Recent Articles in Real Estate & Construction Law from LexMonitor

MARSHALLS CREEK PROJECT PLANNING CONTINUES

dsnyder@foxrothschild.com (David Snyder) — Thu, 08 Jan 2009 18:25:49 GMT

Planning for the last phases of the Marshalls Creek Bypass Project – which PennDOT now calls the “Marshalls Creek Traffic Relief Project” – continues. The project was put on hold in April due to funding issues. PennDOT held a public meeting in October to discuss the options for this phase of the project which can be viewed at www.marshallscreekbypass.com/index.cfm

PennDOT posted the following update on January 2, 2009 on its website:

Project Milestones Reached
• PennDOT submitted the Final Traffic Reports to FHWA on November 24, 2008.
• PennDOT submitted the Final EIS (Environmental Impact Statement) Re-Evaluation on November 26, 2008.
• The Kick-Off Meeting for Final Design was held on December 2, 2008.
• A meeting for the Section 106 Programmatic Agreement (environmental/historical compliance agreement) amendment was held on December 4, 2008, with FHWA, SHPO (State Historic Preservation Office), and PennDOT's District and Central offices.
• The Phase III Archaeology report was delivered to FHWA and PHMC on December 30, 2008.
• A Right-of-Way review meeting was held at the PennDOT District Office on December 30, 2008.
• The Park-and-Ride project bids were reviewed and there is an apparent low bidder (Leeward Construction of Honesdale).
• Core borings have begun and will continue through February 1, 2009.

Upcoming Project Milestones
• The Environmental Review and Permitting will continue to be the challenge when trying to advance the Design/Build contract.
• Rettew Associates is scheduling a preliminary meeting with the permitting agencies for the “bypass” portion of the project.
• The Dewberry Team continues to advance the Final Design.
• The next Bi-Monthly Coordination Meeting is set for January 13, 2009.
• Park-and-Ride lot construction to begin in the spring and last one construction season.

Families, eh

contact@nearlylegal.co.uk (Nearly Legal) — Thu, 08 Jan 2009 17:33:44 GMT

The one key message of property law is never trust your family. Mirza v Mirza is a further example of this truism and I can only marvel at the way Stephen Smith QC, sitting as a Deputy Chancery Judge, dealt with the case. The Claimants, Nasir and Naim, were brothers who sought possession [...]

The one key message of property law is never trust your family. Mirza v Mirza is a further example of this truism and I can only marvel at the way Stephen Smith QC, sitting as a Deputy Chancery Judge, dealt with the case. The Claimants, Nasir and Naim, were brothers who sought possession of a property in Birmingham against another brother, Jahangir, who was the tenant and who lived in the property with his (ex-)wife, and their six children. This simple possession claim was based on the fact that Jahangir - who seems to be an unpleasant individual, against whom exclusion orders had been made on the grounds of violence, and “not an honest witness” (at [79]) - had split from his wife, Tahira, and the family no longer wanted to provide for her and the children. This simple claim “transmogrified” (at [2] - love that word) into a claim by Tahira for a beneficial interest in the property, and a claim by two of the children, Shakeel and Haleema, to beneficial interests in the property as well as a further property. There was a further claim by Naim (and this is the most interesting legal aspect of the case) to an interest in that further property which was now registered in the names of Shakeel and Halima. Another brother, Saleem, generally took the side of Tahira and the children but his evidence was generally discounted where it conflicted with that of Naim. All I can really do is summarise the main facts and points here, but anybody wanting further information about how families can really screw you up should read the 145 paragraphs in full.

Naim was described as “the most reliable witness” (at [76]) which, frankly, does not seem to be saying much. He is an airline pilot who has amassed considerable wealth and seems to have bankrolled the family. Tahira

… remained dignified and restrained notwithstanding her plight. … [She] gave an impassioned plea for justice before she left the witness box, pointing out that after suffering what she portrayed as almost 30 years of misery with Jahangir, it is unfair that he and two of his brothers should now conspire to evict her from what she thought was her family home. (at [77])

Her claim to a beneficial interest in the property was on the basis of being Jahangir’s spouse, a claim which was “misconceived and was rightly abandoned before trial” (at [113]), demonstrating yet again the iniquity of traditional property law determinations in these situations. Worse still, it was held that Jahangir was a tenant of the property, and that, as he had moved out, Tahira was liable for the mesne profits + interest from the end of the tenancy (April 2005) on the basis that she could not reasonably have expected to remain in the property rent free in the meantime if her and her children’s claims failed.

Shakeel and Halima’s case was essentially that all the money used to buy the properties was Jahangir’s. Although it came from Naim’s bank accounts, it had been put there essentially as a deception to enable Jahangir to claim benefits. Although Jahangir had been formally unemployed since 1981, it was asserted that he had amassed the necessary wealth through informal employment in the business enterprises run by his brothers. Although the evidence suggested that he did enjoy some form of employment in those enterprises, the financial evidence of the profit of those companies was “sadly very limited and unimpressive” (at [97]). Essentially, Shakeel and Halima’s claim was found to have no evidential foundation and to be unbelievable (at [106]).

