Unite for a Cause at the 36th Annual RPTE National CLE Conference!
When: Thursday, May 9th | 7-10 PM
Where: Capital Hilton, Washington, D.C.
Are you ready to redefine networking? This isn’t just another evening; it’s your gateway to making a difference in the legal community.
Join us at the “Party for a Purpose” reception, a unique blend of professional networking and philanthropy. Dive into meaningful conversations, connect with fellow legal professionals, and discover the transformative initiatives of the RPTE FJE Section, including the impactful Fellows Program and Scholarship Funds.
Picture this: A night filled with potential, enriched by the thrill of raffles, including a grand prize that’s not just about luck but a promise—a free trip to next year’s CLE Conference in Las Vegas, with hotel accommodations. But the true jackpot? Being part of a community that champions growth, education, and giving back. Don’t miss the grand finale; it promises to be a memorable end to an inspiring evening.
A monthly webinar featuring a panel of professors addressing recent cases or issues of relevance to practitioners and scholars of real estate or trusts and estates. FREE for RPTE Section members!
A monthly webinar featuring a panel of professors addressing recent cases or issues of relevance to practitioners and scholars of real estate or trusts and estates. FREE for RPTE Section members!
A monthly webinar featuring a panel of professors addressing recent cases or issues of relevance to practitioners and scholars of real estate or trusts and estates. FREE for RPTE Section members!
A monthly webinar featuring a panel of professors addressing recent cases or issues of relevance to practitioners and scholars of real estate or trusts and estates. FREE for RPTE Section members!
Register for each webinar at http://ambar.org/ProfessorsCorner
Tuesday, November 14, 2023
ADAPTIVE REUSE, PART I
Register for each webinar at http://ambar.org/ProfessorsCorner
Register for each webinar at http://ambar.org/ProfessorsCorner
Register for each webinar at http://ambar.org/ProfessorsCorner
SOURCE OF INCOME DISCRIMINATION LAWS
CORPORATE LANDLORDS
Tuesday, January 9, 2024 12:30-1:30 pm ET
Tuesday, March 14, 2024 12:30-1:30 pm ET
Tuesday, May 14, 2024 12:30-1:30 pm ET
Moderator: SHELBY D. GREEN, Elisabeth Haub School of Law, Pace University
Panelists: JAMES C. SMITH, University of Georgia
DAVID ZIVE, Ballard Spahr
DANIEL DURRELL, Locke Lord
AND A FUNDAMENTAL RIGHT TO PRIVATE PROPERTY
LEGISLATIVE EXACTIONS & KNIGHT V. METRO GOVERNMENT OF NASHVILLE
Tuesday, June 11, 2024 12:30-1:30 pm ET
Tuesday, April 11, 2024 12:30-1:30 pm ET
Tuesday, February 13, 2024 12:30-1:30 pm ET
A monthly webinar featuring a panel of professors addressing recent cases or issues of relevance to practitioners and scholars of real estate or trusts and estates. FREE for RPTE Section members! Register for each webinar at ambar.org/ProfessorsCorner
November/December 2023
Tuesday, December 12, 2023 September/OctOber 2023
The Nominations Committee (the Committee), consisting of Chair Robert C. Paul, Vice-Chair Hugh F. Drake, and Members C. Scott Schwefel, Mary Elizabeth Anderson, and Bryanna Frazier, met and conducted interviews of Section Officers, Delegates, Council members, and Standing Committee Chairs at the Section Fall Leadership Meeting in Toronto, Ontario, Canada.
The Committee expresses its appreciation to all who shared their thoughtful insights about the future leadership of the Section. The Committee has completed its deliberations and hereby submits its nomination of the following persons:
NOMINATED OR RENOMINATED TO SERVE AS OFFICERS:
Section Chair
Section Chair-Elect
Real Property Division Vice-Chair
Trust & Estate Division Vice-Chair
Section Secretary
Section Finance Officer
Assistant Secretary (Trust & Estate Division)
Assistant Secretary (Real Property Division)
Section Delegate
Diversity Officer
Benetta Y. Park
Marie A. Moore
Kellye Curtis Clarke
Ray Prather
George P. Bernhardt
James R. Carey
Bruce A. Tannahill
Timnetra Burruss
Orlando Lucero
Christina Jenkins NOMINATED
Sarah D. Cline
For the Real Property Division:
Robert Nemzin
Benjamin Orzeske
Crystal Patterson
Shelby D. Green
D. Joshua Crowfoot
The Nominations Committee requests that, pursuant to Section 6.1(g) of the Section Bylaws, written notice of this report, together with contact information, a biographical statement of each nominated person and such additional information required under the Section Bylaws, be circulated to the Section membership in accordance with the Section Bylaws.
Benetta Y. Park
Bessemer Trust
Palm Beach, FL
Will automatically assume the position of Section Chair, term ending August 2025. Positions held in the Section: Chair-Elect; Section Vice-Chair, Trusts & Estate Division; Vice-Chair, International Tax Planning; Co-Chair, CLE; Vice-Chair, Spring Meeting; Member, Community Outreach; Member, Council; TE Division Secretary, Council; Council Rep, TE Practice Groups; Chair and Member, Planning; Member, Nominations; Liaison, Section of Taxation; Member, Meetings Task Force; Member, Career Development Task Force; Liaison, TE Synergy Summit.
Marie A. Moore
Sher Garner Cahill Richter Klein & Hilbert, L.L.C.
New Orleans, LA
Nominated for Section Chair-Elect, term ending August 2025. Positions held in the Section: Section Vice-Chair, Real Property Division; Chair and Vice-Chair, Leasing Group; Chair and Vice-Chair Retail Leasing; Advisor and Member, Diversity and Inclusion; Co-Vice-Chair, Co-Chair, and Member, Corporate Sponsorship; Associate Articles Editor for RP and Last Word Editor, Probate and Property Magazine; Member, Council; Division Vice-Chair and Member, CLE; Member, Planning; SCM and Council Rep, Residential, Multi-Family, and Special Use Group; Advisor and Member, Leadership/Mentoring Task Force; Co-Chair, Special Committee on ABA Relations; Vice-Chair, Affordable Housing; Member, Groups and Substantive; Council; Liaison, Other Groups and Organizations.
Kellye Curtis Clarke
RGS Title
Alexandria, VA
Nominated for a first term as Section Vice-Chair, Real Property Division, term ending August 2025. Positions held in the Section: Section Diversity Officer; Member, Fellows; Chair and Vice-Chair, Single Family Residential; Member, Membership; Co-Chair, Vice-Chair, CoVice Chair, Member, Diversity and Inclusion; Group Chair and Vice Chair, Residential, Multi-Family and Special Use Group; Member, Nominations; Member, RP Government Submissions Task Force; Member, Council; Liaison, Commission on Homelessness and Poverty; Member, Groups and Substantive; Chair, Co-Chair and Member, Special Committee on ABA Relations; SCM, Real Estate Financing Group; Member, Council; Member, Planning; Council Rep, RP Litigation and Ethics Group.
Ray Prather
Prather Ebner Wilson LLP
Chicago, IL
Nominated for a second term as Section Vice-Chair, Trust and Estate Division, term ending August 2025. Positions held in the Section: Section Vice-Chair, Trust and Estate Division; Articles Editor and TE Assistant Editor, eReport; Group Chair, Group Vice-Chair, Chair, Vice Chair and Co-Vice-Chair, Charitable Planning; Member, Corporate Sponsorship; Liaison, LGBT Bar Association; Liaison, ABA Commission on Sexual Orientation & Gender Identity; TE Editor and Member, Publications; Member, Special Committee on ABA Relations; 2023 Council Member, Council Rep, Charitable Planning Organizations Group; Member, Planning; Liaison, Trust and Estate Synergy Summit.
George P. Bernhardt
Houston, TX
Nominated for a second term as Section Secretary, term ending August 2025. Positions held in the Section: Section Secretary; Member and Co-Chair, In-House Counsel; Chair, Industrial
Leasing; Member, Special Committee on In-House Counsel; Member, CLE; Group Chair, Group Co-Chair and Group ViceChair, Leasing Group; 2023 Member, Council; Council Rep, Joint Legal Education and Uniform Laws Group; Member, Nominations; Secretary and Member, Planning; Member, Leadership Mentoring Task Force.
James R. Carey
Levin Schreder & Carey Ltd Chicago, IL
Nominated for second term as Finance Officer, term ending August 2025. Positions held in the Section: Finance Officer; Assistant Finance Officer; Chair and Co-Vice-Chair, Probate & Fiduciary Litigation; Liaison, Section to Dispute Resolution; Council Representative, Group Chair and Vice-Chair, Litigation, Ethics and Malpractice Group; Co-Chair and Member, Corporate Sponsorship; Member, Task Force on Technology and the Profession; Member, Group and Substantive Committees; Member, Council, Member, Groups and Substantive; Member, Planning, Chair and Vice-Chair, Investments.
Bruce A. Tannahill
Mass Mutual Wichita, KS
Nominated for a second term, Assistant Secretary, Trust and Estate Division, term ending August 2025. Positions held in the Section: TE Assistant Secretary, Officers and Council; Advisor, Vice-Chair and Member, CLE; Assoc. Articles Editor, Probate & Property; Co-Chair, Operating Businesses.
Timnetra Burruss
Chicago, IL
Nominated for third term, Assistant Secretary, Real Property Division, term ending August 2025. Positions held in the Section: Member, Fellows; Member, CLE; Member, Diversity; Vice-Chair, Diversity, and Inclusion; Co-Chair, Diversity, Equity, and Inclusion; Vice-Chair, Multi-Family Residential; Member, Communications; Officers and Council, Real Property Division Assistant Secretary.
Orlando Lucero
FNF Family of Companies
Albuquerque, NM
Nominated for a third term as Section Delegate, term ending August 2027. Positions held in the Section and ABAwide: Vice Chair and Chair, Remedies and Miscellaneous Clauses Committee; Member, Partnerships, Joint Ventures and Other Investment Vehicles Committee; Member and Chair, Diversity Committee; Chair, Brokers and Brokerage Committee; Chair, Residential, Multifamily and Special Use Group; Section Liaison to ABA Commission on Racial and Ethnic Diversity in the Profession; Chair, Residential, Multifamily and Special Use Group; Advisor and Member, Planning Committee; Council Member; Section Secretary; RP Division Vice-Chair, Officers; ABA Presidential Appointment, Liaison, Council for Racial and Ethnic Diversity in the Educational Pipeline; Liaison, ABA Commission on Racial and Ethnic Diversity in the Profession; Liaison, Rep to RP Synergy Summit; Member, Planning; Member, RP Governmental Submissions; Co-Chair and Member, Special Committee on ABA Relations; Member, In-House Counsel; Liaison, Commission on Hispanic Rights and Responsibilities; Member, Future Practice and Guidance Task Force; Liaison to Fund for Justice and Education, Liaison ABA Entities; Section Delegate, House of Delegates, Council; Advisor, Diversity and Inclusion. Member, ABA Board of Governors; Member and Chair, ABA Council of the Fund for Justice and Education; Member, HOD Committee on Scope and Correlation of Work, and HOD Committee on Rules and Calendar.
Christina Jenkins Dallas, TX
Nominated for first term as Diversity Officer, term ending August 2025. Positions held in the Section: Chair, ViceChair and Member, Fellows; Fellows Chair, Membership; Member, Communications; Group Chair and Group Vice Chair, Residential, Multi-Family and Special Use Group; Member, Corporate Sponsorship; Co-Chair and Member,
Diversity, Equity and Inclusion; Chair, Vice-Chair and Member, RP Governmental Submissions; Member, Council; Council Representative, Commercial Real Estate Transactions Group; Member, CLE; Member, Groups and Substantive; Member, Nominations; Member, Planning; Member, Leadership Mentoring Task Force; Vice-Chair, Solo and Small Firm Practice; Liaison, Other Groups and Organizations.
Mary
E. Vandenack Vandenack WeaverLLC Omaha, NE
Nominated for a first term as Section Delegate, term ending August 2025. Positions held in the Section and ABAwide: Council, Trust and Estate Division; Member and Co-Chair, Future Practice and Guidance Task Force; Co-Chair, Economics and Technology of the Practice Small Firm Practice; Vice-Chair, Small Firm Practice; Vice-Chair, Asset Protection Planning; Co-Chair, Emotional and Psychological Issues in Estate Planning; Member, Planning; Liaison, ABA Standing Committee on Technology and Information Systems; Group Co-Chair, Joint Law Practice Management Group; TE Assistant Secretary and Member, Council; ABA Law Practice Division: Chair; Editor-in-Chief Law Practice Magazine; Counsel; Women Rainmakers; Vice Chair Futures Task Force; Evolving Business Models; Attorney Well-being; ABA Commission on the Future of the Profession; ABA Commission on Youth At Risk; ABA SCOTIS; Member, Council; Member, Nominations; Council Rep, Non-Tax Estate Planning Considerations Group; Member; Special Committee on Career and Wellness; Chair, Law Practice Division.
Anne Kelley Russell
Womble Bond Dickinson (US) LLP
Charleston, SC
Nominated for a first term on Council, Trust & Estate Division, term ending August 2027. Positions held in the Section: Member, Fellows; Member, Membership; Member, CLE; Co-Chair, Insurance and Financial Planning; Assistant TE Editor,
eReport; Member, Marketing and Social Media; Co-Chair and Vice-Chair, Charitable Organizations; Member, Special Coordinator for Liaisons Groups and Substantive.
Lilly Gerontis
Practical Law Company – Thompson Reuters
New York, NY
Nominated for a first term on Council, Real Property Division, term ending August 2027. Positions held in the Section: Co-Chair and Vice-Chair, Economics, Technology and Practice Methods; Vice Chair and Member, Groups and Substantive Committee; Member, Career Development and Wellness; Group Vice-Chair, Joint Law Practice Management Group.
Sarah D. Cline
Miles & Stockbridge PC
Frederick MD
Nominated for a first term on Council, Real Property Division, term ending August 2027. Positions held in the Section: Member, Fellows; Assistant RP Editor, eReport; Co-Chair and Vice-Chair, Purchase and Sale; Group Vice-Chair, Residential, Multi-Family and Special Use Group; Member, Leadership Mentoring Task Force; Co-Chair, Joint Law Practice Management Group.
Marissa Dungey
Dungey Dougherty PLLC Greenwich, CT
Nominated to fill a two-year unexpired term on Council, Trust & Estate Division, term ending August 2026. Positions held in the Section: Member, Fellows; Member, CLE; Chair and Vice-Chair, Non-Tax Issues Affecting the Planning and Administration of Estate and Trusts; Co-Chair and Vice-Chair; Business Investment Entities Partnerships LLCs & Corps.; Fellow, ACTEC Young Leaders; Group Co-Chair and Group Vice-Chair, Business Planning; eCLE Vice-Chair, CLE; TE Vice-Chair, CLE; Member, Membership; Member, Nominations; Member, Career Development and Well-being Committee; Member, Planning.
Eric M. Mathis
Southfield, MI
Nominated to fill a one-year unexpired term on Council, Real Property Division, term ending August 2025. Positions held in the Section: Member, Fellows; Chair and Vice-Chair, RP Litigation and Alternative Dispute Resolution; Co-Chair, Advisor and Member, Diversity Equity and Inclusion; Liaison, National Bar Association; Chair, Co-Chair and Member, Special Committee on In-House Counsel; Member, Membership; Member, Nominations.
Robert Nemzin
HSBC Private Bank
New York, NY
Renominated for a second full term on Council, Trust & Estate Division, term ending August 2027. Positions held in Section: Chair, Vice-Chair and Member, Fellows; Co-Vice-Chair, Young Lawyers Network; Vice-Chair and Co-Vice-Chair, Estate Planning and Administration for Business Owners, Farmers and Ranchers; Co-Chair, YLD; Member, Membership; Member, Council; Council Representative, Employee Plans and Executive Compensation Group.
Benjamin Orzeske
Uniform Law Commission
Chicago, IL
Renominated for a second full term on Council, Trust & Estate Division, term ending August 2027. Positions held in Section: Chair and Vice Chair, Uniform Laws; Vice-Chair, Uniform Acts for Trust and Estate Law; Chair, Co-Chair and Vice-Chair, TE Legal Education and Uniform Laws Group; Chair, Joint Committee Uniform Laws; Uniform Laws Update Editor; P&P Magazine; Member, Task Force on Technology and the Profession; Council, Member; Council Representative, Joint Legal Education and Uniform Laws; Member, TE Governmental Submissions; Member, RP Governmental Submissions.
Crystal Patterson
Gulfstream Commercial Services, LLC
Louisville, KY
Renominated for a second full term on Council, Trust & Estate Division, term ending August 2027. Positions held in Section: Chair and Vice-Chair, Probate & Fiduciary Litigation; Group Chair and Group Vice-Chair, Litigation, Ethics and Malpractice Group; Chair and Co-Chair, In-House Counsel; Vice-Chair, Hotels, Resorts and Tourism; Member, Council; Co-Chair, Career Development and Wellness; Member, Groups and Substantive; Member, Planning.
Shelby D. Green
Pace University School of Law
White Plains, NY
Renominated for a second full term on Council, Real Property Division, term ending August 2027. Positions held in Section: Keeping Current Property Editor, P&P; Co-Chair and Member, Membership; Vice-Chair and Member, Publications; Chair, Co-Chair and Vice-Chair, Legal Education; Member and Assistant Secretary, Council; Member, Nominations; Chair and Vice-Chair, Joint Legal Education and Uniform Laws Group.
D. Joshua Crowfoot
Crowfoot Law Firm, LLC
Chattanooga, TN
Nominated for a first full term on Council, Real Property Division, term ending August 2027. Positions held in Section: Section Council, Real Property Division; Member, Fellows; Vice-Chair, Retail Leasing; RP Acquisitions Editor, Media/ Books Products; Liaison, ABA GP Solo Division; Chair, YLD; Vice-Chair, Senior Housing and Assisted Living; Chair, Young Lawyers Network; Vice-Chair, Purchase and Sale; Vice-Chair, Office Leasing; Chair, Assignment and Subletting; Member, Council.
The Editorial Board of Probate & Property magazine is interested in reviewing manuscripts in all areas of trust and estate or real property law. Probate & Property strives to present material of interest to lawyers practicing in the areas of real property, trusts, and estates. Authors should aim to provide practical information that will aid lawyers in giving their clients accurate, prompt, and efficient service.
Manuscripts should be submitted to the appropriate articles editor:
Kathleen K. Law
Nyemaster Goode PC
Michael A. Sneeringer
Porter Wright Morris & Arthur LLP
700 Walnut Street, Suite 1600 9132 Strada Place, 3rd Floor
Des Moines, IA 50309-3800 Naples, FL 34108
kklaw@nyemaster.com
MSneeringer@porterwright.com
On our website (www.americanbar.org/groups/real_property_ trust_estate/publications/probate-property-magazine) click on the links under the “Probate & Property Resources” section for complete author guidelines and submission requirements.
If you have any questions, please email erin.remotigue @americanbar.org.
