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Posts from June 2013.

City of Riverside v. Inland Empire Patients Health and Wellness Center, Case No. 198638, (Cal., May 6, 2013) tested a local ban on facilities that distribute “medical marijuana” despite passage of an initiative that permitted those activities in limited circumstances.  Local home rule in California is enshrined in the Constitution and allows the passage and enforcement of local ordinances not in conflict with the criminal laws of the state.  This case involved the validity of Defendant City’s prohibition of the use and distribution of marijuana as a local nuisance.  The City, following the passage of the ordinance, brought injunctive proceedings against defendant and succeeded in both the trial court and the California Court of Appeals.  Defendant sought review and again claimed the local ordinances were preempted by state law.

The court commenced its analysis by examining the status of marijuana under the federal Controlled Substances Act (CSA).  In 1996, despite the federal preemption under the CSA, the voters in California passed the Compassionate Use Act (CUA) which allowed for medical use of the drug.  In 2004 the California legislature enacted the Medical Marijuana Program (MMP) to allow for the cultivation and use of marijuana in certain medical situations by excepting those activities from criminal and general nuisance laws.  These state laws have no impact on the general federal prohibition on the cultivation and use of marijuana.

The instant injunction proceedings were initiated after plaintiff notified defendant that its marijuana dispensary was not permitted under local zoning regulations.  The court said that local authority over land use in the state was an inherent police exercise rooted in the State Constitution, rather than being a legislatively delegated power.  Moreover, there is a presumption that such exercise is not preempted by state law.  To be preempted, the local ordinance must either require what the state law prohibits or prohibits what the state law demands.  No preemption will be inferred when both sets of laws may coexist.  Neither the CUA nor MMP specifically amend local zoning regulations.  The court concluded that these laws may operate concurrently.

In Ross v. RagingWire Telecommunications, Inc., 42 Cal. App. 4th 920 (2008) the court rejected an employee’s challenge to his firing for having trace amounts of a chemical related to marijuana in his blood.  In that case, the court said the relaxation on criminal laws on the use of marijuana did not extend to prevent discharge for marijuana use under an employment policy.  In the criminal law context, the California Appellate Court had read the two state acts narrowly so as not to preempt.  In City of Claremont v. Kruse, 177 Cal. App. 4th 1113 (2009), the California Court of Appeals upheld a land use moratorium on permit issuance to marijuana dispensaries, finding no express conflict between state and local law in that circumstance.  Similarly, the Court of Appeals upheld land use regulations on dispensaries in City of Los Angeles v. Hill, 192 Cal. App. 4th 761, (2011), concluding that the MMP and CUA did not confer on qualified patients and their caregivers unfettered rights to cultivate or dispense marijuana as they choose, thus upholding a regulation inquiring a separation of marijuana dispensaries from schools, playgrounds, parks, places of worship and other uses by 1,000 feet.

The court’s analysis found no express preemption of local regulations on dispensaries.  Those laws relating to cultivation and distribution of marijuana exempted by the MMP are criminal and nuisance laws, but not land use regulations.  Moreover, those acts provide no implied preemption of land use laws – they are not coextensive in their reach and local governments may regulate or prohibit those activities as a local nuisance without fear of preemption.  A combination of state law and local ordinances accommodate multi-jurisdictional interests so the California cities may adopt regulations under the State Constitution and, unless preempted by state law or unconstitutional, those regulations will apply.  The court concluded:

As we have noted, the CUA and the MMP are careful and limited forays into the subject of medical marijuana, aimed at striking a delicate balance in an area that remains controversial, and involves sensitivity in federal-state relations. We must take these laws as we find them, and their purposes and provisions are modest. They remove state-level criminal and civil sanctions from specified medical marijuana activities, but they do not establish a comprehensive state system of legalized medical marijuana; or grant a "right" of convenient access to marijuana for medicinal use; or override the zoning, licensing, and police powers of local jurisdictions; or mandate local accommodation of medical marijuana cooperatives, collectives, or dispensaries.

