Northwest Real Estate Law Blog : Northwest Real Estate Lawyer & Attorney : Davis Wright Tremaine Law Firm : Land Use, Development, Commercial Property : Seattle, Portland, Alaska, Washington, Oregon

Authored by:  Gene Grant and Monique Hawthorne

As published in The Daily Journal of Commerce

Real estate prices today are historically low because there are far fewer buyers than sellers. Foreclosures continue to flood the market with bargains. But people seeking to buy real estate during a severe recession often are unable to qualify for financing even though interest rates are enticingly low.

In such times, seller financing can be used to obtain a premium purchase price. Not only are the underwriting process and financing fees and costs avoided, but the seller often will finance a much higher percentage of the purchase price than would a typical mortgage lender. If and when interest rates increase, sellers can benefit by providing seller financing at a lower rate.

Seller financing has become something of a lost art. Following is a brief review of major issues that should be resolved carefully and that typically require the assistance of a real estate attorney.

 

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 Authored by:  Alan Middleton

The Huntingtons unwittingly built their home, well, and garage entirely on property owned by their neighbor, Noel Proctor. When he learned of the true boundary between the properties, Proctor sued to eject the Huntingtons. The trial court refused to require the Huntingtons to remove their home. Instead, it required Proctor to deed to the Huntingtons the acre underlying the improvements (the acre represented approximately 3.3% of Proctor's parcel) and accept in return payment for the value of the land. A very sharply divided Washington Supreme Court affirmed in a 5-4 decision. Copies of the majority and dissenting opinions can be found here: [opinions]

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Authored by:  Lloyd Chee

In Substitute Senate Bill 6544, the 2010 legislature extended the time period for submitting final plats for approval by cities and counties from five years to seven years.  This extension went into effect on June 10, 2010, and sunsets on December 31, 2014.  It appears to apply to all preliminary plats approved prior to the effective date that have not yet expired under the previous provisions of RCW 58.17.140.  This legislation also extends the period in which lots in final plats are protected as a valid land use to seven years (up from five years) for those final plats filed for record with the county auditor on or before December 31, 2014.  Click here to read the full text of the legislation.

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Authored by:  Alan Middleton

In a 5-4 decision, the Washington Supreme Court held that a 25-year lease subject to the Manufactured/Mobile Home Landlord-Tenant Act (MHLTA), RCW 59.20, does not violate the MHLTA's prohibition against restrictions on assignment, RCW 59.20.060(2)(d), .073(1), if the lease provides that the lease term is shortened to one or two years in the event of assignment. The lease did not otherwise limit a tenant's right to assign. The owner had offered 25-year leases to initial tenants at a low rental to obtain full occupancy of a new development. Although the development was not viable if all owners held their leases for the full 25-year term, the owner calculated that most owners would assign their leases before the 25-year term expired. The Court did not address the tenants' alternative argument that such leases violated the Consumer Protection Act, RCW 19.86, as the Court of Appeals had remanded the CPA claim for further factual findings. The majority and dissenting opinions in case, Little Mountain Estates Tenants Ass'n v. Little Mountain Estates MHC LLC, Case No. 82574-2, can be found here: [www.dwtrealestatelawnw.com/uploads/file/Little Mountain Dissent.pdf ; and www.dwtrealestatelawnw.com/uploads/file/Little Mountain Majority.pdf]

 

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Authored by:  Jonathan Lloyd, Stephen M. Rummage, Daniel M. Waggoner, and Maya Yamazaki

Yesterday, in a 5-4 decision, the Washington Supreme Court ruled that Washington state statutes of limitations do not apply to claims brought in arbitration, absent specific contractual language to the contrary. In particular, the Court found those statutes, which specifically require that "actions" be commenced or parties "sue" within a certain time, do not apply in the context of arbitration proceedings, which are not "actions" or "suits," unless the parties expressly provide for such applicability in their arbitration agreement. Broom v. Morgan Stanley DW, Inc., No. 82311-1 (7/22/10).  Click here to read the full article.

 

 

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Authored by:  Craig Gannett, Lauren Giles Wishnie, and Clayton P. Graham

On May 27, the Washington Department of Ecology (“Ecology”) released draft Guidance regarding the analysis of climate change impacts under Washington’s State Environmental Policy Act ("SEPA"). The Guidance, which will be open for comment until June 25, proposes extensive analysis of both direct and indirect greenhouse gas ("GHG") emissions potentially resulting from government actions covered under SEPA. Among the government actions that are subject to SEPA’s requirements are local governments’ issuance of land use and construction permits for many types of projects, especially commercial, industrial, or larger residential developments. The Guidance also describes potential mitigation measures that project proponents may be required to undertake. Given the broad scope of the Guidance, it is essential that owners and developers of real estate, as well as any business or institution with expansion plans, become familiar with these proposed requirements.

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One of the largest commercial real estate transactions in Portland history was completed at the end of December 2009 when American Pacific International Capital purchased the office portion of KOIN Center. The KOIN Center is Portland’s ninth largest office building with 415,425 square feet and its largest mixed-use project in a single building. While terms of the deal have not been revealed, the Oregonian reported that the sale price was between $50 and $60 million. This is approximately half of the $109 million that the California Public Employees Pension System (CalPERS) paid for the same property in 2007, and less than the $70 million loan which encumbered it.

After CalPERS defaulted on the loan, the mortgage holder, New York Life Insurance Inc. sued to take control of the building and completed the transaction with APIC. Calpers and CommonWealth Partners LLC were joint owners of the office portion of the building and decided to submit a deed in lieu of foreclosure after Ater Wynne LLP vacated 50,000 square feet in the building, relocating to the Lovejoy Building, a mixed-use complex in the Pearl District that also houses a new Safeway and rental apartments. The story of the KOIN Center’s development and transitions, with its colorful cast of characters, makes instructive reading for students of Portland’s urban development history.

To read full article, click here.

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When a boundary line dispute arises between neighboring property owners, one claim that is commonly asserted—along with adverse possession, estoppel in pais, and a few other legal bases for boundary adjustment—is "mutual recognition and acquiescence" in a common boundary. A recent opinion from the Washington Supreme Court (Merriman v. Cokeley) has refined the standard that Washington courts will apply in determining whether a party can establish title under this doctrine.

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Authored by: John Benazzi

As published in The Daily Journal of Commerce

The 2010 special session of the Oregon Legislature resulted in two bills that will impact real estate lending in Oregon. Both came out of the Committee on Consumer Protection and Governmental Accountability and are intended to address consumer protection problems that have arisen during the mortgage crisis.

HB 3656, signed by Gov. Ted Kulongoski on March 10 and now in effect, is designed to protect borrowers of “80/20″ residential loans from deficiency judgments on their “20″ loan after foreclosure of the “80″ loan.

HB 3706, passed by the state House and Senate on Feb. 10, will extend the application of Oregon’s Unfair Trade Practices Act to mortgage banks and other institutions that extend credit and allow consumers and the state to sue lenders for unfair and deceptive dealings. HB 3706 is awaiting the governor’s signature. (read full DJC article)

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