The Section of Real Property, Trust and Estate Law is now accepting entries for the 2024 Law Student Writing Contest. This contest is open to all J.D. and LL.M students currently attending an ABA-accredited law school. It is designed to encourage and reward law student writing on real property or trust and estate law subjects of general and current interest.
1st Place
$2,500 award
2nd Place
$1,500 award
3rd Place
$1,000 award
n Free round-trip economy-class airfare and accommodations to attend the RPTE National CLE Conference. This is an excellent meeting at which to network with RPTE leadership! (First place only.)
n A full-tuition scholarship to the University of Miami School of Law’s Heckerling Graduate Program in Estate Planning OR Robert Traurig-Greenberg Traurig Graduate Program in Real Property Development for the 2024-2025 or 20252026 academic year.* (First place only.)
n Consideration for publication in The Real Property, Trust and Estate Law Journal, the Section’s law review journal.
n One-year free RPTE membership.
n Name and essay title will be published in the eReport, the Section’s electronic newsletter, and Probate & Property, the Section’s flagship magazine.
Contest deadline: May 31, 2024
Visit the RPTE Law School Writing Competition webpage at ambar.org/rptewriting.
*Students must apply and be admitted to the graduate program of their choice to be considered for the scholarship. Applicants to the Heckerling Graduate Program in Estate Planning must hold a J.D. degree from an ABA-accredited law school and must have completed the equivalent of both a trusts and estates course and a federal income tax course. Applicants to the Robert Traurig-Greenberg Traurig Graduate Program in Real Property Development must hold a degree from an ABA-accredited law school or a foreign equivalent non-US school.
Estate planning used to be primarily a local practice. Clients would generally work with an attorney licensed in the client’s home state to draft an estate plan based on the law of the client’s residence. There was little discussion of which state’s law applied.
In 2024, that’s not always the case for several reasons. First, people are more mobile. Families move more often than they used to, sometimes maintaining more than one residence. As children grow up, they are more likely to live in another state. A well-planned estate might have to consider the laws of multiple jurisdictions. Second, wealth is more mobile. Financial assets, rather than real property, comprise the bulk of most people’s estates. Entities like LLCs are increasingly used to hold real property, effectively transforming the asset into a form of personal property.
Finally, state laws have evolved over the last few decades. Several states have adopted legislation to attract trust assets by authorizing various types of trusts unavailable in other jurisdictions, including self-settled asset protection trusts, dynasty trusts, and silent trusts. Settlors and their attorneys now regularly create trusts designed to be administered under the law of a “trust haven” state rather than the law of the settlor’s domicile to avail themselves of these planning opportunities. In this environment, the choice of law to govern various aspects of trust
Uniform Laws Update provides information on uniform and model state laws in development as they apply to property, trust, and estate matters. The editors of Probate & Property welcome information and suggestions from readers.
administration (e.g., creation, administration, distributions) carries greater importance.
The greater range of available options also creates an additional risk that a conflict of laws could arise. When disputes arise, litigators choose forums that have the most favorable state laws. If the parties to a trust (the trustees and other fiduciaries, settlor, and beneficiaries) have a presence in multiple states, the courts of more than one state could likely exercise jurisdiction over the trust, and those courts could disagree about which state’s law applies to a particular matter under dispute.
Section 107 of the Uniform Trust Code provides some guidance for resolving conflicts:
The meaning and effect of the terms of a trust are determined by:
(1) the law of the jurisdiction designated in the terms unless the designation of that jurisdiction’s law is contrary to a strong public policy of the jurisdiction having the most significant relationship to the matter at issue; or
(2) in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.
The UTC does not, however, define several key phrases in Section 107. It is left to the courts to determine what constitutes a “strong public policy” of the state and to adjudge which jurisdiction has the “most significant relationship to the matter at issue.”
The Restatement (Second) of Conflict of Laws provides more definitive rules. However, those rules often point to different jurisdictions depending on whether the trust contains real or personal property and whether the trust is inter vivos or testamentary, further complicating the analysis. Moreover, the Restatement (Second) was drafted between 1952 and 1971, well before states began enacting legislation to cause settlors and their attorneys to consider invoking the law of far-flung jurisdictions.
And the issue is not limited to trusts. Although not as diverse as trust law regimes, state variations in the law of wills and probate procedure also contain enough variation to potentially raise unforeseen issues for even a wellplanned estate.
Two related projects aim to shed some light on this area of the law. First, the American Law Institute (ALI) has begun drafting the Restatement (Third) of Conflict of Laws. Second, the Uniform Law Commission (ULC) is drafting a new uniform act on conflict of laws in trusts and estates. The Reporters for the
ALI Restatement are collaborating with the ULC drafting committee to ensure the two projects are coordinated and, to the extent possible, will lead to the same legal outcomes.
A lot is at stake. Billions of dollars are held in trust, assuming that a particular state’s law will govern should any disputes arise. Estate planners spend a great deal of time learning the laws of various jurisdictions to choose the most appropriate state law to govern their clients’ trusts. A greater degree of certainty would benefit everyone involved.
As with all uniform law projects involving real property or trusts and estates, the RPTE Section has appointed an advisor for the project. David Lieberman, a partner at Levin Schreder & Cary in Chicago, is the Section’s representative and has participated in every drafting committee meeting. The ABA Advisor’s role is to liaise between ABA members and the drafting committee members—keeping section members informed and representing their interests. Although the ULC will not approve the new uniform law until summer 2025, at the earliest, the draft has advanced to the point where all interested RPTE members should review the committee’s work to date and make their opinions known.
Early on, the drafting committee on conflict of laws made certain policy decisions. To the extent possible, the uniform law will respect the American tradition of allowing a donor to choose the law that governs most aspects of the donor’s estate plan. The committee will also attempt to simplify the existing law of conflicts by eradicating the distinction between real and personal property, by de-emphasizing the distinction between inter-vivos and testamentary trusts, and by eliminating, to the extent possible, the application of different laws to matters of construction and interpretation of a will or a trust. Under the current draft, it would remain possible that the laws of different states could apply to different
aspects of a particular trust or estate.
Because this topic is complex and the ramifications of the project could be wide-reaching, the ALI and ULC are taking all the time necessary to ensure the final products will significantly improve today’s messy legal landscape. Although a great deal of work product is available to review, both the ALI and ULC projects are still at a point where stakeholder input can be incorporated and encouraged.
RPTE members seeking additional information on this project are encouraged to consult any of the following sources and persons:
1. Uniform Law Commission website www.uniformlaws.org. Navigate to “Projects” → “Browse Drafting” → “Conflict of Laws in Trusts and Estates Committee” to follow the committee’s work and review current and past drafts.
2. American Law Institute, which has published tentative drafts of the Restatement (Third) of Conflict of Laws
3. The series of papers presented at the Tulane University School of Law and the American College of Trust and Estate Counsel’s Symposium on Conflict of Laws in Trusts and Estates in October 2022, published in the Tulane Law Review, Vol 97 No. 5.
4. David E. Lieberman, Levin, Schreder & Carey, ABA Advisor to the ULC Drafting Committee on Conflict of Laws in Trusts and Estates.
5. Prof. Robert H. Sitkoff, Harvard Law School, Chair of the ULC Drafting Committee on Conflict of Laws in Trusts and Estates.
6. Turney P. Berry, Wyatt, Tarrant & Combs, Vice Chair of ULC Drafting Committee on Conflict of Laws in Trusts and Estates.
7. Benjamin Orzeske, ULC Legislative Counsel for Uniform Trust and Estate Acts.
Primary sources for this column are the draft Conflict of Laws in Trusts and
Estates Act and the extensive comments to it by Prof. Ronald J. Scalise Jr., John Minor Wisdom Professor of Civil Law at Tulane University School of Law, who is the Reporter for the ULC Drafting Committee on Conflict of Laws in Trusts and Estates. n
By Robert J. Greene
The increasing prevalence of pet trusts incorporated into estate wills presents attorneys with novel challenges and intricacies in their efforts to carry out their clients’ desires regarding the welfare of their beloved pets. Pet owners increasingly view their furry companions as cherished family members and want to ensure their pets are well-cared-for even after the owners die. This growing trend has led to the emergence of pet care administration companies that offer services to assist estate planners and attorneys in meeting the unique demands of these pet-related trusts.
This article will delve into the key issues surrounding pet care in wills and the importance of handling pet trusts with proper oversight and implementation. We also will explore two prominent pet care administration companies in the United States that have been aiding estate planners and attorneys in this realm. Furthermore, we will outline essential steps that attorneys must take to ensure the proper fulfillment of pet owners’ wishes and provide practical advice on how to include pets in estate planning.
One primary obstacle in addressing pet trusts within wills is the lack of proper oversight and implementation. A significant number of wills lack adequate mechanisms to ensure that designated caregivers adequately fulfill their responsibilities in caring for pets. As a result, courts often find themselves grappling with untangling the details and resolving disputes when the wills are unclear or when caregivers fail to meet their duties.
To address this issue, attorneys must draft pet trusts with clear and detailed instructions, leaving no room for ambiguity. Caregivers must have a welldefined set of responsibilities and obligations to follow, ensuring the pets’ welfare is prioritized.
The notorious probate case of Leona Helmsley serves as a cautionary tale highlighting the potential complications surrounding pet trusts.
Leona Helmsley (wife of billionaire real estate magnate Harry Helmsley), upon her death in October 2007, left a pet trust worth $12 million to her miniature Maltese named Trouble. The will also included her grandchildren unequally, leading to
Robert J. Greene is the CEO of LifePet.Care.
a legal challenge. Two of her grandchildren were excluded from the will without any reason given.
Ultimately, the court decided to take $6 million from Trouble’s $12 million trust fund and give it to the two grandchildren who were initially disinherited. Moreover, Helmsley’s brother, who was named as one of the executors responsible for Trouble’s care, declined the responsibility, despite accepting his sister’s inheritance. This case exemplifies how a lack of contingency plans and clear instructions for caregivers can lead to confusion and conflicts after the pet owner’s passing.
To avoid such situations, attorneys must include contingency plans in the wills, designating alternative caregivers who will ensure the pets’ well-being if the primary caregiver is unable to fulfill their duties. Before the emergence of pet care administration companies, attorneys lacked a mechanism for conducting pre-screening of potential pet caregiver candidates. In the alternative, a monitoring team can be assigned to ensure that the pet caregiver is fulfilling pet care according to the wishes of the estate.
The case of Nancy Sauer sheds light on the difficulties in handling pet
care in wills. Nancy, who passed away in November 2022, left $2.5 million for the care of her seven beloved Persian cats, wishing for them to remain together as a family. Because of resource constraints, however, the judge faced challenges in fulfilling this request during the probate proceedings. Consequently, the cats were handed over to the Humane Society of Tampa Bay, with no guarantee that they would remain together as Nancy intended. It seems the will was poorly worded, and no pet caregiver was assigned.
This case has prompted many pet advocacy groups, like the Association for Animal Welfare Advancement (theaawa.org), to contact state probate courts to provide resources on pet care administration.
To address these concerns, attorneys should ensure adequate funding is provided in the pet trusts to cover the pets’ lifetime expenses, including veterinary care, food, and other necessities. In addition, attorneys must establish a mechanism for regular oversight of the pet trusts to monitor the caregiver’s compliance with the will’s terms and to assess the pets’ welfare periodically. Estate planners and attorneys can now contract with pet care administration companies to address these issues, such as pet caregiver monitoring and audit services.
So that a probate judge doesn’t
ignore your client’s wishes, it’s crucial to avoid potential pitfalls associated with pet trusts in estate wills; attorneys must take several essential measures.
Clear and Detailed Instructions:
When crafting pet trusts, precision is paramount. Draft these trusts with meticulous attention to detail, ensuring that instructions are both specific and unambiguous, leaving no room for interpretation. Furthermore, extend the clarity beyond the legal language by providing practical guidance that equips pet caregivers for their role. A comprehensive caregiver agreement should be established, outlining crystalclear expectations and responsibilities that come with being a pet caregiver.
In addition to the caregiver agreement, a resource compendium should be included within the trust. This compilation of resources is designed to support caregivers, particularly when unforeseen circumstances arise. For instance, consider a scenario where the pet in their care unexpectedly becomes pregnant. This resource library should encompass information, contacts, and guidelines on how to navigate such situations. By offering readily accessible guidance, the trust not only anticipates potential challenges but actively empowers caregivers to provide the best possible care.
By embedding clear instructions within the pet trust and coupling them
with a comprehensive caregiver agreement and resource collection, attorneys can ensure that the intentions of pet owners are safeguarded, while caregivers are well-equipped to fulfill their responsibilities even in complex or unanticipated situations.
Contingency Plans: Anticipating and addressing changes in caregivers’ circumstances is an essential aspect of effective pet trust planning. Caregivers are humans with life challenges that we all experience, and their lives could be disrupted by unforeseen events affecting their own health or personal situations. Recognizing this, a comprehensive trust administrator should prioritize the concept of “fairness” to pet caregivers. This extends beyond financial considerations and encompasses the emotional well-being of those entrusted with the care of the pets.
For instance, the provision of counseling services could be established within the pet trust, aimed at ensuring the mental and emotional well-being
of caregivers. These services would be available to support caregivers in managing any challenges that arise during their caregiving journey. The associated costs of such services should be covered by the pet trust, reflecting a commitment to the caregivers’ overall welfare. By incorporating this holistic approach, the trust administration acknowledges the human factor and seeks to reduce pet caregiver turnover. This proactive measure not only benefits the caregivers but also serves to provide the pets with stable and loving care throughout their lives.
In parallel, it remains crucial to designate alternative caregivers as part of the contingency plan. By doing so, the well-being of the pets remains paramount, even when unforeseen disruptions affect the primary caregiver’s ability to fulfill her responsibilities. Through a combination of thoughtful planning, emotional support, and prudent contingency measures, the pet trust can ensure that caregivers are better equipped to provide enduring
and compassionate care to the pets entrusted to them.
Adequate Funding: Ensuring proper funding within the pet trust is paramount to adequately cover the entirety of the pet’s expenses throughout its lifetime. To determine the appropriate funding amount, consider creating a comprehensive spreadsheet that analyzes historical expenses for your client’s pet as a starting point. This analysis should be combined with an assessment of the pet’s age in relation to the average lifespan of its breed, allowing for accurate forecasting of remaining years and associated costs. To provide an extra cushion, it’s advisable to add funding for two additional years of expenses, particularly in the event that the client’s pet lives beyond the average lifespan. The standard funding model should encompass veterinary visits, food expenditures, grooming, and any other related costs. Furthermore, an allocation should be included to cover the salary of the designated pet caregiver. This financial plan should be
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Clients may consider having a family member as the overseer instead of relying solely on the pet trust company.
presented to potential pet caregivers for their approval, ensuring transparency and mutual understanding. Additionally, it’s prudent to establish a backup plan for any remaining funds in the trust once the pet has passed, outlining how these funds will be distributed or repurposed in alignment with the client’s intentions.
Regular Oversight: Establish a mechanism for oversight of the pet trust to monitor the caregiver’s compliance and periodically assess the pets’ welfare. The pet trust company and the client determine how involved they would want the pet trust company to be. Some options include placing DNA samples on file to help verify the pet’s identity, obtaining veterinarian reports for additional information, and conducting site visits for further evaluation. Clients may consider having a family member as the overseer instead of relying solely on the pet trust company.
Expert Consultation: Seek advice from pet care administration professionals specializing in estate planning involving pets to navigate the complexities effectively.
For your clients seeking to include their beloved pets in their estate plan, there are several options to consider:
1. Pet Trusts: Create a pet trust within their will, appointing a trustee to hold funds specifically for their pet’s benefit. Name a “protector” to supervise the trustee and an alternative trustee if needed.
2. Testamentary Gift: Have them bequeath their pet to a trusted individual with funds designated for their care. Ensure you
include alternative beneficiaries and a clear plan for fund management. Pet care administration companies provide pet caregiver evaluation services to ensure that the chosen caregiver is the right fit. Pet care administration companies can also source pet caregivers for clients who do not have anyone in mind.
3. Planning for Incapacity: Include instructions regarding the transfer of the pet’s care in your client’s enduring or continuing power of attorney for property to address incapacity situations.
4. Immediate Care Information for Your Pet: Keep emergency information about the pet’s location and a contact person on the client’s fridge or the dog or cat tag so that person can provide immediate assistance in case of sudden incapacitation.
Pets hold a special place in our hearts, providing companionship, loyalty, and unconditional love. Pet owners naturally want to ensure their beloved companions are well-cared-for even after they are no longer around. Recognizing this need, a niche industry has emerged, spearheaded by pet care administration companies. These companies offer a comprehensive range of services aimed at helping lawyers establish sound afterlife pet care plans for wills, securing the future well-being of pets.
Pet care administration companies are dedicated entities that specialize in managing and coordinating various aspects of pet care within estate planning. Their role is to ensure that pets are cared for when their owners pass away. These companies offer a wide array of services, making it easier for attorneys and pet owners to navigate the complexities of estate planning involving pets.
1. Sourcing and Evaluating Pet Caregivers: One of the primary services these companies offer is to find suitable caregivers for pets left behind by their deceased owners. This involves conducting background checks, assessing qualifications, and verifying references to ensure the chosen caregivers are reliable and capable of providing the necessary care.
2. Managing Pet Trusts: Pet care administration companies assist in setting up and managing pet trusts. These trusts are designated funds specifically allocated for the care of the pets, ensuring that financial provisions are in place to cover their needs.
3. Pet Caregiver Site Visits and Audits: Regular site visits and audits are conducted to monitor pets’ living conditions and wellbeing under the care of appointed caregivers. This ensures that the pets receive the level of care they deserve.
4. Providing Alternative Pet Caregivers: In case of unforeseen circumstances, such as the original caregiver being unable to continue her duties, these companies have a backup plan. They can quickly provide alternative caregivers to ensure the continuous care of the pets.
5. Pet Temperament Evaluations for Caregivers: Understanding pets’ unique needs and personalities is crucial. Pet care
administration companies can evaluate pets’ temperament and match them with caregivers who have experience handling similar traits.
6. Consultation in Court Cases: These companies can be valuable consultants in legal pet care matters. They offer their expertise and knowledge to support attorneys and ensure the pets’ best interests are represented in court.
In recent years, a significant shift has been observed in estate planning and wills, with more attorneys seeking the assistance of pet care administration companies. The surge in demand can be attributed to clients’ growing requests beyond the traditional legal services scope. These specialized companies provide concierge-type services to cater to the complex needs surrounding pets in estate planning. In this case, one of the most pressing issues attorneys face is the predicament of pet caregivers reaching out after the client’s passing, asking to be relieved of the responsibility for continued pet care.
Currently, the United States boasts two prominent pet care administration companies: LifePet.Care and Animal Care Trust USA.
LifePet.Care: LifePet.Care, being a for-profit entity, caters to a higherend clientele. It serves both the United States and Canada. It is known for offering a wide range of services to pet owners and attorneys tailored to their needs. LifePet.Care is a member of the Association of Animal Welfare Awareness (theaawa.org), which prioritizes ethical and compassionate pet care.
