Inspections Make Sense

          Most new homebuyers never think about it, but it’s true.  How do all those new homes get built?

Homebuilders often use subcontractors to do large portions of their work on new homes.  A substantial portion of a Homebuilder’s work consists of coordinating the work of the different subcontractor trades.  Scheduling can become a critical issue.  If the concrete subcontractor is too busy to pour the foundation, then it’s difficult for the framer to put up the walls.  Sometimes different phases of the construction can be done in parallel.  But you’re not going to put the roof on before the walls go up.

Lack of proper sequencing by the developer can lead to odd results.  For example, what if a Homebuilder schedules the sheet metal contractor to put on the chimney caps before the chimney flues are fully finished?  It can happen.  If that kind of a sequence is followed, a house could end up with a sheet metal cap on the top of the chimney, but the flue might be only partially completed – or there might be no flue at all.

Is it possible for such things to happen?  Yes.  And they do.  So what would happen in such a situation?  The embers from a fireplace could ignite the wooden chimney box in a framed in chimney – and a house fire could result.

So how can homebuyers protect themselves from such things?  It’s difficult to detect every construction defect in new construction.  But many new homebuyers seem to think there’s no need for a home inspection on new construction, because after all, the home is brand new.  What these homebuyers don’t realize is that even though construction is new, there can still be issues or imperfections.

Insurance Coverage is Important

It’s probably safe to say that most home buyers use a loan from a bank or other lender to help pay for their house.  While some home buyers have enough money to pay cash for their home, most home buyers end up paying for their home over a period of years.  The most common way to buy a home over time is to get a loan from a bank or other lender. When this is done the buyer can pay the seller cash for the home, and then the buyer repays the lender over a period of years.

Most institutional lenders will require that a homeowner obtain homeowners insurance.  There’s a good reason for this.  The home serves as the lender’s security.  If the homeowner defaults on their loan payments, then the lender can foreclose.  However, if the home has been severely damaged from fire, storm, or other cause then the lender’s security is damaged as well.  Insurance proceeds can be used to help repair a damaged home.

Most homeowners probably buy an insurance policy and never think twice about what might happen if they ever had to make a claim under their policy for significant damage to their home.  Homeowners might not realize that an insurance company’s obligation to pay will probably be limited by the amount of coverage purchased.  If the homeowner’s coverage limit is a million dollars, then if a storm damaged their home and the damage cost two million dollars to fix, then the homeowner may end up short of cash.  This can be a significant problem.  Also, insurance policies often contain “exclusions.”  These exclusions determine the types of loss the policy will cover.  For example, if an insurance policy excludes coverage due to earthquake, then if a home is damaged or destroyed by an earthquake then the homeowner may very well not be entitled to any payout from the insurance company.

Insurance coverage questions can be quite complex.  For example, if a homeowner’s policy includes coverage for fire but excludes coverage for earthquake, then a question may arise whether or not coverage exists if a water heater falls over in an earthquake starts a fire.  In such a situation, the insurance company may claim that no coverage exists because earthquake damage is excluded from coverage.  However, the homeowner may claim that the damage was caused not by earthquake but by fire, and fire damage is covered in the policy.  Many of these types of questions have already been answered by California cases, but others remain unanswered.

When insurance coverage questions exist, attorneys often get involved in an effort to obtain insurance coverage for their clients.  These attorneys often work long and hard in an effort to obtain such coverage.  Many times such efforts are successful, but sometimes they are not.  An unusual example illustrates this concept.

Several years ago, two motorists were traveling at night on an interstate freeway in Ohio when their car struck one of a cow that had wandered onto the freeway. The motorists were injured, and they filed suit against the owner of the cow.  However, the owner had no liability insurance.

The motorists’ policy apparently provided that the motorists’ own insurance policy would cover them for injury or damage if another motorist was at fault for a collision even if that other motorist didn’t have any insurance.  Because the owner of the cows had no insurance, the motorists made a claim under their own insurance policy against their own insurance company for uninsured motorist coverage.

