REAL CASES IN REAL ESTATE
By Andrea Lee Negroni, Esq.
Cases in Real Estate is a
weekly update on real estate law, with legal principles illustrated and
explained by lawsuits from around the country. The topics are wide-ranging for
appeal to a broad spectrum of readers including lawyers, homeowners, investors
and the general public. Andrea Lee Negroni, a Washington DC
attorney and legal writer with 25 years of experience in financial services and
mortgage law, contributes the case summaries.
of Real Cases in Real Estate will learn and be entertained by lawsuits
involving nuisance, trespass, zoning violations, deed restrictions, title
insurance, public utilities, mechanics liens, construction defects, adverse
possession, foreclosure and eviction, divorce and marital property rights,
tenants' rights, and more. Real Cases in Real Estate uncovers the
unpredictable, amusing, and sometimes outrageous disputes between next-door
neighbors, contractors and homeowners, condo boards and residents, real estate
brokers and homebuyers, and zoning administrators and developers.
fully cited case summary highlights the essential law of the case and explains
the principal legal theories and concepts relevant to the outcome. Plain
language treatment makes Real Cases in Real Estate accessible to lawyers
and laymen alike.
you follow real estate law professionally or as a hobby, you'll find something
new and useful every week in Real Cases in Real Estate.
Updates for week of July 19, 2010
When Arson Damages
Neighbor's Home, Liability Requires the Criminal Act be Foreseeable
In this Texas case, the court considered
whether a homeowner owed a duty to the owner of the house next door, when both
homes were damaged in a fire. The case also explains the meaning of negligent entrustment and rules that
this principle is not applicable to real estate in Texas.
Scurlock sued Carol Pennell after a fire destroyed Pennell's vacation house and
damaged Scurlock's house. Pennell had not been at her vacation house for 10
months before the fire and testified that she left the house locked up with the
utilities off. The fire at Pennell's house was apparently started by an
arsonist. Scurlock's lawsuit was based on Pennell's negligence. Liability for
negligent activity requires that the injury result from the activity complained
about. In this case, however, the arsonist's activity was an intervening cause
of Scurlock's property damage, which ultimately relieved Pennell from
liability. However, if the intervening criminal act created a foreseeable risk of injury, then Pennell's
liability would not have been excused.
In this case, Scurlock did not demonstrate
that Pennell should have foreseen the risk of fire by arson. The factors that
make danger foreseeable include other criminal conduct on or near the property,
how frequent the other criminal conduct occurred, how similar the other
criminal conduct was to the conduct complained about, and whether the property
owner knew about those other criminal incidents. Briefly put, the court looked
for "similarity, recency, frequency and publicity" of prior criminal acts in
considering whether the injury caused by arson was foreseeable. The only other
nearby criminal activity mentioned in the trial was a burglary nearly 30 years
earlier. This crime (burglary) was not similar to the arson, or recent, or
evidence of frequent criminal activity in the area. Therefore, the court found
that Pennell could not have foreseen the risk that arson would injure her
neighbor. As the decision states, "Property owners owe a legal duty to those
whom a third-party criminal act may harm only if the risk of criminal conduct
is so great that it is both unreasonable an foreseeable."
Scurlock also based her claims against
Pennell on negligent entrustment,
defined in Black's Law Dictionary as "the act of leaving a dangerous article
(such as a gun or a car) with a person who the lender knows, or should know, is
likely to use it in an unreasonably risky manner." In Texas, however, negligent
entrustment applies only to chattels, not to real estate.
subscribers can view the enhanced version of Scurlock
v. Pennell, 177 S.W.3d 222 (Tex. App. 1st Dist. 2005).
can use lexisOne's Free Case Law search to view the free, un-enhanced version
of Scurlock v. Pennell, 177 S.W.3d 222 (Tex. App. 1st Dist. 2005).
New York Landlord Has
No Legal Duty to Mitigate Damages Following Broken Lease
A New York court considered a landlord's
obligations to his tenant after the landlord rented a house that was not
complete when the tenant moved in. The decision in Hamblin v. Bachman
(unpublished) reaffirms the long-standing rule in New York that a residential
landlord is not required to mitigate damages when his tenant breaks the lease.
In simpler terms, the landlord doesn't have to re-rent the house but may sue
his tenant for the full unpaid rent under the broken lease. The case also
explains what it means for a lease contract to be surrendered by operation of law.
Steven Campo rented a house knowing that work
was needed, but oddly, he signed a lease requiring him, as tenant, to ensure
the property conformed with town codes. Although he was aware of the unfinished
condition of the house when he rented it, Campo did not reference any kind of
punch list for items he expected the landlord to repair. In a separate note to
the landlord, he requested the repairs. Campo was dissatisfied with the
landlord's delay in making the requested repairs and reported mold and moisture
to the health department.
The health department did not determine that
the mold violated the health code, but did report a violation based on damaged
asbestos insulation and ordered the landlord to abate the violation in 21 days.
The health department also suggested no one enter the basement or garage
because of the asbestos.
Campo stopped paying rent and moved out. The
landlord made some repairs and re-rented the house. The issue decided in this
case is how much rent Campo owed the landlord. The New York rule is that
landlords have no duty to mitigate damages from a broken lease, so a tenant is
liable for the rent until the end of the lease term if the house isn't
re-rented. However, when the landlord re-rents the house, the lease is surrendered by operation of law. "A
surrender by operation of law is inferred from the conduct of the parties."
That is, both landlord and tenant acted in a way that was completely
inconsistent with their desire to continue the lease. The tenant's conduct, in
moving out, was inconsistent with his desire to continue to rent the house, and
the landlord's conduct, by re-renting the house to someone else, was
inconsistent with his desire to continue the lease with Campo.
Ironically, the education and accomplishments
of the tenants worked against them in this lawsuit. Noting that one tenant had
a master's degree and the other owned a business, the court decided their
bargaining power was equal to the landlord's, so they should have worked harder
to negotiate the lease. There is even a suggestion in this decision that if the
same lease had been made by a tenant with less knowledge and education, it
might have been unconscionable.
The legal principle favoring the tenants in
this case is the common law warranty of habitability, which means that a
landlord's commitment to rent a residence legally implies that the property
will not be harmful to his tenant. The Court relied on a treatise on New York
Landlord-Tenant law for guidance on the proportion of rent that should be
abated based on the severity of this breach of warranty of habitability. The
Court abated Campo's contractual rent 60% for the health risk posed by asbestos
and 20% for the mold.
subscribers can view the enhanced version of Hamblin
v. Bachman, 23 Misc. 3d 1116(A), 885 N.Y.S.2d 711 (N.Y. City Ct. 2009).
can access State Case Law, Codes, Full Jurisdictional Shepard's® Citations and
more using lexisOne's Research Value Package.