Real Estate: September 2008 Archives

Current law provides an alternative process for purchasers and contractors or sellers to resolve issues related to the design, construction, condition or sale of a dwelling prior to filing a lawsuit. Proposition 201 makes mandatory changes to the legal procedures for any purchaser dwelling action and for the time to sue on any improvements for real property:

4. After receiving notice of alleged defects, the measure would require rather than allow the seller to conduct an inspection of the dwelling to determine the cause of the alleged defects and what repairs or replacements would be necessary, if any, to remedy the alleged defects.

5. The seller would be required to send the purchaser a written response within 30 days, instead of 60 days, after receiving a notice from the purchaser of the purchaser's intent to file a court action against the seller. If an offer to repair or replace any alleged defects includes an offer of compensation, the purchaser would be given the sole power to choose compensation instead of repair or replacement.

6. A seller would be required to hire a qualified licensed contractor to complete any and all repairs to the dwelling. In order for the licensed contractor to be qualified, the registrar of contractors could not have had an order against the licensed contractor in the preceding 10 years.

Current law provides an alternative process for purchasers and contractors or sellers to resolve issues related to the design, construction, condition or sale of a dwelling prior to filing a lawsuit. Proposition 201 makes mandatory changes to the legal procedures for any purchaser dwelling action and for the time to sue on any improvements for real property:

1. Expands existing law to grant "prospective buyers" the rights to sue over a dwelling action.

2. Prohibits sellers or purchasers from agreeing to or allowing any "reasonable alternative dispute resolution" procedures in sales contracts.

3. A purchaser would be required to give 60 days' notice, instead of 90 days, to a seller about the alleged defects before filing a court action against the seller. The notice must currently contain a "detailed and itemized" list of alleged defects. Proposition 201 replaces that standard with a requirement that the notice contain a description in "ordinary, nontechnical terms" of defects that a purchaser of "average experience" would be expected to observe.

Neither law nor real estate appraisal has thoroughly clarified the different damage valuation methodologies that are applicable under tort law, condemnation law, regulatory takings law, and inverse condemnation law in various political jurisdictions. Real estate appraisal generally relies on three cardinal valuation methods: the Cost, Sales Comparison, and Income Approaches. This article shows that there are three methods of damage valuation that generally comport with the three conventional methods of valuation.

The three conventional valuation methodologies have been incorporated into damage law under different terminology and computation formats. Two rules predominate and have mostly been applied to damage situations involving use of eminent domain powers by public entities:
Existing Nomenclature for Damage Valuation Rules:
* The Federal Rule or Before and After Rule (Comparison Approach)
* The State Rule or Value of the Take Plus Damages Rule (Cost Approach)

More to follow from ForensisGroup experts Wayne C. Lusvardi and Charles Warren.