Legislative and Case Law Legislative and Case Law UpdateUpdate

J. Cliff McKinneyQuattlebaum, Grooms, Tull & Burrow PLLC111 Center Street, Suite 1900Little Rock, Arkansas 72201501-379-1700

GOVERNMENT GOVERNMENT ALWAYS MAKES ALWAYS MAKES THINGS BETTERTHINGS BETTER

SOLVING THE SOLVING THE BROADWAY BRIDGE BROADWAY BRIDGE CRISISCRISISJust read the papers…

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MORE GOVERNMENT MORE GOVERNMENT AT WORKAT WORK

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AND FINALLY…AND FINALLY…

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YOU PAID FOR THIS YOU PAID FOR THIS STUDY…STUDY…

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HOUSING SALES RISEHOUSING SALES RISE Sales of existing homes rose in July even with constraints of affordable inventory, and the national median price is showing five consecutive months of year-over-year increases, according to the National Association of Realtors®. Monthly sales rose in every region but the West, where inventory is very tight.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 2.3 percent to a seasonally adjusted annual rate of 4.47 million in July from 4.37 million in June, and are 10.4 percent above the 4.05 million-unit pace in July 2011.

Lawrence Yun, NAR chief economist, said housing affordability conditions are very good. “Mortgage interest rates have been at record lows this year while rents have been rising at faster rates. Combined, these factors are helping to unleash a pent-up demand,” he said. “However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions

2.3% Increase – Modest but Positive

Once the residential market returns…

So will the commercial market

We all know “retail follows rooftops”

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HOME PRICES RISING…HOME PRICES RISING…THE WALL STREET JOURNAL

Updated August 28, 2012, 10:52 a.m. ET

Home Prices Post First Gain in Two Years

U.S. home prices in June posted their first year-over-year increase in nearly two years as more buyers chased fewer homes for sale during the first half of 2012, according to an index released Tuesday.

The S&P/Case-Shiller index of 20 metropolitan areas showed home prices rose 0.5% from a year ago in June, ending a streak of 20 straight monthly declines. Home prices are still down by nearly 31% from their 2006 peak, returning to mid-2003 levels.

Since prices began their steep decline in 2006, they had previously posted year-over-year increases in just eight months during 2010, when home-buyer tax credits fueled a burst of sales activity.

Reuters Sale prices of U.S. homes were up in June, the S&P Case-Shiller indexes showed Tuesday.

Today, prices are rising amid sharp declines in the number of homes for sale as banks are taking back fewer foreclosed homes and traditional sellers have held out for better prices. Meanwhile, record-low mortgage-interest rates have dramatically increased the purchasing power of buyers. Also, investors have scooped up bargain-priced foreclosures that can be converted into rental properties.

0.5% Median Price increase – again, modest but positive…

Reversed a 20 month decline…

Housing Prices still only back to 2003 levels….

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HOUSING STARTS HOUSING STARTS EDGE DOWN 1.1 EDGE DOWN 1.1 PERCENT, PERMITS PERCENT, PERMITS RISE IN JULY RISE IN JULY

August 16, 2012 - Nationwide housing production edged down 1.1 percent to a seasonally adjusted annual rate of 746,000 units in July, according to newly released figures from HUD and the U.S. Census Bureau. However, builders pulled more permits for planned new-home projects than they have in any month since August of 2008.

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PLANNED U.S. STORE PLANNED U.S. STORE OPENINGS UP 11 OPENINGS UP 11 PERCENT IN JULYPERCENT IN JULY

U.S. retailer store-opening plans hit a four-year high in July, according to RBC Capital Markets, whose research team tracks 2,000 chains each month. The retailers in the firm’s database say they plan to open 78,325 stores over the next 24 months, up 11 percent from the 2-year period ended in 2011 and 0.6 percent from June. Dollar General, Family Dollar, Five Guys Burgers and Fries, and Subway have the most new stores on the drawing board, according to the RBC report.