The insurance company denied the claim and the matter was submitted to a court for a decision.  The Court found that the motorists’ policy provided coverage for injuries caused by an accident arising out of the “ownership, maintenance or use” of an uninsured land motor vehicle. The court found that the owner of the cow had no insurance.  However, the Court had a problem with whether or not a “cow” qualified as a “motor vehicle.”   The Court’s own words are as follows:

“There appears to be no dispute that there was a collision; the cow was not insured at the time of the collision, and that the cow caused the collision.  The dispute in this case is whether the cow was a ‘land motor vehicle’ as defined in the policy. While a cow is designed for operation on land, we do not believe a cow is a “motor vehicle.”  The policy at issue does not separately define ‘motor vehicle;’ therefore we must look to the common, ordinary meaning of this term.  The American Heritage Dictionary defines ‘motor vehicle’ as, ‘a self-propelled, wheeled conveyance that does not run on rails.  A cow is self-propelled, does not run on rails, and could be used as a conveyance; however, there is no indication in the record that this particular cow had wheels.  Therefore, it was not a motor vehicle.”

For the full report of the case, see Mayor v. Wedding, (2003) WL 22931354.

The end result?  The cow won (and the motorists lost).

Interest Never Sleeps

It’s a common experience.  People visit their lawyer – and they often feel better.

Why would that be the case?  Why would anybody go see a lawyer in order to feel better?

There’s a very good reason.  People who are upset or angry either may or may not feel better after they see their lawyer.  But people who are in financial trouble can often feel much better after they see their lawyer.

Why is this so?  It’s because people who are behind in their payments often don’t know what the likely outcome of their situation might be.  Most people don’t exactly know what a creditor can – or cannot – do when a borrower gets behind on their payments.  Many people have a vague, generalized sense that a debtor’s wages can be seized, or garnished.  And there are often stories about cars being repossessed in the middle of the night after an owner gets behind on their car payments.  Debtor’s bank accounts can be frozen or drained, and other assets can sometimes be seized as well.

It’s enough to make a borrower nervous.  So when the pressure gets too high, borrowers sometimes turn to legal counsel to find out exactly what their rights – and liabilities – might be.

It’s a tough position to be in.  Unforeseen events can result in an unexpected loss of income, or significant additional debt.  A prolonged illness, divorce, or job loss can all result in a significant – and sudden – loss of income.  But when something like this happens, the bills usually don’t stop coming – only the income.  This can suddenly place even the most prosperous, thrifty wage earner into a far different position than they ever expected to find themselves in.

With respect to the incurring of unnecessary debt, Gordon B. Hinckley, a prominent leader in the Mormon Church, had this to say:

“I commend to you the virtues of thrift and industry. It is the labor and the thrift of people that make a nation strong. It is work and thrift that make the family independent. Debt can be a terrible thing. It is so easy to incur and so difficult to repay. Borrowed money is had only at a price, and that price can be burdensome. Bankruptcy generally is the bitter fruit of debt. It is a tragic fulfillment of a simple process of borrowing more than one can repay. Back in 1938, I heard President J. Reuben Clark, Jr. . . . talk about interest. He said:

“Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours; it never has short crops nor droughts; it never pays taxes; it buys no food; it wears no clothes; it is unhoused and without home and so has no repairs; it has neither wife, children, father, mother, nor kinfolk to watch over and care for; it has no expense of living; it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.” (In Conference Report, April 1938, page 103.) (Quoting from Gordon B. Hinckley in March, 1990 Ensign magazine).

The ready availability of credit has had a profound impact on the economy of this country over many years.  Freddie Mac was set up by the Federal Government many years ago in order to make money more readily available to the home-buying public.  And the use of credit has made commercial development possible that never could have otherwise occurred. (The construction of Disneyland was made possible through borrowed funds).  Wisely used, loans and credit can be powerful tools.  But unnecessarily used, they can lead to almost overwhelming financial distress.

Lending or borrowing money, the use of credit, and obtaining loans all involve complex legal principles, regulations and considerations.  Persons involved in significant lending, borrowing or debt workouts would do well to consult legal counsel.

Know Whereof you Read Before Signing a Contract

         Next time you take out a loan or refinance your house, do something unusual: Read all the loan papers.

You’ll drive the loan officer crazy.  The officer will meet you in a large and spacious conference room with a stack of papers at least a foot high.  She’ll set the first group of documents down on the table and slide it toward you.  She’ll show you the signature line and say, “Sign here, here and here.”

If you start reading the papers line by line, the loan officer will first look surprised.  Then impatient.  Then helpless.

My wife has this down to a science.  We’re together, the loan officer hands us a paper, and I start to read it.  My wife quickly says, “He’s a lawyer.  He reads everything.”  This seems to pacify them.

What percentage of borrowers actually read the documents they sign?  Nobody knows for sure.  But if the reactions of the loan officers are any indication, it can’t be very high.