Shakeel and Halima had purchased the further property with the assistance of what was found to be a loan from Naim to pay the deposit of c £25k on a c £95k property, the remainder being provided by a mortgage lender. The loan was to be repaid when Shakeel and Halima were “financially more stable” (at [128]) and Naim claimed that the agreement was that he would be paid £50k when the property was sold (although the Judge found that Naim was “mistaken” in this recollection: at [131]). Shakeel and Halima argued that the loan was void because it was not in writing and therefore did not comply with s 2, Law of Property (Miscellaneous Provisions) Act 1989 (or, as was heard around the Law Commission in the 1990s, the mysterious provisions Act). Now, this was an interesting argument in favour of which they might have cited the CA decision in Sahib. Instead, the court went down the executory contract route in Tootal Clothing v Guinea Properties (1992) 64 P&CR 452, in which, in essence, the CA held that section 2 has no application to completed contracts, only to executory contracts. The Judge held that this was a completed contract because the legal and beneficial title to the property had been passed to Shakeel and Halima, all that remained was for the money to be repaid, and it made no difference that the agreement was not set out in writing. Personally, I don’t buy into that finding on the law, which seems to go against the grain of the LPMPA, but you can’t blame Stephen Smith QC for trying to find a neat solution here. In any event, the loan couldn’t be repaid because Shakeel and Halima weren’t financially more stable - whatever that might mean - and Naim’s claim for repayment was rejected (at [145]). But, no claim seems to have been made by Naim under s. 14 of the Trusts of Land and Appointment of Trustees Act 1996 for an order for sale - next steps, no doubt.

Court Rules Against Pipeline

aackerman@sbcglobal.net (Alan Ackerman) — Thu, 08 Jan 2009 15:35:42 GMT

East Valley Tribune

The owner of a single piece of property is standing in the way of a new natural gas pipeline to serve central Arizona.

And a federal appeals court won't force the issue - at least not yet.

Without dissent, the 9th U.S. Circuit Court of Appeals has rejected efforts by Transwestern Pipeline to get immediate possession of properties in the path it seeks for its 260-mile pipe.

The judges said the company may eventually be allowed to condemn the property. But they concluded that the private company cannot take immediate possession until it gets a court order.

That requires a hearing where the landowners have a chance to challenge both the company's need for the property as well as whether Transwestern is meeting its requirements to negotiate in good faith on the price.

The court ruling is the latest setback for Transwestern, which has faced opposition in its bid to complete the $700 million project that is designed to connect central Arizona with the company's main pipeline that carries gas from New Mexico across northern Arizona.

Transwestern spokesman Jerry Herenden said the 280-mile spur eventually will carry 500 million cubic feet of natural gas to the Valley each day.

The interesting proposition of the subject of the article is the appropriate recognition by the federal appellate court that Due Process applies to the rights of individuals and recognition that eminent domain statutes must be followed.

Court Rules Against Pipeline

aackerman@sbcglobal.net (Alan Ackerman) — Thu, 08 Jan 2009 15:35:42 GMT

East Valley Tribune

The owner of a single piece of property is standing in the way of a new natural gas pipeline to serve central Arizona.

And a federal appeals court won't force the issue - at least not yet.

Without dissent, the 9th U.S. Circuit Court of Appeals has rejected efforts by Transwestern Pipeline to get immediate possession of properties in the path it seeks for its 260-mile pipe.

The judges said the company may eventually be allowed to condemn the property. But they concluded that the private company cannot take immediate possession until it gets a court order.

Transwestern spokesman Jerry Herenden said the 280-mile spur eventually will carry 500 million cubic feet of natural gas to the Valley each day.

New Jersey's Foreclosure Mediation Program

rdeluca@stark-stark.com (Stark & Stark) — Thu, 08 Jan 2009 13:07:29 GMT

This installment of the New Jersey Legal Update is an interview with Bari Gambacorta, Shareholder in Stark & Stark's Bankruptcy & Creditor's Rights group, Allyson Cofran, member of Stark & Stark's Bankruptcy & Creditor's Rights group, and Kevin Wolfe, of the State of New Jersey's Civil Practice Division. The podcast is a discussion of the New Jersey Foreclosure Mediation Program which went into effect Monday January 5, 2009 in order to assist homeowner's throughout New Jersey who are facing foreclosure delinquencies.

You can download the full interview here. (15.5 MB)

Transit Oriented Development and Affordable Housing

Thu, 08 Jan 2009 07:41:00 GMT

In a recent entry at HawaiiBusiness.com, two sides fired off on whether Honolulu's transit project will impact the availability of housing for working families.

Transit per se will not affect the availability or unavailability of affordable housing. In order to provide more affordable housing, transit must be paired with transit oriented development (“TOD”). According to the Transit Cooperative Research Program, sponsored by the Federal Transportation Association, TOD has three primary traits (1) Mixed-use development; (2) Development that is close to and well-served by transit; and (3) Development that is conducive to transit riding.

According to a 2002 study, Factors for Success in California’s Transit-Oriented Development, commissioned by the California Department of Transportation,

TOD can contribute to more affordable housing. TOD can add to the supply of affordable housing [1] by providing lower-cost and accessible housing, and [2] by reducing household transportation expenditures. Housing costs for land and structures can be significantly reduced through more compact growth patterns.

First, providing lower-cost and accessible housing is achieved through various developer incentives that promote development near transit stations in exchange for affordable units, including:

Reducing the minimum parking requirements or setting maximum parking requirements around major transit stops,
Density bonuses, and
Property tax abatements to developers of higher-density, mixed-use, residential developments.

In addition to developer incentives, potential homeowners may be eligible for a Location Efficient Mortgage (“LEM”). An LEM, sponsored by Fannie Mae, is a mortgage that helps people become homeowners in location efficient communities such as TOD projects.

Second, reducing household transportation expenditures can also promote housing affordability. The average annual expenditure per capita in Honolulu for transportation between 2004 and 2005 was about $10,000. TOD can help to reduce the cost of transportation by reducing a homeowner's dependence on vehicles. According to the Center for Neighborhood Technology,

A growing body of research has shown a strong relationship between increased density, transit access and pedestrian friendliness on the one hand, and reduced vehicle miles traveled and automobile ownership on the other.

The bottom line: Transit paired with TOD creates an opportunity for increased housing affordability.

For more on affordable housing policies in Hawaii see this blawg’s Affordable Housing archive.