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FEDERAL ISSUESFEDERAL ISSUES

THE FINANCIAL THE FINANCIAL INSTITUTIONS INSTITUTIONS EXAMINATION FAIRNESS EXAMINATION FAIRNESS AND REFORM ACT (HR AND REFORM ACT (HR 3461)3461)

NOW, UNDER DODD FRANK, LOANS WITHOUT PAYMENT OR OTHER DEFAULT MAY FACE A REQUIRED WRITE DOWN…  BECAUSE THE APPRAISAL SHOWS A COLLATERAL VALUE DECLINE THE INCREASE IN REFINANCING PRESSURES FOR THESE PERFORMING LOANS, ALONG WITH THE 1.4 TRILLION OF COMMERCIAL LOANS THAT COME DUE IN THE NEXT 2 YEARS…SHRINKS SUPPLY OF MONEY  HR 3461 WOULD FIX THAT SITUATION VIA DIRECTIVE TO REGULATORS NOT TO REQUIRE A LOAN WRITE DOWN OR PLACEMENT ON NON-ACCRUAL SOLELY DUE TO AN APPRAISAL 12

FLOOD INSURANCE FLOOD INSURANCE H.R.4348H.R.4348

The Biggert-Waters Flood Insurance Reform Act of 2012 (July 6, 2012)

Extended the National Flood Insurance Program until September 30, 2017

5,600,000 property owners rely on the NFIP

Replaces the uncertainty we have faced over the past 5 years resulting from 17 short-term extensions and 2 periods where the program was actually allowed to expire

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GSES/CMBS/GSES/CMBS/SECONDARY FINANCE SECONDARY FINANCE MARKETMARKET

NOVEMBER 9, 2011: LETTER FROM NAR PRESIDENT TO CONGRESS URGING SUPPORT OF THE BILL:

  REAL ESTATE IS THE CORNERSTONE OF

OUR NATION’S ECONOMY. NAR RESEARCH SHOWS THAT COMMERCIAL REAL ESTATE SUPPORTS MORE THAN 9 MILLION JOBS AND GENERATES BILLIONS OF DOLLARS IN TAX REVENUE. MOREVOER, OUR RESEARCH ALSO INDICATES 1 MILLION ADDITIONAL HOME SALES WILL GENERATE AN ADDITIONAL 500,000 PRIVATE SECTOR JOBS. IN NEARLY ALL PAST ECONOMIC DOWNTURNS, IT HAS BEEN REAL ESTATE THAT HAS PULLED THE ECONOMY THROUGH. THEREFORE, AS WE WORK TO REFORM AND REBUILD OUR REAL ESTATE FINANCING SYSTEM, REALTORS BELIEVE THAT IT IS IMPERATIVE THAT ALL REAL ESTATE FINANCE INSTRUMENTS IN OUR ARSENAL BE UTILIZED.

 

WHAT FORM OF GOVERNMENT SPONSORED ENTERPRISES, IF ANY WILL REPLACE FNMA/FREDDIE MAC?   -WILL THE REPLACEMENT HAVE ANY GOVERNMENT BACKING OR BE LEFT SOLELY TO THE PRIVATE SECTOR?    -COULD WE SOON SEE THE END OF THE 30 YEAR MORTGAGE…WE ARE ONE OF AND MAYBE THE LAST COUNTRY ON EARTH THAT HAS SUCH A PRODUCT? 

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THE OBAMA THE OBAMA GSE/HOUSING PLANGSE/HOUSING PLANThe Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 mandated that the Treasury Department present a plan for reforming Fannie Mae and Freddie Mac by the end of January 2011. On February 11, 2011, the Obama Administration released its proposal for restructuring the housing finance system.

The proposal offers three options for restructuring the secondary mortgage market: (1) full privatization, (2) a guarantee mechanism that would step up during times of crisis, and (3) a privatized system with a federal catastrophic reinsurance if private capital proved to be insufficient.

The proposal also favors higher down payments for GSE and FHA mortgages, lower GSE and FHA loan limits, and higher GSE guarantee fees (g-fees) and FHA premiums, which the Obama Administration believes are appropriate changes to give sufficient incentive for the private sector to resume making mortgages without FHA or GSE involvement. NAR has serious concerns with the Administration proposals.

