Relating to Real Estate

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Relating to Real Estate - January 2014

In this issue:

DEED RESTRICTION DOES NOT PREVENT JOHNS HOPKINS FROM DEVELOPING MONTGOMERY COUNTY CAMPUS

In a well-publicized case, the Court of Special Appeals recently held that The Johns Hopkins University is not prohibited by the terms of the deed that conveyed a farm in Montgomery County to it from developing that property in the way that it wants, even though the prior owners wanted the development to be much less intense than Hopkins is planning. Newell v. Johns Hopkins University, -- Md. App. --, 79 A.3d 1009 (2013).

The plaintiffs in the case were members of the family of Elizabeth Banks, who owned and lived on a 138-acre farm. Ms. Banks’s family had owned the farm for more than 100 years. Ms. Banks was outspoken in her dislike for the way that nearby properties were being developed.
In the 1980’s Montgomery County imposed assessments on the farm because of the widening of roads adjacent to it, and Ms. Banks could not afford to pay those charges. Therefore, she began discussions with Hopkins about transferring the property to it. In 1988, Ms. Banks and Hopkins entered into a contract of sale, which was later amended and restated, for the sale and gift of the farm. Under the agreement, Hopkins paid $8 million to Ms. Banks and her siblings, Hopkins built a house on the property for Ms. Banks to live in for the rest of her life, and Hopkins assumed the obligation to pay $1.6 million to the County for its assessments. Because Hopkins had placed a value of $15 million on the property, Ms. Banks and her siblings were able to take a significant tax benefit from the conveyance.

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OWNER OF TWO HOUSES IN HOMEOWNER COMMUNITY IS THEORETICALLY ENTITLED TO DISCLOSURES, BUT HE MAY BE ESTOPPED FROM CLAIMING A RIGHT TO THEM

In Lipitz et al. v. Hurwitz, 435 Md. 273, 77 A.3d 1088 (2013), the Court of Appeals held that William Hurwitz was entitled to the statutory disclosures under the Maryland Homeowners Association Act before he bought a house in the Caves Valley Golf Club Development in Baltimore County even though he already owned two houses in the development. The Court further held, however, that Hurwitz may be equitably estopped from asserting his right to those disclosures.

On August 6, 2009 Hurwitz entered into a contract to purchase a home in the Caves Valley Golf Club Development from Flora and Roger Lipitz, trustees of a revocable trust, for approximately $4,000,000. Although the form of contract that the real estate broker submitted included the Maryland Homeowners Association Act Notice to Buyer and the Maryland Homeowners Association Act Disclosures to Buyer, the parties struck those documents from the contract that they signed. The sellers alleged that they attempted to provide Hurwitz with the information set forth in those forms, but that Hurwitz refused to accept the disclosures because he already had them.

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IT IS PERMISSIBLE TO PROVIDE IN AN ADVERTISEMENT FOR A FORECLOSURE SALE FOR A $750 ATTORNEYS’ FEE UPON A RESALE

In 101 Geneva LLC v. Wynn, 435 Md. 233 77 A.3d 1064 (2013), the Court of Appeals held in a 4 to 3 decision that a foreclosure sale should not be set aside merely because the advertisement of sale contained a requirement that the purchaser must pay attorneys’ fees of $750.00 plus all costs if the purchaser does not timely settle and the substitute trustees file a motion to resell the property.

101 Geneva LLC v. Wynn involved a foreclosure sale of a residential property that was held on October 17, 2011 in Montgomery County, the advertisement for which included the provision referred to above. 101 Geneva LLC, which was not related to a party named in the foreclosed deed of trust, purchased the property at the foreclosure sale. On October 31, 2011, the Substitute Trustees filed a report of sale. On January 24, 2012, before the sale was ratified, the Court of Appeals decided Maddox v. Cohn. Subsequently, the administrative judge, on his own, decided to review all pending foreclosure actions for compliance with Maddox v. Cohn. That judge determined that the $750.00 attorneys’ fee set forth in the advertisement of sale for the property purchased by 101 Geneva LLC was impermissible under Maddox v. Cohn, and he issued a notice of non-compliance as to the 101 Geneva LLC foreclosure. A hearing was set for May 10, 2012 on the substitute trustees’ exceptions to the notice. However, before that the administrative judge told the hearing judge how to rule on the motion, and the hearing judge issued an order vacating the sale.

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RECONVEYANCE RIGHT IS A COLLATERAL AGREEMENT THAT DOES NOT MERGE INTO A DEED

Because a particular Agreement and a Deed were recorded in the wrong order, the parties had to go all of the way to the Court of Special Appeals to sort out their rights. Because that Agreement was a “collateral agreement,” it was not subject to the presumption that contractual provisions merge into deeds and the terms of the deeds set forth the entire understandings of the parties.

Prime Venturers v. OneWest Bank Group, LLC, 213 Md.App. 122, 73 A.3d 361 (2013), involved the transfer of real property in Sykesville from Prime Venturers to David and Cheryl Leupens. The parties intended that the conveyance would include only 1.68 acres, but the property that Prime Venturers owned consisted of approximately three acres and was not subdivided. Therefore, they structured their transaction with a deed (the “Deed”) for the entire three acres to the Leupens and an agreement (the “Agreement”) that provided that when Prime Venturers was able to subdivide the 1.68 acre portion of the property, the Leupens would reconvey the balance of the property to Prime Venturers for $1.00. The Deed was in normal form and made no mention of the Agreement or of the understanding of the parties regarding the reconveyance. Both the Deed and the Agreement were dated July 30, 2003. Unfortunately, the Agreement was recorded before the Deed.

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SPEAKING OF REAL ESTATE

AWARDS / RECOGNITION

Timothy D.A. Chriss, David H. Fishman, Edward J. Levin, and Searle E. Mitnick have been named as Maryland Super Lawyers in Real Estate for 2014. Super Lawyers named Y. Jeffrey Spatz as a Rising Star.

PRESENTATIONS AND PUBLICATIONS

Ed Levin was a panelist on the Strafford Webinar entitled “Subordination, Non-Disturbance and Attornment Agreements in Commercial Leasing and Real Estate Finance,” which was held on December 11, 2013.

Ed Levin will be a presenter on the American Bar Association, Section of Real Property, Trust and Estate Law, Real Estate Financing Group talk on “Enforceability Opinions and Their Qualifications,” to be held on January 15, 2014.

Ed Levin is the author of “IDOTs Still Work for Deposit Mortgages,” to be published in the January/February 2014 issue of BUILDING Magazine of MNCBIA.

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Date

01.07.14

Type

Publications

Authors

Levin, Edward J.

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