Animal Care Trust USA: Animal Care Trust USA operates as a not-forprofit organization primarily focusing on serving individual pet owners. Although it has an office in Oviedo, Florida, its website does not currently mention services provided directly to attorneys. Nevertheless, it may still play an essential role in assisting pet owners in securing appropriate care for their pets in estate planning.
The emergence of pet care administration companies fills a crucial void in estate planning, ensuring that our four-legged companions are welllooked-after when their owners can no longer be there for them. Their comprehensive services provide peace of mind to pet owners, who know their pets will be cared for in accordance with their wishes. As the importance of pets in people’s lives continues to grow, the services offered by these companies are becoming increasingly invaluable in securing a lasting legacy of love and care for our furry friends.
As pet trusts in the estate will become more prevalent, attorneys must be well-versed in handling the complexities surrounding pet care. Proper oversight, clear instructions,
and contingency planning are essential to ensure these trusts are executed as intended, safeguarding the well-being of cherished pets even after their owners pass away. Pet care administration companies have emerged as valuable resources for estate planners and attorneys, providing concierge-type services to fulfill the unique demands of these trusts. Pet owners demonstrate their love and commitment to their furry family members by including pets in estate planning, ensuring they are cared for and protected even after the owners’ passing.
DISCLOSURE: Robert Joseph Greene is the CEO of LifePet.Care. Mr. Greene’s company is mentioned as a resource in this article. n
COMMON INTEREST COMMUNI-
TIES: Homeowner’s view of lake is not protected by covenants. A homeowners’ association approved plans for the Hamptons to build an RV garage on their property notwithstanding the objection of their neighbor, Pietrowski, who claimed that the garage would block her view of Lake Mead. Pietrowski sued, alleging that the homeowners’ association breached various duties in failing to consider the effect of the garage on her view. The trial court granted summary judgment to the homeowners’ association, and the supreme court affirmed. Nothing in the Covenants, Conditions & Restrictions (CC&Rs) protected lot owners’ unobstructed views of the lake. And, although the CC&Rs did contain restrictions on the size and placement of buildings on lots, they did not prohibit blocking an owner’s view in whole or in part, but only required the homeowners’ association to consider the effect of the height of proposed improvements on the views of other lot owners in the approval process. Here, because the homeowners’ association measured the height of the proposed garage and considered its effect on Pietrowski’s view, the association had discretion to approve notwithstanding the impact. Pietrowski v. Hampton, 540 P.3d 1054 (Nev. 2023).
DEEDS: Statements made by grantor years after executing transfer-on-death deed are not grounds for revocation. Brandt and Sanders were in a romantic relationship, parted, and re-united a decade later. When in 2016 Brandt got sick, Sanders cared for him, prepared his
Keeping Current—Property Editor: Prof. Shelby D. Green, Elisabeth Haub School of Law at Pace University, White Plains, NY 10603, sgreen@law.pace.edu. Contributor: Prof. Darryl C. Wilson.
Keeping Current—Property offers a look at selected recent cases, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
meals, and took him to doctor’s appointments. During his treatment, different doctors gave conflicting diagnoses of his mental condition, some noting cognitive impairment, others finding his thinking appropriate. In 2017, Brandt executed a transfer-on-death deed, called a beneficiary deed in Arizona, naming Sanders as the beneficiary of his home and rental property. Brandt had earlier executed a beneficiary deed to these properties to his niece, Rosenberg. The deed to Sanders was promptly recorded, which Ariz. Rev. Stat. § 33-405(E) requires for a beneficiary deed to be valid. Nearly 14 months later, Brandt became very ill and was hospitalized. Rosenberg visited Brandt at the hospital, where he told her that he was afraid of Sanders and feared she was trying to kill him and steal his assets. Rosenberg claimed that Brandt asked her to cancel the credit card he gave Sanders and collect the contents of his safety deposit box to keep Sanders from getting them. At the same time, a hospital psychiatrist found Brandt “alert, oriented, and pleasant and cooperative,” but also noted in a report that Brandt said he no longer trusted Sanders. When Brandt was discharged from the hospital, he went back to live with Sanders and died several months later. Rosenberg brought an action to set aside the deed on the ground of undue influence. The trial court entered summary judgment for Sanders. The court of appeals reversed on account of the trial court not considering Brandt’s alleged statements
while hospitalized. The supreme court in turn reversed. It explained that undue influence takes place when one person exerts power over the mind of another person, makes the latter’s desires conform to his own, thereby removing volition. Post-execution statements are relevant to an undue influence claim if they address the grantor’s state of mind or mental condition, or the circumstances present at the time of the execution of the document. Brandt’s alleged post-execution statements in the hospital were made 14 months after he executed the 2017 deed. Because the statements spoke only to Brandt’s state of mind and mental condition at the time of his hospitalization, and not the circumstances when he executed the deed, they were not relevant or admissible on the issue of undue influence.
Rosenberg v. Sanders, 539 P.3d 120 (Ariz. 2023).
EASEMENTS: Tacking is allowed to satisfy period of use for prescriptive easement only when consecutive adverse users own interests in the benefitted land. In the 1990s, Edmondson began hunting on the property currently owned by Boles based on permission from the prior owner. To access the Boles property, Edmondson used a road across a neighboring 25-acre property owned by Riley. In 2016, Edmondson received a lease to use the Boles property and sent a letter to Riley seeking an agreement to allow Edmondson to use Riley’s road. Riley refused the request and threatened arrest if Edmondson continued to use the road. After Boles acquired title to the property in 2021, he filed a complaint seeking a declaratory judgment that he had a prescriptive easement across Riley’s road. The trial court agreed, and Riley appealed. The supreme court reversed for several reasons, concluding that Boles failed to establish adverse use for the statutory period of 20 years.
First, Edmondson’s use of the road before his 2016 letter was presumed permissive because there was no evidence of adverse use. Second, there was no evidence that Riley knew or should have known of the use of his road. Third, even if Edmondson’s use was adverse, tacking of his period of use to Boles’ period was not permitted because he was not a predecessor in title, except for the period of his two-year lease from 2016 to 2018. At the other times, he was merely a licensee, whose period of use is not eligible for tacking. Riley v. Boles, 2024 Ala. LEXIS 51 (Ala. Jan. 12, 2024).
EASEMENTS: Expression of purpose in road easement does not limit its use. In 1998, the Thirty-One Bar Ranch Company granted “an easement for a private road” across an existing 2.47-mile portion of Brush Creek Road to the owner of the Richeau property. At the time, both properties were operated as a common agricultural operation, and the easement stated it was reciprocal. Later, the easement was used for access for the construction of a house on the Richeau property. In 2020, the then-owner of the Richeau property entered into an agreement allowing a hunting outfitter to hold guided trips on the Richeau property, using the easement road as access. Thirty-One Bar objected to this use, installed gates to prevent access, and brought an action seeking a declaratory judgment that the road easement was not valid and that the user exceeded its permissible scope. After a bench trial, the court ruled that use by the commercial outfitter exceeded the scope of the easement. The supreme court reversed. The court began with the well-settled proposition that, in interpreting easements, a court must rely on the plain language in the instrument creating it and context cannot be invoked to contradict the clear meaning. Because the easement’s only statement of purpose was “for a private road,” the trial court erred when it looked to the uses of the property at the time the easement was granted to limit it to agricultural uses. Moreover, the court explained, even when purposes are stated, in the absence of contrary intent, both the uses of the dominant and servient estates are subject to adjustment consistent with the normal development of their respective lands. For context to be relevant, it must
serve as evidence of intent that the easement was not to be used for purposes other than those stated. Here, there was no evidence of intent to restrict other uses of the easement. Testolin v. ThirtyOne Bar Ranch Co., 541 P.3d 455 (Wyo. 2024).
FORECLOSURE: Claim preclusion does not bar foreclosure action after earlier dismissal for lender’s failure to comply with statutory notice provisions. Finch defaulted on his mortgage loan, and the bank commenced an action to foreclose and to recover the unpaid debt. The bank failed to comply, however, with a statute that prohibited foreclosure of a residential mortgage unless the lender first gives the borrower a notice of default and acceleration in the form specified by a statute. 14 Me. Rev. Stat. § 6111. After the foreclosure action was dismissed, Finch sought a judgment declaring the note and mortgage unenforceable, relying on a 2017 ruling from the supreme judicial court, Pushard v. Bank of America, 175 A.3d 103 (Me. 2017), which established the right to discharge in the same circumstances. The court granted relief and ordered the mortgage discharged. The bank appealed. The supreme judicial court held for the bank and overruled Pushard. The court explained that Pushard relied upon doubtful legal premises and had proven to be quite draconian and unfair in its effect. In its reassessment of Pushard, the court noted that it
rested largely on the principle of claim preclusion—that after dismissal of an action to foreclose, relitigation is not allowed. But the application of that rule was flawed, the court concluded, because when a complaint is dismissed for failure to comply with the statutory notice requirements, the lender had no right to enforce the mortgage in the first place. This means that the lender’s action was not and could not be litigated, such that a subsequent foreclosure action should not be barred. The court found no other jurisdiction followed Pushard and it was out of step with the Restatement (Second) of Judgments §20(2). Thus, when a lender fails to prove in a foreclosure action that it has issued a valid notice of acceleration or fails to prove that the borrower has breached the parties’ contract, the parties are returned to the positions they occupied before filing of the action (except as to any claim for an unaccelerated amount due that could have been litigated). Finch v. U.S. Bank, 307 A.3d 1049 (Me. 2024).
LANDLORD-TENANT: A landlord cannot prohibit a tenant’s guest from entry onto the property absent authority that is expressly part of the lease agreement. Greenbelt Place Apartments banned Antonio Randolph from the apartment complex. Later the property manager responded to a noise complaint at the unit rented by Randolph’s uncle and found Randolph inside the unit. Randolph was then arrested and charged with criminal trespass. At trial, Randolph testified that his uncle had invited him over. The City of Toledo provided no evidence that the uncle’s lease authorized the landlord to exclude anyone from the leased apartment. The trial court found Randolph guilty, however, concluding that he lacked a privilege to enter his uncle’s unit because he was banned from the complex. The court considered the ban justified by a landlord’s duty to ensure the quiet enjoyment of the property for all neighbors. The appellate court reversed, and the supreme court affirmed. The court noted the state criminal trespass statute provides that no “person, without privilege to do so” shall knowingly enter or remain on the land
or premises of another and defines privilege to include “an immunity, license, or right . . . bestowed by express or implied grant.” Ohio Rev. Code. §§ 2911.219(A); 2901.01(A)(12). Randolph was privileged to enter because landlords cede possessory interests in leased properties to their tenants. This means that a tenant may invite any person onto the leased premises, including a person whom the landlord has sought to ban, unless the lease has a provision restricting the tenant’s authority to invite guests. A landlord can protect neighboring tenants’ rights to quiet enjoyment by evicting an offending tenant. State v. Randolph, 2023 Ohio LEXIS 2565, 2023 WL 9007535 (Ohio Dec. 29, 2023).
Agreement giving tenant option to purchase does not create contract for deed. The parties signed a “Rental/Option Agreement” under which the tenant rented a single-family home for five years. The agreement contained a provision labeled “Option,” which gave the tenant the option to purchase the property for $89,000 at the end of the rental term and required the tenant to pay $5,000 as “option earnest money” to be applied to the purchase price, which was nonrefundable if tenant did not complete the purchase. Also, $84 of each rental payment was credited to the purchase price. The tenant made all payments, including the $5,000 option price, and several months before the term ended, notified the landlord that he would not purchase the property. Thereafter, the landlord gave the tenant a notice to quit. When the tenant did not vacate at the end of the term, the landlord sought eviction, but the tenant responded with a claim for a writ of possession. The trial court ruled that the agreement was unambiguously a lease with an option to purchase, not a contract for deed, and therefore the tenant had no equitable interest in the property. The supreme court affirmed. The court explained that when an agreement does not hold the purchaser liable for the full purchase price in the event of default, it is an option contract, not giving rise to an equitable interest. The parties’
agreement consistently used “option” language and did not obligate the tenant to purchase the property. Pratt v. Agel Corman Realty, Inc., 2023 N.H. LEXIS 224, 2023 WL 8622209 (N.H. Dec. 13, 2023).
NUISANCE: Statute of limitations for permanent nuisance starts when injury becomes observable. In 2000, Forsyth County and the Georgia Department of Transportation completed a roadway widening project near the property of Wise Business Forms. In 2016, Wise noticed a sinkhole in its parking lot, which he attributed to an increase of surface and stormwater flowing underneath its property because of the road expansion project. In 2020, Wise sued the county and the department, raising various claims, including inverse condemnation by permanent nuisance. The defendants successfully moved for dismissal of Wise’s claims as being barred by the four-year statute of limitations. Ga. Code § 9-3-30(a). The appellate court affirmed, finding the action time-barred on the ground that the cause of action accrued in 2000 when the project was completed. Wise appealed further, and the supreme court reversed. The court stated that permanent nuisance cases vary in relation to when the alleged harm to a plaintiff’s property becomes observable, thereby providing alternative options regarding how a plaintiff may proceed against a defendant and when the statute begins to run. When harm is not immediately observable when a defendant completes construction of improvements, the nuisance, by its nature, continues and will continue indefinitely. In such instances, pinpointing when the statute of limitations starts to run is challenging. A plaintiff may elect to sue upon occurrence of each harm, or to file a single suit for harms that occurred within the past four years, or to sue for all prospective harms that might occur in the future. Here, Wise’s complaint alleged a permanent nuisance, and Wise elected to pursue the single lawsuit option. Because the alleged harms to Wise’s property did not become observable until 2016, his suit filed in 2020 was not time-barred. Wise
Business Forms, Inc. v. Forsyth Cnty., 893 S.E.2d 32 (Ga. 2023).
PREMISES LIABILITY: Ownership of dam depends on whether it is fixture or personal property, which is determined by parties’ intent. Under a stream bank stabilization project funded by the federal Flood Control Act of 1944, a federal agency designed, constructed, and installed a series of dams on Buffalo Creek. Pursuant to the federal statute, in 1949 the state created the Erie-Wyoming County Soil Conservation District to act as sponsor of the dams. In 1959 and 1984, when the dams needed reconstruction, the federal agency and the district entered into operation and maintenance agreements, which required the district to obtain permanent easements from landowners for the construction and operation of the dams and to inspect and maintain them. The 1984 agreement also provided that “title to real property shall vest in the [district]” and that “real property means land, including land improvement, structures, and appurtenances thereto, excluding movable machinery and equipment.” In 2012, a teenager drowned after swimming near a “low-head” dam, which created an undertow effect. The teenager’s mother sued the district and other defendants seeking to hold them liable for failing to warn of the danger posed by the structure. Whether the district could be liable in negligence depended on its ownership of the dams. The jury returned a verdict for the district, but the trial court entered a directed verdict for the plaintiff, holding as a matter of law that the district acquired ownership of the dams from the federal agency under the 1984 agreement. The intermediate appellate court reversed, ruling that the agency could not have transferred ownership of the dams because the dams were “permanently affixed to land underlying Buffalo Creek” and thus were “fixtures,” the ownership of which runs with the land. The Court of Appeals reversed, finding the fact that the dams were attached to the creek did not establish as a matter of law their ownership. The court relied on cases finding railroad structures and appurtenances
installed under easements to be personalty, absent intent that they merge with the realty. Thus, whether the dams were fixtures must be determined by examining the intent of the federal agency and the district. The court remanded because neither party introduced evidence showing that the 1984 agreement transferring title to “real property” included the dams. Pearce v. Erie-Wyoming Cnty. Soil Conservation Dist., 2024 N.Y. LEXIS 62 (N.Y. Jan. 16, 2024).
ZONING: Exaction fee for parks and open space is lawful based on essential nexus and rough proportionality between fee and city’s purpose to preserve parks and open space. Puce applied to the City of Burnsville for permits to develop his small parcel of land for commercial use. The city approved his application subject to the condition that he pay a park dedication fee, at first set at $37,804, then reduced to $11,700. The city assessed the fee pursuant to its ordinance that requires all developers who are platting or replatting land to contribute a park dedication or an equivalent fee. Puce contested the fee
on the ground that his planned development for retail business use did not increase the need for parks. The city asserted that the redevelopment of the open land created a higher intensity use and a simultaneous need for more open space. Puce appealed the fee imposition, and the district court found the fee was lawful as an essential nexus was present. Specifically, the city planned to build a trail next to the property, and Puce’s development would draw more people to nearby parks and trails. The appellate court reversed, finding the fee violated a state statute that regulates municipal dedications and fees, Minn. Stat. § 462.358, because there was no rough proportionality between the fee and the need created by the proposed development. The supreme court reversed. The court noted that the statute codifies language from both US Supreme Court cases and its own prior decisions regarding development fees, specifically requiring an “essential nexus” between the fee and the city’s “purpose sought to be achieved by the fee” and “rough proportionality” between the fee and “the need created by the proposed
subdivision or development.” The court first found an essential nexus because the fee was necessary to fund the acquisition or improvement of open space and parkland, which Puce’s development would diminish. Second, rough proportionality was present based on the city’s application of its dedication formula and subsequent steps further to reduce the fee based on the specific traits of Puce’s property as opposed to average commercial land values. The court also found that the city’s determination of the need to acquire or improve a reasonable portion of land based on the approval of Puce’s development plan was sound and based on historical data of prior acquisitions in accordance with developments and the city’s comprehensive plan. Puce v. City of Burnsville, 997 N.W.2d 49 (Minn. 2023).
PROPERTY THEORY: Prof. Nate Ela, in Property and the Problem of Disuse, 100 Wash. U. L. Rev. 995 (2023), believes idle property is just that—idle—particularly when its use is sorely needed by
non-owners and society. Indulging property owners in disuse seems contrary to the oft-expressed idea that property’s purpose is to help people put things to use. Indeed, the right to exclude is often offered as property’s essential core because it helps serve this purpose. Yet the right to exclude empowers owners to leave resources idle, even if using the resources would help others. Prof. Ela discusses solutions to this seeming paradox through a case study of urban agriculture in Chicago. He proposes the “use fix,” which incorporates four property practices: matching idle resources with potential users, mapping the extent and location of disuse, articulating social interests in use, and cultivating a norm against letting resources lie. By following the use fix, Chicago’s reformers have activated idle land and alleviated poverty and unemployment. Looking outside of Chicago, he notes similar practices in efforts to house people in vacant homes, restart idled workplaces, and provide space for quarantine and isolation during the COVID-19 pandemic. Still, he states, the use fix has failed to become an enduring institution, despite its proven record as an efficacious and promising strategy for making cities more productive, equitable, and resilient.
RENT CONTROL: In Commercial Rent Stabilization: One Local Response to Skyrocketing Rents, 25 N.Y.U. J. Legis. & Pub. Pol’y 603 (2023), Prof. Julian M. Hill makes the case for rent control for commercial tenancies, particularly those held by small business owners, who suffered disproportionally from the pandemic shut down and who feel the brunt of market shifts more acutely. He shows that when small businesses are forced to shut down or relocate because of unaffordable rent rises, the community suffers as well—from disruptions in social and economic connections to reduced tax revenues. His focus is on a proposed measure from the New York City Council, CRS Bill 2019, which would put an annual cap on the percentage increase owners can impose on their tenants. The bill met with opposition in the City Council and remains stalled.