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COVERED COVERED BONDSBONDS (S. (S. 1835)1835)Would provide an alternative to traditional loan securitization—

Either residential pools

Or

Commercial Mortgage Backed Securities (CMBS)

Would allow for a mix of financial institution assets to serve as collateral for a Bond…residential, commercial even (limited to 20%) state and federal debt obligations

Would provide a new “placement” source for financial institution assets

New potential source of commercial finance

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ARKANSAS ISSUESARKANSAS ISSUES

““STAR BONDS”STAR BONDS”

Sales Tax Anticipated Revenue Bonds

Passed as Senate Joint Resolution 5

Will be on November Ballot

Much like “TIF” legislation

But avoids school conflict

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PROPOSED PROPOSED CONSTITUTIONAL CONSTITUTIONAL AMENDMENT #1-AMENDMENT #1-HIGHWAYSHIGHWAYS

Temporary 1/2¢ Sales Tax Financing a 10-Year Bond Issue and Providing Annual Revenue to Cities and Counties.

Support 40,000 Jobs Without Raising Taxes on Groceries, Medicine or Gasoline.

Continue Construction and Improvement of a Four-Lane Highway System Connecting All Parts of the State.

Make Arkansas Roads Safer for Everyone, Including School Buses, Emergency Vehicles and Drivers Sharing the Road with Big Trucks.

Make it Easier and More Desirable for Business and Industry to Locate and Expand in Arkansas.

Provide Local Revenue for Cities and Counties to Improve County Roads and Fix City Streets.

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ARKANSAS SENDS ARKANSAS SENDS MEDICAL MARIJUANA MEDICAL MARIJUANA LAW TO THE BALLOTLAW TO THE BALLOT

Arkansas Business –

The proposal would allow Arkansans with qualifying conditions to purchase marijuana from non-profit dispensaries with a doctor's recommendation. Qualifying conditions include cancer, glaucoma, HIV, AIDS and Alzheimer's disease.

If a patient lives more than 5 miles from a “dispensary” he/she may “grow their own?”

The proposal acknowledges that marijuana is illegal under federal law.

If voters approve the measure in November, Arkansas would become the first medical pot state in the South

Talk Business – Hendrix College Poll:

Q: A proposal to allow the use of medical marijuana may also be on the ballot. It would provide Arkansans the ability to use medical marijuana for serious debilitating medical conditions with a doctors recommendation, and to allow patients to purchase their medicine at a regulated not-for-profit dispensary. If the election were held today, would you vote to allow for medical marijuana sales?

47% Yes46% No7% Don’t Know

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ACT 185 –RESTRICTIVE ACT 185 –RESTRICTIVE COVENANTSCOVENANTS

Addresses the holding in Rausch Coleman Homes, 2009 Ark. App. 225. If there are separate restrictive covenants dealing with “duration” and “amendment,” they are to be read independently of each other so that the durational requirement will not prohibit amendment of the covenants during the duration. Ark. Code Ann. § 18-12-103.

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STATUTORY STATUTORY FORECLOSURESFORECLOSURES

THE “IN RE JOHNSON” MESS

CAUSED ARKANSAS FORECLOSURES TO COME TO A COMPLETE HALT

CAUSED TITLE INSURANCE COMPANIES TO CEASE INSURING ANY TITLE WITH A STATUTORY FORECLOSURE IN ITS CHAIN OF TITLE

MADE ARKANSAS LOOK REALLY GREAT—FOR AWHILE -- IN THE “FORECLOSURE CHARTS”

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STATUTORY FORECLOSURE FIXSTATUTORY FORECLOSURE FIXIn re Johnson, 460 B.R. 234 (Sept. 28, 2011)JPMorgan Chase Bank v. Johnson, 470 B.R.

829 (May 11, 2012)The decision of the bankruptcy court was reversed by

Judge Leon HolmesBut, still issues linger with regard to out of state

lenders, servicing companiesAny entity with a mortgage loan in Arkansas but not

“registered” with bank department or secretary of state

Implication for Arkansas – non “lender friendly”ARA to seek a fix for this problem in the 2013 general

assembly

ACKNOWLEDGMENT FIXACKNOWLEDGMENT FIX

In re Stewart, 422 B.R. 185 (Dec. 21, 2009)◦Omission of the name and use of the pronoun

“he” in the acknowledgment” combined to invalidate the acknowledgment.