How Many Votes Does An Owner Get For A Board Election?

Califcondoguru@aol.com (Beth Grimm) — Thu, 08 Jan 2009 06:05:43 GMT

Here is a very common question, that seems simple to me, but is not clearly understood by the average person in an HOA (sent by a reader): "We have three Board of Directors positions coming available at our annual meeting in February (President, Vice President/Secretary and Treasurer). I was informed by our management company that even though there are three seats/positions available, each owner can only cast one vote total. Is this correct? You would think that each owner would be able to cast a vote for each open position…thus three votes total. Is this not the case?" If the HOA documents (usually found in the bylaws but there might be a reference in the CC&Rs) do not specify any voting scheme, then I would suggest that an owner should be allowed to exercise at least one vote per candidate up to the number of vacant positions. If the documents do specify the voting allotment (which most do), then the language in the documents would dictate the voting allotment. And furthermore, if the documents allow cumulative voting, each owner should be able to place a vote for each candidate position either by placing them all on one candidate, or some...

Here is a very common question, that seems simple to me, but is not clearly understood by the average person in an HOA (sent by a reader):

"We have three Board of Directors positions coming available at our annual meeting in February (President, Vice President/Secretary and Treasurer). I was informed by our management company that even though there are three seats/positions available, each owner can only cast one vote total. Is this correct? You would think that each owner would be able to cast a vote for each open position…thus three votes total. Is this not the case?"

If the HOA documents (usually found in the bylaws but there might be a reference in the CC&Rs) do not specify any voting scheme, then I would suggest that an owner should be allowed to exercise at least one vote per candidate up to the number of vacant positions.

If the documents do specify the voting allotment (which most do), then the language in the documents would dictate the voting allotment.

And furthermore, if the documents allow cumulative voting, each owner should be able to place a vote for each candidate position either by placing them all on one candidate, or some formula in between (in this example, 1 on each of 3 candidates, 3 on one candidate, or any combination of 2 and 1.)

Of course, an owner can submit less than 3 votes here, and a common error that owners make when cumulative voting is not explained well (or owners do not read the instructions) is to put a "1" after a candidate's name thinking it counts for all the votes (here 3) instead of just 1 vote when there is cumulative voting.

Under the "old way" of elections, the Corporations Code language had meaning - it provides that in order to trigger cumulative voting, a member of the Corporation has to ask to cumulate their votes, but now, the HOA elections law provides for voting by mail in a double envelope process and requires that if cumulative voting is provided in the governing documents, it needs to be noted in the election rules (paraphrasing the law but this is the impact of the California HOA elections law). So, if its in the rules, the HOA needs to explain it to folks in the ballot package. There is generally no meaningful opportunity to make the call for cumulative voting at an HOA meeting.

(Nothing is as simple as it seems it should be, huh!)

Homelessness collaboration agreement

contact@nearlylegal.co.uk (Nearly Legal) — Wed, 07 Jan 2009 23:37:22 GMT

Out of Leeds comes an interesting story (picked up via Shelter’s Roof blog) about an agreement between the Local Authority, two Citizens Advice Bureaux and Shelter’s West Yorkshire Advice Service. Leeds City Council has signed an agreement with the CABs and WYAS which sets out the ways in which they will collaborate on providing advice and [...]

Leeds City Council has signed an agreement with the CABs and WYAS which sets out the ways in which they will collaborate on providing advice and help to those facing homelessness.

Under the terms of the agreement the agencies will work more closely together to provide early advice, assistance and support both to people at risk of homelessness and those who have already lost their homes, as well as preventing recurring homelessness by helping people secure sustainable accommodation.

The agreement is apparently the first to use a model that has been developed by the National Homelessness Advice Service, a partnership between Citizens Advice Service and Shelter, with support from Communities and Local Government, with the aim of helping local authorities and independent advice agencies to work together to prevent homelessness. It sets minimum standards for co-operative working and outlines good practice.

Hmm. We would be very interested to hear from anyone involved in this arrangment, or in deploying the NHAS model, as to how it actually works. While cooperation to reduce homelessness is clearly of value, I must admit to some concerns over the effect on the independence of the CABs and Shelter advisors in bringing challenges to Local Authority ‘advice’ or decisions on homelessness applications.

And then, given that the ‘preventing homelessness’ agenda in local authorities has seen the numbers of accepted full housing duty drop by 13% in the last year and 60% since 2003/4, I’m perhaps unduly suspicious of ‘prevention’ per se. (After all, no-one in the sector can seriously believe that the number of people presenting to LAs as homeless has dropped 60% since 2003/4. Gatekeeping of one form or another is rife). I would therefore be very interested to know what forms of support and assistance are involved in this venture. Leeds has divested its housing stock into three ALMOs, but still sets the allocation policy and runs the HPU (or ‘Homelessness advice unit’).

Elections Rules Questions - The Continuing Saga

Califcondoguru@aol.com (Beth Grimm) — Wed, 07 Jan 2009 21:30:49 GMT

Here are some recent questions on elections: "Our HOA has an election coming up and still has not adopted election rules. Does this mean we do it the 'old way'?" Answer: The "old way" still works for some elections, but most are governed now by Civil Code Section 1363.03 that requires a double envelope ballot system, an inspector of elections, and preservation of secrecy of the ballot. So I would say generally no, don't do it the "old way". HOAs should be conducting elections the "new way", whether the election rules are in place or not. The "new way" is outlined in Civil Code Section 1363.03 - which can be accessed through my website at http://www.californiacondoguru.com or through the California government website at http://www.ca.gov (navigate to California Codes and check "Civil Code" and put in the number 1363.03 and you should get all pertinent sections). And another question: "We have draft election rules and have told the members about them but have not formally adopted them yet. We just conducted an election. Does that make the election void?" Answer: Failure to formally adopt election rules should not make an election void (however, I would suggest doing it as soon as...