If you don’t read the contract but just sign it, are you bound by its terms?  In most cases, yes.  The problem is, many times borrowers won’t understand the language even if they read it.  If they don’t understand it, are they still bound?  Again, in most cases, yes.

What to do?  Take a lawyer with you to review the documents.  Who actually does that?  Almost nobody.  What does that mean?  That lenders are free to put in that contract a lot of provisions that benefit them and only them.

A small example:  Have you ever signed a contract that provided that any lawsuit about the contract would be filed in New York or another state?  Some states limit or bar punitive damages.  That means if the lender, brokerage house or other institution is really, really guilty of doing something wrong, the most you’ll get is you actual (or out of pocket) damages.  You might get some emotional distress or related damages.  But your ability to get other damages may be severely limited or barred altogether.

How about that?  If a major corporation presents you with a contract to sign that says any lawsuit will be filed in Wyoming, or Delaware or Kansas, will your lawsuit be filed there?  Very possibly, yes.  If a problem develops, you might find yourself talking to lawyers 2,000 miles away.  And a trial?  Try to find a comfortable motel at a good price, because you may find yourself having an extended stay at a place you’ve never been before.

Fortunately, most contracts don’t end up in a lawsuit.  But for conservative people who can afford it?  Know what you’re signing.

Law advises landowners to make use of property

When I was a youngster, my mother always told me “You can’t get something for nothing.”  Mother, bless her heart, obviously didn’t own much real estate.

What mother didn’t know is that almost all real estate—even the old family homestead—is at risk from what is known as a “prescriptive easement.”

The policy of the law is to favor the actual use of real estate.  The law, in proper situations, also favors certainty in the use of real estate.  What all this means is that in real estate, owners must either “use it or lose it.”  And for non-owners, the policy can be “use it—and get it.”

An owner, who doesn’t use real estate for five years, may lose ownership if a stranger occupies the property for those five years and pays the taxes on it. This principle is known as “adverse possession.”  If the owner pays the taxes each year, then he or she can’t lose ownership of the property.

However, if someone else uses the property, that person may gain a “prescriptive easement.”  This “easement” is an actual ownership interest in the property.  It doesn’t exclude the owner, which means the owner can continue using the property.  But if the occupant gets an easement, then the occupant has a legal right to continue using the property.  The owner may not be able to exclude the occupant or stop him or her from using the property.

The process for obtaining a prescriptive easement is similar to the process for obtaining title to property through adverse possession.  However, an occupant need not pay taxes to get a prescriptive easement unless the easement has taxes separately assessed.

In order to get a prescriptive easement, an occupant must occupy the property for five years.  The occupant doesn’t have to live on the property or stay on it.  Even driving over a road when needed may be sufficient as long as the owner doesn’t give permission and as long as the use is sufficiently open that the owner can observe it.

After five years of such use, the occupant, or user, holds an “easement by prescription.” This easement isn’t ownership, but it is a right to use the property.

Obtaining a prescriptive easement might look appealing.  But persons who unlawfully and without permission enter property belonging to someone else can be guilty of a trespass.  As a result, the obtaining of a prescriptive easement can in some cases result in potential trespass problems.

To protect themselves from potential claims of easement, owners can post signs at each entrance to their property and at certain intervals along the boundary.  These signs say “Right to pass by permission, and subject to control, of owner: Section 1008, Civil Code.”  When done properly, these signs can prevent users or occupants from gaining an easement in the property.  However, property owners do well to seek professional legal counsel before placing such signs, because the law contains specific requirements for such signs to be effective.

Unreasonable Music

As defined by Webster’s II New College Dictionary, the word “nuisance” means “something that is inconvenient or vexatious: bother.”  That’s a concept that’s easily understood – when something (or someone) is a nuisance, then there’s an annoyance, or a bother.

But there’s a slightly different meaning in the law.  Webster’s also notes that in a legal context, a “nuisance” is “a use of property or course of conduct that interferes with the legal rights of others by causing damage, annoyance, or inconvenience.”

These two definitions are the only two definitions of the word “nuisance” that is given in Webster’s II New College Dictionary.

There are many kinds of dictionaries.  In addition to dictionaries of English words (such as Webster’s) there are also dictionaries that define and describe specialty words.  For example, Means Illustratrated Construction Dictionary gives definitions (and pictures) of many different kinds of construction terms.  And it’s possible for anyone to purchase Mosby’s Dictionary of Medicine, Nursing & Health Professions.