Although the proposed measure has problems, he believes a small commercial rent control ordinance that balances landlords’ property interests and profit motive against the long-term needs of the community can be drafted. He offers some ideas for calibrating the best rent adjustments and for evaluating the various interests that should be considered.
Prof. Hill believes the CRS Bill, like residential rent control, would survive constitutional challenge based on a legitimate exercise of police power. And, he notes, there is precedent for upholding such an ordinance—the Supreme Court has consistently upheld price control laws, including commercial rent control, with substantially more prohibitive language and triggers than the New York proposal. Although commercial entities do not evoke the same sort of sympathy as working-class families needing shelter, the plight of some small, struggling commercial tenants, serving their communities, seems equally precarious.
TAX LIENS: Randall K. Johnson, in What Is the Optimal Basis for Imposing Government Liens?, 2023 U. Ill. L. Rev. Online 128 (2023), reports on a study of the enforcement of tax liens in Illinois. Using a newly released Department of Revenue dataset, he concludes that similarly situated debtors may be treated in non-standard ways without adequate justification. In his view, this unequal treatment is not only unfortunate but may also violate the federal constitution, although in a different way than was alleged in Tyler v. Hennepin County, 143 S. Ct. 1369 (2023). Prof. Johnson ventures an explanation for the unequal treatment of certain similarly situated debtor-citizens, which is that the state may be reticent to impose government liens on more politically organized groups, such as business debtors, but not so much about encumbering the properties of more politically marginalized groups like poor individual debtors. Prof. Johnson asserts that the disparate treatment is not justified by any rational grounds, such as cost savings, because it may give rise to litigation in more complex factual situations than
what was described in Tyler. The disparate treatment also increases the risk of unjustified violations of the Fifth and Fourteenth Amendments by an already cash-strapped state. The article analyzes data from 1994 to 2020 and reports that there were 475,838 liens imposed on debtor-citizens, which had a combined economic value of $3,377,850,783. Most liens were imposed on individual debtors, as opposed to business ones: 72 percent to 28 percent, respectively, and this was so even as most lien debt was owed by business debtors. Prof. Johnson suspects that business debtors may be gaming the system—late payments often serve as hidden subsidies that may conceal business losses—and that they may have different views about the morality of paying late than individual debtors, and the state may share in the view that late payments by business debtors are less blameworthy than late payments by individuals. These findings make a compelling case for a deeper examination of what seems a troubling system.
PENNSYLVANIA enacts legislation making null and void racially restrictive covenants. The law allows an owner to repudiate such covenants on a prescribed form. Instruments in the declarations in common interest communities can be repudiated by the board of the association without the need for individual votes of the owners. 2023 Pa. Laws 54.
NEW YORK creates a commission on reparations to address the legacies of slavery. The New York State Community Commission on Reparation Remedies is charged with examining the institution of slavery and its lingering negative impacts on persons of African descent, including overt discrimination in access to government supported housing, redlining, and segregationist urban planning. The commission is directed to recommend ways to educate the public on its findings and recommend appropriate remedies. 2023 N.Y. Laws 729. n
2024, 279 pages, 6x9
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Can a neighborhood Napoleon simply take over, and become the owner of, another neighbor’s property? Any attorney even considering approaching an adverse possession case, regardless of which side, must start here. This is the first known book which focuses on just this issue - and from the litigator’s point of view. It is a one-stop shop for practitioners, with not only full descriptions of the ins and outs of the elements and potential defenses, and sample pleadings, but also various practical tips, tricks, clues, and ideas for successfully litigating these unusual cases.
“Who would believe that a thirty-eight-chapter deep dive into every aspect of litigating adverse possession - that hoary doctrine that somehow transforms trespass into ownership - could also be an engaging and accessible read? Paul Golden has somehow pulled it off. This erudite and comprehensive volume will prove truly invaluable for practitioners as well as academics and students engaging with one of the most enigmatic, yet practically important, areas of property law.”
Nestor M. Davidson
Albert A. Walsh Professor of Real Estate, Land Use and Property Law, Fordham Law School
“Paul Golden’s book is a gold mine for any lawyer litigating an adverse possession case. The book collects cases on every aspect of adverse possession doctrine, and does far more than survey standard problems that complicate adverse possession law. Golden examines the peculiarities of local law in many states and outlines a variety of defenses available to adverse possession litigators. To top it off, Golden’s refreshingly breezy style makes it easy to digest the valuable information he doles out.”
Stewart Sterk
Mack Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University
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Billboards have been around for a long time, dating back to the late 1800s and early 1900s. In time, the billboard industry became “Outdoor Advertising.” Today the industry is “Out-of-Home,” which includes ads in elevators, in restrooms, and on screens in airports. Billboards are still the largest part of the industry. This article focuses on ground leases for billboard purposes.
If you are going to lease land to a billboard operator, you need to understand the business. If you are a billboard operator, you need to understand the law surrounding licenses, ground leases, and easements.
At its most basic level, billboard operators rent space on their signs to advertisers. In that sense, it’s similar to offering office or residential space for rent. At the same time, it’s more. Just as a hotel combines rooms to rent with other services, billboard operators provide more than space on their signs. They provide design services. They print advertising copy for display.
Operators can design a campaign or “showing” that reaches a large percentage of the population in an area. They also can design a campaign that will reach people within a certain distance of every location of the advertiser’s business. Those are just two examples.
People and companies that erect a single billboard generally cannot provide those services. The authors are aware of a billboard that is vacant a large part of the year despite being within a mile of Los Angeles International Airport on one of the major streets that feed into the airport. In the authors’ opinion, unless you are ready to jump into the outdoor advertising business with both feet, you will probably be better off leasing your structure to a billboard operator.
Billboards have either “static” or “digital” displays, also known as “faces.” Static displays show copy that stays the same until changed manually. Digital faces are screens that change electronically.
Whether static or digital, the faces are attached to support posts. Older signs were usually supported by steel I-beams. A sign face might be supported by three to eight steel posts sunk into the ground, depending on the size of the face. The most common sizes for static signs are bulletins (14 ft. × 48 ft.) and poster panels (12 ft.× 24 ft.). Larger signs (“spectaculars”) and smaller signs (“8-sheets”) are also common.
One very creative spectacular demonstrated the power of billboards. There is a mid-rise office building near the intersection of I-10 and I-405 in West Los Angeles. It’s one of the busiest interchanges in the country. To promote a disaster movie, a billboard operator wrapped vinyl around several of the higher stories of the building. The picture on the vinyl made it look as though a meteor had crashed through the building, showing blue sky through it. It brought traffic on I-405 to a standstill. Billboards do not have to be large to be effective. A shaving cream company used to advertise on very small signs, perhaps 1ft. × 3 ft. on a single wooden pole, placed only a few feet above grade.
There would be a series of signs perhaps 15 feet apart. Each sign had three or four words and rhymed with the previous sign. The last sign said, “Burma Shave.” (According to Wikipedia, American Safety Razor Company bought Burma Shave in 1963, stopped using the signs, and filed for bankruptcy in 2010.)
Digital signs have a greater range of sizes, from small enough to fit in an elevator to the size of a large jumbotron in a football stadium. Although a static sign requires a crew of installers to change copy, a digital sign requires only a connection to the Internet. This permits digital signs to be used for current news. It also permits them to change copy frequently. Typically, copy changes every eight seconds.
Modern displays are usually supported by a single steel column. For a free-standing sign, the installer digs a hole as deep as the height of the sign the column will support. The diameter of the hole will be a foot larger than the diameter of the column. Once in the hole, the installer surrounds the column with fast-drying cement.
Often, a column will support two sign faces. These may be back-to-back with the faces parallel to each other. In the alternative, the two faces may be angled away from each other in a V-shaped formation.
Before the invention of digital signs,
some operators tried to increase the available space for ads by constructing triangular panels that rotated in tandem. That allows a single sign face to display three different ads (Tri-Vision).
Typically, operators erect billboards as close to a property line as possible. This permits the greatest development of the remainder of the property. A billboard on the property line is less likely to interfere with construction on the rest of the property.
Real estate includes land and fixtures. Fixtures are improvements that are permanently attached to the land. Billboards qualify as fixtures, as the supporting columns are placed into the ground and surrounded by concrete. The superstructures are bolted to the columns.
Billboards are engineered to withstand high winds and other risks. A static sign will typically last 40 or 50 years, or perhaps longer. The support structures for digital signs typically last as long as a static sign, although the faces will need to be replaced from time to time. Some buildings have a shorter useful life than a billboard.
Like any other real estate, location matters. An advertiser might pay tens of thousands of dollars a month for space on a billboard on Sunset Boulevard in West Hollywood or on Times Square in New York. The same sign in a rural area might
command only a few hundred dollars to a couple of thousand dollars a month from an advertiser.
For a ground lessor, billboard operators are ideal tenants. A hole with a five-foot diameter occupies less than 20 square feet on the ground. An operator who receives $200 a month in ground rent receives $10 per square foot of rented space per month. That’s a better return than paid for most retail space. The lessor also has no capital investment in erecting the billboard and no expense to maintain it. Those are usually the billboard operator’s responsibility. This kind of return generally justifies the risks described later in this article.
For a billboard operator, the expenses of erecting and operating a sign do not change significantly with the location. Subject to difficulties of access and distance from the operator’s plant, it generally costs the same to change copy, illuminate, and provide electricity to a sign, regardless of location.
Specific regulations will vary with the jurisdiction, but billboards typically are heavily regulated. President Lyndon Johnson used his legislative skills to pass the Highway Beautification Act (HBA), reportedly at the urging of his wife, Lady Bird Johnson. She did not like billboards (perhaps because they competed with her television and radio stations for advertising dollars).
The Federal Highway Administration (FHWA, to distinguish from the FHA) administers the HBA. The HBA imposes nationwide restrictions on placement of billboards: The HBA prohibits construction of new signs other than those permitted by 23 U.S.C. § 131. It requires states to enact strict controls on the construction and maintenance of billboards. If an individual state fails to impose those restrictions, it will lose federal highway funds. Though the HBA allows individual states to enforce stricter regulations, if the FHWA concludes a state is being too lax, it will threaten to withhold federal highway funds.
The FHWA enters into agreements with the individual states. California’s agreement with FHWA allows signs to be erected only within 1,000 feet from the nearest edge of an active commercial or industrial building or activity. On interstate highways and primary freeways, static signs on the same side of the road must be at least 500 sq. ft. apart. On non-freeway primary highways, signs on the same side of the road must be at least 100 sq. ft. apart in incorporated cities. Outside of incorporated cities, they must be at least 300 sq. ft. apart.
Spacing restrictions generally don’t limit back-to-back or V-shaped displays. They might limit multiple signs and murals painted on the same property.
Most zoning regulations distinguish between on-site and off-site signs. Onsite signs offer goods and services that are available on the same property as the sign is located. Off-site signs offer goods and services that are not available on the same property as the sign is located.
The HBA and related state statutes and local ordinances generally apply stricter limits to off-site signs. These limits generally appear in a city’s zoning ordinance. Recently, the US Supreme Court upheld the distinction, which had been challenged on First Amendment grounds.
Zoning ordinances enforce the state and federal restrictions required by the HBA. Individual cities may require greater spacing or greater distance from schools, parks, and other government activities.
In addition to complying with zoning regulations, anyone building a new billboard must comply with local building codes. In California, for example, signs must be engineered to withstand earthquakes. In the southeast and the gulf coast, they must stand up to hurricanes.
Digital signs are not covered by the HBA or by any regulations issued thereunder. Digital signs had not been invented at the time the HBA was enacted. An FHWA memo addresses digital faces. Digital-billboard operators generally leave individual ads in place for eight seconds to avoid the distraction of moving copy. The operators also generally limit the brightness of digital signs to avoid blinding drivers and disturbing neighbors.
Though the HBA reach is national in scope, billboards are still real estate, and most real estate regulation is local. In Los Angeles County alone, there are about 115 incorporated cities. Here are typical sources of local regulation:
• Municipal ordinances, sign codes, and policy manuals;
• General and specific plans;
• Community plans;
• Sign districts;
• Conditional use permits;
• Sign permits; and
• Development agreements (often with compensation to cities).
The enforcement and interpretation of these ordinances are often left to staff. One needs to have a good understanding of staff’s concerns. Staff are the necessary gatekeepers for elected officials.
Local elected officials have the ultimate authority to approve development agreements and ordinances that affect construction and placement of billboards. Even when their constituencies overlap, they may have different concerns.
For example, although a majority of local jurisdictions limit billboards, Las Vegas, Nevada, and Times Square in New York allow digital signs with animation and flashing lights. (Studies show there are no more accidents per vehicle mile at these locations than anywhere else. This is true of billboards in general.) West Hollywood, California, recently adopted a special ordinance for the Sunset Strip. Billboard owners were
allowed to submit proposals for creative and artistic signs.
It may be easier than expected to achieve community support. A professor at Villanova University collected opinions from 26,000 people. About 75 percent of the people were okay with billboards in commercial and industrial areas. About the same percentage thought billboards were useful for travelers and helped businesses to attract customers and create jobs.
The authors’ own experience with much smaller samples, voir dire of potential jurors, reached similar results: About 25 percent of the people on jury panels liked billboards; about 50 percent thought billboards were okay in appropriate locations; and about 25 percent disliked billboards. A large percentage of those who disliked billboards worked directly for government agencies. The authors suspect that the potential loss of federal highway funding may explain that prejudice.
In recent years, local governments have become more receptive to billboards if they can receive a percentage of the gross revenue. Smaller cities with tight budgets are often very receptive to installation of a billboard if the city can participate in the revenue from the sign.
Sometimes people rely on overly literal readings of legislation and regulations in an effort to build and operate billboards. Here are a few efforts that have failed:
• Sign owners cannot include a small amount of space in a building on the same property as the sign and call it “on-site” advertising for the tenant. The courts have held that renting a closet-sized space on the same property as the billboard does not qualify as offering goods and services on the same property as the billboard. People ex rel. Dept. of Transportation v. Maldonado, 86 Cal. App. 4th 1225, 104 Cal. Rptr. 2d 66 (Cal. Ct. App. 2001). In that situation, the sign is subject to the more stringent restrictions on off-site signs.
• A city that wants to share in the revenue from a billboard cannot carve out just enough space for a billboard and call it an “industrial” zone. That is called spot zoning. Although spot zoning may be permitted if it is rationally related to a substantial public need (such as senior housing), billboards don’t qualify. Foothills Communities Coalition v. County of Orange, 222 Cal. App. 4th 1032,
166 Cal. Rptr. 3d 627 (2014).
• A city settled a lawsuit against it by allowing two billboard companies to convert several static signs to digital. Competitors challenged the settlement because the city’s ordinances did not permit new or converted billboards. The court agreed and banned the companies from using the converted signs. Summit Media v. City of Los Angeles, 211 Cal. App. 4th 921, 150 Cal. Rptr. 3d 574 (2012).
Occasionally, a billboard operator or property owner will simply build a sign without proper permits. When caught, the operator or owner faces a risk of forfeiting all profit earned by the illegally placed sign.
Landowners and billboard operators face many of the same risks that owners and tenants of other real estate face, but with a twist. Other risks generally come up mostly in a billboard context.
Billboards are generally built close to heavily traveled roads. The authors have been involved in several cases in which a state or county widened a freeway, turnpike, or other highway.
The expansion required any signs that encroached on the new right-of-way to be removed. Although the foregoing is the most common situation requiring removal of a billboard, below are other examples that might require removal of a billboard:
• Light-rail construction;
• Redevelopment;
• Property taken for a school, park, or other public improvement;
• Property taken as a staging area for construction; and
• A building permit that requires removal of a billboard as a condition of approval.
California allows compensation for business goodwill, so that is not an issue there. As noted above, billboards are solidly affixed to the land. Many of them last longer than some buildings. Leaseholds are an interest in real estate.
If a condemning agency sues to take the property, a taking has occurred. If the condemning agency purchases property under threat of condemnation, a taking has occurred. If an agency purchases property in an arm’s-length transaction, a taking did not occur.
Some landowners will want the right to terminate the lease if the landowner sells the property. That makes sense if the billboard will be incompatible with redevelopment. Government agencies might use that tactic to avoid paying compensation. To reduce the risk of that result, the lease drafter should include a provision that excludes sale to an entity with the power of eminent domain from any right to terminate the lease upon sale of the property.
If a city conditions the issuance of a building permit upon removal of a sign, that is arguably a taking. Although condemning agencies argue that it is the property owner who removed the sign, that’s disingenuous. In California, a statute exists that expressly defines this situation as a taking.
It is advisable to take notice of a state’s procedural requirements. For example, California requires affected parties to appeal from a taking by condition of approval. The parties must give the permit-issuing entity the opportunity to consider the cost of the condition. If the appeal is unsuccessful, the billboard operator must seek relief through administrative mandamus (which may be combined with inverse condemnation).
The HBA requires just compensation when a condemning agency requires removal of a lawfully erected sign by regulation, ordinance, or imposed condition of land use. 23 U.S.C. § 131(g)).
Certain states argue that the property must be valued as a single interest. These states argue that the owner and the tenant must work out the division of the condemnation award between them. This typically leads to disputes between the owner and the tenant and may become a sticking point when negotiating a lease. Property with billboards should be valued differently than those without.
The HBA entitles the owner of the display to compensation for all rights, title, leasehold, and interests in the display. The owner of the property on which the sign is located must be compensated for the owner’s rights and interests to keep the sign on the property. When viewed this way, there is no conflict between property owner and billboard owner.
A billboard is a separate property interest. It produces revenue above what the property alone can produce. The property should be valued based on the revenue it produces, including rent paid by the billboard owner. The
billboard owner should be paid for the value of the billboard, based on the income stream it produces.
Condemning agencies argue that paying the replacement cost is sufficient. Most urban areas in California ban construction of new billboards. The billboard cannot be replaced near its current location. Building a replacement sign in the same area is seldom possible. As one judge observed during an eminent domain trial, a sign on a freeway in Los Angeles will earn more revenue than a sign in the Mojave Desert.
In one eminent domain trial, the state’s appraiser argued that the sign should be valued by a formula using hypothetical numbers for factors such as rate of growth, cost of capital, and expected interest rates. The problem with this approach: The assumptions and predictions of the relevant factors must be accurate. In that case, when we plugged the actual rate of growth into the appraiser’s formula, the valuation went from one-third of the appraiser’s value to about 95 percent.
Billboard companies rarely sell individual signs. Sales that do occur are unlikely to be in the same immediate area as a sign that is subject to eminent domain. That makes it difficult to determine comparable sales. The best way to value a billboard is by capitalizing its income stream. When sales data are available, valuing signs as a multiple of revenue or net operating income will also work.
Some billboards are placed using short-term leases. Many billboards located on railroad rights-of-way are described as licenses and terminable on 30 days’ notice or less. Condemning agencies will argue that the billboard owner has “only an expectancy” and not an interest in real estate. This confuses liability (the taking) with damages (just compensation). (Mark Ulmer, a billboard attorney in Florida, developed this analogy.) In a 1973 case, United States v. Almota, 409 U.S. 470 (1973), a lessee owned a grain silo with an indefinite useful life. His lease had five years remaining. The government wanted to value the silo based on the remaining
term of the lease. The Supreme Court held that given the reasonable probability of continued renewal, the lessee was entitled to value the silo based on its useful life.