Here are some recent questions on elections:

"Our HOA has an election coming up and still has not adopted election rules. Does this mean we do it the 'old way'?"

Answer: The "old way" still works for some elections, but most are governed now by Civil Code Section 1363.03 that requires a double envelope ballot system, an inspector of elections, and preservation of secrecy of the ballot. So I would say generally no, don't do it the "old way". HOAs should be conducting elections the "new way", whether the election rules are in place or not. The "new way" is outlined in Civil Code Section 1363.03 - which can be accessed through my website at http://www.californiacondoguru.com or through the California government website at http://www.ca.gov (navigate to California Codes and check "Civil Code" and put in the number 1363.03 and you should get all pertinent sections).

And another question:

"We have draft election rules and have told the members about them but have not formally adopted them yet. We just conducted an election. Does that make the election void?"

Answer: Failure to formally adopt election rules should not make an election void (however, I would suggest doing it as soon as is feasible after you have completed the steps of circulating them to the members for comment found in Civil Code Section 1357.100).

So long as the election was conducted using the processes in Civil Code Section 1363.03, it should be upheld, the point being, not to unduly punish the HOAs that try to do things right under the laws - by unravelling perfectly good and fair election processes.

Boards do sometimes make mistakes and might miss a step in the many, many technical formalities (which are unbelievably complicating in California to the job of a California HOA Board and those who try to manage the HOA properly).

I have continually written that good faith is an important factor in trying to follow the law. I do not have case citations to offer on elections, as yet, because I do not know of any binding appellate cases on the subject yet, but do find in the published cases that challenge Board actions in other areas that Boards tend to prevail when their actions were rendered "in good faith", and so I believe that "good faith" is a key factor to reviewing the actions of an HOA board or manager.

So go forth, in "good faith", do your best, and get ye the help you need to succeed in 2009! But don't sweat the small stuff.

Employee Free Choice Act

steve.boutwell@keanmiller.com (Steven Boutwell) — Wed, 07 Jan 2009 20:33:18 GMT

By A. Edward Hardin, Jr. and Scott D. Huffstetler

One likely result of the recent Presidential and Congressional elections is that the executive and legislative branches will be open to pushing the legislative agendas of organized labor. There is little doubt that the proposed Employee Free Choice Act, H.R. 800, 110th Cong. (2007)(“EFCA”) is at the top of this legislative agenda. The EFCA is something to which employers should pay serious attention. If enacted, the EFCA would make it easier for employees to form, join, or assist labor organizations and would provide for mandatory injunctions for unfair labor practices during organizing efforts and for other purposes. Moreover, if enacted, certain unions are already estimating that they will be able to organize millions of new workers.

The EFCA seeks to amend the National Labor Relations Act (which was last amended nearly 70 years ago) and provide new, more relaxed, rules for the selection of an employees’ collective bargaining representative (i.e., unions).

Under the current National Labor Relations Act, employees select a bargaining representative through a secret ballot election process. Generally, in order to get to an election, a union seeking to represent employees must show the National Labor Relations Board that there is a sufficient showing of employee interest in favor of the union. Unions typically show there is an interest in the union by collecting employee signatures or signed authorization cards from 50% - 75% of employees.

The union then files a representation petition with the National Labor Relations Board. Approximately five weeks later (sometimes sooner), the Board conducts a secret ballot election, and all the effected employees are allowed to cast ballots in favor of, or against, the union.

During the period leading up to the election, both the union and the employer typically “campaign” and state their cases regarding union representation. However, employers are bound by the “TIPS” rules and may not threaten (“T”), intimidate (“I”), or make promises (“P”) to employees to encourage them to vote against the union and employers may not spy (“S”) on employees. Unions are not similarly bound.

In order for a union to be designated the employees’ collective bargaining representative, the union must win a majority of the votes cast in a secret ballot election. (Again, the National Labor Relations Board conducts the election.) Following the secret ballot election, if a union is certified as the employee representative, the employer and the union are then required to bargain in good faith over a collective bargaining agreement. However, the National Labor Relations Acts does not require either party to agree to anything. The EFCA changes all that.

Among other things, the EFCA eliminates secret ballot elections. I nstead, once a union collects authorization cards from a majority of the employees, the National Labor Relations Board would certify the union as the employees’ bargaining agent without an election. The employer would not be allowed to state its case to its employees, and employees would not be allowed to cast ballots in secret, away from peer pressure and intimidation.

The EFCA would also severely impact the bargaining process. Under the Act, the parties would have 90 days to reach an initial contract. If an initial contract is not reached in 90 days, the parties would then have an additional 30 days to reach an agreement with the assistance of the Federal Mediation and Conciliation Service (“FMCS”). If the parties are unable to reach an agreement after 120 days, the issue would be submitted to binding arbitration, and an arbitrator (not the parties) would determine the terms of the initial contract, and the parties would be bound for two years. Even more problematic is that the EFCA is not helpful on the procedure of these proposed arbitrations. The Act relies on the FMCS to promulgate proposed rules and receive comments on the arbitrations. None of this has been done. Thus, if enacted, the EFCA would leave more questions than answers.

Finally, the EFCA adds civil penalties and increased back pay for certain unfair labor practices. The bill would require the NLRB to seek a federal court injunction against an employer whenever there is reasonable cause to believe that the employer has discharged or discriminated against employees, threatened to discharge or discriminate against employees, or engaged in conduct that significantly interferes with employee rights during an organizing or first contract drive. The EFCA also authorizes the courts to grant temporary restraining orders or other appropriate injunctive relief. The bill also calls for increases in the amount an employer is required to pay when an employee is discharged or discriminated against during an organizing campaign or first contract drive to two times back pay as liquidated damages, in addition to the back pay owed, for a total of three times the back pay. Current damages are limited to back pay, lest any wages earned by an employee if they are hired by another employer. Last, the bill would provide for civil fines of up to $20,000 per violation against employers found to have willfully or repeatedly violated employees’ rights during an organizing campaign or first contract drive. Currently there are no civil fines for violations.