There are also Legal Dictionaries that define legal terms, words and phrases.  One of these is Black’s Law Dictionary (seventh edition).  Black’s definitions of “nuisance” occupies more than a one and a half pages of text.  That’s a fairly clear indicator that “nuisance” is a concept that is pretty well developed in the law.  Black’s defines “nuisance” as “A condition or situation (such as a loud noise or foul odor) that interferes with the use or enjoyment of property.  Black’s notes that a “nuisance” isn’t necessarily something that is offensive to all people.  For example, Black’s cites a United States Supreme Court case from 1926 for an example of a nuisance: “A nuisance may be merely a right thing in the wrong place, like a pig in the parlor instead of the barnyard.”  But Black’s also observes that the concept of “nuisance” has a wide range of applications.  “There is perhaps no more impenetrable jungle in the entire law than that which surrounds the word ‘nuisance.’  It has meant all things to all people, and has been applied indiscriminately to everything from an alarming advertisement to a cockroach baked in a pie.” (The original source of this statement is a famous legal work entitled “Prosser and Keeton on the Law of Torts §86, at 616.”)

The concept of “nuisance” is not new.  It’s been around for many, many years.  In an entertaining case from 1939, a New York court described as follows one particular case of nuisance “Claremont Inn, at 124th Street and Riverside Drive, is an old institution rich in historical incident. Acquired by the City in 1872, it has been under the jurisdiction of the Park Department, leased at various times to private persons to conduct as a place of refreshment. Renovated in 1934, it was converted from an expensive to a popular establishment. It consists of an indoor restaurant and bar and also a large outdoor pavilion with an outdoor modern dance orchestra. The outdoor section is open from about June 1st to the end of September. And the band plays from 7 P. M. to 1 A. M. (on Saturdays and holidays to 2 A. M.). It is noteworthy that this is the only open air dance orchestra in a residential section in any part of the City.”

The neighbors filed a lawsuit, asking the New York Court to order the Inn to close earlier each night due to “loud music, excessive noise, heedless conduct of its operators and boisterous behavior of its patrons.”  The court noted that “Assurances have been given for the correction of many of the offending practices, such as rehearsals of the orchestra at 3 A. M.; the removal of refuse cans, and deliveries by tradespeople, with attendant clatter and rumbling of trucks, early in the morning; and congested traffic and parking, with resulting clamor and shouting, when the patrons of the Inn depart. But the defendants insist upon continuing the outdoor band to the hours above specified—and the residents of the district, claiming that their sleep is disturbed, insist on an earlier hour.”  The case is reported as Peters v. Moses (1939) 12 N.Y.S.2d 735.

This was evidently quite an event each evening.  The outdoor dance floor was located in a residential neighborhood.  The dance band held rehearsals at 3 a.m.  The band played until 1:00 a.m. each evening, except for weekends when it played until 2:00 a.m.  With all of the noise, disturbance, and clamour of an outdoor dance, the neighboring residents were understandably up in arms.

Open House Has Surprising Result

            On any given summer weekend, it’s possible to drive around suburban neighborhoods and see realtor signs out on the sidewalk.  It’s a known fact: Realtors hold open houses.  These open houses can be a great opportunity for buyers of real estate to check out a neighborhood, check out a potential new home, or even check out a realtor.  No appointment is necessary – all you have to do is get in a car, find an area you like and start driving.  If you’re lucky, you might even score some refreshments.

The history of theft, fraud, and abuse is as old as mankind.  Stories of theft, fraud and abuse go all the way back to the earliest recorded histories.  So it’s no surprise that sometimes people come up with new ways of doing an old thing – which is trying to get something for nothing; an effort to get something without working for it and without paying for it.  The problem is, people who try to make a fast buck illegally often underestimate the true costs of such activities – the emotional drain they experience from working outside the law, the risk and fear of getting caught, always looking over their shoulder, and then ultimately the consequences if and when they do get caught. It’s just bad every which way.

In the old days, Burglary was sometimes defined as breaking and entering into another’s dwelling at night with the intent to commit a felony.  The modern law is usually not so limited.  Burglary is no longer usually limited to an entry at night, and Burglary is generally no longer limited to entry into residential properties.  Therefore, an unauthorized entry into a commercial property with an intent to commit any larceny (i.e. theft) or with an intent to commit any felony can qualify as burglary.  Most people probably think of a burglar as someone who unlawfully enters into a property with the intent to steal something.  This might be the most common result of burglary – a theft of something — but a burglary can also exist where there’s an intent to commit any felony.

