Real Property Notes Blog
HUD Issues Guidance for Assessing a Request for an Animal as a Reasonable Accommodation
Under the Fair Housing Act, disabled persons may request a reasonable accommodation for service animals and other assistance animals if necessary to allow the disabled person an equal opportunity to enjoy and use a dwelling. How to analyze a request has been troubling for housing providers (landlords, condominium associations) because of the disparity of court decisions. On January 28, 2020, HUD issued its FEHO Notice 2020-01 which provides what HUD considers a set of best practices regarding the type and amount of documentation a housing provider may ask a disabled person to provide in support of a request for an accommodation when the need for the support or assistance animal is not obvious and not known to the provider.
The Notice should be required reading for all housing providers, including managing agents, board members, and attorneys who represent housing providers. It provides fairly clear and cogent guidelines for analyzing requests.
Commission Due on Sale of Property Two Years after Listing Agreement Expires
In Thomas Hospitality Group, Inc. v Bree Enterprises, Inc., an unpublished Michigan Court of Appeals opinion, the owner of a bar and restaurant signed a 1-year exclusive listing agreement which provided, in pertinent part, that "if at any time after this Agreement expires, anyone sells the Property to anyone with whom or to whom anyone, during the Term of this Agreement, had negotiations for or discussions related to the sale or lease of the Property, sent a marketing package” the owner would pay a commission of 10% of the sale price. The agreement also provided that the broker could file a lien against the real property and a UCC financing statement against the personal property to secure the commission. Four days before the agreement expired, the broker was contacted by a prospective purchaser. Two days before the agreement expired, the broker e-mailed a marketing package to the purchaser. Over a year later, the prospective purchaser and the bar owner entered into an agreement for sale. After the purchaser paid $150,000 to the bar owner, the broker filed a claim of lien against the real estate and a UCC financing statement. The property closed, but the purchaser subsequently tendered back the property.
The broker sued and obtained a judgment for the 10% commission, but the trial court held the lien and financing statement were invalid because not filed before the end of the 1 year term. The bar owner appealed, arguing, among other things, that the contract contained an indefinite term, noting that, in theory, the broker could collect a commission “years, decades, or even centuries” after the expiration of the commission agreement, and thus ran afoul of the statute of frauds. The court held that, even if the time for performance (payment of the commission) was indefinite, the remedy is not to hold the contract unenforceable, but to presume a reasonable time for performance. The court determined that the less than 2 year period was a reasonable period of time.
According to the court, these types of clauses are commonly referred to as extension clauses and are routinely enforced. When entering into a listing agreement, a savvy seller will seek to insert a cutoff provision for the extension clause as well as an expiration of the listing term.
On the broker’s cross-appeal the court held that the broker was entitled to record the claim of lien and financing statement after the initial one year term of the agreement. The court held that the right to file the claim of lien and financing statement was intended to protect the broker’s interest in a commission, and thus the right to file persisted as long as the right to a commission persisted.
This is another case that highlights the need for careful drafting as well as an understanding of the ramifications of contract language before signing contracts.
Agreement to Pay 50% of Equity in Property is an “interest in land” within Statute of Frauds
In two opinions issued on the same day, Ralph Roberts Realty, LLC v Schierlinger and Ralph Roberts Realty, LLC v Tyson, an unpublished Michigan Court of Appeals opinion, Plaintiff prepared, but the parties never signed, an agreement whereby Plaintiff would purchase properties in Defendant’s name. Plaintiff would receive $5,000 for that service, as well as the exclusive right to sell the property for a 7% commission and, if the property did not sell within 5 years, Plaintiff would be entitled to 50% of the equity in the property. Plaintiff purchased properties for each Defendant. When the properties had not sold within 5 years, Plaintiff sued Defendants for the 50% equity in the property. Defendant claimed the unsigned contract was barred by the statute of frauds, a statute barring certain types of contracts unless they are in writing and signed by the party being sued. The trial court held that the agreement was barred by the statute of frauds that barred contracts that could not be performed within 1 year unless in writing and signed by the party against whom enforcement was sought. Plaintiff appealed.
On appeal, the Michigan Court of Appeals affirmed, although it held that a different provision of the statute of frauds, barring contracts for an “interest in land” unless in writing and signed by the party against whom enforcement was sought, was applicable. The court held that an agreement to pay 50% of the equity in the property was a contract for an interest in the land. Since the contract was unsigned in each case, it was unenforceable.