The history of the EFCA shows it already has much support. On March 1, 2007, the House of Representatives passed the bill, 241 to 185. On March 30, 2007, Senator Ted Kennedy (D-MA), Chairman of the Senate Committee on Health, Employment, Labor, and Pensions, introduced the Senate version of the EFCA (S. 1041). The Senate on June 26, 2007 voted 51 to 48 on a Motion to Invoke Cloture on the Motion to Proceed to Consider H.R. 800 (the House version). Because 60 votes were needed to invoke cloture, the bill did not pass during the 110th Congress.

It is even more likely that the EFCA will pass in some form during the 111th Congress. President-Elect Barack Obama co-sponsored S. 1041 and promised to sign the EFCA should he become President. Democrats have increased their majority in the Senate. After the defeat in the 110th Congress, proponents of the EFCA, such as Senator Kennedy and John Sweeney (President of the AFL-CIO), were quoted as saying they will continue to push this piece of legislation.

The Employee Free Choice Act is a hot item. Unions have rallied and are pushing for passage of the Act. Likewise, business leaders are equally energized and have spoken out against the legislation. F or the time being, the outcome does not look good for employers. Employers are encouraged to monitor the Act and lobby for either a complete defeat or an Act in a final form that is not as harsh toward employers as is the current Act.

Procedure in the Lands Tribunal

contact@nearlylegal.co.uk (Nearly Legal) — Wed, 07 Jan 2009 18:43:18 GMT

The Lands Tribunal has handed down a number of important decisions in the last week that those working in the field of leasehold enfranchisement need to be aware of. Earl Cadogan v Erkman LRA/56/2007 & LRA/68/2007 (links to a .pdf file) concerns attempts to get around the decision of the Court of Appeal in the Sportelli [...]

The Lands Tribunal has handed down a number of important decisions in the last week that those working in the field of leasehold enfranchisement need to be aware of.

Earl Cadogan v Erkman LRA/56/2007 & LRA/68/2007 (links to a .pdf file) concerns attempts to get around the decision of the Court of Appeal in the Sportelli litigation ([2008] 2 All ER 220). Although Sportelli subsequently went to the House of Lords, it only went up on the question of “hope value” (see our earlier post about this here). The Court of Appeal decision is - arguably - of wider practical importance, since it confirmed that there was a general deferment rate of 4.75% for houses and 5% for flats and that the Lands Tribunal could and should give detailed guidance of this sort for the benefit of the LVT.

In the appeal, both parties contended both that the LVT had erred in applying the Sportelli deferment rate and that a different rate should have been applied. Evidence justifying departures from the Sportelli approved figures was filed on both sides.

The Lands Tribunal held that it had the power to allow this new evidence to be adduced by both parties but that, in the present case, it would not allow the evidence to be relied upon. At least some of the evidence was directed to undermine the decision in Sportelli and should not be allowed. The LVT (and Lands Tribunal) should only allow evidence which went to undermine the Sportelli approved deferment rates in exceptional circumstances.

For those working in enfranchisement in and around London, this will be a very welcome decision, since it means that we no longer need detailed expert evidence on deferment rates, save, perhaps, for a truly exceptional case. However, for those working outside of London, this decision will not be well received. There was already some considerable disquiet about having a deferment rate which was determined in litigation about PCL (Prime Central London) properties applied to - say - rural Gloucestershire. But, the Lands Tribunal has spoken…

Halliard Property Company Ltd v Bemont Hall and Elm Court RTM Company Ltd and other appeal LRX/130/2007 & LRA/85/2008 (not available online, but on file with the author) concerns the power of the LVT to award up to £500 of costs against any party who has acted “frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings.” (See Sch 12, para 8, Commonhold and Leasehold Reform Act 2002).

The appellant companies were freeholders of various properties. In one case, the appellant had been the respondent to a Right to Manage application which had been withdrawn and in the other appeal, it had been the respondent to an application for a lease extension. In each case, the appellant company was entitled to a sum (to be determined by the LVT) in respect of its costs.

In each case, the LVT pushed for the matter to be determined on the papers and, in each case, the appellant companies rejected this approach and sought an oral hearing on the question of costs. The LVT determined that - by requiring an oral hearing in a matter which the LVT thought was suitable for a determination on the papers - the appellant companies had acted otherwise unreasonably and ordered that the appellant company pay costs, not to exceed £500 in each case.

Unsurprisingly, the companies appealed these costs orders and their appeals were allowed by the Lands Tribunal. In order for a party to behave “otherwise unreasonably” it’s behaviour had to be akin to the previous words in the sentence - i.e. it had to be frivolous, vexatious, abusive or disruptive. Merely behaving in a manner which merited criticism was not, of itself, unreasonable behaviour. Regard should he had to the comments of Sir Thomas Bingham MR (as he was then) in Ridehalgh v Horsefield [1994] 3 All ER, to the effect that something cannot be unreasonable if it has a reasonable explanation and behaviour in reliance on the judgment of a legal practitioner is not usually regarded as being unreasonable.

In addition, a party had an absolute right to an oral hearing before the LVT and it was the paper based hearing which was the exception to the general rule. It would need truly exceptional circumstances before a party could be said to have acted unreasonably by insisting on the exercise of a statutory right.

Robust common sense all round.

