Rockwell publishing real estate law chapter 17

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Rockwell publishing real estate law chapter 17

  1. 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 www.rockwellinstitute.com© 2009 Rockwell Institute
  2. 2. California Real Estate Law Lesson 17: Private and Public Restrictions on Land © Copyright 2007 Rockwell Publishing, Inc.IntroductionThis lesson will discuss: l private restrictions on land use l public restrictions on land use © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UsePrivate restrictions also known as restrictivecovenants.Restrictive covenant: land use limitation imposed onproperty by a private party (as opposed to agovernment agency) © Copyright 2007 Rockwell Publishing, Inc. 1
  3. 3. Private Restrictions on Land UsePrivate restrictions often used to: l limit property to residential use l prevent property from being subdivided into small lots l prohibit the planting of certain types of trees l require certain types of fencing or shrubbery l set maintenance standards © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UseIf certain conditions are met: l private restrictions run with the land l last indefinitelyRun with the land: all future owners of the propertywill have to comply with restrictions © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UseEstimated: one in six American homeownerssubject to private restrictions on their land © Copyright 2007 Rockwell Publishing, Inc. 2
  4. 4. Private Restrictions on Land UseCreating private restrictionsPrivate restrictions can be created by: l deed l declaration l contract © Copyright 2007 Rockwell Publishing, Inc.Creating Private RestrictionsBy deedRestrictions affecting single piece of property: l usually created in deed l when ownership changes handsExample: “The property described in this deed to bepreserved as undeveloped wilderness.” © Copyright 2007 Rockwell Publishing, Inc.By DeedCovenants vs. conditionsRestriction imposed in deed may be either: l covenant l condition © Copyright 2007 Rockwell Publishing, Inc. 3
  5. 5. By DeedCovenants vs. conditionsCondition in deed makes grantee’s title conditional. l grantee owns in fee simple defeasibleIf condition is violated: l grantee’s title may be terminated by grantor © Copyright 2007 Rockwell Publishing, Inc.By DeedCovenants vs. conditionsCovenant in deed doesn’t make grantee’s titlesubject to termination.If covenant is violated: l grantee may be ordered to stop violation and pay damages l but grantee won’t lose title © Copyright 2007 Rockwell Publishing, Inc.By DeedCovenants vs. conditionsWhenever possible, courts interpret restrictions ascovenants rather than conditions. © Copyright 2007 Rockwell Publishing, Inc. 4
  6. 6. Creating Private RestrictionsBy declarationMost restrictions apply to entire neighborhood,rather than just one property. l typically created with declaration of restrictions (instead of in deed)Declaration of restrictions: document prepared andrecorded by subdivision developer to create blanketset of restrictions affecting all lots in subdivision l also called CC&Rs (“covenants, conditions, and restrictions”) © Copyright 2007 Rockwell Publishing, Inc.Creating Private RestrictionsBy declarationWhen developer begins selling lots, deed to eachlot references declaration of restrictions.Example: “This deed is subject to declaration ofrestrictions, recording no. 991035939.” © Copyright 2007 Rockwell Publishing, Inc.By DeclarationPurpose of CC&RsPurpose of CC&Rs: l maintain standards throughout neighborhood l limit conduct that might have negative impact on community © Copyright 2007 Rockwell Publishing, Inc. 5
  7. 7. By DeclarationChanging the CC&RsProcedures for changing or adding CC&Rs may beincluded in: l declaration of restrictions l homeowners association bylawsChanges usually require majority vote ofhomeowners. l may require supermajority (such as 80% approval) © Copyright 2007 Rockwell Publishing, Inc.By DeclarationChanging the CC&RsHomeowners associations may impose ruleswithout vote. l known as operating rulesOperating rules: like CC&Rs, address matters suchas property use or aesthetic and architecturalreview of proposed alterations © Copyright 2007 Rockwell Publishing, Inc.By DeclarationChanging the CC&RsIn early 2000s, California began limiting power ofhomeowners associations. l homeowners can now vote to repeal board- passed rule by vote l association prevented from readopting rule for at least one year © Copyright 2007 Rockwell Publishing, Inc. 6
  8. 8. Creating Private RestrictionsBy contractLandowners may agree to private restriction bycontract.Example: Morgan lives next to Tom; trees onMorgan’s property block Tom’s view of ocean. Inreturn for cash payment from Tom, Morgan agreesto cut down blocking trees and keep any new treesfrom blocking view. © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UseRestrictions that run with the landRestrictions that provide benefits add to propertyvalue. l add even more value if they bind future owners, not just current ownersSo most property owners want private restrictions torun with the land. © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UseRestrictions that run with the landUnder Civil Code, restrictions that will burden futureowners must: l include legal description of property l express intent to bind future owners l relate to property’s use, repair, or maintenance; co-owner partition rights; or payment of taxes and assessments l be recorded © Copyright 2007 Rockwell Publishing, Inc. 7
