Answer:  The psychological stigma of a murder or other violent crime occurring at a home is generally a material, adverse fact that would need to be disclosed by the seller and the real estate agents to the buyer.  The landmark ruling is a 1983 California appeals court decision permitting rescission of the purchase transaction by an elderly lady who had bought a home in which a mother and three children had been murdered ten years earlier.  In response to that California decision, however, California passed a statute limiting to three years the requirement of disclosure of a murder or other violent crime occurring in the home.  Therefore, in California the seller of the home where the Nicole Simpson/Ron Goldman murders occurred would only have been required to disclose those murders to any buyer in the three years following the murders. 

In 1995 Arizona adopted a similar statute (A.R.S. §32-2156) that does not require the seller to disclose to a buyer a murder occurring in the home.  This Arizona statute also protects the real estate agents in the transaction. Unlike California, however, there is no time period in the Arizona statute.  In other words, even if the seller and the real estate agents in the transaction learn of a murder in the home the day before closing, under this Arizona statute they have no liability for failing to disclose this murder to the buyer of the home.  This Arizona statute has been amended several times since 1995 to not require disclosure by sellers and real estate agents of numerous other material, adverse facts that under common law would generally need to be disclosed to the buyer.  These amendments include no requirement to disclose to the buyer a natural death or suicide in the home, any felony that occurred in the home, HIV/AIDS of the seller or any occupant of the home, and, most recently, any sex offender in the neighborhood.

PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back. 

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.

“When houses were doubling in value, mom and pop making $80,000 a year were taking out $300,000 home equity loans for new cars and boats,” said Christopher A. Combs, a real estate lawyer here, where the problem is especially pronounced. “Their chances are pretty good of walking away and not having the bank collect.”

Lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same, with combined write-offs of $7.88 billion in the first quarter.

Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. “People got 90 cents for free,” Mr. Combs said. “It rewards immorality, to some extent.”

Click here to finish reading this New York Times article

Answer:  The CC&Rs should provide that the homeowners can establish an HOA and elect a board of directors to govern the HOA.  The board of directors, or the architectural committee formed by the board of directors, generally has the power to enforce the CC&Rs with respect to alteration and remodeling of homes in the subdivision.  You should organize your neighbors in order to establish an HOA and a board of directors, and then form an architectural committee.  If your neighbors will not support you, you as an individual homeowner generally can enforce the CC&Rs.  The “bottom line” is that, if the CC&Rs are not enforced either by the HOA or by the individual homeowners in the subdivision, under Arizona and real estate law all of the CC&Rs may be deemed abandoned.

Answer:  You need to immediately begin foreclosure proceedings on the $245,000 loan.  If the home is now worth less than $245,000, in Arizona real estate law you normally would not be entitled to sue for this deficiency after foreclosure.  If there is damage to the home due to “waste,” however, you would be entitled to sue for this damage.  The failure to repair the roof coupled with the failure to pay the homeowner’s insurance payments is probably waste.  After you have the roof repaired, you should contact an Arizona real estate attorney to file a lawsuit against the buyer for the $50,000 damage to the home.  Unfortunately, however, if a homeowner loses a home to foreclosure, the homeowner rarely has any assets to pay a judgment for any damage to the home.

Note:  You as the lender should have been named a “loss payee” under the homeowner’s insurance policy.   You would then have been entitled to receive notice from the homeowner’s insurance company when the buyer failed to make the payments, and you could have made the payments to keep  the homeowner’s insurance effective. An attorney should be able to help you review the homeowner’s insurance policy to see if you may have coverage for the damage to the home.

Answer:   No! Darryl Royal, the legendary football coach at the University of Texas, and a strong advocate of the running game, said that there are three things that can happen with a forward pass, and two of them are bad!  Similarly, there are three things that can happen if you close this transaction now, and two of them are bad.  The good thing would be that the seller receives the personal injury settlement and pays off the $40,000 I.R.S. tax lien, but the two bad things would be that the seller does not receive the personal injury settlement, or that the seller receives the personal injury settlement but does not pay off the $40,000 I.R.S. tax lien.  If either of these two bad things happens, you will never be able to sell your home until you pay off this $40,000 I.R.S. tax lien. 

Note: Under the standard residential contract, if there is any title “problem” such as an I.R.S. tax lien shown on the title commitment received by the buyer, the buyer has only five days either to cancel the contract or to request that the seller correct the problem.  Otherwise, the buyer could lose the earnest money if the buyer does not close the purchase of the home because of the title problem.

Answer:    First, Yavapai County was telling you that, because the dirt road was not dedicated by the former owner, and the dedication accepted by Yavapai County, the maintenance of the dirt road is not the responsibility of Yavapai County. Therefore, the maintenance of the dirt road is your responsibility as the current owner of the easement.  Second, you should immediately tell your neighbor that his driveway cuts across your front yard, and give your neighbor permission, preferably in writing, to use the driveway. Alternatively, but not very neighborly, you can block part of the driveway off to prevent your neighbor from driving across the corner of your front yard.  Otherwise, if your neighbor continues to use the driveway for more than ten years, your neighbor may acquire a prescriptive easement to use the driveway across the corner of your front yard.