Regulations Mandating Greenhouse Gas Reporting Become Effective

updates@antitrustlawblog.com (Sheppard Mullin) — Wed, 07 Jan 2009 18:40:59 GMT

By Olivier F. Theard

In December 2007, the California Air Resources Board passed regulations requiring operators of facilities that emit 25,000 metric tons of CO₂ or more in a calendar year to report their greenhouse gas emissions. The regulations became effective January 1, 2009.

Under the regulations, facilities classified as “general stationary combustion facilities,” which includes industrial gas producers, food and beverage processors, paperboard manufacturers, steel foundries, colleges and universities, glass container manufacturers and other facilities, must report their 2008 greenhouse gas emissions by April 1, 2009. Other facilities, including petroleum refineries, hydrogen plants, cement plants, and electricity retail providers and marketers, have until June 1, 2009 to report emissions.

2009 is considered a “transition period” for implementation. This means that the methods used to calculate emissions are somewhat relaxed to allow for development of best available emissions data and methods, which must be used starting in 2010. In addition, while the regulation requires a third-party to verify any emissions reports, such verification will not be required until 2010.

The processes for calculating emissions, conducting source tests, defining sources and reporting methods, keeping records and other provisions are set forth in Title 17, California Code of Regulations, sections 91000 to 91022. In addition, in December 2008 the Air Resources Board published a valuable guidance document entitled “Mandatory Reporting of Greenhouse Gas Emissions: Instructional Guidance for Operators.” Click here to access this document and other useful background materials.

Authored by:

Olivier F. Theard

(213) 617-5427

otheard@sheppardmullin.com

Mr. Theard practices in the Business Trial Practice Group and Environmental Litigation Practice Group in the Los Angeles office of Sheppard, Mullin, Richter and Hampton LLP.

Mitigation Allows Surf School to Continue as Nonconforming Use

Wed, 07 Jan 2009 08:10:22 GMT

Save Diamond Head Waters, LLC v. Hans Hedemann Surf, Inc., ICA No. 27804, December 19, 2008, is a recent Hawaii zoning case involving nonconforming uses. The underlying points of law in this case are that nonconforming uses can be changed, but they cannot be expanded. Also, an accessory use must be secondary to the allowed primary use. The Surf School in this case was allowed to continue, because it was not an accessory use but a changed nonconforming use.

Hans Hedemann Surf, Inc. (“Hedemann”), operates Hans Hedemann Surf School (“Surf School”). The Surf School is located on the ground floor in a space called “Shop #7” of the New Otani Kaimana Beach Hotel.

The Hotel was constructed in 1950 and expanded in 1962. When built, zoning at the site allowed “commercial uses other than businesses that primarily served the tenants and occupants of the buildings in which they were located, known as ‘accessory uses’” Current zoning at the site is “A-2 Medium Density Apartment District designation. Hotel and accessory uses are not permitted in A-2 districts. However, because hotel use was acceptable at the time of the Hotel's construction and the Hotel has continued to be used as a hotel, hotel use survives as a nonconforming use.”

Neighbors protested the Surf School’s operation at the Hotel and sought a declaratory order from the Director of the Department of Planning and Permitting. The Director ruled in favor of the Surf School as follows:

. . . [t]he Hotel itself is a nonconforming use and although "accessory" commercial businesses are allowed within the Hotel, the operation of the Surf School was not an accessory use, because it did not draw its students/customers primarily from the Hotel. The Director also ruled that the Surf School's operation did not represent an expansion of the nonconforming use as there had been no physical expansion of the existing structure, no extension of operating hours insofar as the Hotel operated on a 24-hour basis, no evidence of an increase of "visitor units" within the Hotel or any other increase in density or intensity of use on the site. The Director concluded that the Surf School was more properly characterized as a change of use rather than an expansion of the nonconforming use and that the activities conducted on-site --assembly and registration of, and distribution of surfboards to students, as opposed to actual instruction -- was an "office" use. The ZBA agreed with the Director on these matters. (Emphasis added.)

The neighbors appealed to the first circuit court, which reversed the Director’s decision. The Surf School appealed to the intermediate court of appeals (“ICA”), which reversed the first circuit and upheld the Director’s decision.

The question before the ICA was “whether the Director, in response to [the neighbors’] petition for a declaratory ruling, acted beyond his authority to issue that ruling when it set the permissible limits of a lessee's use of its leased space under the [Land Use Ordinance].”

In affirming the Director’s decision, the ICA approved that the Director “set the standard for the impact of a surfing class as ‘no greater than if it operated as an accessory use of the hotel’ and focused on determining ‘the level of activity or intensity of use which results in greater adverse effects.’” The Director’s decision was not an abuse of discretion, because his “ruling was reasonably based on the evidence before [him] and constituted a reasonable application of the applicable zoning ordinance and the DPP's previous interpretation of that ordinance.”

New Acting Administrator for the FAA: Lynne A. Osmus

staber@calairlaw.com (Steven Taber) — Wed, 07 Jan 2009 01:59:55 GMT

The White House announced today, January 6, 2009, that Lynne A. Osmus will take over for Bobby Sturgell effective January 16, 2009. Near the end of an announcement about President Bush's late appointments is the the statement: "The President intends to designate Lynne A. Osmus, of Virginia, to be Acting Administrator of the Federal Aviation Administration, to become effective January 16, 2009."

Ms. Osmus is currently the FAA Assistant Administrator for Security and Hazardous Materials, a position she has had since July 1, 2003. She has been with the FAA since 1979, and an executive since 1990, primarily in the field of aviation security. She was appointed to be the Deputy Associate Administrator of FAA's Civil Aviation Security Program just three months prior to the 9/11 attacks and then led the FAA's transition of the security programs to the TSA.