Of course, nothing prevents future efforts by the Legislature, or by the People, to adopt a different approach. In the meantime, however, we must conclude that Riverside’s ordinances are not preempted by state law.

Justice Liu concurred, having a slightly different view of preemption, but agreeing with the majority that the Riverside ordinance was not preempted by the MMP or CUA.

The unanimous result in this case by a well-regarded court carefully explains that exemption of certain activities from criminal and nuisance laws cannot be extended to require local governments to allow those activities under their zoning regulations.

The Euclid Society came together on June 6, 2013, to engage in a lively discussion on density-related issues in the Portland area.

Parking and its relation to planning and development is a complex topic that many cities currently struggle to variously accommodate.  Some cities promote stackable parking lots, more frequent public transit as an alternative to personal vehicles, and in Portland, for many years, a no minimum parking requirement in commercial zones with proximity to public transit (the CS and CM zones). However, that rule came under fire and culminated in recent decisions by LUBA in Richmond Neighbors for Responsible Growth v. City of Portland, (LUBA No. 2012-061, February 20, 2013) and Kerns Neighbors for Rational Growth v. City of Portland, (LUBA No. 2012-085, February 26, 2013).  Although these cases did not specifically include arguments about the no minimum parking rules, the political backdrop leading to the appeals focused on a lack of parking in area neighborhoods.

As a result of the lawsuits, the City of Portland adopted new minimum parking standards in the two affected commercial zones. The minimum standards are a token to the neighbors if a large residential development is proposed, however, the no minimum parking standards remain for commercial uses.  Further, the concern for many affordable housing advocates is the disincentive for high density developments near transit in favor of building projects with only 30 units that are exempt from parking standards.

In addition to the no minimum parking outcry, another subtext in the discussion is that most properties in the affected zones are not subject to site plan and design review.  As can be seen in the materials provided at the Euclid Society session, those projects that are subject to site plan and design review show marked improvement over the massive residential cubes that many community members find aesthetically offensive.  High density residential development along transit corridors would be much more palatable if site plan and design review standards applied.

Please consider joining the conversation at one of our upcoming Euclid Society events.  Save the date for September 25, 2013, when we will present on the latest in the urban growth boundary expansion debate.

 

In 1989, the legislature enacted ORS 105.620 resulting in a modification of a common law claim for adverse possession. The statute went into effect on January 1, 1990 and applies to adverse possession claims that vest after its effective date. The statute added as an additional element the requirement that the person claiming adverse possession held an “honest belief” he or she is the actual owner of the property when he or she first comes into possession of the property. ORS 105.620(1)(b). The requirement to prove an “honest belief” of actual ownership creates a difficult hurdle for a party claiming ownership of property by adverse possession vesting after the effective date of the statute.  Property owners are often most aware of property line and easement disputes when they first come into possession of the property. Title reports and property line survey are likely to be seen and reviewed during change of ownership, and therefore more likely to destroy any “honest belief” ownership even if there is longstanding open, notorious and hostile use of the property by predecessors in ownership.

In Uhl v. Krupsky, 254 Or App 736 (2013), the court of appeals addressed the question of whether ORS 105.620 applies to a claim by a fee simple owner of property to extinguish an easement by adverse possession. Plaintiffs sought to eliminate a portion of a recorded access easement located on their property by their open, notorious and hostile use of a portion of the access easement. Defendants, contending that ORS 105.620 applies to all adverse possession claims, argued that the plaintiffs could not establish an “honest belief” of actual ownership based on their knowledge of the written access easement agreement when they purchased the property. There was no factual dispute that the plaintiffs had met all the other elements of adverse possession – open, notorious, exclusive, hostile and continuous possession of the portion of the easement they sought to extinguish for the requisite ten year period. The trial court granted summary judgment in favor of the plaintiffs extinguishing the disputed portion of the access easement. The Court of Appeals affirmed holding that ORS 105.620 does not apply to an adverse possession claim where a property owner seeks to extinguish an easement.  The court reasoned that the phrase “acquire fee simple title to real property by adverse possession . . .” contained in ORS 105.620, limits its applications to claims involving “the acquisition of possession, control, and the power of disposal of the broadest property interest allowed by law, which does not include an easement.” Id. at 740-41.  Further, the Court of Appeals noted the language found in ORS 105.620(1)(b) was also inconsistent with application to easements because the language requires the “honest belief” to be held at the time the claimant first comes into “possession” of the property and an easement is a “nonpossessory” interest. Id. at 741. For these reasons, the court found that the plaintiffs claim to extinguish an easement fell outside the scope or ORS 105.620 and that because plaintiffs otherwise established the common law elements of adverse possession summary judgment was appropriate.