Like the grain silo, billboards have a useful life that is generally much longer than the lease term. Billboard operators usually have a reasonable expectation that the lease will be renewed for the entire useful life of the sign. Once there is a taking, the billboard owner is entitled to compensation. The duration of the lease and the expectation of renewal determine just compensation.
When there is a taking, there is often a chance to negotiate with the condemning agency for the right to relocate the sign elsewhere on the same property or nearby. That will save the agency money and permit the operator to continue to sell advertising in that market.
In jurisdictions where it is illegal to construct new billboards, existing signs are “grandfathered” in as legal nonconforming signs. (This applies only to signs that were legally built.) FHWA regulations allow “customary maintenance.” 23 C.F.R. § 750.707(d).
Sometimes “customary maintenance” is clear. On static signs, billboard operators may change copy without losing their legal, nonconforming status. Repairing broken pieces of the superstructure is permitted. On digital signs, replacing burned-out LED bulbs is typically permitted. The issue arises when there is greater damage to the sign. If a legal nonconforming sign is destroyed, it typically cannot be replaced. Some bright-line measures are based on a percentage of either the value of the sign or the cost of construction. Others are qualitative rather than quantitative.
Unless contractual, there is generally no view easement for a billboard. Absent a view easement, there is nothing a billboard operator can do about a blocked sign or rerouted traffic.
If an agency builds a sound wall, bridge, or other impediment, the jurisdiction might have a statute that will allow the billboard operator to raise the height of a sign enough to be seen. Some states will issue permits that allow a billboard operator to trim foliage that blocks the view of the sign. Most billboard operators will insist on a right to end the lease or reduce the rent if the view of the sign from the street becomes blocked. It’s reasonable for an operator to insist on such a provision. A billboard’s value stems from its visibility.
A common billboard lease provision bars a property owner from permitting any construction or plantings from blocking the view of the billboard from the street. The restriction applies to any adjacent property the lessor owns.
The vast majority of billboard operators comply with regulations, state laws, and local ordinances. There are a few that do not. These operators build signs without permits and without leases. They may trim, remove, or kill trees on another’s property.
That’s a risky way to run a business. There are cases in which courts have ordered billboard companies to disgorge revenue received from illegal signs. Courts have awarded substantial damages, including punitive damages, against billboard operators that have trimmed trees without the owner’s consent.
Rogue operators are also risky for the landowner. Some ordinances make the landowner responsible for code violations by a tenant. This may result in fines or loss of nonconforming status, which will result in removal of the billboard. At best, the property owner could incur attorney fees to deal with problems created by a rogue operator.
As mentioned above, billboards are generally erected as close to a property line as possible. That permits maximum use of the property. It also means there are likely to be other tenants on the property. The leases between the property
owner and billboard operator must be coordinated with leases between the property owner and its other tenants. The property owner is in the best position to avoid any conflicts between uses of the property by billboard operators and other tenants.
Entering into a billboard lease can be daunting, and property owners should familiarize themselves with billboard law and retain experienced counsel. The outdoor advertising company (OAC) leasing the billboard has the advantage of fully understanding the practical details and potential pitfalls in outdoor advertising.
A thorough site inspection and title search is the OAC’s first necessary due diligence. The OAC has to know who owns the land or building and whether there are any easements or mortgage restrictions that could prevent the installation of the sign. Although the property owner will agree to ensure that there will be nothing obstructing the billboard, the OAC must investigate the likelihood of such obstructions developing.
Another significant aspect of due diligence for the OAC is to navigate the complex bureaucracy governing outdoor advertising to ensure the viability of the planned location. The state and local regulations can be extremely complicated. Most states regulate the erection of billboards within a certain distance of a park or arterial highway. Permit applicants also must comply with federal regulations such as the Highway Beautification Act (and its numerous amendments and modifications). The more populous and urban the city of the billboard’s location, the more complex the laws.
The OAC almost always handles obtaining the permits. Regardless, the billboard lease must be clear on each party’s responsibilities to avoid getting bogged down in permit limbo. Both the property owner and the OAC have an incentive to expedite the permitting process, as the rent generally
commences when the permits are approved. The property owner should specify the deadline by which the OAC must obtain the permits. The parties should consider that location’s required laws and regulations when negotiating that deadline.
The details in the billboard lease need to be precise. The lease should spell out the exact location, size, and design of the billboard; the direction the billboard faces; and the number of poles supporting it. It should also dictate and sanction the access route, and whether it is an easement or license. The lease should include a diagram of the completed billboard. The OAC has a personal stake in the construction design because it must remove the sign and restore the land or property at the lease expiration.
The OAC should also try to prevent the property owner from negotiating a right to relocate the sign or easements in case of new construction or redevelopment on the land.
The lease should also limit the mode of advertising. The OAC’s right to use alternative technology, such as an outdoor LED or passive repeater, should be contingent on the property owner’s consent and the rent should be revisited in such case. The cost of lights and electricity can be significant. Many billboards have sub-meters to measure their usage. The maintenance, insurance, and a portion of real property taxes are the responsibility of the OAC.
As in any lease, the rent can be a fixed rent or a percentage rent above a defined breakpoint or other methods. How the property owner is compensated can vary. In quieter areas, a fixed annual rate is standard, considering escalations based on the Consumer Price Index. In a large urban area, a percentage of revenue is usually more desirable to the property owner. The goal of the OAC is to generally keep percentage rent below 25 percent of potential ad revenue. High-traffic locations may result in the parties agreeing to higher amounts.
Assigning or subletting should require approval by the property owner. Assigning the billboard to a
less-established OAC will decrease the quality of the advertisements and negatively affect the percentage of rent.
The lease must have provisions regarding the control of content on the billboard. The lease should also restrict the billboard’s content for two main reasons. First, property owners must control the content so that the billboard does not carry offensive or controversial advertisements such as adult entertainment or religious or political opinions that can severely damage the property’s primary use of the land. Second, property owners do not want the billboard to compete with existing commercial tenants, if applicable. For example, if the property owner rents to nearby businesses, the owner will not permit competing businesses to advertise on the billboard. Ultimately, there is no one-size-fits-all language that sufficiently addresses all of these issues. The parties must consider the current and potential concerns unique to that location.
A well-thought-out billboard lease should cover all acts of God and force majeure events. The property owner should maintain control over what would result in the termination of the billboard lease. If the property owner is concerned that the billboard may negatively affect its resale price, then it can include a provision that gives the property owner the right to terminate the lease on the sale of the land or building. Alternatives that the OAC would likely agree to are giving the OAC the right of first refusal on the property or the property owner giving the OAC a large buy-out payment. Failure of the parties to effectively negotiate termination issues may result in the billboard lease running with the title to the property.
As in any commercial lease, a billboard lease must include default provisions, subrogation language, personal guaranties, and many other applicable clauses. The goal of this article is to address some primary concerns related to billboard leases. n
POUR OVER TRUST: Trustee of trust receiving pour over has duty to protect estate assets. The testator’s will poured over the residue to an existing trust. More than ten years after the testator’s death, the residue still had not been distributed to the trustees, who are the executor, the testator’s ex-spouse, and the testator’s surviving spouse. The testator’s ex-spouse and the testator’s children, who are beneficiaries, brought an action alleging that the surviving spouse had breached fiduciary duties by not investigating the executor’s alleged mismanagement of the residuary assets. The trial court granted the surviving spouse’s motion for summary judgment on the grounds that so long as the estate assets remained in the estate, the trustees’ fiduciary duties with regard to those assets had not begun. On appeal, the Connecticut Supreme Court reversed and remanded in Barash v. Lembo, 303 A.3d 577 (Conn. 2023). The court held that the duty to collect and protect trust property extended to the trust’s interest in the estate assets and that the plaintiffs had presented sufficient evidence to go to trial on whether the defendant knew or should have known about the executor’s alleged breach.
TRUST DISTRIBUTIONS: Trustee is to consider standard of living of the beneficiary at the time of the settlor’s death. At the time of the decedent’s death, the decedent and the decedent’s spouse were legally separated. The deceased spouse’s will, executed before the separation, created a trust that gives the trustee
Keeping Current—Probate Editor: Prof. Gerry W. Beyer, Texas Tech University School of Law, Lubbock, TX 79409, gwb@ ProfessorBeyer.com. Contributors: Julia Koert, Paula Moore, Prof. William P. LaPiana, and Jake W. Villanueva.
Keeping Current—Probate offers a look at selected recent cases, tax rulings and regulations, literature, and legislation. The editors of Probate & Property welcome suggestions and contributions from readers.
the discretion to distribute income and principal to the surviving spouse and the decedent’s descendants from a prior marriage for the beneficiaries’ health, education, support, and maintenance. The trust also directs the trustee to give primary consideration to the decedent’s spouse. The terms also “suggest” to the trustee that the primary purpose is to provide for the spouse’s support, having regard for the standard of living enjoyed by the spouse during the marriage. In Matter of Katherine E. Reece Trust, 541 P. 3d 37 (Colo. App. 2023), the Colorado intermediate appellate court affirmed the probate court’s determination that the relevant standard of living is what the spouse enjoyed during the time of legal separation, citing as “persuasive authority” the statement in Restatement (Third) of Trusts, § 50 cmt. d(2), that the standard of living of a beneficiary to be considered by the trustee who is directed to do so is that enjoyed at the time of the settlor’s death or the creation of an irrevocable trust.
TRUST PROPERTY: Potential wrongful death recovery may be transferred to beneficiary’s revocable trust. The decedent’s parent is a statutory beneficiary of any wrongful death recovery related to the decedent’s death. Shortly before parent’s death and while the wrongful death litigation was pending, the parent purported to transfer parent’s interest in any judgment in the litigation to the
parent as trustee of the parent’s revocable trust. The wrongful death action was settled five years later, and the successor trustee filed a motion seeking a determination that the assignment was valid. The trial court made an order so holding, which was affirmed on appeal. On further appeal, the Oklahoma Supreme Court affirmed in Matter of Estate of Williams, 538 P.3d 176 (Okla. 2023): first, the parent transferred any interest in the potential recovery not the claim itself, and the transfer was made as part of the statutory beneficiary’s own estate planning; and second, the “weight of authority” is that contingent interests can be assigned to a trust.
TRUSTS—BENEFICIARY STANDING: Trust can be an accommodation party, but beneficiaries lack standing to seek reimbursement. The settlor and trustee of a revocable trust and the settlor’s spouse borrowed from a bank and signed a note evidencing the loan. Individually and as trustee, the settlor pledged certain securities held in the trust as collateral for the note. The proceeds were used to improve and maintain the settlor’s home, which was not trust property and is now owned by the settlor’s spouse. After the settlor’s death, the note went into default and the successor trustee, a bank, liquidated the securities to satisfy the debt. The remainder beneficiaries sued seeking reimbursement from the spouse to the trust, arguing that the trust was an “accommodation party” under Fla. Stat. §§ 673.4191(1,5). The trial court granted the surviving spouse’s motion to dismiss. The intermediate appellate court in Roller v. Collins, 373 So.3d 35 (Fla. Dist. Ct. App. 2023), affirmed. Although the trust as an accommodation party was entitled to reimbursement from the surviving spouse, the beneficiaries did not have standing because the trustee is the real party in interest.
TRUSTS—NECESSARY PARTY: Revocable trust created by spouses not necessary party to divorce proceeding. In Lopez v. Lopez, 541 P.3d 117 (Nev. Ct. App. 2023), the Nevada intermediate appellate court held that where divorcing spouses are the co-trustees, co-settlors, and beneficiaries of a revocable trust, the trust need not be made a party to the divorce proceeding for the trial court to have jurisdiction to distribute community property held in the trust.
WILLS—CONTEST GROUNDS: Fraud and undue influence are not the same. The testator’s son challenged the testator’s will on grounds of undue influence and fraud by the testator’s daughter. The trial court granted daughter’s demurrers. The son’s appeal on the fraud claim eventually reached the Oklahoma Supreme Court in Matter of Estate of Rivenburg, 539 P.3d 1262 (Okla. 2023). The court reversed and remanded, holding that although the evidence cited by the intermediate appellate supported dismissal of the undue influence claim—the daughter was not present at the execution of the will and claimed not to know of its contents—it did not show that the son did not meet his burden of proof on the issue of fraud which involves whether the testator was deceived. The opinion includes a detailed discussion of the differences between the two doctrines.
WILLS—MISSPELLED NAMES: Misspelled names of beneficiaries is not a suspicious circumstance. The Chancery Court granted summary judgment to the will’s proponent, the testator’s surviving spouse, in a contest brought by the testator’s children who alleged undue influence. On appeal, the Mississippi Supreme Court affirmed in Estate of Biddle v. Biddle, 369 So.3d 525 (Miss. 2023). The court held that the misspelling of the middle names of two of the will beneficiaries is not a suspicious circumstance that can raise the presumption of undue influence and is not sufficient to raise a genuine factual dispute to overcome summary judgment.
WILLS—SURVIVORSHIP: Devise to beneficiaries in “joint ownership” does
not create survivorship. The decedent’s holographic will devised real property to the decedent’s two children. The next sentence stated, “[t]his includes joint ownership of all contents, the house, property, etc.” One of the children died a year after the decedent, and the administrator of child’s estate filed a declaratory judgment action alleging that the one-half of the devised property belonged to the deceased child’s estate because the will created a tenancy in common. The trial court granted summary judgment for the administrator and the Georgia intermediate appellate court affirmed in Davis v. Estate of McClain, 895 S.E.2d 508 (Ga. Ct. App. 2023), holding that the language of the will did not meet the statutory requirement that it be “essentially the same” as language required by the statute to create a joint tenancy with right of survivorship, Ga. Code Ann. § 44-6-190(a)(2), which requires the words “joint tenants” or some mention of the survivorship feature.
Testator’s debilitated condition insufficient to raise presumption of undue influence. In its opinion in In re Estate of Coffman, No. 128867, 2023 WL 8266285 (Ill. Nov. 30, 2023), the Illinois Supreme Court reaffirmed its holding in Belfield v. Coop, 134 N.E.2d 249 (Ill. 1956), that without the existence of a confidential relationship between the testator and the person alleged to have exercised undue influence, the testator’s weakened and debilitated condition is not sufficient to raise a presumption of undue influence.
INTEREST: When calculating imputed interest, disposition of stock occurs at the time of closing and not upon resolution of legal claims resolving the sale. The founder of a pharmaceutical company formed trusts for his children. One of those trusts sold its shares during a short-form merger designed to squeeze out a son who worked outside the company. The trust challenged the merger in court and received a settlement three years later. The trust paid capital gains
on the settlement, which was a difference of over five million dollars between what was paid and the imputed interest owed. The Tax Court in Charles G. Berwind Trust for David M. Berwind. v. Comm’r, T.C. Memo 2023-146, held that the actual sale occurred at the time of the merger and imputed interest for the three years legal proceedings were pending.
AUSTRALIA—TESTAMENTARY
PREFERENCES: To prepare A Behavioral Economics Analysis of Will Making Preferences: When to Begin and Who Should Have the Most Input? 32 Minn. J. Int’l L. 1 (2023), Tina Cockburn, Kelly Purser, Ho Fai Chan, Bridget Crawford, Stephen Whyte, and Uwe Dulleck asked the Australian general public and estate planning professionals three main questions: “(1) when people should begin to plan their estates in anticipation of death; (2) the relative role that the lawyer should play in the estate planning process; and (3) whether remote witnessing rules for wills have any impact on individuals’ expressed preferences towards will making.” This behavioral economics study provides a novel way to analyze will-making. It presents relevant evidence that can assist policymakers in crafting practical and effective reforms that align with the actual decision-making behaviors of individuals.
DEATH PLANNING: In A Good Death: Personal Autonomy and Medical Decision Making in Louisiana, 83 La. L. Rev. 1295 (2023), Elizabeth Carter ponders the subjective question of what is a “good death” and highlights the importance of personal preference on end-of-life care. Carter explores Louisiana’s legal framework surrounding personal autonomy in advance-planning documents and hopes this article will guide attorneys and legislators in facilitating greater autonomy to effectuate a patient’s wishes on end-oflife care.
DEBTOR STATUS: In Status Check: Should the Federal Tax Status of a Disregarded Debtor Be Property of the Estate?, 39 Emory Bankr. Dev. J. 629 (2023),
J. Benjamin Ward examines whether the tax status of a debtor is “property” within the debtor’s estate under 11 U.S.C §541(a). Although the courts are split, Ward agrees with the Third Circuit’s position that it is not property because “the ultimate control of the debtor’s tax status is contingent on the will of the parentowner of the debtor.”
ETHICS: Kristin Yokomoto explores the ethical considerations estate planning lawyers face in Navigating the Endless Ethical Issues for Estate Planners When Preparing Trusts, 65-DEC Orange Cnty. Law. 53 (2023). Yokomoto discusses the importance of defining the client and scope of services, maintaining competence in tax laws, addressing conflicts of interest in joint representation, ensuring confidentiality, and navigating issues related to client capacity and malpractice claims.
In Thy Will Be Done: Issues in Family Farm Transitions Between the Farmers, Their Family, and New Agrarians, 27 Drake J. Agric. L. 129 (2022), Alexander Sandeen explores the importance of American family-operated farms, which account for 89 percent of all domestic food production. Farmers have historically relied on intergenerational succession for stability. With an aging population of agrarians and the decline in wills as an estate planning tool, the importance of a farmer’s operational transition plan is of utmost importance. Sandeen recommends increasing educational opportunities on estate planning options for farmers to ensure a smooth transition from one generation to the next.
TAXATION: In Preparing for the Sunset, 87 Tex. B.J. 32 (2024), Liz Nielsen explains what every lawyer needs to know about the potential sunset of the Tax Cuts and Jobs Act at the end of 2025. She outlines the current exemption amounts and the potential impact of the sunset on estate planning for individuals with varying levels of wealth. Lastly, she offers guidance on gifting strategies before the sunset occurs.
PROVISIONS: In his article, “I’ll Give You My Trust Assets When You Pry Them from My Cold, Dead Hands”: The Supreme Court of Georgia Clarifies That a Mere Challenge to a Trust’s Formation Will Not Trigger an In Terrorem Clause, 74 Mercer L. Rev. 1649 (2023), Kiana Johnson explains the recent ruling in Slosberg v. Giller, 876 S.E.3d 228 (Ga. 2022), in which the Supreme Court of Georgia acknowledged that an in terrorem clause does not prevent an interested beneficiary from challenging the valid formation of a trust. In Georgia, the current rule is that if a trust is proven to have been obtained through undue influence, the entire trust, including any in terrorem clause, will be considered void.
GRANTOR TRUSTS: In Resolving Unfairness in a Fair Way: How the Grantor Trust Rules Should Be Reformed, 48 BYU L. Rev. 2311 (2023), Aaron Anderson explains how many wealthy taxpayers use grantor trusts to take advantage of a difference in rules between income and estate tax systems to minimize the amount of property subject to estate taxes. He recommends updating grantor trust rules by harmonizing estate and income tax systems and incorporating grandfather provisions to ensure taxpayers who have relied on the current rules are not treated unfairly.
