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On February 11, 2019, Division One of the Washington Court of Appeals issued an opinion in the case of Woodley v. Style Corp. d/b/a Servpro of Shoreline/Woodinville, No. 77352-6-I (Wash. Ct. App. Feb. 11, 2019).  The case highlights the care that should be exercised in filing a lien claim for services furnished to improve a condominium and the consequences that may befall a claimant under Washington’s frivolous lien claim statute, RCW 60.04.081.

The case arose from water intrusion at a unit in the Bellevue Park condominium complex. After discovery of the condition, the condominium’s property management company contacted Servpro and executed a work authorization for the contractor to clean up the water and perform restoration work.  Servpro was not paid for its work and filed a claim of lien.  The lien named the association as the indebted person, recited that it applied to the 20 specific units and a common storage area of the condominium, and named each owner of the 20 units but did not allocate a specific portion of the total debt to each unit.

The key to a legal nonconforming use is establishing that the use was previously permitted. The Utah Court of Appeals recently reiterated this statutory requirement in LJ Mascaro v. Herriman City, 2018 UT App 127, where it stated a land owner must “provide substantial evidence to support a prior legal use,” in order to…

The condominium embodies a missing price point in Seattle’s real estate market. As a result, we have noticed an uptick in the number of developers seeking legal advice regarding the potential risks associated with condominiums. In my first article for the Daily Journal of Commerce, I provide an update on Washington’s condominium laws, a…

The ability to defer taxes through a 1031 Exchange can make or break a real estate transaction.  But federal tax law does not treat all real estate owners equally. Under IRC Section 1031(a)(2), real property held “primarily for sale” in the ordinary course of a trade or business is excluded from Section 1031 and may be subject to ordinary income taxes in the event of a sale.

Generally, land held for investment purposes can be swapped for “like kind” property without triggering taxable gain. However, certain property is excluded from 1031 because, under IRC Section 1221(a)(1), it is not a capital asset, including:

(i)   Stock in trade of the taxpayer
(ii)  Inventory; or
(iii) Property held by the taxpayer primarily for sale to customers in the ordinary course of a trade or business.

Such property, including any real estate which qualifies as inventory, is excluded from 1031 treatment and, upon sale, is taxed at ordinary income rates. This means that active developers dealing in subdivided property for sale in the ordinary course of business may be excluded from capital gains tax treatment.

Recently, in RSB Vineyards LLC v. Orsi, the First Appellate District Court of Appeal confirmed the long-standing rule in California: sellers must disclose all known material matters.  While this affirmed rule was not surprising, the court was very helpful  in providing the first detailed framework for what it means for a seller to have…

Portland real estate is booming and Portland is now on the map for many national and international developers for the first time. This success, while enviable, is not without some negative consequences, as evidenced by increasing housing costs and congestion.

As Portland anticipates the arrival of even more people, it is trying to figure out where to put those new arrivals and how to preserve and enhance quality of life for both new and existing residents. Large-scale City planning efforts such as the 2012 Portland Plan and 2017 Comprehensive Plan reflect a recognition that not everyone has enjoyed the benefits of past prosperity and public investment, and that the City will seek to be more intentional and inclusive going forward.

Broadway Corridor Study Area, Prosper Portland

An emerging redevelopment area offers an opportunity to try new things and develop differently this time. The Broadway Corridor redevelopment area is 24 acres located between the Pearl District and Old Town/Chinatown. The area is centrally located in downtown Portland, has freeway access and is served both by Amtrak, via historic Union Station, and by TriMet’s light rail.  The “pearl” of this redevelopment area is the 14-acre U.S. Post Office site, bordered by NW 9th Avenue, NW Hoyt Street, NW Broadway and NW Lovejoy and purchased by the City of Portland in 2016.

The City purchased the Post Office site for almost $90,000,000 and understandably is carefully shepherding this public investment. The City’s Broadway Corridor Framework Plan provides a conceptual “framework” for future development of a 24-acre area including the Post Office site, but actual development will require a new type of public-private partnership and substantial further refinement of the plan, with the City committed to recovering its financial investment.

An access easement is a key link in the legal chain when builders need to cross another’s land to develop property. A poorly drafted easement could hobble an entire development.  Counsel should always be consulted to avoid the crippling impact of a development held hostage.  Here are eight tips to remember in reviewing an access easement where the developer is seeking easement rights.

A letter of intent (“LOI”) is often the first document in a proposed deal – a summary of a range of key terms or concepts for negotiation toward entering into a final, formal agreement. But what seems like a simple document can be much more than a mere list of possible terms to be discussed by the parties, and might just result in a final agreement in one side’s sole discretion.  In some cases, an LOI can be an enforceable agreement to negotiate in good faith toward a final agreement based, at least in part, on its stated terms.  Even those LOIs that specifically say they are non-binding may, in fact, be binding.  For instance, an LOI could be enforceable in its own right if all material terms of a final agreement are set out in the LOI and the parties’ conduct suggests they treated the LOI as a final agreement.  Rather than being a “safe haven” that can be terminated at will without liability, an LOI can present great risk and unintended consequences to the parties if not recognized and handled with care.  Missteps in documentation and/or subsequent conduct of the parties along the way could result in blown deals and damages.  Even an otherwise carefully and clearly drafted LOI may not be free from risk or unintended consequences.

So, what’s the big deal if you’re a little “late” in giving your insurer notice of the claim or lawsuit against your company?  That’s the question, albeit in essence, that the Ninth Circuit has posed to the California Supreme Court recently in an Order Certifying Questions, Pitzer College v. Indian Harbor Insurance Co.

Specifically, the Ninth Circuit is asking for legal insight as to the following:Policy

1. Is California’s common law notice-prejudice rule a fundamental public policy for the purpose of choice-of-law analysis? May common law rules, other than unconscionability not enshrined in statute, regulation, or the constitution, be fundamental public policies for the purpose of choice-of-law analysis?

2. If the notice-prejudice rule is a fundamental public policy for the purpose of choice-of-law analysis, can a consent provision in a first-party claim insurance policy be interpreted as a notice provision such that the notice-prejudice rule applies?