1.         During the ten-day inspection period the buyer delivers to the seller a Buyers Inspection Notice and Sellers Response (BINSR) requesting that (1) missing roof shingles be replaced, and that (2) the seller furnish to the buyer a certification of the fitness of the roof and a three-year roof warranty by a licensed roofing contractor.  In the sellers response to the BINSR, the seller agrees to replace the missing roof shingles.  The seller refuses, however, to furnish a roof certification and/or a three-year roof warranty by a licensed roofing contractor.  Can the buyer cancel the contract because the seller only agreed to replace the roof shingles?

Answer – No.  The buyers additional request in the BINSR for a roof certification and a roof warranty by a licensed roofing contractor is a request by the buyer to amend the contract.  This offer to amend the contract was rejected by the seller.  Therefore, the buyer cannot cancel the contract, and is required to close the transaction with the seller only being required to replace the missing roof shingles.

2.         During the ten‑day inspection period the buyer requested in the Buyers Inspection Notice and Sellers Response (“BINSR”) the repair of non‑warranted items such as the replacement of roof shingles, and also gave notice of warranted items that were not working such as the air conditioning and the swimming pool motor.  In the sellers BINSR response, the seller offered a $3,000.00 reduction in the purchase price in lieu of all repairs.”  The buyer accepted this $3,000.00 offer.  Is the seller still obligated to repair, by close of escrow, the warranted items such as the air conditioning and the swimming pool motor?

Answer – Probably not.  The seller offered to amend the contract by paying $3,000.00 in lieu of all repairs.  After the buyer accepted the sellers $3,000.00 offer, the seller probably had no obligation to make any repairs, including repairs to warranted items.

3.         In the residential lease the tenant authorized a lock box on the home after a written request by the landlord or the landlords  broker.  The residential lease is expiring, and the landlords broker has given written notice to the tenant to place a lock box on the home.  The tenant is refusing despite the language in the residential lease authorizing a lock box.  Can the tenant refuse this lock box?

Answer – Yes.  Under the Arizona Residential Landlord-Tenant Act (the Act) a landlord must generally give a tenant at least two days= notice before entering the home.  See A. R. S. ‘33-1343(c).  The placing of a lock box on the home is constructively entering the home without two days= notice, as real estate agents will have the ability to enter the home at any time day or night without the tenant=s consent.  Inasmuch as the primary purpose of the Act is to protect the rights of tenants, a term in the residential lease contradicting the protection of this Act is not enforceable.  See A.R.S. ‘33-1315.  Therefore, despite the tenants written authorization in the residential lease to a lock box, a lock box is not allowed.

4.         The seller and the buyer agreed that the buyers $10,000.00 earnest money would be hard after the ten-day inspection period.  Two days after opening escrow the buyer loses his job.  The buyer delivers a loan denial letter within the ten-day inspection period, and demands the return of the $10,000.00 earnest money.  Is the buyer entitled to the return of the $10,000.00 earnest money?

 Answer – No.  The buyer is required to act in good faith to acquire financing until the scheduled closing date, not until the end of the ten-day inspection period.  Lines 54-55 of the Contract provide that the buyer is only entitled to the return of the earnest money for unfulfilled loan contingency, if buyer is Aunable to obtain loan approval without conditions by COE Date.  In other words, between the expiration of the ten-day inspection period and the close of escrow date many things could happen, e.g., buyer could be re-hired, that would enable the buyer to obtain a loan.

Christopher represents real property owners and developers in a variety of areas, including, but not limited to, breach of contract disputes, non-disclosure disputes, and land use / zoning issues. Christopher also represents commercial landlords and tenants with commercial lease negotiations and asset purchase agreements. Additionally, Christopher represents Arizona real estate professionals with licensing issues with the governing agencies, including the Arizona Department of Real Estate. Finally, Christopher’s practice also includes Homeowner Association law.

Picture:  Christopher J. Charles, Member of Phoenix Salvation Army Advisory Board, Attorney at Combs Law Group, P.C., Charles Jensen, President of Politics on the Rocks, Col. Sather, Salvation Army, Mark West, Phoenix Suns, Bob Namburg, Chair of Phoenix Kroc Committee.

Discussions of bankruptcy inevitably turn to an explanation of the various “chapters” of the bankruptcy code and their uses. The Bankruptcy Code is organized into Chapters and is found in Title 11 of the U.S. Code. The most commonly used Chapters of the code are Chapter 7, 11 and 13.

Chapter 7 is the most used of the bankruptcy chapters. It is referred to as a “liquidation” and is generally available to all debtors subject to certain income guidelines. Generally, the debtor in a Chapter 7 bankruptcy is able to retain most of their real and personal property through “exemptions” provided in the bankruptcy code. Any property subject to liens will be either returned to the creditor or will be kept by the debtor. If a debtor decides to keep property subject to a lien, they must continue to make monthly payments until the lien is satisfied. Chapter 7 cases are usually completed in a few months and allow the debtors to quickly begin the process of rebuilding their credit.