INCAPACITATED SETTLOR: In The Incapacitated Grantor and the Revocable Trust: Unnecessary Tax Complexity and a Reform Proposal, 76 Tax Law. 487 (2023), Sergio Pareja discusses the common use of revocable trusts as an alternative to wills to manage a person’s assets upon mental incapacity. This article highlights that, when a grantor is afflicted with mental incapacity, the trust may lose its beneficial tax status and potentially result in numerous adverse tax consequences. Pareja proposes a solution to maintain the grantor’s trust status until the grantor’s death as a default rule.
IRAS: In Designated Beneficiaries of Individual Retirement Arrangements, 87 Tex. B.J. 35 (2024), Jim Norman explores the intricacies of IRAs and the effect of
beneficiary designations on estate planning. The article focuses on the rules governing distributions to designated beneficiaries, highlighting exceptions such as the flexibility granted to surviving spouses.
MEDICAID PLANNING: In her article, The Legal & Ethical Considerations of Medicaid Planning: Strategies & Solutions, 29 ILSA J. Int’l & Comp. L. 271 (2023), Anna Lieberman examines Medicaid planning for the elderly seeking long-term healthcare, comparing the approaches of the United States and the United Kingdom. Further, she details various Medicaid planning techniques along with ethical and legal implications for attorneys assisting individuals in this process.
OREGON—FOREST TRUSTS:
In The Oregon Forest Trust: An Ecological Endowment for Posterity, 101 Or. L. Rev. 515 (2023), Mary Wood discusses the historical exploitation and destruction of Oregon’s forests and emphasizes the need for a fundamental change in the approach to forest management. She advocates for the public trust principle and holds the government accountable for the protection of Oregon’s invaluable forests. In this view, the government is the trustee of natural resources with a strict fiduciary responsibility to protect them for all citizens.
REVIVAL: In Reviving Revival in the Law of Wills, 55 Tex. Tech L. Rev. 501 (2023), Richard Storrow explores the idea of “revival” that comes into play when a testator dies after making several wills. He explores the confusion and inconsistency in how revival is applied in different jurisdictions and suggests instead that revival should be the standard rule with an option for nonrevival through a testator’s express election. Finally, he emphasizes the importance of understanding the theory of ambulation or the importance of understanding how testators expect to be able to change their estate plan over time and how these expectations clash with certain legal rules.
RULE AGAINST PERPETUITIES: In RAP TRAPS, 68 S.D. L. Rev. 374 (2023),
Thomas Simmons explores how South Dakota’s trust industry has flourished following the state’s 1983 repeal of the Rule Against Perpetuities. This article is one of a two-part series; in this first article, Simmons highlights the complexity and counterproductive nature of common law RAP, setting the scene for the second article, which will delve into South Dakota’s unique experience with RAP.
SURVIVING SPOUSE: In Navigating the Minefield of Estate Administration with a Surviving Spouse: A Look at Some of the Hotspots in the Process, 87 Tex. B.J. 30 (2024), Elizabeth Brenner explores the surviving spouse’s potential challenges in estate administration, such as property division, accurate inventory preparation,
exemptions for the surviving spouse, handling debts, and protecting the surviving spouse’s community property interest. Brenner highlights the importance of consulting both the Texas Family Code and the Texas Estates Code to navigate the estate administration of a surviving spouse, especially when multiple heirs or beneficiaries are involved.
MICHIGAN adopts the Uniform Power of Attorney Act. 2023 Mich. Legis. Serv. P.A. 187.
NEW YORK grants a deceased tenant’s personal representative the option
to terminate the lease agreement upon notice to the landlord notwithstanding any contrary lease provision. The estate will remain liable for rents and debts accrued prior to the notice. 2023 Sess. Law News of N.Y. Ch. 632.
PENNSYLVANIA modernizes guardianship proceedings procedures regarding (1) the appointment of counsel, (2) the required certifications by a court where an individual is seeking to serve as a guardian for three or more individuals, (3) the consideration of less restrictive alternatives to guardianships, and (4) the procedures for the review of guardianships. 2023 Pa. Legis. Serv. Act 2023-61. n
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CHARGING FORWARD! EV Charging Stations on Commercial Properties Create Real Estate Questions
By Katheryne L. Zelenock
The rapid proliferation of EV charging stations on commercial properties—in apartment complexes; at offices, hotels, shopping centers, entertainment venues, recreational sites, public parking lots; and even at hospitals and other health care facilities; not to mention dedicated charging facilities roughly equivalent to fossil fuel service stations and charging units located at automotive dealers— gives rise to a number of real property issues, some of which are not being
Katheryne L. Zelenock is the chair of the Real Estate Finance Practice Group at Dickinson Wright PLLC and co-chair of the firm’s Diversity, Equity, and Inclusion Committee. She is a member of the Real Property Law Sections of both the American Bar Association and the State Bar of Michigan.
well-addressed in the haste to push for rapid adoption of this relatively new and rapidly evolving technology.
Both property owners and operators who are eager to embrace charging stations to enhance the services offered at their properties, as well as the providers of charging stations (Providers) should carefully consider a number of issues before signing an agreement.
There are several competing business models in the charging station space. Some property owners, particularly residential owners and small businesses, purchase charging stations from a charging port manufacturer and attempt to use and maintain those units to provide service to a small group
of users (the Self-Service Model). For these smaller installations, relatively slow-charging L1 chargers, which make use of existing standard residential or light commercial electricity services, may be sufficient, at least for the next few years. (See sidebar on page 45.)
Where the volume of users is greater, however, as for properties such as offices, hotels, shopping centers, entertainment venues, or parking lots, more rapid chargers are almost always desirable. The L2 or DC fast chargers may require elevated electrical service to the property site (in some cases with attendant governmental and utility approval costs and timing, plus greater installation expenses), but also require significantly more ongoing maintenance. For these properties, landowners more frequently lease or
Residential and smaller commercial property owners may opt for a “plug and play” approach to charging stations, using the Self-Service Model.
license portions of their properties, or lease the charging equipment, to permit an EV charging station provider to establish a charging site (the Service Provider Model). The Service Provider Model is more complicated and raises a wider variety of potential issues than the Self-Service Model, from the responsibility for obtaining permits and utility services necessary for installation of the charging station, to ongoing maintenance of the charging station and liability and insurance issues related to third-party users of the stations.
The Service Provider Model is more complex not only because it involves consideration of a variety of risks, but also because the different providers have varying business strategies. Some providers plan to make their profits by selling charging equipment or consultative services related to equipment installation or maintenance services to property owners. Others hope to create widespread networks accessible to users, placing a greater emphasis on convenience fees and other marketing to the end user or consumer via software applications that allow users to find publicly available chargers. Others are dabbling in several income streams. As a result, some providers would prefer to control the charging station after installation, but others would prefer to walk away—and these business models are in flux as the EV market expands.
In addition, certain automotive manufacturers (original equipment manufacturers, or OEMs) and fossil fuel companies are offering alternatives to support their customers and to promote their brand, or to preserve the relevancy
of their investments in EV vehicles or automotive service stations. The motivations of the providers therefore greatly influence their approaches to EV charging station installation and maintenance, which are further complicated by rapid growth and active partnerships and mergers in the provider industry.
As discussed above, some residential and smaller commercial property owners may opt for a “plug and play” approach to charging stations, using the Self-Service Model. In those cases, the property owner must be sure to comply with local regulations and other requirements concerning installation and maintenance of the selected charging station, but the sale, lease, or licensing of the real property upon which the charging station is located is not a consideration. For larger commercial property owners, however, some variation of the Service Provider Model is more likely to be desirable, and property owners must consider whether to sell, lease, or license the property upon which the charging stations will be located.
Outright sale of the land upon which the charging station will be located is feasible only when working with providers interested in such an arrangement (and many providers are not). Providers most interested in a purchase of property include some OEMs, some oil and gas companies, and a few providers interested in establishing free-standing service stations. Sale of a portion of an existing parcel of land can be troublesome, however, as
resubdivision of existing land can be time-consuming. A sale of the land does have the virtue of making the provider wholly responsible for the charging station, from installation to maintenance to use-related liabilities, but a sale of land usually results in the original landowner having very little control over the new parcel, usually severely limiting the owner’s ability to assure that the new landowner provides the promised charging stations and maintains them in good working order. As a practical matter, most shopping center, office, apartment, or hotel owners are not going to find this option desirable.
Leasing a portion of property has several advantages for property owners and some providers. Leasing generally provides a tenant with exclusive possession of a specific area of property, usually in exchange for payment of rent—though rent can include a percentage of sales at the site. Under most leases, the tenant is responsible for most utility and insurance charges associated with the use of the leased premises and bears responsibility for keeping the leased premises safe for those who enter therein. Because of the tenant’s exclusive possession of the leased premises, the provider usually would be responsible for maintenance and operation of the equipment located on the leased property. Therefore, leasing is advantageous for many landowners who do not want responsibility for installation, operation, and maintenance of the charging stations but who do want the benefits of the charging stations on their properties.
Licensing, or site hosting, in contrast,
•
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is a more limited right of use. Most licenses for use of property are revocable and nonexclusive—that is, they have no set term and the use of the land is typically shared with others. A fee may or may not be charged for the right of use. Under most licenses, the property owner retains the primary responsibility for the property and its safety, and, therefore, the property owner most often pays for utilities and insurance and would have at least some share of responsibility for liabilities arising out of the use of the licensed area.
Naturally, both leases and licenses can be negotiated to fit the parameters of a particular situation, but being aware of the differences, and structuring a transaction accordingly, will avoid trouble down the road.
Charging stations may consist of a few enhanced parking spaces or a freestanding station similar to a gas station, complete with restrooms, convenience foods and drinks, and other amenities, or options in-between. A property
owner should consider not only the desirable number and location of charging stations, but the hours that charging stations may be used, and the potential burden associated with policing competing users and providing security for theft and vandalism deterrence (for example, for vehicles left to charge overnight). Expansion areas for future needs also may be a consideration. The needs of a small multifamily or office property may be drastically different from a hotel, shopping center, or entertainment venue.
Charging station installations must comply with state and local codes and regulations, and typically must be completed by a licensed electrical contractor. Especially if L2 or DC fast charging stations will be installed, relocation or amplification of electrical services may be required, necessitating coordination with the local utility company.
Providers can offer experience and proficiency to streamline installation, but those services may come with later trade-offs in terms of profit-sharing or long-term relationships that become
less desirable over time. Property owners should carefully consider which business model fits best to maintain appropriate autonomy and the ability to continue to innovate.
More appropriately a topic for an entirely separate article, tax and other incentives can play a role in the manner in which charging stations are constructed. Utilities, as well as local, state, and federal governments, and even private companies and foundations are offering a multitude of incentives to develop EV charging station infrastructure. These incentives can provide motivation for a particular deal structure, for both the landowner and provider.
Charging equipment and supporting amenities will vary based on the number and type of connectors offered, but also existing conditions, such as existing electrical services available and local labor costs. The Department of Energy notes that public and workplace installation of L2 chargers costs about $2,500 on average, while DC fast charger
installation costs range from $20,000 to $60,000 per connector, depending on the charging power and number of connectors installed. These expenses will continue to evolve as more competitors enter the market and construction standards become more uniform, but property owners and providers may want to adjust the price for access to the charging station to help recover installation costs if that cost recovery does not compromise incentives received for charging equipment installation.
There is also the obvious ongoing electrical energy expense, which may be provided as a courtesy to visitors or tenants of an office building, for example, but metered and charged to individual users, either at cost or at a markup for other property types. Rates for electricity may vary by time of year, time of day, or overall volume of usage. Charging units may be equipped with credit card readers, require use of a proprietary network membership, or be accessed through an attendant who monitors use—or a combination of these methods, with varied pricing.
Although efforts are being made to render various differing charging technologies more compatible between various brands of vehicles, differences remain. Choosing one protocol over another may limit the utility of a charging station. Currently, there are four connectors in use in the United States for consumer vehicles:
(i) the SAE J1772 standard connector (often referred to as a J1772), a round connector that can convey an L1 or L2 charge; (ii) SAE Combined Charging System (CCS) (the same round connectors as the J1772, plus an additional two-prong receptacle, which permits use of L1, L2, and DC fast charging equipment), which is increasingly common in the United States and Europe; (iii) North American Charging Standard (NACS), currently used only on Tesla vehicles, but likely expanding to other brands through announced and future partnerships, which can convey an L2 or DC fast charge (Teslas also come with a J1772 adapter and limited adapters
Level 1 (L1): Level 1 equipment provides charging through residential-type 120-volt AC outlets. Level 1 chargers can take more than 40-50 hours to charge a Battery Electric Vehicle (BEV) from empty to 80 percent* and five to six hours to charge a Plug-In Hybrid Electric Vehicle (PHEV). These chargers are typically used for residential installations and constitute less than 1 percent of public EV charging ports.
Level 2 (L2): Level 2 equipment offers higher-rate AC charging through 240volt (in residential applications) or 208-volt (in commercial applications) electrical service. Level 2 chargers can take four to ten hours to charge a BEV from empty to 80 percent and can charge a PHEV in one to two hours. Per the US Department of Energy, in 2022, approximately 80 percent of public EV charging ports in the United States were Level 2.
Direct Current Fast Charging (DCFC or DC Fast): DC Fast requires a more expensive, specialized installation and is generally reserved for higher-traffic installations. There are currently three different types of DC Fast charging systems available in the United States, though efforts are being made to make at least some of the systems more compatible with one another. DC Fast equipment can charge a BEV from empty to 80 percent in just 20 minutes to one hour. Most PHEVs currently on the market do not work with DC Fast chargers. In 2022, approximately 20 percent of public EV charging ports in the United States were DC Fast chargers, with this number expected to increase because of state and federal funding earmarked to create a national EV charging network, as well as private fleet installations (including Uber, Lyft, and other private companies).
*Charging speed slows as an EV battery gets closer to full to prevent damage to the battery. In many instances, it is more cost- and time-efficient for EV drivers to charge to 80 percent, then proceed. It can take as long to charge the last 10 percent of an EV battery as the first 90 percent, with some variation among vehicle manufacturer, age of the vehicle, vehicle battery capacity, manufacturer, condition, age of the charging equipment, and even air temperature.
• US Department of Transportation, “Charger Types and Speeds,” available at https://tinyurl.com/bpz67c8n.
• US Department of Energy, “Developing Infrastructure to Charge Electric Vehicles,” available at https://tinyurl.com/5cvym9pn.
for CCS or CHAdeMO use, which allows them to use non-Tesla L2 and some DC fast charging equipment); and (iv) CHAdeMO, a DC fast connector type used by some Japanese automakers, and the prevalent standard in Asian markets, but not widely adopted in the United States. Other standards, such as the SAE J3068, extreme fast chargers (XFC), and various forms of inductive (cordless) charging are currently available for industrial and fleet uses and in some aftermarket products and may become more widely available.
For commercial property owners offering charging stations to the public or other visitors to their properties, a combination CCS or NACS charger is probably the way to go—for today—but in some cases, it may be more costeffective to choose one over the other. Given the ever-changing nature of the EV market, however, the key negotiating point is to maintain the ability to change the charging station type (including the ability to require a provider to upgrade or change the charging station type).
Installation of charging stations not only involves changes to electrical
services, often necessitating changes to fire safety equipment and protocols, possible strains to a local power grid (particularly in areas of extreme weather), and attendant business interruptions, but also is likely to require changes to property management because of modified access to the property and related security considerations. All these changes, in turn, require thoughtful planning for appropriate insurance coverage. Although a property owner’s general liability and property insurance may cover many risks, and providers may have insurance to cover risks arising directly from the use of the charging station, negotiation of a lease or license must address insurance responsibilities—including allocation of risk if available insurance policies change.
Ongoing maintenance of charging stations is a significant issue, both from general wear and from vandalism or misuse of equipment. Failure to properly maintain equipment can convert an attractive property amenity into a source of frustration for stranded EV drivers. Property owners may be able to adequately clean and monitor charging
station equipment but are unlikely to have the expertise necessary to repair damaged or malfunctioning equipment. Working with the provider to assure responsive, expert service at a palatable cost is an essential part of any charging station installation plan. While some malfunctions may be covered by manufacturer warranty, negotiation of “always up, always on” service requires a separate maintenance agreement, potentially at a relatively significant cost.
The federal government is increasing efforts to make all public charging stations readily identifiable to EV users, but many proprietary networks formed by providers and other parties also offer paid and unpaid subscriptions to software applications that deliver detailed information about charging stations within their network, including general hours of availability or up-to-the-minute availability reporting, charging speeds, comments on security and other amenities, user ratings, and other information. Networks also may provide property owners with useful data concerning the consumers
using the charging stations, and even offer marketing opportunities to those users—perhaps particularly interesting for shopping center owners and entertainment venues.
When selecting a provider, a property owner may perceive a benefit or detriment in such a network or want the flexibility to be associated with more than one network, or to reserve certain branding opportunities to itself, and negotiate the lease or license accordingly.
No matter what deal structure is selected, it is advisable to limit the deal term or allow for termination or modification rights, given the rapidly evolving technology in the charging station industry. Property owners who are early adopters today will not want to tolerate outdated equipment in a year or two, and providers (or at least some of them) will want rights to change their network configuration or update equipment.
All of the foregoing issues (and more) should be addressed in a thoughtful, well-negotiated process between the property owner and Provider. Not every Provider will be a good fit for every property owner, and vice versa. n
The Corporate Transparency Act (CTA), enacted on January 1, 2021, as part of broad antimoney-laundering and antiterrorism measures taken by Congress, is set to take effect January 1, 2024. The CTA requires certain business entities (each defined as a “reporting company”) to file, in the absence of an exemption, information on their “beneficial owners” and, in some cases, “company applicants” with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury (Treasury). The information provided to FinCEN will not be publicly available, but FinCEN is authorized to disclose the information to certain agencies and other entities/persons.
At first blush, the CTA would not appear to have large-scale implications on attorneys whose practices focus on real estate or trusts and estates. Because of the large-scale use of holding companies involved in real property transactions and their common usage in holding assets indirectly owned by trusts, however, it is likely that the CTA’s reporting obligations will apply to many, if not most, of these holding companies. The following article provides a general summary of the
component parts of the CTA, including which entities are considered reporting companies, how to identify a reporting company’s beneficial owners and company applicants, what information needs to be reported to FinCEN, when that information must be reported, and the penalties for noncompliance with the CTA.
All companies that fall within the scope of “reporting company” under the CTA and do not fall under an exemption (as discussed below) will be required to report information about the entity’s owners to FinCEN. These companies include both domestic reporting companies and foreign reporting companies. Unlike certain reporting obligations imposed by federal securities laws, the CTA’s obligations for reporting beneficial ownership information (BOI) fall on the company itself, not the beneficial owner.
