B. Both civil and criminal verdicts require three-fourths of the jurors to agree C. Civil case verdicts must be unanimous; criminal case verdicts require three-fourths of the jurors to agree D. Civil case verdicts require three-fourths of the jurors to agree; criminal case verdicts must be unanimous17. A judgment creditor may do which of the following? A. File a judgment lien against the debtors real property B. Garnish the debtors bank account C. Garnish the debtors wages D. All of the above18. At an appellate hearing: A. a jury is seated B. evidence is heard C. lawyers argue questions of law D. witnesses are called© 2009 Rockwell Publishing 3
  • 24. 19. A plaintiff loses a case in U.S. District Court in San Diego. The plaintiff would appeal directly to the: A. California Court of Appeal for the Fourth District B. California Supreme Court C. U.S. Ninth Circuit Court of Appeals D. U.S. Supreme Court20. If an appellate court finds prejudicial error, it may do all of the following, except: A. hear additional evidence prior to issuing a different verdict B. issue a new verdict C. order a new trial D. remand the case to the trial court for additional proceedings© 2009 Rockwell Publishing 4