People who have regular income that is too high to permit them to file a Chapter 7 may have to file a Chapter 13.  Chapter 13 bankruptcies are referred to as “wage earner cases” and provide protection from creditors and reorganization of debts through a plan confirmed by the court. The Chapter 13 reorganization plans are generally 3-5 years in length. Payments are made monthly to the trustee who distributes the payments to creditors. While a Chapter 7 provides a complete discharge of debts, a Chapter 13 provides for a partial repayment to the creditors. Chapter 13 also has useful tools not available in a chapter 7. These include the ability of the court to reduce the principal balance and interest rates on certain car loans, and the removal of a second lien on a home that is severely “upside down.”

Businesses that need protection from their creditors while maintaining their operations usually file for a Chapter 11 bankruptcy, which is also sometimes used by individuals ineligible to file a Chapter 7 or Chapter 13. Similar to Chapter 13, Chapter 11 is a reorganization and requires a confirmed plan and regular monthly payments.

There are both pros and cons to each of the bankruptcy chapters, and to filing bankruptcy generally. While credit damage may result, very often filing bankruptcy marks the beginning of rebuilding an individual’s credit.  At Combs Law Group we can advise you of the specific ramifications of bankruptcy and we will represent you if bankruptcy is the best option.  If you have questions regarding Bankruptcy or foreclosure, we recommend that you contact Combs Law Group to schedule an initial consultation.

Benjamin Skinner is an attorney with the Combs Law Group who’s practice primarily includes real estate litigation, bankruptcy and homeowners’ association representation.

Real Estate

I represent clients in a variety of real estate matters. These include litigating mortgage deficiency claims, boundary and easement disputes, real estate purchase contract disputes, commercial lease disputes, and construction defect claims. I regularly conduct nonjudicial foreclosure actions on behalf of creditors on both residential and commercial properties. I have successfully represented many private lenders with respect to the enforcement and collection of promissory notes.

I have advised hundreds of individuals of their rights and potential liabilities under Arizona’s anti-deficiency statutes. Additionally, in cooperation with many trusted Realtors, I vigorously represent sellers in short sale transactions negotiating with lenders to facilitate the most advantageous resolution on behalf of my clients. I am an Arizona Department of Real Estate approved instructor and regularly teach continuing education courses to real estate agents on Arizona’s anti-deficiency statutes, short sales, contracts, agency and other subjects.

My practice also includes the representation of several homeowners’ associations in the interpretation and enforcement of their community documents.

Bankruptcy

My practice encompasses counseling and representing debtors regarding bankruptcy. I have assisted many individuals and married couples in obtaining a fresh start through bankruptcy under both Chapter 7 and Chapter 13 filings. I am a member of the American Bankruptcy Institute (ABI) and the National Association of Consumer Bankruptcy Attorneys (NACBA). 

After a lis pendens is recorded, the first question a seller generally asks is “How soon can I remove the lis pendens against  my property so that I can sell it to another buyer?”  After informing the seller that pursuant to A.R.S. § 33-420(B) the seller is entitled to a prompt hearing on the validity of the lis pendens, the second question asked by the seller is “What must be proved at this hearing to invalidate the lis pendens?”

The Arizona Court of Appeals in Evergreen West, Inc. v. Boyd, 167 Ariz. 614, 810 P.2d 612 (Ariz. Ct. App. 1991), established a “groundless” standard for invalidating a lis pendens before resolution of the specific performance lawsuit (which may last years).  In other words, the seller seeking to invalidate the lis pendens carries the burden of proof to establish that the claim upon which the lis pendens is based is “groundless” (i.e.,  frivolous or totally without merit). This “groundless” standard promulgated by the Court of Appeals in Evergreen West establishes the lowest possible threshold for invalidating a lis pendens prior to resolution of the specific performance lawsuit.

In 1992 our neighboring jurisdiction of California established a much tougher standard which better protects sellers.  California’s standard requires the trial court to make a threshold inquiry into whether “the claimant has . . . established by a preponderance of the evidence the probable validity of the real property claim.”  Cal. Civ. Proc. Code § 405.32 (emphasis added).  In other words, unless the buyer will probably prevail at trial, the lis pendens will be ruled invalid and the seller will be immediately entitled to sell the real property while the lawsuit proceeds to resolution.

In conclusion, requiring an inquiry into the buyer’s underlying facts and legal position, to determine whether the buyer’s claim for lis pendens has at least a “probable” chance of succeeding at trial, is an excellent rule.  A lis pendens should not be used as a weapon by buyers to tie up properties and extort concessions from sellers.  Accordingly, the Arizona Court of Appeals or the Arizona legislature will hopefully modify Evergreen West’s ruling in the future and establish a higher standard, requiring a buyer to prove the probable validity of a lis pendens at the beginning of the litigation.  

Note: Even if the lis pendens is ruled invalid, any buyer with actual knowledge of the title dispute will not be protected if the original buyer wins the lawsuit. Furthermore, the seller is required to disclose this title dispute to any buyer and, if the seller does properly disclose, any buyer will have actual knowledge of the title dispute.  Therefore, as a practical matter, even if the lis pendens is ruled invalid, a sale of the real property will only be valid if the seller does not disclose and the buyer does not have any actual knowledge of the title dispute.