  9. 9. Private Restrictions on Land UseIllegal restrictionsPrivate restrictions on certain matters are illegal andunenforceable.Example: Older deeds in certain areas oftencontained restrictions against selling property toAfrican-Americans, Jews.Federal and state laws now require title companiesto strike offensive provisions from title documents. © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UseIllegal restrictionsCalifornia prohibits restrictions against race,religion, sex, sexual orientation, marital status,familial status, national origin, ancestry, disability, orsource of income.Other statutes prohibit l restrictions forbidding pets l restrictions prohibiting solar energy systems l restrictions against flags, for-sale or political signs © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UseEnforcing restrictionsProperty owners can sue other owners who violaterestrictions.If there is homeowners association, three choices: l sue neighbor for violating restriction l ask homeowners association to sue or enforce l sue association if board refuses to act © Copyright 2007 Rockwell Publishing, Inc. 8
  10. 10. Private Restrictions on Land UseEnforcing restrictionsLawsuit can result in: l injunction: court order directing defendant to stop or fix violation l damages: if violation caused financial loss © Copyright 2007 Rockwell Publishing, Inc.Private Restrictions on Land UseTerminating restrictionsRestrictions that run with land will continueindefinitely, unless owners of properties agree toterminate.Restrictions can also terminate by: l waiver l changed conditions l expiration © Copyright 2007 Rockwell Publishing, Inc.Terminating RestrictionsWaiverIf homeowners routinely fail to enforce restrictions,they may be held to have waived right to enforce. l courts interpret waiver narrowly © Copyright 2007 Rockwell Publishing, Inc. 9
  11. 11. Terminating RestrictionsWaiverExample: Subdivision has view protection restrictionthat prohibits roof-top flags. Many homeowners flyflags anyway and association has ignored them. l New home is built that violates view protection restriction; association orders modification l New owner sues, arguing association has waived view protection restriction by allowing flags l Court will likely say association has only waived flag provision in restriction—not entire view protection restriction © Copyright 2007 Rockwell Publishing, Inc.Terminating RestrictionsChanged conditionsCourt may refuse to enforce restriction if generalcharacter of neighborhood has changed andenforcement serves no real purpose.Example: Subdivision is limited to single-familyresidences. Over time, it’s surrounded bycommercial and multi-family development. l If lot owner wants to build commercially, court will likely find subdivision has lost single-family character, so enforcing restriction serves no real purpose © Copyright 2007 Rockwell Publishing, Inc.Terminating RestrictionsExpirationMost modern CC&Rs don’t contain expiration dates. l some older sets of CC&Rs do l homeowners associations usually vote to extend expiring restrictions © Copyright 2007 Rockwell Publishing, Inc. 10
  12. 12. SummaryPrivate Restrictions on Land Use l Restrictive covenant l Declaration of restrictions l CC&Rs l Operating rules l Waiver l Changed conditions l Expiration © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UsePublic restrictions include: l comprehensive planning l zoning l building codesPublic restrictions must meet constitutionalrequirements. © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseConstitutional requirementsPublic restrictions must serve public purpose. l can be imposed under police powerPolice power: government’s power to adopt lawsand regulations to protect public’s health, safety,morals, and general welfareLand use laws that aren’t reasonably related topolice power: unconstitutional and unenforceable. © Copyright 2007 Rockwell Publishing, Inc. 11
  13. 13. Public Restrictions on Land UseConstitutional requirementsPublic restrictions: l cannot violate Equal Protection Clause of Fourteenth Amendment l must apply in same manner to all property owners similarly situated © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseConstitutional requirementsPublic restrictions: l cannot violate Fifth Amendment l cannot reduce property’s value so much that it amounts to uncompensated taking of private property © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseComprehensive planningShift of population from cities to suburbs hascaused problems: l loss of agricultural land/open space l automobile congestion l pollution © Copyright 2007 Rockwell Publishing, Inc. 12