A domestic reporting company is a corporation, limited liability company, or other entity created by filing a document with a secretary of state or similar office in the United States, District of Columbia, or U.S. territories, or with the office of an Indian tribe. A foreign reporting company is an entity formed under the laws of a foreign
country and is registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or similar office. It is expected that (in addition to corporations and LLCs) the other types of entities that are likely to be considered “reporting companies” under the CTA will also include limited liability partnerships, limited liability limited partnerships, business trusts, and most limited partnerships, because these entities are generally created by a filing with a secretary of state or similar office. It is also likely that this definition will mean that sole proprietorships, most general partnerships, or other entities not necessarily created by a filing with a secretary of state or similar office will not be considered “reporting companies.” Therefore, with very few exceptions, nearly all business entities conducting business in the United States will be considered reporting companies unless they meet one of the exemptions enumerated under the CTA.
The CTA specifically exempts 23 categories of entities from the definition of “reporting company.” In this article, we will discuss three exemptions in which we expect many private, non-regulated businesses to be most interested, but
When seeking to qualify for an exemption involving tax-exempt status, entities need to be aware of potential CTA reporting obligations during the period after formation of the entity but before the entity receives its tax-exempt status.
a summarized list of all of the exemptions is provided below. For each of the below exemptions, the detailed requirements to meet the exemption are included at 31 U.S.C. § 5336(a)(11)(B):
• Publicly traded companies;
• Inactive entities;
• Investment companies or investment advisers registered with the SEC;
• Venture capital fund advisers;
• Pooled investment vehicles;
• Insurance companies and insurance producers;
• Public accounting firms;
• Governmental authorities;
• Other highly regulated entities:
o Banks,
o Federal and state credit unions,
o Bank holding companies,
o Money transmitting businesses and money service businesses registered with FinCEN,
o Securities brokers or dealers registered with the SEC,
o Exchange or clearing agencies registered with the SEC,
o Other entities registered with the SEC,
o Entities registered under the Commodity Exchange Act,
o Regulated public utilities, and
o Financial market utilities;
• Large operating companies;
• Nonprofit companies; and
• Subsidiaries of other exempt entities.
To qualify under the “large operating company” exemption, an entity must
meet all of the following requirements:
• Employ more than 20 full-time employees in the United States;
• Have an operating presence at a physical office in the United States; and
• Have greater than $5 million in gross receipts or sales (net of returns and allowances) from sources in the United States on its federal tax return for the previous tax year.
For purposes of meeting the large operating company exemption, a fulltime employee is anyone employed an average of at least 30 hours per week or 130 hours per month. Further, the entity must be the employer of 20+ full-time employees—entities may not consolidate employees across affiliated entities for CTA purposes. The operating presence in the United States must be at a physical location (having a P.O. box or other principal address where no business is conducted will not be sufficient) owned or leased by the exempt entity and may not be shared (except with the entity’s affiliates). Unlike the employment requirement, an entity that is part of an affiliated group that files a consolidated tax return is permitted to aggregate the entirety of the affiliated group’s gross receipts or sales requirement for purposes of meeting the gross receipts or sales requirement. The requirement specifically references, however, that the $5 million test is determined based on the entity’s previous tax year’s tax return, so until the entity has a tax return meeting the above requirement, it will not be able to take advantage of the large operating
company exemption. Further, this requirement specifically states that the source of receipts or sales must come from business conducted within the territorial boundaries of the United States, so any receipts or sales received by an entity outside of the United States will not be includable for purposes of meeting this requirement.
Businesses meeting the large operating company exemption should be wary: Should the entity no longer meet the above requirements at any time (such as if the business no longer has 20 full-time employees or sees US gross receipts or sales dip below $5 million), the entity will no longer qualify for the large operating company exemption, and if the entity does not fit under any other exemption, it would be required to file a BOI report with FinCEN within 30 days from the date the entity no longer is exempt.
Nonprofit organizations described in Section 501(c) of the Internal Revenue Code (IRC) and tax-exempt under IRC Section 501(a), as well as trusts described in IRC Section 4947(a)(1) and (2), are also exempt from the CTA’s reporting obligations. When seeking to qualify for an exemption involving taxexempt status, however, entities need to be aware of potential CTA reporting obligations during the period after formation of the entity but before the entity receives its tax-exempt status from the Internal Revenue Service. The exemption requires both that the entity be an entity that meets the requirements of IRC Section 501(c), but also
that the entity is tax-exempt under IRC Section 501(a), which, for many nonprofits, will not occur until after they submit their application, and the IRS approves of, the entity’s tax-exempt status. During this period, unless the entity falls under another one of the CTA’s exemptions, the entity will be required to file a BOI report with FinCEN.
A third exemption to the CTA’s definition of “reporting company” is for subsidiaries of exempt entities. Entities owned 100 percent (directly or indirectly) by one or more entities meeting an exemption to the definition of reporting company are also exempt. Such subsidiaries will not qualify for the subsidiary exemption, however, if the parent entity or entities are themselves exempt only under the CTA’s exemptions for (1) pooled investment vehicles, (2) money transmitting or money services businesses, (3) entities assisting tax-exempt entities, or (4) inactive entities.
An example of an entity qualifying for this exemption is a subsidiary of a large operating company. The parent company (the large operating company) will itself be exempt from the “reporting company” definition, and therefore its subsidiary will be exempt as well. If the subsidiary is not owned entirely by one or more exempt entities, however, it will not be exempt under the subsidiary exemption. For example, if an exempt entity owns 99.99 percent of the subsidiary and an individual or other nonexempt entity owns just 0.01 percent of the subsidiary, the subsidiary will not qualify under this exemption.
If an entity is a “reporting company” under the CTA, the first step is to identify the entity’s “beneficial owners.” A beneficial owner is any individual (natural person) who, directly or indirectly:
• Exercises substantial control over the company; or
• Owns or controls at least 25 percent of the ownership interests of the company.
An individual will be considered a beneficial owner of a reporting company if the individual exercises “substantial control” over the entity. An individual exercises substantial control over an entity if the individual serves as a senior officer of the entity, has authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body) of the entity, or directs, determines, or has substantial influence over important business decisions for the entity.
For purposes of the CTA, the term “senior officer” means any individual holding the position or exercising the authority of president or chief executive officer, treasurer or chief financial officer, secretary or general counsel, chief operating officer, or any other officer (regardless of title) performing a similar function. Important business decisions of the reporting company include, but are not limited to, decisions regarding:
• Nature and scope of the company’s business;
• Sale, lease, mortgage, or other transfer of principal assets;
• Reorganization, dissolution, or merger;
• Major expenditures or investments;
• Issuance of equity or incurrence of significant debt;
• Selection or termination of business lines or ventures, or geographic focus;
• Approval of operating budget;
• Compensation and benefits of senior officers;
• Entry into or termination of significant contracts; and
• Amendments to the company’s substantial governance documents (e.g., articles of incorporation, bylaws, shareholders agreement, etc.).
The “Final Reporting Rule” issued by FinCEN set out a nonexhaustive list of examples in which an individual may exercise substantial control over a reporting company, including by way of:
• Board representation,
• Ownership or control of a
majority of the reporting company’s voting power or voting rights,
• Rights associated with a financing arrangement or interest in the reporting company,
• Control over intermediate entities separately or collectively exercising substantial control over the reporting company,
• Arrangements (including financial or business relationships) with other individuals or entities acting as nominees, or
• Any other contract, arrangement, understanding, relationship, or otherwise.
In addition to exercising substantial control over a reporting company, an individual will be considered a beneficial owner if that individual directly or indirectly owns or controls at least 25% of the ownership interests of the reporting company. “Directly or indirectly” is very broad language, as the individual may have an ownership interest through any contract, arrangement, understanding, or relationship.
“Ownership interests” is defined broadly in FinCEN’s Final Reporting Rule to include any equity, stock, or similar instrument; any preorganization certificate or subscription; any transferable share of (or voting trust certificate or certificate of deposit for) an equity security; an interest in a joint venture; and a certificate of interest in a business trust. Additionally, “ownership interests” includes any capital or profits; instruments convertible into any share or instrument described previously; any right to purchase, sell, or subscribe to a share or other interest; any put, call, or other option (except to the extent the option is held by a third-party unknown to the reporting company); and any other instrument, contract, or arrangement used to establish ownership.
For CTA reporting purposes, debt instruments will be considered ownership interests if the holder of the instrument has the ability to exercise the same rights as a holder of one of the equity (or other) instruments described
above. For example, the holder of a convertible note would have an ownership interest, but the holder of a simple security interest would not.
The challenging step in determining whether an individual is a beneficial owner of a reporting company is calculating the person’s ownership interests. The following standards will govern whether an individual has met the 25 percent ownership or control threshold to qualify as a beneficial owner.
First, total ownership interests owned or controlled are calculated as a percentage of the total ownership interests of the reporting company. At the time of calculation, any options or similar interests held by the particular individual will be treated as exercised. Next, if a reporting company issues capital or profits interests, the ownership interests of the individual at issue will be calculated by taking their capital or profits interests in the reporting company as a percentage of the total outstanding capital or profits interests of the company.
The applicable percentage for corporations (as well as entities taxed as corporations and other reporting companies issuing shares) is the greater of (i) the total combined voting power of all classes of ownership interests of the individual as a percentage of the total outstanding voting power of all classes of ownership interests entitled to vote and (ii) the total combined value of the individual’s ownership interests as a percentage of the total outstanding value of all classes of ownership interests. An important note when calculating ownership interests is that if the calculations cannot be made with reasonable certainty, an individual owning or controlling 25 percent or more of any single class or type of ownership interest will be deemed to have exceeded the 25 percent ownership interest threshold.
If an ownership interest in a reporting
company is held through a trust, the following individuals are deemed to have an ownership interest in the reporting company:
• A trustee of the trust or other individual (if any) with the authority to dispose of trust assets;
• A beneficiary who is the sole permissible recipient of the trust’s income and principal; or has the right to demand a distribution of or withdraw substantially all of the trust’s assets; or
• A grantor or settlor who has the right to revoke the trust or otherwise withdraw the trust’s assets.
The CTA provides five exemptions from the definition of “beneficial owner.” The first is a minor, as defined by the laws of the state under which the company was created or registered. Nonetheless, the company must report information for the minor’s parent or guardian and submit an updated report when the minor reaches the age of majority. The next exemption is for nominees, intermediaries, custodians, and agents on behalf of another individual. The BOI of a nominee need not be reported, but the company will still need to report the BOI for the individual on whose behalf the nominee acts.
An important exemption from the definition of “beneficial owner” is for employees who—while they may exercise substantial control over or economic benefits from the reporting company—(i) have their control or benefits derived solely from their employment status; and (ii) are not senior officers (as discussed above). Heirs (individuals whose only interest in the company is a future interest through an inheritance right) are also exempt.
Finally, certain creditors of a reporting company will not be considered beneficial owners. These are creditors holding only a right to be paid a predetermined sum of money, who meet the “beneficial owner” definition only by way of a loan covenant (or similar right) associated with a right
to repayment intended to secure such right or enhance the likelihood of the repayment of debt. For example, a creditor holding a security interest in assets of the reporting company would not be considered a beneficial owner by virtue of such security interest.
In addition to submitting beneficial ownership information for beneficial owners, reporting companies must also submit beneficial ownership information for individuals known as “company applicants.” A company applicant is an individual who either:
• Directly filed the document creating the domestic reporting company or first registering the foreign entity to do business in the United States; or
• If more than one individual is involved, is primarily responsible for directing or controlling the filing of such document.
For the second prong of this analysis, FinCEN intends only for a reporting company to list at most two individuals as company applicants. In FinCEN’s Final Reporting Rule, it provided the following example to specifically illustrate identifying company applicants if a law firm is involved in the filing of any formation documents: If a supervising attorney oversees the preparation and filing of a reporting document and a paralegal or associate files the document with the state filing office, the reporting company must list both the supervising attorney and the paralegal or associate as company applicants.
Reporting companies formed or registered to do business in the United States before January 1, 2024, do not need to report information regarding company applicants in their initial BOI report. Additionally, in any subsequent BOI report correcting or amending reported information, reporting companies do not need to report any change to the required information regarding company applicants, unless such information was not correct when initially reported.
FinCEN’s Final Reporting Rule clarified several situations regarding company applicant reporting requirements. First, employees in the filing office processing formation or registration documents (e.g., secretary of state) are not the filers of these documents and are thus not considered company applicants. Another grey area sure to arise concerns the use of business formation services. Such services may provide software or written guidance for forming entities. The employees of these services are not company applicants by virtue of providing the software or guidance. To the extent these employees are personally involved in the filing of a formation or registration document for a reporting company, however, they would meet the definition of “company applicant” under the CTA.
A reporting company must disclose the following regarding each of its individual beneficial owners and, in the case of a company created or registered on or after January 1, 2024, its company applicants:
• Full legal name;
• Date of birth;
• Current residential address (except that a business address may be used for company applicants who form or register entities in the course of their business);
• Unique identifying number from one of the following: (1) a US passport; (2) a state, local, or Indian tribal identification document; (3) a state-issued driver’s license; or (4) if an individual does not have any of the other types of identification, a passport issued by a foreign government; and
• An image of the identification document from which the unique identifying number was obtained. The CTA regulations also provide that, as an alternative to providing the above information, an individual may provide a FinCEN identifier, which is an identification number an individual
can obtain from FinCEN by providing the same information listed above.
If a reporting company has beneficial owners who are themselves exempt from the CTA’s reporting requirements, the reporting company may elect to list the name of the exempt entity rather than provide the beneficial ownership information.
Further, a reporting company must disclose the following information about the company itself:
• Full legal name of the reporting company;
• Any trade names used by the reporting company;
• Its current physical address (a P.O. box cannot be used);
• Its state, tribal, or foreign jurisdiction of formation (and for foreign entities, the state or tribal jurisdiction where it first registered in the United States); and
• Its IRS taxpayer identification number (or for a foreign entity that does not have a US taxpayer identification number, its tax identification number issued to it by a foreign jurisdiction).
Entities must submit beneficial ownership information for each of its beneficial owners to FinCEN in the entity’s initial report and in any updated reports. Reporting companies created (or which become foreign registered companies) before January 1, 2024,
have until January 1, 2025, to file an initial BOI report. Reporting companies created (or that become foreign registered companies) on or after January 1, 2024, must file an initial BOI report within 30 days of the earlier of the date on which:
• Receipt of actual notice that its creation (or registration to do business) has become effective; or
• A secretary of state or similar office provides public notice of its creation (or registration to do business).
If, after the filing of the initial report, there is any change to information regarding the reporting company or any of its beneficial owners, an updated report must be filed by the reporting company within 30 days of such change.
The CTA provides both civil and criminal penalties. These penalties include fines of up to $10,000 and, for any person who willfully provides or attempts to provide false or fraudulent information or willfully fails to report complete or updated information, up to two years of imprisonment. Importantly, these penalties can be levied against any of the “senior officers” (see definition above in the section entitled “Substantial Control”). n
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Over the past five years, the question of whether real estate appraisers systematically undervalue homes purchased or occupied by Black and Hispanic households has emerged as a significant civil rights issue. Major media have highlighted some instances where the same home received a dramatically higher appraisal when the appraiser believed the client was white rather than Black. Some social scientists have argued that appraisal discrimination is the root cause of the lower housing prices that prevail in many urban minority neighborhoods—and thus an important source of the racial “wealth gap.” Candidate Biden expressed strong concern about the issue during the 2020 presidential campaign, and President Biden in 2021 created a special cabinet-level Task Force on Property Appraisal and Valuation Equity (PAVE) to investigate the issue and propose solutions.
Given the salience of this issue, the ABA’s RPTE Section created its own investigative task force, which in turn asked the authors, as fair housing scholars, to aid its research. We identified over a dozen relevant studies, from advocacy groups, scholars, and government agencies, and interviewed many of the authors as well as experts in the appraisal industry, at the National Fair Housing Alliance, and at PAVE. Although the public positions taken by various parties are very different, when we examined the core research findings, some common themes and patterns emerged.
Appraisals are usually commissioned by banks as part of their underwriting process for home mortgage applications. Most mortgage applications arise as part of a home-purchase process, though mortgage refinancings are now common and a refinance process also usually involves an appraisal.
Richard Sander is an economist and the Dukeminier Distinguished Professor of Law at UCLA and director of the UCLA-RAND Center for Law & Public Policy. Carol Necole Brown is a professor at The University of Richmond School of Law.
Appraisers inspect a home, note its key features, and then identify comparable recent sales (comps) in the surrounding neighborhood. Home values are determined by largely subjective judgments that estimate what value for the subject property best aligns with the chosen comps. A home “underapppraises” if the appraiser’s estimated value is lower than the buyer’s purchase price. If the appraised value is significantly below the purchase price, the bank may reject the buyer’s mortgage application or require the buyer to make a larger down payment on the property.
The research on appraisal discrimination consistently shows, across many different studies, that appraisals in which the lender’s client is Black or Hispanic more commonly arrive at valuations that are either below the client’s actual purchase price or below an algorithmically generated estimate of the market value. This is strong evidence that there is a problem, but the problem is much more nuanced than one might infer from either the media coverage or the advocacy surrounding the issue. For one thing, the average “underappraisal” amount for Black and Hispanic homebuyers is quite small— around two percent of the market value, on average. For another, the race of the appraiser does not seem to matter much: Black appraisers are as likely to slightly undervalue Black homes as are white appraisers. Mortgage applications by Black and Hispanic homebuyers are more likely to fail because of a low appraisal, but this is an important factor in only about one to two percent of mortgage applications.
It is quite possible that the problem of more frequent underappraisals in Black and Hispanic home purchases is not an appraisal problem at all. A team of economists led by Patrick Bayer at Duke University studied hundreds of thousands of cases where a particular home changed owners multiple times over a period of years. Patrick Bayer et al., Racial and Ethnic Price Differentials in the Housing Market, 102 J. Urb. Econ. 91 (2017). They found a persistent tendency for Black buyers to pay slightly more for a given home than a preceding
or subsequent white buyer did (while controlling for other relevant factors). Many things could explain such a gap, from less experience among Black buyers in navigating the single-family home market, to white seller discrimination, to a greater reluctance among Black buyers in white neighborhoods to negotiate aggressively. Regardless of the cause, if Black buyers do slightly “overpay” for single-family homes, then the racial appraisal gap may simply be an accurate reflection of this phenomenon.
Racial differentials in appraisals also might be caused, at least in part, by the unreflective use of practices that work better in suburban settings than urban ones. For example, housing composition, density, and safety often vary more over short distances in urban (often minority) neighborhoods than in less-dense suburban neighborhoods. If appraisers in both settings use a one-half-mile radius as an acceptable area within which to select comps, this might produce more variability, and a downward bias, to appraisal results in urban settings compared to suburban ones. At least one study has found evidence of this sort of disparate impact from appraisal practices.
The upshot is that although there are clear race-related differences in appraisal outcomes, one should proceed with caution in reaching conclusions about what drives these differences. The rhetoric surrounding appraisal discrimination is generally not cautious—many journalists, advocates, and political figures have both exaggerated and oversimplified what turns out to be a fairly complex issue. PAVE, the presidential commission working on this issue, has indulged in some of this rhetoric, but its actual recommendations to date have been moderate and constructive. For example, it has suggested ways of improving the training that appraisers receive and is developing guidelines that encourage lenders to seek a second opinion when an appraisal comes in with certain signs of possible bias.
