The Week in Land Law - Garcetti moving on, adverse possession fails against bank, and new legislation
There are a few new updates this week, one of the biggest being President Biden’s selection of LA Mayor Eric Garcetti to serve as the U.S. Ambassador to India. Not directly land law related, but certainly of interest to those in the business of real estate in Los Angeles. If Garcetti is confirmed by the Senate, LA will have to find a new mayor. City Council President Nury Martinez would automatically assume the role of acting mayor. The City Council would then need to call a special election or appoint someone to the position. The mayoral primary will take place in June 2022, and the council is unlikely to schedule a special election before then.
In other news this week:
Case Law
Bailey v. Citibank; filed July 6, 2021, Fifth District, 2021 S.O.S. 2978. Main takeaway - if you try to adversely possess property from a bank that has a recorded mortgage, you will probably lose, even if the bank fails to respond to the lawsuit and fails to hold a trustee sale for a decade after recording a notice of default.
In this case, plaintiffs almost succeeded in a quiet title action based on a claim of adverse possession, but Citibank had the judgment overturned. First, Citibank sought relief from default (they failed to respond to the lawsuit before judgment was entered against them!). Then, Citibank convinced the Court of Appeal that, while plaintiffs satisfied all other elements of adverse possession, plaintiffs’ possession was not hostile and adverse to Citibank’s title for the required five year period.
The original owners defaulted on their mortgage in 2008. A notice of default and election to sell was recorded. However, no notice of trustee’s sale was recorded (bad bank!). Meanwhile, the plaintiffs saw that the property was empty, and in 2013 they took possession of the property without permission and claimed it as their own. Their possession was open and obvious. Plaintiffs stored equipment and trailers on the property, kept chickens, pigs and goats there, made repairs to the residence, and paid the assessed property taxes each year when due.
During this period of possession, the deed of trust was reassigned twice, ultimately to Citibank. In 2018 Citibank rescinded the 2008 notice of default, recorded a new notice of default, and held a trustee’s sale, at which Citibank became the owner of the property.
The court of appeal determined that the five year period required for hostile and adverse possession does not begin to run until a mortgage holder (bank) acquires a right of possession of the property; and that prior to actual delivery of the trustee’s deed (at the trustee’s sale in 2018), Citibank had no right of possession. A new five year period started when Citibank accepted delivery of the trustee’s deed in 2018. The Court of Appeal reversed the trial court’s judgment and gave the house to Citibank.
Pending Legislation
AB 1401 – Passed out of the Senate Housing Committee. Assembly Bill 1401 would prohibit any public agency from imposing minimum parking requirements for certain projects within a half-mile of public transit. See more here.
H.R.3684 - INVEST in America Act passed in the U.S. House. It’s a five-year, $715 billion measure that aims to provide a “New Vision for the Environment and Surface Transportation in America.” Check your congressperson’s website for an update on how much is allocated to your district and where that money will go. $19.1 million was approved for San Fernando Valley Transportation projects, and $20 million for South Bay projects in the 33rd district. Scroll down to section 107(c) of the bill to review the California-specific projects. Next up for the bill is a trip to the Senate.
SB 9 update - 120 elected officials from 48 cities signed on to an op-ed opposing SB 9. Read more here. It seems to be universally hated by local elected officials.