In re Beene, 354 B.R. 856 (Nov. 27, 2006)◦Jurat was an improper acknowledgement:

“Given under my hand and seal this 24th day of November, 2003. [Signed by Notary]”

DEFECTIVE DEFECTIVE ACKNOWLEDGEMENT ACKNOWLEDGEMENT CURE PASSED IN CURE PASSED IN 2005…2005…

§ 18-12-208. Defects(a) All deeds, conveyances, deeds of trust, mortgages, marriage contracts, and other instruments in writing affectingor purporting to affect the title to any real estate or personal property situated in this state, which havebeen recorded and which are defective or ineffectual because:(1) Of failure to comply with § 18-12-403;(2) The officer who certified the acknowledgment or acknowledgments to such instruments omitted any wordsrequired by law to be in the certificate or acknowledgments;(3) The officer failed or omitted to attach his or her seal to the certificate

***

Most Arkansas lawyers and title professionals felt the “defective acknowledgment statute” would prevent outcomes such as Stewart and Beene

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AN ATTEMPT TO AN ATTEMPT TO CORRECT…CORRECT…

State of Arkansas89th General Assembly A BillRegular Session, 2012

For An Act To Be EntitledAN ACT TO AMEND ARKANSAS CODE TITLE 18, CHAPTER 12, REGARDING DEFECTS IN ACKNOWLEDGEMENTS IN RECORDED INSTRUMENTS, TO CORRECT DISCREPENCIES BETWEEN TITLE 18, CHAPTER 12, SECTION 207 AND TITLE 16, CHAPTER 47, SECTION 107 AND TITLE 16, CHAPTER 47, SECTION 207; AND FOR OTHER PURPOSES. SubtitleAN ACT REGARDING THE FORM OF ACKNOWLEDGMENTS AND ADDRESSING DEFECTS IN ACKNOWLEDGEMENTS IN RECORDED INSTRUMENTS; AND FOR OTHER PURPOSES.  

The Arkansas REALTORS® Association will work on legislation and anticipates assistance and support from numerous organizations including:

The Arkansas Land Title Association, Arkansas Community Bankers, Arkansas Bar Association and Arkansas Bankers Association

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I HEAR YOU KNOCKING…I HEAR YOU KNOCKING…

HB1781 — An Act to Provide Notice of Land Surveys to Adjoining Landowners: Would have required surveyors to give 25 days notice to adjoining landowners before conducting a survey. The bill was referred to interim study by the Joint Interim Committee on Agriculture, Forestry & Economic Development.

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ACT 1198—ACT 1198—COMMISSION ON THE COMMISSION ON THE STUDY OF LANDLORD-STUDY OF LANDLORD-TENANT LAWSTENANT LAWS

Requires the governor to call the first meeting of the Commission.

The Commission is charged with “studying, reviewing and reporting, by Dec. 31, 2012, on the landlord-tenant laws in Arkansas and other states.”

Commission Members

Steve Giles (Chair) (Little Rock attorney)(Governor appointee)

Lynn Foster (Vice-Chair)(UALR Law Professor)

Marshall Prettyman (Arkansas Legal Services Partnership)(UofA Law)

John Phelps (Jonesboro attorney)(Bar)

Dr. Jay Barth (Hendrix professor)

Howard Warren (Landlord’s Association)

Robin Miller (ARA)

Russ Altizer (Affordable Housing Assoc)

Jim Cargill (Arkansas Bankers Assoc)

John Hill (Senate Pro Tem)

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Act 145—Prohibition of Act 145—Prohibition of Certain Transfer Fee Certain Transfer Fee CovenantsCovenantsProhibits private transfer fee covenants

whose sole purpose is to pay developers for years after the completion of a house or subdivision. Private transfer fees arise after a home’s original sale, often unbeknownst to the buyer and seller. Arkansas now joins approximately half the states in banning them. The statute does not affect any such covenants recorded before its effective date. Ark. Code Ann. § 18-12-107.