  14. 14. Public Restrictions on Land UseComprehensive planningGeneral plans: plans developed by cities andcounties to control how and where localdevelopment takes place l usually designed by a local planning commission l adopted by city or county council or board of supervisors l subject to public hearings l also known as master plans, city plans, or comprehensive plans © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseComprehensive planning l land use l transportation In California, state law l housing requires every local l conservation of government to have a natural general plan that resources addresses: l open space l noise l safety (protection against natural hazards) © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseComprehensive planningSome states have enacted growth managementlaws to help coordinate and unify local generalplans.California has no state-wide law, but some countieshave enacted growth management laws.Example: urban growth boundary laws imposed inVentura County to manage urban sprawl © Copyright 2007 Rockwell Publishing, Inc. 13
  15. 15. Public Restrictions on Land UseZoningZoning ordinances: public restrictions enacted bycity or county councils, usually after one or morepublic hearings l split city or governmental unit into zones that are limited to particular uses © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseZoningBasic zoning categories include: l agricultural l residential l commercial l industrial © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseZoningCategories contain many subcategories.For example, within residential category: l R-1: only single-family homes allowed l R-2: duplexes also allowed l R-3: condominiums and apartment buildings also allowed © Copyright 2007 Rockwell Publishing, Inc. 14
  16. 16. Public Restrictions on Land UseZoningPurpose of zoning: l preserves basic character of neighborhoods l keeps incompatible uses from bumping up against each other © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseZoningZoning also regulates development aspects withineach zone: l setbacks l square footage l height l business hours l noise levels l parking © Copyright 2007 Rockwell Publishing, Inc.ZoningZoning and the general planZoning ordinances must: l be consistent with general plan l further goals of general plan © Copyright 2007 Rockwell Publishing, Inc. 15
  17. 17. ZoningZoning and the general planZoning ordinances help general plan goals by: l concentrating growth l protecting wetlands l preserving open space, etc. © Copyright 2007 Rockwell Publishing, Inc.ZoningExceptions to zoning rulesExceptions to zoning: l nonconforming uses l conditional uses l variances © Copyright 2007 Rockwell Publishing, Inc.Exceptions to Zoning RulesNonconforming usesNonconforming use: when area is zoned for firsttime (or rezoned) and existing use no longerconforms to new rules l usually “grandfathered in” l can remain in operation, with limits l usually can’t be enlarged or replaced if destroyed © Copyright 2007 Rockwell Publishing, Inc. 16
  18. 18. Exceptions to Zoning RulesConditional usesConditional use: may be permitted if proposed usesatisfies unmet community needExamples: church, school, hospital in residentialzone © Copyright 2007 Rockwell Publishing, Inc.Exceptions to Zoning RulesConditional usesConditional use permit typically contains conditions. l condition must be related to relieving burden caused by projectExample: hospital can build in residential zone, butmust provide underground parking © Copyright 2007 Rockwell Publishing, Inc.Exceptions to Zoning RulesVariancesVariance: allowed departure from zoningrequirements concerning setbacks, building heights,parking, etc. l only allowed for minor departures from zoning l owner must show property has special characteristic justifying varianceExample: topography of lot makes it impossible toobey setback requirements © Copyright 2007 Rockwell Publishing, Inc. 17
  19. 19. Exceptions to Zoning RulesVariancesUse variances: prohibited by lawExample: allowing variance for industrial use inresidential zone © Copyright 2007 Rockwell Publishing, Inc.ZoningRezonesRezone: not just permit or exception to rules, butchange in zoning ordinanceSpot zoning: rezone that imposes requirements ona particular property that are different (stricter orlooser) from those that apply to surroundingproperties l illegal; violates constitutional right of equal protection © Copyright 2007 Rockwell Publishing, Inc.ZoningConflicts with private restrictionsWhen zoning conflicts with private restrictions,property owners generally must obey stricterrequirement.Example: Zoning says no buildings over 25 feet inheight; subdivision restriction says no building over20 feet in height. l landowner must obey subdivision restriction © Copyright 2007 Rockwell Publishing, Inc. 18
  20. 20. Public Restrictions on Land UseBuilding codesBuilding codes govern: l design l materials l construction methods l electrical wiring l plumbing l etc. © Copyright 2007 Rockwell Publishing, Inc.Public Restrictions on Land UseBuilding codesPurpose of building codes: l protect public’s health and safety by requiring minimum construction standards l promote energy efficiency l make buildings accessible to disabled © Copyright 2007 Rockwell Publishing, Inc.Building CodesStatewide codesIn some states, building codes are local laws.California has statewide building code. l California Building Standards Code, contained in CA Code of Regulations, title 24 © Copyright 2007 Rockwell Publishing, Inc. 19
