Category: Real Estate

The ABA publishes Dean Alterman’s book “How to Draft Easements”

Dean Alterman’s second book, How to Draft Easements, came out in print this month.  It’s published by the Real Property, Trusts and Estates section of the American Bar Association and follows by six years his first book, How to Build a Real Estate Law Practice, also published by the ABA.  The book explains the basic legal doctrines behind easements and easement agreements, describes how to draft five different types of easement agreements, and concludes by listing ten ways to misdraft an easement agreement.   His goal in writing the book was to help lawyers “draft easement agreements to reduce the chance that your clients find themselves in court arguing about their rights.  Litigation is a blunt and expensive tool with which to settle a dispute.”

Champlain Towers South and insurance: uncovered dangers may become uncovered losses

Three days after the tragic collapse of half of the 136-unit Champlain Towers South condominium in Surfside, Florida, the association’s insurer, James River Insurance Company, announced that it was paying the entire amount of its policy into court.

In matters of insurance, always read the fine print, even in news stories.  James River is paying not the amount of its coverage for building insurance, but its coverage for general liability – the coverage that we associate with visitors who slip on wet or damaged walkways.  That policy amount is reported to be $5 million, which equates to about $30,000 per condominium unit.  The association carried insurance of various sorts reported to total $48 million, which is about $300,000 per unit, and is about half the total market value of the 136 units before the collapse.

The legal dispute between Champlain South’s insurers (there are several) and the association is likely to focus on whether the policies cover the loss of the building.  That depends on the words in the policy.  Not every loss is a covered loss.

The Champlain Towers South case won’t be the first time Florida has seen this question.  In The Sandalwood Condominium Association at Wildwood, Inc. v. Allstate Insurance Company, 294 F.Supp. 2d 1315 (2003), the condominium’s policy covered “risk of direct physical loss involving collapse of a covered building or any part of a covered building caused only by one or more of the following,” including “hidden decay” and “hidden insect or vermin damage.”  In November 1998 the association discovered that termites had damaged several of the buildings.  As the association repaired the damage, it learned that the termite damage was extensive, and it filed a claim with Allstate in April 2000.  Seventeen months later Allstate denied the claim on two grounds: first, that the damage was not “collapse,” and second, that the damage was not “hidden.”   Allstate moved for summary judgment on both defenses.

The court denied both parts of Allstate’s motion.  Its explanation for rejecting Allstate’s argument that the damage was not “hidden” was not really a win for the association.  Why not?

Allstate alleged that, in the court’s words, the association “cannot claim the damage was hidden if they had prior knowledge of its existence,” and asked the court to rule that the Sandalwood association had to show that it did not know, and did not have a reason to know, that termites and decay had damaged the buildings.

The court rejected Allstate’s motion, but it adopted Allstate’s rule, saying that “in order to recover under the policy, Sandalwood must demonstrate that the damage to the structural integrity of the Complex was not visible and that Sandalwood neither knew nor should have known of the structural damage with sufficient time to allow for repairs before it reached the state of ‘collapse.'”  Because that was a question of fact and not a question of law, the court denied the motion.

Three years ago an engineering firm evaluated Champlain South. Buried in its report on page 7 is the following:  “The waterproofing below the Pool Deck & Entrance Drive as well as all of the planter waterproofing is beyond its useful life and therefore must all be completely removed and replaced.  The failed waterproofing is causing major structural damage to the concrete structural slab below these areas.  Failure to replace the waterproofing in the near future will cause the extent of the concrete deterioration to expand exponentially.”

If Champlain South’s policy reads like Sandalwood’s policy from Allstate did, be prepared for Champlain South’s insurer to argue that it doesn’t have to pay for the lost building because the association – its insured – knew about the severe damage in 2018 and had enough time to arrange for repairs, but didn’t.

The case for lower case in legal descriptions

Surveyors are wonderful and interesting people, full of information about real estate and able to interpret documents that perplex many lawyers.  The combination of an able lawyer and a competent surveyor can resolve problems that neither could handle alone.

For some years I’ve encouraged surveyors to change one quirk in how they do business, which is to cease writing legal descriptions in ALL CAPITAL LETTERS and in run-on paragraphs.  All caps and run-on paragraphs may be an acceptable style for Internet conspiracy theorists, but not for surveyors and their cousins in the title insurance companies.

Consider the following actual legal description from one of our property transactions, which I’ve lightly anonymized but otherwise left untouched.  Here is the legal description in the format in which I received it:

A TRACT OF LAND SITUATED IN THE NORTHEAST QUARTER SOUTHEAST QUARTER OF SECTION 3, TOWNSHIP 10 SOUTH, RANGE 10 EAST OF THE WILLAMETTE MERIDIAN, HARRISON COUNTY, OREGON, DESCRIBED AS FOLLOWS:

BEGINNING AT A ½ INCH IRON PIN WHICH BEARS SOUTH 89º 52’ WEST A DISTANCE OF 745.73 FEET AND SOUTH 0º 20’ 55″ EAST A DISTANCE OF 220.16 FEET FROM THE BRASS CAP MONUMENT MARKING THE EAST QUARTER CORNER OF SECTION 3, TOWNSHIP 10 SOUTH, RANGE 10 EAST OF THE WILLAMETTE MERIDIAN, SAID BEGINNING POINT ALSO BEING ON THE SOUTH LINE OF TRACT DESCRIBED AS PARCEL #1 IN DEED FROM HARRISON COUNTY SCHOOL DISTRICT TO HARRISON COUNTY, RECORDED IN VOLUME 42 AT PAGE 314, DEED RECORDS OF HARRISON COUNTY, OREGON; THENCE CONTINUING FROM SAID BEGINNING POINT SOUTH 0º 20’ 55″ EAST ALONG A LINE PARALLEL TO AND 4.0 FEET DISTANT EASTERLY, WHEN MEASURED AT RIGHT ANGLES TO, FROM THE EXISTING EASTERLY WALL OF THE PAYLESS DRUG STORE BUILDING AS THE SAME IS PRESENTLY LOCATED AND CONSTRUCTED, A DISTANCE OF 402.04 FEET TO ½ INCH IRON PIPE; THENCE SOUTH 53º 42’ 15″ WEST A DISTANCE OF 304.44 FEET, MORE OR LESS TO A ½ INCH IRON PIPE ON THE NORTHEASTERLY BOUNDARY OF THE SHORT LINE RAILROAD RIGHT OF WAY AS THE SAME IS PRESENTLY LOCATED AND CONSTRUCTED AND FROM WHICH POINT THE AFORESAID MONUMENT MARKING THE EAST QUARTER CORNER OF SAID SECTION 3 BEARS NORTH 50º 50’ 20″ EAST A DISTANCE OF 1273.34 FEET; THENCE NORTHWESTERLY ALONG SAID NORTHEASTERLY BOUNDARY OF THE SHORT LINE RAILROAD RIGHT OF WAY A DISTANCE OF 299.5 FEET, MORE OR LESS, TO THE WEST LINE OF SAID NORTHEAST QUARTER SOUTHEAST QUARTER; THENCE NORTH ALONG SAID WEST LINE A DISTANCE OF 186.5 FEET, MORE OR LESS, TO A POINT ON SAID WEST LINE WHICH BEARS SOUTH 0º 22’ 15″ EAST A DISTANCE OF 460.0 FEET FROM THE SOUTHERLY BOUNDARY LINE OF THE RELOCATED RIGHT OF WAY OF BEND-ONTARIO HIGHWAY; THENCE EASTERLY, PARALLEL WITH SAID HIGHWAY RIGHT OF WAY LINE A DISTANCE OF 142.5 FEET TO A POINT; THENCE NORTH, PARALLEL WITH THE WEST LINE OF SAID NORTHEAST QUARTER SOUTHEAST QUARTER, A DISTANCE OF 460.0 FEET, MORE OR LESS, TO THE SOUTHERLY BOUNDARY OF SAID RELOCATED HIGHWAY RIGHT OF WAY; THENCE EASTERLY ALONG SAID RELOCATED RIGHT OF WAY LINE A DISTANCE OF 387.7 FEET, MORE OR LESS, TO A POINT WHICH BEARS NORTH 0º 20’ 55″ WEST FROM THE POINT OF BEGINNING; THENCE SOUTH 0º 20’ 55″ EAST A DISTANCE OF 174.66 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.

Is that mess anything you want to read, let alone proofread?  Let us reformat this description.  First, we won’t write it in ALL CAPS but with ordinary capitalization.  Second, we’ll begin each call (each metes-and-bounds course) on a new line.  With those two simple changes in formatting, the opaque description becomes much easier both to read and to proof.  Here’s how our reformatted legal description begins:

           A tract of land situated in the Northeast quarter of the Southeast quarter of Section 3, Township 10 South, Range 10 East of the Willamette Meridian, Harrison County, Oregon, described as follows:

            Beginning at a ½ inch iron pin which bears South 89º 52’ West a distance of 745.73 feet and South 0º 20’ 55″ East a distance of 220.16 feet from the brass cap monument marking the East quarter corner of Section 3, Township 10 South, Range 10 East of the Willamette Meridian, said beginning point also being on the South line of tract described as Parcel #1 in deed from Harrison County School District to Harrison County, recorded in Volume 42 at Page 314, Deed Records of Harrison County, Oregon;

            Thence continuing from said beginning point South 0º 20’ 55″ East along a line parallel to and 4.0 feet distant Easterly, when measured at right angles to, from the existing Easterly wall of the Payless Drug Store building as the same is presently located and constructed, a distance of 402.04 feet to ½ inch iron pipe;

            Thence South 53º 42’ 15″ West a distance of 304.44 feet, more or less to a ½ inch iron pipe on the northeasterly boundary of the Short Line Railroad * * *

When a client buys property described by metes and bounds, if the description is not a simple rectangle I will enter it into deed plotting software and verify that the legal description closes – that the last call ends where the first call begins.  Once or twice a year I discover a legal description that doesn’t close, sometimes because a past conveyancer has transposed numbers, or exchanged “east” for “west,” or omitted an entire call.  Surveyors, title insurance companies, and lawyers will catch these errors much more easily if we write legal descriptions to be easier to read.  Let’s agree to leave the field of ALL CAPS to the Internet screamers.