Act 172—Illegally Recording Act 172—Illegally Recording InstrumentsInstrumentsIncreases the penalties for

persons who file a false instrument for the purpose of harassing a judge, prosecuting attorney or law enforcement officer.

A felony in some cases.

LET’S SCREW UP EVERY DEEDLET’S SCREW UP EVERY DEED

HB1209 — An Act to Modify the Requirements for Recordation of a Deed: Would have required a statement on the deed listing the monetary consideration and the value and type of any nonmonetary consideration. The bill was withdrawn by the author.

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DEEDSDEEDS

Grant, Bargain and SellGrant, Bargain and SellThere are no implied warranties of

title.The magic words “grant, bargain

and sell” imply some of the warranties of title.

Without the exact magic words, or express warranties, then the deed is without warranty of title regardless of the title of the deed.

Grant, Bargain and SellGrant, Bargain and SellThe warranties created by “grant,

bargain and sell” has one special warranty in it.

The magic words create only a special warranty against encumbrances.

This has the effect of limiting liability under the covenants of seisin, right to convey and quiet enjoyment to defects in title caused by the grantor only, and not any of his predecessors in title.

The Deed StudyThe Deed StudySample of 311 deeds filed in Pulaski

County in June 2011.79.1% labeled General Warranty20.6% labeled Special Warranty17.7% drafted by Arkansas-licensed

attorneys76.6% drafted by title agents using

forms prepared by Arkansas-licensed attorneys

2.3% drafted pro se

The Deed StudyThe Deed StudyAverage purchase price was

$171,551.Median purchase price was

$135,000.

The The Riddle Riddle ProblemProblemRiddle v. Udouj (371 Ark. 452)

(2007)Fence not exactly on the property

lineBoundary by acquiescence

establishedBreach of the covenant of seisin is

decided “on the basis of who has possession” at the time of the conveyance

The Deed StudyThe Deed Study67.8% contained an express exception to the

covenants of title:◦ “subject to easements, restrictions or

encumbrances which may appear of record”

The Riddle problem◦ Not fixed merely by excepting matters “of

record” because the boundary dispute is not necessarily a matter of record

◦ Only 4.2% of the deeds had language that would prevent a Riddle claim

The Deed StudyThe Deed StudyOnly 30.9% of the deeds

contained an express exception for prior mineral reservations.

None of the deeds contained a mineral reservation in favor of the grantor.

The Deed StudyThe Deed Study29.7% of the special warranty

deeds failed to include the phrase “grant, bargain and sell”, thus failing to convey any of the present covenants of title.

Only 1.2% of the general warranty deeds failed to include the phrase “grant, bargain and sell”

The Deed StudyThe Deed StudyThough included as part of the

covenants automatically created by “grant, bargain and sell”, 99.7% of all deeds still contained an express covenant of either special or general warranty in the deed.

Suing the HeirsSuing the Heirs In Smiley v. Thomas (1952), Brice Williams

conveyed a warranty deed with no exceptions to a Mr. and Mrs. Thomas in 1929, but Williams did not own one-half of the mineral interests.

Williams died in 1936. In 1950, the Thomases sued a third party

unsuccessfully to quiet title to the mineral rights in themselves. After losing the quiet title action, the Thomases sued Jodie Smiley, the sole heir of Brice Williams.

Smiley v. ThomasSmiley v. ThomasSmiley argued in defense the statute of

limitations, laches, and the statute of nonclaims.

The court held these arguments were without merit, without citing any authority as to how recovery could be had as against an heir of the decedent fourteen years after his death. The court held that eviction had occurred when the decree in the 1950 quiet title suit was rendered.

SPECIAL NOTESPECIAL NOTENew required transfer tax

affidavit:I certify under penalty of false

swearing that documentary stamps or a documentary symbol in the legally correct amount has been placed on this instrument.

MAJOR RECENTMAJOR RECENTCASESCASES

Parks v. Rogers Group, Parks v. Rogers Group, Inc.Inc.February 9, 2011Arkansas Court of AppealsParks (landlord) signed a lease in 2001 with

Rogers Group (tenant). Toward the end of the 5 year term, Parks notified Rogers Group that it wanted to terminate the lease.