  21. 21. Building CodesStatewide codesLocal governments may establish more restrictiveconstruction standards. l must be reasonably necessary due to local climatic, geological, topographical conditions © Copyright 2007 Rockwell Publishing, Inc.Building CodesPermitting processBuilding permit required for new construction andmost remodeling.Process: l property owner applies for permit l planning or building department reviews plans l large projects may require public input l inspectors will inspect construction at various points to ensure compliance l final certificate of occupancy © Copyright 2007 Rockwell Publishing, Inc.Building CodesNew requirementsBuilding codes change periodically to account fornew and improved construction methods ormaterials l new rules apply to new construction l some rules retroactive (especially if safety concern) © Copyright 2007 Rockwell Publishing, Inc. 20
  22. 22. SummaryPublic Restrictions on Land Use l Police power l General plans l Zoning ordinances l Nonconforming uses l Conditional uses l Variances l Rezone l Building codes © Copyright 2007 Rockwell Publishing, Inc. 21
  23. 23. Legal Aspects of Real Estate Lesson 17 Cumulative Quiz1. The state governments constitutional power to adopt and enforce laws for the protection of the publichealth, safety, morals, and general welfare is called: A. inverse condemnation B. police power C. enactment power D. power of eminent domain2. To be constitutional, public land use restrictions cannot: A. apply in the same manner to all similarly situated property owners B. address aesthetic issues C. reduce the propertys value so much that it amounts to an uncompensated taking D. be based on long-term development goals3. Which of the following cannot be regulated by zoning ordinances? A. Building size B. Building shape C. Building location on a lot D. All of the above may be regulated4. A land use that violates current zoning ordinances, but was legal under earlier law, is a/an: A. nonconforming use B. conditional use C. spot zone D. illegal use5. To get a variance, a property owner must show: A. major inconvenience B. financial loss C. undue hardship D. public benefit6. Spot zoning is: A. common in rural areas B. common in urban areas C. illegal D. None of the above© 2009 Rockwell Publishing 1
  24. 24. 7. Which of the following uses is not likely to qualify for a conditional use permit? A. School B. Church C. Hospital D. All of the above will likely qualify8. Property owners can challenge a zoning classification by filing a petition for a: A. deregulation B. rezone C. downzone D. spot zone9. When a building passes a final inspection after construction is complete: A. a building permit is issued B. a certificate of compliance is issued C. a certificate of occupancy is issued D. None of the above10. Which of the following is not one of the ways in which private restrictions can be created? A. Contract B. Declaration C. Lawsuit D. Deed11. Which of the following is needed for private restrictions to run with the land? A. The street address of the affected property B. Payment of money C. An intent to bind future owners of the property D. Notice to neighboring property owners12. Comprehensive plans are implemented by: A. the judiciary B. planning commissions C. the police D. legislatures© 2009 Rockwell Publishing 2
  25. 25. 13. A set of CC&Rs requires all houses in the subdivision to have tile roofs. Over the past twenty years, anumber of property owners have replaced their roofs with asphalt shingles. When the homeownersassociation tries to prevent another owner from changing her roof, the restriction may be terminatedbecause of: A. changed conditions B. injunction C. expiration D. waiver14. Which of the following are the typical categories of land use for zoning purposes? A. Agricultural, rural, commercial, industrial B. Commercial, industrial, residential, special C. Agricultural/rural, commercial, industrial, residential D. Commercial, familial, residential, agricultural/rural15. A variance allowing a commercial use in an industrial zone is: A. downzoning B. an illegal use variance C. a nonconforming use D. All of the above16. Which of the following is not a way in which private restrictions can be terminated? A. A vote to repeal the restriction by the homeowners B. Changed conditions C. Agreement by the owners of the affected properties D. Nonconforming use17. Applying modern building requirements to an older building is called: A. retroactive conversion B. bringing it up to code C. minimum safety D. comprehensive planning18. Private restrictions: A. limit the use of a property B. can be either covenants or conditions C. usually run with the land D. All of the above© 2009 Rockwell Publishing 3
  26. 26. 19. Which of the following isnt a residential use subcategory? A. Mobile homes B. Apartments C. Storefronts D. Duplexes20. CC&Rs are an example of: A. zoning B. comprehensive planning C. private restrictions D. police power© 2009 Rockwell Publishing 4

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