Differing degrees of burglary exist.  First degree burglary generally includes burglary of an inhabited dwelling house, or an inhabited floating home, or an inhabited trailer coach, or the portion of any building which is inhabited.  Second degree burglary is any burglary which is not first degree burglary.  There’s a long history in the development of the law concerning burglary.  These definitions aren’t the full story concerning burglary – but they are a starting point.

It seems that in June of 2010, a realtor was holding an open house in California.  Two individuals attended the open house.  Once inside the property being shown, the individuals split up.  One of the individuals spoke with the realtor for several minutes, and the other disappeared for a few minutes inside the property.

After the individuals left the house, the realtor realized her wallet was missing. Her wallet contained several credit cards, a gift certificate, and a lottery ticket.  The realtor looked about the property and her car for her wallet, and contacted her roommate at home to see if she had left the purse at home.  She couldn’t locate the wallet, and so she called the police.

An on-duty police Sergeant heard the radio dispatch about the stolen wallet while he was out working in the field.  He spotted a pickup truck that matched the description from the dispatch.  He made a traffic stop, searched the pickup truck and found the realtor’s credit cards in between the seats.  The realtor made a positive identification of the persons in the pickup truck.

One of the suspects was charged, and after trial was convicted, of first degree residential burglary, second degree commercial burglary and fraudulently using an access card.  On appeal, this individual claimed, among other things, that he was not guilty of first degree residential burglary because the occupants of the house were not present at the home at the time he was there.  He argued that first degree burglary can only exist for a dwelling which is occupied, and that because the residents weren’t there at the time of the open house, the property wasn’t “inhabited.”

The court of appeal disagreed, and found that the property was “inhabited” but that the occupants were “temporarily absent” at the time of the open house.  The court of appeal affirmed the judgment of conviction.

The single theft of the wallet from inside a residential property resulted in the individual being convicted of three crimes, one of which was first degree residential burglary.  It was a high price to pay for stealing a wallet.  The defendant was sentenced to 21 years and 4 months.

The case is reported as People v. Little (2012) DJDAR 7965.

This article only summarizes some of the main points of this case.  The complete facts and law involved in this case are more detailed and complex than those summarized here.  Nothing in this article should be relied on in any specific situation, because the considerations in any specific situation may require different considerations or may provide a different result.  Persons with questions or issues concerning the legal issues raised in this column should consult competent legal counsel.

Options Exist for Check Problems

With the continuing popularity of online banking and the widespread use of credit  and debit cards, it seems like virtually all transactions these days are being done electronically.  But some large transactions are still done mostly by check.

A good example of this is the sale of real estate.  Most real estate sales involve an “escrow holder.”  This “escrow holder” accepts instructions from both the Buyer and the Seller.  The Seller deposits a deed into escrow and the Buyer (or the Buyer’s lender) deposits the purchase price into the escrow.  When the escrow holder can fully comply with the instructions from the Buyer and the Seller, then the “escrow” is closed, the deed is recorded and the Buyer’s money is given to the Seller.

Most often the purchase money is given to the Seller in the form of a check.  So what happens if the Seller takes the check, goes out to dinner to celebrate the sale, but leaves the check in the restaurant with their purse or wallet?  What if the check is lost or stolen?  Can the Seller do anything about this?

The answer is “Yes.”  In that situation, the Seller can contact the escrow holder and request that a “stop payment” be issued on the check.  The escrow holder can contact its bank and ask that the check not be honored.  A verbal “stop payment” is generally valid for 14 days.  If a letter is sent, then such a stop payment request is usually valid for 6 months.  As long as the bank is given sufficient notice to act on the sop payment request, then the Bank can’t properly honor the check if a valid stop payment request has been made.  If the bank honors the check after receiving a valid stop payment request then the bank may be liable for any loss or damage that results from any wrongful payment by the bank on the check.

This isn’t to say that persons receiving checks should plan to rely on a stop payment order if they lose a check.  Mistakes happen, and sometimes checks are honored when they shouldn’t be.  If a bank mistakenly pays a check subject to a stop order, the person who lost the check may be unable to get a replacement from the check issuer and this person may need to rely on the bank for repayment.

The bank may resist making such a payment and an expensive lawsuit may be necessary.  Further, if the stop payment was only verbal, there may be no record of the stop payment and the bank may dispute when or whether such a stop payment request was validly made.

Therefore, in order to avoid a real headache situation, the best policy with respect to checks is to treat them like cash.

Original Promissory Note May Not Be Necessary in Foreclosure

Nothing ventured, nothing gained.