Lease provided that it would be renewed automatically for one year terms until the tenant gave the landlord written notice of termination at least 30 days before the end of the term.

Parks v. Rogers Group, Parks v. Rogers Group, Inc.Inc.Parks sued Rogers Group for a

declaration that the landlord has a right to terminate the lease.

Court held that the terms of the lease effectively created a perpetual lease.

The leased property was a rock quarry—could this be a distinction?

Fairpark, LLC v. Healthcare Fairpark, LLC v. Healthcare EssentialsEssentialsFebruary 23, 2011Arkansas Court of AppealsLandlord gave tenant a build-out

allowance of $28,000 but did not specify in the lease that Tenant would be responsible for the difference. The finish out cost $65,000.

Tenant refused to pay the difference.

Fairpark, LLC v. Healthcare Fairpark, LLC v. Healthcare EssentialsEssentialsTenant and Landlord argued about the

$37,000 deficit and tried different options for resolving the dispute including reducing the size of the Tenant’s space and adjusting rent.

During the negotiations, the air conditioner broke. Landlord did not fix the air conditioner, allegedly to hold the Tenant hostage to resolve the $37,000 issue.

Fairpark, LLC v. Healthcare Fairpark, LLC v. Healthcare EssentialsEssentialsThe Court found that the Landlord

breached its obligation in the lease to keep the premises in good working order.

The Court found that the written lease, which failed to specify that the Tenant would be responsible for excess building costs, left the Landlord responsible for the entire finish-out costs.

Garner v. XTO Energy, Inc.Garner v. XTO Energy, Inc.October 12, 20112011 Ark. App. 606Garner and XTO’s predecessor

signed a mineral lease for a term of five years “and so long thereafter as oil, gas, or other hydrocarbons were produced or deemed to be produced from the premises or lands pooled therewith.”

Garner v. XTO Energy, Inc.Garner v. XTO Energy, Inc.Thirteen days before the expiration of

the 5 year term, XTO started drilling. Garner sued for a declaration that the

lease terminated at the end of the five years because there was no production.

Paragraph 6 of the lease defined “operations” to include preparation of a drilling site and drilling.

The lease survived challenge.

Hipp v. Vernon L. Smith & Hipp v. Vernon L. Smith & AssociatesAssociatesOctober 12, 20112011 Ark. App. 611Kenneth and Tammy Hipp executed

an oil and gas lease. The lease included an initial 5 year term with an additional five year option.

The Hipps claim that the leasing agent told them there were no options terms.

The Hipps did not read the lease.

Hipp v. Vernon L. Smith & Hipp v. Vernon L. Smith & AssociatesAssociatesHipps sued alleging fraud in the

inducement and violations of the Arkansas Deceptive Trade Practices Act (ADTPA).

Court dismissed the suit, holding that the lessor’s failure to read the lease will not support a claim of fraud to toll the statute of limitation for either fraudulent inducement or the ADTPA.

Mauldin v. SnowdenMauldin v. SnowdenOctober 26, 20112011 Ark. App. 630Snowden owned the surface and

the minerals.On the same day, Snowden

conveyed the minerals to his company, Cenark Oil, and sold the surface to Flory. The deed did NOT contain a reservation of mineral rights.

Mauldin v. SnowdenMauldin v. SnowdenSix years later, Flory sold the surface

to Mauldin, but the deed did not include a reservation of mineral rights.

A year later, Cenark Oil conveyed the minerals back to Snowden.

Mauldin sued for the mineral estate under the doctrine of after-acquired title or, alternatively, breach of the deed covenants from Flory and Snowden.

Mauldin v. SnowdenMauldin v. SnowdenFlory and Snowden filed a

counterclaims asking for reformation of the deeds due to mutual mistake to include a reservation of the mineral rights.

Flory and Snowden convinced the court by “clear and convincing evidence” that Mauldin knew no minerals were to be conveyed and that no consideration was paid for the minerals.

Gurlen V. Henry Gurlen V. Henry ManagementManagementDecember 15, 2010Arkansas Court of AppealsGurlen leased an apartment and an off-site

storage facility.The apartment manager invited Gurlen to

move her off-site property to an on-site storage unit on the premises.