More recently, Ms. Osmus was designated as the "transition executive" for the Obama Transition team. This reunited her with her old boss Jane Garvey, the former FAA Administrator under President Clinton, for whom Ms. Osmus was Chief of Staff. Ms. Garvey is a member of the Obama Transition team and had been mentioned as a possible nominee for Secretary of Transportation.

The appointment comes as a bit of a surprise, since the current Acting Administrator, Bobby Sturgell, has not been reported as having resigned, although it was widely assumed that he would be stepping down at the end of the Bush Administration. Reports from sources in the FAA had indicated that Ms. Osmus had been elevated to Deputy Administrator.

Contractual Limitation of Liability in Engineer / Survey Contract Upheld

david.bowerman@klgates.com (Kirkpatrick & Lockhart Preston Gates Ellis LLP) — Tue, 06 Jan 2009 20:02:01 GMT

Blaylock Grading Co., LLP v. Smith, 658 S.E.2d 680 (N.C. Ct. App. 2008)

In this case, a grading contractor sued a surveyor (who was also an engineer) for breach of contract and negligence regarding mistakes in surveying work which resulted in the contractor having to incur costs to import fill to raise the elevation of the site. The contract between the contractor and surveyor contained a provision limiting the surveyor’s liability to $50,000. The surveyor unsuccessfully moved for partial summary judgment based on the limit of liability. Following a jury verdict against the surveyor for $574,714, the surveyor moved for judgment notwithstanding the verdict, which the trial court denied, ruling that the limit of liability was void as against public policy. The North Carolina Court of Appeals reversed the trial court, holding that the limitation of liability was valid and enforceable.

Blaylock Grading Company, LLP, a grading contractor, entered into a contract with Neil Smith and Neil Smith Engineering, Inc., pursuant to which Smith would provide land surveying services for Blaylock regarding a military housing project on which Blaylock was working. The contract contained a “Risk Allocation” provision which limited Smith’s liability to the greater of $50,000 or the Defendants’ fee, or such other amount specified in the contract ($50,000 ended up being the relevant amount). This provision applied, without limitation, to liability for negligence, errors, omissions, strict liability, breach of contract, or breach of warranty. Pursuant to the contract, Smith surveyed the site to determine the extent of grading needed by Blaylock. Smith negligently set the site benchmarks 1.66 to 1.7 feet higher than specified in the design plans. Smith’s error required Blaylock to import substantial amounts of compacted fill to raise the overall elevation of the site. Blaylock filed suit against Smith alleging breach of contract and negligence. At trial, a jury found in favor of Blaylock. Smith moved for judgment not withstanding the verdict which was denied upon a finding that the limit of liability was void as against public policy.

The Court of Appeals reversed, holding that North Carolina law allows a professional engineer/land surveyor to limit its liability when contracting with another party. Citing existing North Carolina law, the court reasoned that the limit of liability provision was valid, as both parties were sophisticated professionals that were capable of conducting an arms length business transaction.

The court also rejected the trial court’s determination that the provision was void on public policy grounds. The trial court reasoned that land surveying services are extensively regulated, and thus fall within the “public service” exception to the usual rule that contractual limitations of liability are valid. The Court of Appeals disagreed, noting that just because land surveyors and engineers are regulated by the state and are required to be licensed does not convert these professions into public services. Second, the court noted that when a breach of contract between two parties involves only economic loss the health and safety of the public are not implicated.

Lastly, the court held that North Carolina’s anti-indemnity statute, N.C. Gen. Stat. § 22B-1, deals with indemnity agreements and therefore was not applicable to this case.

Insulting Bids Are No Longer Insulting

Tue, 06 Jan 2009 15:27:46 GMT

Once upon a time, in a town known as Gotham, property owners reveled in a housing boom that saw ultra low inventory and a plethora of "well-qualified" buyers (thanks to lax lending standards). Buyers found this environment to be incredibly daunting and downright frustrating as they almost always were just one of many bidders vying for the opportunity to own their piece of the Big Apple. Can you imagine what it was like for these agitated buyers when they would have to bid over the asking price only to discover that someone more eager and qualified was willing to pay even more? It seems like only yesterday that this was the case...oh...it was!

But now things are different. The past decade was challenging to say the least for prospective buyers of Manhattan real estate, but today is a new day and a different era in the New York City real estate market and requires a shift in psychology for buyers and sellers alike. Back in the peak of the housing boom, buyers often feared that if they didn't pay the asking price or better that they would not only miss out on the opportunity of buying that particular home but they also feared that they may insult the seller. On the other hand, sellers were often insulted by and in a position to scoff at low offers all the while knowing that someone would come along and pay their price...or more! Which brings me to my point:

The days of insulting bids are over.

In today's real estate market, both buyers and sellers must be mindful of changed market dynamics. Buyers are no longer afraid to submit what were once deemed insulting offers sometimes as low as 20-30% below asking prices. And sellers are no longer ignoring these once insulting offers. The Manhattan real estate market has moved closer to one of normalcy where offers are made, countered by sellers, and negotiated to a level that is mutually acceptable. The negotiation process no longer happens within 24-48 hours and almost never includes sealed bids or bidding wars. Although many sellers are still selling for considerable profits, higher inventory and patience have become kings for buyers.

So I leave you with this:

Buyers: Don't worry about insulting someone with a low offer. Due diligence regarding comps and market conditions is key. Make your offer and defend it with hard data. You must also remember to be reasonable (bidding $2M for a place asking $6M will get you nowhere whether or not you think it is overpriced)

Sellers: Consider all offers as serious and don't take low offers personally. Imagine yourself buying property in today's market to help take the sting out of low offers. Also have hard data at your fingertips to support your asking price but also be reasonable (ignoring a bid of 20% below your asking price may come back to bite you later). Keep lines of communication open when negotiating in an effort to effect a deal.