The holding in Uhl provides strong support that claims for adverse possession seeking to extinguish or create easement rights are controlled by common law rather than ORS 105.620. As a result, a claimant seeking to establish or extinguish an easement by adverse possession will have a far better chance of success than one seeking to claim a fee interest in property.

If you have any questions please feel free to email me.

Governor Inslee recently signed legislation passed by the Washington legislature which provides a mechanism for clearing up deeds of trust on title securing paid loans, without having to chase lenders.  This is good news for the real estate industry.

Have you ever paid off a debt secured by a deed of trust on real estate, and had to waste time and money chasing the lender to get the trustee to reconvey the lien?  It's a pain.  Sure, there's been a 60 day time limit, requiring lenders and their trustees to release deeds of trust securing satisfied debts.  If the deed of trust is not reconveyed within that time period, a lender is liable to the property owner for damages and attorney fees.  RCW 61.16.030; I'm happy to report that the Washington legislature has created another tool to clear up title without bringing a lawsuit.

Representatives Roger Goodman (D-Kirkland) and Terry Nealey (R-Walla Walla) sponsored the new legislation which allows a title insurance company or agent, a licensed escrow agent, or a Washington attorney (collectively, “Agent”), who has paid a lender’s pay off demand in full from escrow powers to bring about a reconveyance of the lien securing the satisfied debt.  Upon receipt of notice of the beneficiary's failure to request reconveyance, the Agent may submit proof of satisfaction of the debt and request the deed of trust trustee to reconvey the lien.  If the trustee on the deed of trust is unable or unwilling to reconvey within 120 days following payment to the beneficiary in response to the beneficiary's demand statement, then the agent may record a notarized "declaration of payment" in the land records of the county(ies) where the deed of trust was recorded, and send a copy to the beneficiary and trustee.

The beneficiary or trustee then have 60 days to object to the "declaration of payment" by filing an "objection to declaration of payment".   If no objection has been filed within 60 days, "any lien of the deed of trust against the real property encumbered must cease to exist".   Magic - clean title.

This is a good law.  Too often a lender is intensely interested in having its loan repaid, and then its attention to cleaning up the encumbered property is quickly distracted.  Who wants to have to bring a lawsuit to clear title of a deed of trust which has been repaid?  The costs and time involved are usually prohibitive. This new law, which will be codified at RCW 61.24.110 (2) and (3) provides an easy tool to do so.

Is there a downside?   There is a possibility of a dishonest title insurance company or agent, escrow agent or attorney filing a false "declaration of payment," and then failing to send notice to the beneficiary.   A subsequent examination of title in connection with a refinancing or sale would not consider the subject deed of trust to be valid, which could result in a secured loan not being repaid upon such event. The initial loss would fall on the title insurance company, insuring the new deed of trust and/or purchaser.

Ultimately, and hopefully, the guilty Agent filing the declaration of payment would be drawn and quartered, or at least be required to pay, and if the agent were a lawyer, severely disciplined.

More probably, less time will be wasted chasing down disorganized lenders to reconvey their liens. May it be so!

Please feel free to contact me if you have any questions!

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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