The manager said there would be no charge until the apartment decided how much to charge in the future for units.

Gurlen v. Henry Gurlen v. Henry ManagementManagementGurlen did not tell the apartment

manager which storage bins on-site she had decided to use.

The apartment decided to start charging for on-site storage and posted notices informing residents that they needed to coordinate with management to keep the storage bins.

Gurlen claims she did not see the notices.

Gurlen v. Henry Gurlen v. Henry ManagementManagementAfter failing to respond to the notices,

the apartment emptied the unclaimed bins and disposed of the property.

The lease said: All personal property placed on the

leased premises, or in the storerooms or in any other portion of said premises or any place appurtenant thereto, shall be at the risk of the Resident…

Gurlen v. Henry Gurlen v. Henry ManagementManagementLandlord won at the trial court……but LOST on appeal…the landlord’s knowledge that

Gurlen had stored property in the storage bins, but nevertheless destroyed the property, made the landlord liable for the destroyed property.

Garrett v. FiteGarrett v. Fite2009 Ark. App. 869December 16, 2009Question of whether the

purchase agreement was valid.Fite=SellerGarrett=Buyer

Garrett v. FiteGarrett v. FiteProperty had a fair market value of

$368,000Purchase price in the contract was

$104,000Fite’s son-in-law, Wintory, was the

broker for both Garrett and Fite in the real estate contract

Wintory also did other work for Garrett

Garrett v. FiteGarrett v. FiteFite was in the business of

buying and selling houses.Two years before the contract,

Fite stated that he wanted $100,000 for the property.

Garrett and Fite never met.

Garrett v. FiteGarrett v. FiteBut…“The record shows that Fite was

vulnerable at the time of contracting. He had gout. And he was depressed about in-fighting among his children.”

Fite testified, “I was just would have loved to fell in a place to just gone off and left everything…I didn’t—didn’t care what happened.”

Garrett v. FiteGarrett v. FiteWintory visited Fite’s home four

separate times on the day the contract was signed.

Fite testified, he simply “gave in and signed it”.

Garrett v. FiteGarrett v. FiteDo you have any obligation to

judge the mental or physical health of the seller?

Do you have any obligation to judge whether the sale is for adequate consideration?

What warnings should be given about familial relationships as part of a transaction?

Donathan v. McDillDonathan v. McDill304 Ark. 242December 21, 1990Tort of Interference with Business

Expectancy

Donathan v. McDillDonathan v. McDillGuy McDill was president of Hot

Springs Title CompanyRaymond Donathan hired Hot

Springs Title Co. to research title to a parcel that Donathan wished to purchase.

McDill identified that the land was soon to be sold for nonpayment of taxes.

Donathan v. McDillDonathan v. McDillMcDill and Donathan both

showed up at the tax sale and bid on the property.

Donthan was the successful bidder at $2,800.

The delinquent taxes were approximately $300.

Donathan v. McDillDonathan v. McDillMcDill contacted the owner of the land

about the sale and notified the owner of its right to redeem the land by payment of the back taxes within 30 days of the date of the sale.

McDill used his own money, channeled through Hot Springs Title Company, to redeem the property.

McDill purchased the property from the estate.

Donathan v. McDillDonathan v. McDill“Donathan’s business expectancy

was to purchase the land in question for $2800 from the commissioner unless the owner made a timely redemption. His expectancy was fulfilled. No authority is cited holding, or even suggesting, that causing such a contingency as redemption to occur constitutes tortious interference.”

Donathan v. McDillDonathan v. McDillWould it have made a difference

if McDill was also a licensed attorney?

Where is the line between being an attorney and being a title agent?

Windsong Enterprises v. Windsong Enterprises v. UptonUpton366 Ark. 23March 23, 2006Tort of Interference with Business

Expectancy

Windsong Enterprises v. Windsong Enterprises v. UptonUptonIn 1997, Windsong purchased a

tract at a foreclosure sale in Eden Isle Subdivision (the “Southwinds Property”).

Southwinds was previously owned by Red Apple Enterprises Limited Partnership

Windsong planned to develop condominiums on the Southwinds Property

Windsong Enterprises v. Windsong Enterprises v. UptonUptonAfter the foreclosure sale,

Windsong discovered that the Property it acquired included parts of the Red Apple golf course.