Canadian Bridge Plaza

aackerman@sbcglobal.net (Alan Ackerman) — Tue, 06 Jan 2009 13:35:11 GMT

Times Herald

Canadian officials are prepared to start a $54 million (Canadian) project to revamp the Blue Water Bridge Plaza in Point Edward.

The project includes a 120,000-square-foot, four-story building to house Canada Border Services Agency, the Canadian Food Inspection Agency, commercial brokers and Blue Water Bridge Canada administrative offices. The project also includes building seven new inspection lanes for commercial traffic.

The project will start this month and be completed in December 2010. The new building will be west of the existing Customs building.

Chuck Chrapko, president and chief executive officer of Blue Water Bridge Canada, said travelers to Ontario barely will notice the project has started.

"It will not divert traffic in any way," he said.

The work is the first phase of what is expected to be a three-phase project costing a combined $110 million.

Phase two includes building secondary processing stations for passenger vehicles and 14 new inspection lanes. Phase three includes new toll booths and toll offices and updating infrastructure.

At the end of the project, which could take between six and 10 years, virtually everything on the bridge plaza will be replaced, Chrapko said.

Timelines for the second and third phases have not

been established. Chrapko said the project is designed in such a way that each phase is not required to be finished but can be depending on need and money.

The design of the new plaza, Chrapko said, increases security by making it less open. Currently, people can walk easily across the plaza from other places, such as the Duty Free parking lot. That won't be possible on the new plaza.

All one needs to do is travel on the Blue Water Bridge. This bridge, which was once a beautiful alternative to going through Detroit to New York State or Toronto, now maintains lines through Detroit Customs to the Canadian side of the bridge. Clearly, no PR blitz is needed for one to understand that something must be done with the plaza. It is simply a decision of how best to maintain the City of Port Huron's commercial existence while substantially interfering with commercial activity because of the acquisition/eminent domain process.

The bridge clearly will hurt the United States far more than Canada because Canada has been attempting to purchase the land over the years. Canada probably destroyed values by the process, but the same process has been used by the Detroit International Bridge Company for the past 20 years; with some results not totally destructive of individual property rights but other results which created great harm to neighborhoods.

Canadian Bridge Plaza

aackerman@sbcglobal.net (Alan Ackerman) — Tue, 06 Jan 2009 13:35:11 GMT

Times Herald

Canadian officials are prepared to start a $54 million (Canadian) project to revamp the Blue Water Bridge Plaza in Point Edward.

The project will start this month and be completed in December 2010. The new building will be west of the existing Customs building.

Chuck Chrapko, president and chief executive officer of Blue Water Bridge Canada, said travelers to Ontario barely will notice the project has started.

"It will not divert traffic in any way," he said.

The work is the first phase of what is expected to be a three-phase project costing a combined $110 million.

Phase two includes building secondary processing stations for passenger vehicles and 14 new inspection lanes. Phase three includes new toll booths and toll offices and updating infrastructure.

At the end of the project, which could take between six and 10 years, virtually everything on the bridge plaza will be replaced, Chrapko said.

Timelines for the second and third phases have not

been established. Chrapko said the project is designed in such a way that each phase is not required to be finished but can be depending on need and money.

New York City's Cooperatives React To The Current Economy & Real Estate Market

dbyrne@stark-stark.com (David J. Byrne) — Tue, 06 Jan 2009 13:17:05 GMT

Typically, cooperatives have the right to scrutinize and ultimately admit or reject potential buyers. This right is furthered via the adoption and use of admissions policies, set and amended from time to time by the Board of Directors. During the challenging time, Boards are maintaining their strict and tough admissions standards, and often making them stricter. Ensuring that only those financially secure buyers are admitted helps to minimize the risk to the cooperative of shareholders in foreclosure, its own foreclosures, collection-related legal fees and delinquencies that lead to deficits in the monthly and annual budget.

Some cooperatives have amended admissions rules to require buyers to post as much as a 50% down payment. Some have mandated that buyers deposit funds into an escrow fund to cover upcoming maintenance fees. Cooperatives are frowning upon buyers with interest-only mortgages or adjustable rate mortgages. Buyers with fixed-rate mortgages are preferred. Even more interesting perhaps are those cooperatives that are rejecting applications because they feel that the proposed sale price was too low. In such instances the co-op believes that a low sale price will adversely impact the values of their other apartments.

Boards have become less restrictive however with respect to subletting. While typically disfavored, subletting provides financially troubled shareholders with the ability to remain current on maintenance charges as well.

Each Board should consult with legal counsel or skilled and experienced management prior to amending admissions rules. Such consultations can help ensure that a Board does not jeopardize the protections afforded by the business judgment rule in the face of a challenging and troubled economy."

Scotland’s homelessness advance warning system

contact@nearlylegal.co.uk (Nearly Legal) — Tue, 06 Jan 2009 12:44:44 GMT

News of a change from over the border. From 1st April landlords will have to notify the local authority in a standard form when they raise proceedings for possession. This will give effect to s. 11 of the Homelessness etc (Scotland) Act 2003. Notice can be posted or sent electronically to the local authority. The Notice to Local [...]

The Notice to Local Authorities (Scotland) Regulations 2008 SSI 2008/324 details the information that a landlord is required to give:

Details of landlord and their legal representative
Landlord’s registration reference
Tenant’s name
Address of property
Date tenancy started
Details of which court and when proceedings were raised
What statutory provision proceedings are being raised under

There are no direct sanctions for landlords who don’t comply, but discussions are ongoing. The requirement to give notice is a small change, but it may make quite a difference to the abilities of local authorities to plan ahead and for succesful interventions to be made through e.g. rent deposit schemes so that homelessness can be prevented.