With the unprecedented number of foreclosures that have been occurring over the past few years, borrowers in default on their loans have been faced with the unpleasant – and very real – prospect of losing their homes in foreclosure.

When presented with the likelihood of foreclosure, some borrowers have chosen to sell their properties through a “short sale.”  Others have chosen to simply abandon their homes and allow the foreclosure sale to occur.  Other borrowers have ended up in bankruptcy.

Some borrowers have taken a very creative approach in dealing with a potential foreclosure.  In one case, a homeowner in default chose to file a lawsuit against a lender by claiming that the lender had no right to foreclose because the lender didn’t have the original promissory note. This case was determined by a federal court, and it is identified as Sicairos v. NDEX West, LLC, 2009 WL 385855 (S.D. Cal.)   A “promissory note” is a written promise to pay money, and many loan agreements are evidenced by a promissory note.  In general, a creditor who holds a promissory note should be able to prove that such creditor actually owns the loan by producing the original promissory note.

Home loans get bought and sold by lenders every day.  Sometimes the paper trail is imperfect, and as a result the loan may be transferred to a purchasing bank, but the original promissory note may get lost in the shuffle.  The homeowner in the Sicairos case claimed that because the bank didn’t have the original promissory note, it wasn’t entitled to foreclose on the borrower’s home. But the homeowner’s attorney didn’t have any real legal authority that required the foreclosing lender to actually have the original promissory note.  In the Sicairos case, the court held that California law doesn’t require a lender to actually have physical possession of the original promissory note in order to conduct foreclosure proceedings. The Sicairos court found that California law provides a comprehensive procedures for non-judicial foreclosures, and the Sicairos court wasn’t able to identify anything in the foreclosure statutes that required the lender to actually have the original promissory note.

Some borrower may wonder whether or not they might have a good defense to foreclosure if their lender hasn’t kept a perfect paper trail.  The plaintiff in the Sicairos case certainly made a game effort to halt foreclosure based on this technicality.  But in this case, the court wasn’t impressed, and it dismissed the homeowner’s lawsuit, thereby allowing the lender to proceed with foreclosure.

The Sicairos case was decided by a federal trial court.  This decision wouldn’t be binding on California state courts, nor would it be binding on most other federal courts, including bankruptcy courts.  Sometimes technical arguments can be successful in legal matters. And a different court could potentially have reached a different result.  But in this case, this technical argument failed.

Owners Must Maintain Some Properties

                The number of foreclosures in the late 2000’s was very, very high. Californians probably haven’t seen this many foreclosure sales since the Great Depression of the 1930’s.

Besides the economic upheaval experienced by families in foreclosure, some owners of neighboring properties found that their own properties were being negatively affected by “foreclosure blight.”  If a foreclosed property is left vacant and not maintained, the yard can quickly get out of hand.  Because the foreclosure process takes several months to complete, and because lenders are often delaying foreclosure during workout or short-sale negotiations, a vacant property can quickly become an eyesore.  Properties sold at foreclosure sale can be purchased by investors who don’t move into the property, but who instead hold the property vacant for investment purposes.  Because these owners don’t actually live in the property, they sometimes have an economic disincentive to maintain such properties.

Recognizing that such properties can have negative effects on neighborhood property values, the California Legislature passed a law in 2008 that gives local government the power to address such problems.  Normally, a homeowner isn’t required to cut his or her grass.  And before 2008, there was no law that required a homeowner to trim or prune trees or shrubs so long as sidewalks, roads, and neighboring properties aren’t directly affected and so long as the public health and safety isn’t negatively affected.  But in 2008, the California Legislature passed Civil Code section 2929.3.  That law provides that persons who purchase a property at a foreclosure sale must maintain that property so long as it remains vacant.  If the owner of such property fails to maintain it, then the city or other local governmental entity can assess fines of up to $1,000 per day for each violation.

That’s a substantial fine for not cutting your grass.  If you leave your grass uncut for 30 days, you could end up paying a fine equivalent to the cost of installing a small swimming pool.  Leaving your lawn or your shrubs uncut for two months could cost you the price of a really nice swimming pool  – or a great European vacation.

The statute requires that such owners “maintain” the exterior of their vacant properties.  The new law doesn’t given a detailed description of the maintenance that must be performed, but the law does state that “failure to maintain” includes a failure to trim excess “foliage” that diminishes the value of neighboring properties.  “Failure to maintain” also includes failure to keep trespassers or “squatters” off the property.  And the owner will also be in violation if there’s standing water that results in mosquito breeding.