Red Apple Enterprises and Windsong could not agree on a price to return the golf course portion to Red Apple Enterprises.

Windsong Enterprises v. Windsong Enterprises v. UptonUptonThe Bill of Assurances could be

amended with more than 50% of the landowners approving.

Red Apple Enterprises owned 48% of the Eden Isle Subdivision.

Friends and relatives of the owners of Red Apple Enterprises owned enough of the Eden Isle Subdivision to amend the subdivision’s bill of assurances.

Windsong Enterprises v. Windsong Enterprises v. UptonUptonIn alleged retaliation for

Windsong not selling the golf course back to Red Apple Enterprises, Red Apple Enterprises and its friends amended the bill of assurances to restrict Southwinds to single-family residential use only.

Windsong Enterprises v. Windsong Enterprises v. UptonUptonDonathan v. McDill is the “apposite

and controlling” case.Compare Windsong Enterprises, Inc.

v. Upton, 91 Ark. App. 149, stating:“Finally, we reject out-of-hand Upton’s

suggestion that this court somehow erred in distinguishing Donathan v. McDill. We are not aware of anything that requires us to cite inapposite authority.”

Windsong Enterprises v. Windsong Enterprises v. UptonUptonIs there a duty of good faith?When is it “OK” to hurt

someone’s business for revenge or leverage?

Campbell v. Asbury Campbell v. Asbury AutomotiveAutomotiveArkansas Supreme Court CaseApril 14, 2011Unauthorized Practice of Law

(UPL)

Campbell v. Asbury Campbell v. Asbury AutomotiveAutomotive“Statutes relating to the practice

of law are merely in aid of, but do not supersede or detract from the power of the judicial department to define, regulate, and control the practice of law, and the legislative branch may not, in any way, hinder, interfere with, restrict, or frustrate the powers of the courts.”

Campbell v. Asbury Campbell v. Asbury AutomotiveAutomotiveAllows a private lawsuit against

non-lawyers who engage in the practice of law.

Class Action against Car Dealers for charging document preparation fees.

So, what is the definition practicing law???

Campbell v. Asbury Campbell v. Asbury AutomotiveAutomotive…well, there isn’t one…Arkansas Bar Association v. Block

(1959)◦“We believe it is impossible to frame

any comprehensive definition of what constitutes the practice of law. Each case must be decided upon its own particular facts.—The practice of law is difficult to define. Perhaps it does not admit of exact definition.”

Campbell v. Asbury Campbell v. Asbury AutomotiveAutomotiveSo what is permitted??Creekmore v. Izard (1963)

◦ “[A] real estate broker, when the person for whom he is acting has declined to employ a lawyer to prepare the necessary instruments and has authorized the real estate broker to do so, may be permitted to fill in the blanks in simple printed standardized real estate forms, which forms must be approved by a lawyer…without charge for the simple service of filling in the blanks.”

Cambell v. Asbury Cambell v. Asbury AutomotiveAutomotive Pope County Bar Ass’n, Inc. v. Suggs (1981) (1) That the person for whom the broker is

acting has declined to employ a lawyer to prepare the necessary instruments and has authorized the broker to do so; and

(2) That the forms are approved by a lawyer either before or after the blanks are filled in but prior to delivery to the person for whom the broker is acting; and

(3) That the forms shall not be used for other than simple real estate transactions which arise in the usual course of the broker's business; and

Campbell v. Asbury Campbell v. Asbury AutomotiveAutomotivePope County Continued… (4) That the forms shall be used only in

connection with real estate transactions actually handled by such brokers as a broker; and

(5) That the broker shall make no charge for filling in the blanks; and

(6) That the broker shall not give advice or opinions as to the legal rights of the parties, as to the legal effects of instruments to accomplish specific purposes or as to the validity of title to real estate.

Campbell v. Asbury Campbell v. Asbury AutomotiveAutomotiveFilling out forms IS the practice of

law…but non-lawyers with a real estate license have limited permission from the Arkansas Supreme Court to do so…