In our view, it makes sense to support PAVE’s moderate and sensible steps. But we should also encourage research that focuses not on whether
Before the passage of the Fair Housing Act in 1968, Black home prices were higher, not lower, than white home prices— sometimes much higher.
race-related differences in appraisal outcomes exist (this is now well-established) but on how well alternative explanations can account for the differences. The policy response should be very different if the key underlying problem is overpayment by Black and Hispanic buyers or if it is flawed appraisal standards that produce skewed results in dense neighborhoods. It is important both to get to the bottom of what drives these differences and to support policies that are well-calibrated to address demonstrated problems.
The “appraisal discrimination” debate also has had an important side benefit. It has brought welcome (if somewhat confused) attention to the large disparity between white and Black housing prices in many housing markets. In most of our largest metropolitan areas, single-family homes in predominantly white communities sell for much more than similar homes in predominantly Black communities, and the difference remains quite large (over 20 percent) even when we control for a host of factors, such as housing age, size, local school quality, local amenities, and crime. As we noted earlier, some prominent voices have argued that appraisal discrimination is behind the “home value gap,” a notion that seems plausible until one
looks more closely at the data. It turns out that most of the racial gap in home values originated in the 1970–90 period and was concentrated in certain types of metro areas. Before the passage of the Fair Housing Act in 1968, Black home prices were higher, not lower, than white home prices—sometimes much higher. To the extent appraisal discrimination exists, it was undoubtedly more common in the 1950s and 1960s than it is today.
With the growing presence and enforcement of fair housing laws in the 1970s and 1980s, many metropolitan areas achieved significant levels of housing integration. In nearly all of these areas, Black and white housing prices converged, and homeowners of all races experienced similar levels of equity appreciation. (No one has yet studied whether appraisal disparities exist in these cities, but we suspect they do not.) Other metro areas—including most of our largest urban areas, such as Chicago, New York, and Philadelphia—continued to be highly segregated, but also experienced large-scale racial transition and resegregation across many neighborhoods. As whites withdrew from these neighborhoods, the increased stock of housing in newly Black neighborhoods outpaced demand. This process depressed
the non-white housing markets in these metro areas, which not only hurt housing appreciation in minority neighborhoods but also contributed to the widespread housing abandonment observed in many central cities in the 1970s and 1980s. See Richard H. Sander, Yana A. Kucheva & Jonathan M. Zasloff, Moving Toward Integration: The Past and Future of Fair Housing, ch. 9 (2018).
In other words, the problem of
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low housing values in Black and Hispanic neighborhoods probably has more to do with segregation than appraisal discrimination. For most of the past 50 years, fair housing strategies and advocacy have focused on housing discrimination, often assuming that housing integration would naturally follow once housing discrimination levels fell. Discrimination did indeed fall, but subsequent desegregation was the exception rather than the
rule. Housing integration and workable strategies to achieve it deserve more attention than they have received. A wide range of research shows that lowering racial housing segregation also lowers mortality rates, unemployment, and crime, especially for Black households. Addressing housing segregation also may be the best cure for depressed minority housing values and a way of constructively bridging the racial wealth gap. n
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By this time of the year, our New Year’s resolutions may either be going strong or, more than likely, have started to fade into a distant memory.
Like many other working professionals, this year, I vowed to embrace that current favorite bromide—“work smarter, not harder”—and find ways to become more efficient and prioritize tasks that move the needle. As with all of these resolutions, this can be easier said than done!
A great place to start is by maximizing my use of both existing and new technologies.
A warning, though: Getting the intended efficiencies will require finding the ‘right’ technology tools, as the ‘wrong’ ones may make tasks take longer and create a more confusing process.
A great example of working smarter, not harder was examined in a prior article about estate document drafting software tools. Utilizing the proper software allowed attorneys to save time, freeing up more time in business development or educating and counseling clients. After all, estate planning is more than merely document preparation. It is coordinating what our clients own, how they want their assets to pass on to the next generation, and making sure the practitioners do so in the most tax-efficient way.
Along that continuum, there are many topics about which an attorney may need to educate their clients, ranging from basic estate plan terminology to complex wealth transfer strategies. Attorneys can utilize various tools and techniques to convey these concepts to their clients. But because each client learns differently, attorneys may need to use flow charts, diagrams, or calculations to illustrate a specific concept.
Technology—Probate Editor: Ross Bruch, Brown Brothers Harriman & Co., One Logan Square, 14th Floor, Philadelphia, PA 19103.
Contributing Author: Marguerite Weese.
Technology—Probate provides information on current technology and microcomputer software of interest in the trusts and estates area. The editors of Probate & Property welcome information and suggestions from readers.
While these deliverables are helpful to the client, they may be time-consuming for the attorney to pull together. Whether the attorney is billing by the hour or charging a flat fee, time is our most precious resource. Automating these illustrations can help create efficiencies and consistency in the client deliverables. This article focuses on three key features that various software programs may provide to help estate planners modernize and digitize their practice.
No matter how large or small a client’s net worth is, you must have a solid understanding of the client’s balance sheet before planning. Estate planning professionals should have a clear vision about their client’s total net worth to discern whether or not federal or state estate taxes will be due following the client’s death. Other important information to know about includes how assets are owned or titled, identifying the assets’ tax characteristics, understanding the liquidity status of the assets, and determining what assets exist inside versus outside the taxable estate. Titling will inform incidents of survivorship as well as how an asset may pass at death. For example, joint assets with right-of-survivorship pass automatically to the surviving owner, but joint assets without this right may pass via a properly executed will. Retirement accounts, on the other hand, pass by beneficiary
designation, and the account owner’s death triggers very specific required distribution rules that the beneficiary must follow.
For estate planners looking to provide holistic planning advice, the ability to perform an accurate liquidity analysis will lend itself to a conversation about the ability to pay estate taxes and other related expenses at death. Finally, it is imperative to know which assets may be included in an estate for estate tax purposes and which may fall outside the taxable estate to estimate directionally accurate estate tax. Given the information required to create a comprehensive plan, an estate practitioner may desire a clear, consistent format to display this net worth information and an easy or streamlined way to collect it. Using estate planning software may be one way to provide the attorney with this desired result.
Having a client’s financial information in one place and format will make a convenient reference page for advisors. This will help during initial planning conversations and when the advisor needs to refer to the client’s profile to check facts quickly. Basic static snapshots of this information can easily be built in Microsoft Word, PowerPoint, or Excel, but that does not always allow for the information to be easily sliced and diced to review the information with the necessary various lenses. Software tool Vanilla® promotes a balance sheet builder that can show a client’s entire financial picture and allows third parties—family members or other advisors—to upload information independently.
Inviting third parties to help gather relevant information may seem particularly appealing if you’ve been stuck waiting for clients to provide you with all their information. To address this hurdle, some software programs offer additional help. eState Planner advertises that it uses a built-in questionnaire to gather information, while tools like NaviPlan or eMoney
market the capability of account aggregation, meaning they allow clients to connect financial accounts (investment accounts, checking accounts, loans, etc.) to save time and reduce errors. Although this may seem like the perfect solution, it has drawbacks.
Significant work is needed to connect each account, particularly if your client has several at various institutions. The software is intended to create efficiencies and reduce the time spent on data collecting. Still, the practitioner should be aware of potential connectivity hiccups if a client must change a password or if there is multi-step account authentication. A practitioner will also not gain any efficiencies using this software if the client has a significant number of assets that don’t have online accounts, such as private equity, businesses, or real estate, that must be manually tracked. For these reasons, these aggregation tools may be more appealing to those who are advising broadly on wealth planning than to an attorney who focuses on drafting documents.
Once an attorney understands a clients’ net worth and unique family dynamics, the next step is to help clients understand their current estate plan (which could be intestate succession if they don’t have any valid estate documents in place) and counsel them through their choices to reach their desired objectives. This process may involve walking a client through each estate document and illustrating how different estate vehicles, such as trusts, work as part of the larger picture. Advisors often rely on document summaries and flow charts to illustrate these points because they are much easier for clients to comprehend and less intimidating than a thick stack of draft documents potentially filled with legal jargon. Flow charts can also present options and show how estate tax ramifications depend on when and how assets are transferred.
Mark Twain famously said: “I didn’t have time to write a short letter, so I wrote a longer one instead.” Turning long documents into shorter summaries is hugely time-consuming, and translating words into graphics is even worse, making this an area that cries out for efficiency. In addition, if flow charts and other summaries are given to a client, the documents must have a polished look.
Most advisors don’t have a marketing background or an understanding of how to best package materials. Using software to assist in this process could help advisors perform these tasks more efficiently and effectively. Depending on the client’s goals, several software options are available—each with some useful tools:
• Luminary touts its ability to create dynamic, customizable visuals to illustrate a client’s existing estate plan, quantify transfer outcomes, and create one-page summaries of key terms and details;
• Vanilla® boasts its ability to build estate visualizations using pre-built fact patterns, custom flows, and proprietary artificial intelligence engine; and
• eState Planner states it allows an advisor to create a visual representation of a client’s estate plan in real time as the client describes the client’s wishes.
Once advisors find the one that best suits their client’s needs (and their skills!), they can more effectively walk a client through the decision points of the estate plan. Although these three programs are aimed explicitly at estate planning practitioners, other software programs, not necessarily marketed similarly, may still help with different needs, such as flow charts.
Lucidchart and SmartDraw are examples of this software. They market themselves as a diagramming application that brings plans to life by letting advisors visualize complex ideas, showing current and future states, and creating polished diagrams. Keep in mind that all of these technologies and software come with a learning curve. In some instances, an advisor will need to spend significant time understanding how to use them and integrate them into the advisor’s current practice.
For advisors who serve clients with taxable estates, the ability to run estate tax calculations and show wealth transfer strategy illustrations is critical.
Many products—such as NumberCruncher, TigerTables, or zCalc—make
performing directionally correct estate tax calculations relatively straightforward. As most estate practitioners know, tying estate tax calculations into a dynamic wealth transfer illustration can be tricky. Software tools such as eMoney and NaviPlan tout the ability to handle such complex scenarios, but these are both primarily financial planning tools with limitations. WealthTec combines the power of numbers with illustrations but does not integrate back with larger flow charts. For example, clients may want to understand the ripple effects if they irrevocably gift significant wealth using an LLC into a trust. Advisors can use software to help map out these consequences for the client, which will help clients better understand what that does to their income, estate tax, and ultimately to their heirs.
The efficiencies software programs can provide diminish as an estate plan becomes more complex and an advisor has to tie all the pieces together. Even though there are some shortfalls to all of the current technologies, advisors and practitioners may still be able to save valuable time using the different options available. All the software mentioned above can create certain efficiencies, but finding the best one for you takes time and testing.
Perhaps artificial intelligence and fintech will change the current pitfalls, but practitioners are left pulling these complex illustrations together using all currently available technologies.
Although I focused this article on only some of the features that may be used to help educate and counsel clients, this is not a comprehensive review of every module or tool. Many of the programs mentioned also include other ways to create efficiencies in an estate planning practice, such as client development, client records, billing, and communication, to name a few.
No one software does it all. And we all have to investigate the different software to see what is most tailored to our needs. So, if you—like me—aspire to work “smarter and not harder,” a little early homework will help make this year a happy one for yourselves and your clients. n
A crisis in housing motivates zoning reform. Thirty percent of households suffer from “housing overburden” because they pay more than 30 percent of their income for housing. Housing is unaffordable for workers earning low wages. A worker paid the federal minimum wage for a 40-hour week cannot afford a modest two-bedroom rental home anywhere. Zoning is a major cause of the high cost of housing. It increases the cost of housing at a time when housing costs are at stratospheric levels.
Exclusive single-family zoning, which dominates residential areas, contributes to housing cost overburden by excluding multi-family rental housing. It also excludes other affordable housing, such as single-family manufactured homes and accessory dwelling units (ADUs), a secondary house or apartment that shares the building lot of a larger, primary home.
Supplementary zoning restrictions reinforce exclusive single-family zoning. Low housing densities of one acre or more dominate suburban areas, increase housing costs, and aggravate income and racial segregation. Excessive housing setbacks and height requirements also increase housing costs, and arbitrary project denials can occur in design reviews.
Zoning exclusion is aggravated because developers must get governmental approval to raise density or build different housing types in single-family zones. Public hearings may be required, and they can provide opportunities for delay and
Land Use Update
Editor: Daniel R. Mandelker, Stamper Professor of Law Emeritus, Washington University School of Law, St. Louis, Missouri.obstructive public opposition that leads to project modifications or rejection.
Statutes and court decisions protect exclusive single-family zoning. State zoning legislation is facially neutral. It authorizes local governments to adopt zoning ordinances and districts but does not provide statutory criteria for zoning regulations. There is no statutory restraint on restrictive zoning that can raise the cost of housing.
The US Supreme Court stopped most constitutional attacks on zoning almost 100 years ago. A leading case, Village of Euclid v. Ambler Realty, 272 U.S. 365 (1926), upheld exclusive residential zoning in a zoning ordinance adopted by a declining Cleveland suburb. The ordinance was based on racially-inspired zoning in Cleveland and elsewhere, and its draftsman admitted the ordinance was arbitrary.
The “serious question,” the Court said, was the creation of exclusive residential districts. It held they were constitutional because “apartment houses” are “a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district.” They “greatly retarded” and “destroyed” residential areas, interfered “by their height and bulk with the free circulation of air and monopolizing the rays of the sun,” and “come very near to being nuisances.” Id. at 394-95.
The US Supreme Court has never disowned this offensive and obsolete description of multi-family housing, and courts have relied on it to uphold exclusive single-family zoning. Courts also uphold other zoning restrictions, such as
low residential densities and the exclusion of manufactured housing from singlefamily districts.
Zoning requires reform. The neutral and unrestricted zoning authority that local governments have puts few restraints on local government reform. Local governments can adopt zoning reforms similar to those that states can adopt. Salt Lake City’s zoning reforms are typical. They allow quadruplexes in single-family zones, more housing in some areas that allow multi-family housing, streamline the planning process, and reduce parking requirements. Some new housing units must be set aside for occupants who earn below specific area median income thresholds.
State legislation has the advantage that it mandates local governments to adopt zoning reforms that state statutes require. This Update discusses recent state zoning reforms. See also Patrick Sisson, What Is Zoning Reform and Why Do We Need It?, Planning Mag. (Jan. 18, 2023), http:// tinyurl.com/2kwc68rx.
California has a history of zoning reform that was improved in 2023. Here are some examples. California makes adopting a comprehensive plan by local governments mandatory, and comprehensive plans must include a Housing Element. It includes a land use strategy that accommodates housing by identifying properly zoned sites available for housing construction. It also includes a Regional Housing Needs Allocation (RHNA) establishing local government housing production targets. The Housing Element and RHNA are binding on local governments.
Reform strengthened the Housing Element. Cities must now assess the probability that development will occur on specific parcels. When measuring housing needs, the RHNA must consider housing cost burdens, overcrowding, and fair housing. New enforcement mechanisms have been added.
California also has a Density Bonus Law that provides a density increase for housing projects along with regulatory concessions that include a required minimum amount of affordable housing. Reform made the density bonus more attractive. It now allows 100-percent affordable housing projects and a higher 80-percent bonus, and it eliminates affordable housing fees for affordable units.
California legislation protects ADUs from restrictive zoning regulations, and reform in 2023 strengthened these protections. ADU approval is now ministerial, which means that ADU units can be built as of right and are exempt from statutory
environmental review, which causes unnecessary approval delays. The reform also limits the reasons for disapproving ADUs by prohibiting occupancy requirements, restrictive lot size requirements, setbacks, and parking standards. In addition, it reduces impact fees and the time allowed for municipal approval. California has already approved 60,000 ADUs.
Another reform requires the ministerial approval of multi-family housing projects in infill areas in cities that are not meeting their RHNA production goals, again eliminating the lengthy statutory environmental analysis requirement. There is a minimum requirement for affordable housing depending on project size and jurisdiction. The reform also strengthens the state’s Housing Accountability Act by prohibiting the denial of projects that comply with objective local land use regulations. For more detail, see William Fulton et al., New Pathways to Encourage Housing Production: A Review of California’s Recent Housing Legislation (Terner Center
Montana adopted comprehensive zoning reform in 2023 after an extensive campaign led by the governor that included a statewide housing task force. The reform created a new statutory structure that mandates zoning and planning that meets housing needs and removes exclusionary zoning barriers. The legislative statement of purpose states that the intent is to provide “sufficient housing units for the state’s growing population that are attainable for citizens of all income levels.” Here are some examples.
A statutory requirement, similar to California’s regional housing needs allocation, requires local governments to “identify and analyze existing and projected housing needs” and “provide regulations that will allow for “the number of housing units needed” as identified in the land use plan. Local governments must accommodate existing and needed housing types to
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meet population projections and prepare a site inventory. They must also analyze zoning and other constraints to housing development and identify market-based incentives. Land use plans must identify “adequate sites to accommodate the type and supply of housing needed for the projected population.”
Reform eliminates problems created when development must obtain site-specific approval by limiting public participation and comment at the approval stage. If a development “is in substantial compliance with the land use plan,” public participation and comment during site-specific development approval is limited to impacts or significantly increased impacts “not previously identified and considered” in the land use plan or the zoning or subdivision regulations. This reform means that public participation and comment must occur upfront at the planning stage, not in isolation, when a development must obtain approval. The legislature also intends that “comprehensive planning allows for streamlined administrative review decisionmaking for site-specific development applications.” Subdivision review is streamlined.
Reform restricts abuse in design review, such as adopting vague and ambiguous design standards that permit arbitrary denial. Reform requires design review standards to be “clear, objective, and necessary to protect public health or safety or to comply with federal law.” This reform will prohibit abusive design decisions,
such as rejecting manufactured housing design because it is limited to standardized design formats.
To strengthen the purpose of zoning reform, the legislation requires zoning regulations to include 5 out of 19 reform requirements that apply in the majority of the areas where residential development is permitted. Examples are allowing duplexes where a single-unit dwelling is permitted, allowing an ADU on a lot with a primary single-family residence, eliminating or reducing minimum lot sizes and setbacks, and eliminating aesthetic requirements such as bulk, floor area, and massing requirements for multi-unit dwellings and mixed-use developments. The legislation explicitly prevents a zoning ordinance from treating manufactured housing and low occupancy community residential facilities differently from other uses. Municipalities must allow housing development in commercial zones and permit ADUs without parking or owneroccupancy requirements. Duplexes are allowed in all single-family zones in cities with populations over 5,000.
Several other states adopted zoning reform in 2023. Washington allows duplexes, fourplexes, and sixplexes in major metropolitan areas depending on city size and proximity to transit and requires the inclusion of affordable units. Reform broadly legalized ADUs and prohibited impracticable building
requirements for ADUs. It tightened permitting rules and exempted most housing development in planned “urban growth areas” from time-consuming and burdensome review under the State Environmental Policy Act. Reform also made it easier to subdivide existing multi-family buildings to create smaller units and limited design review, which is a major headache for Seattle builders, to “clear and objective” standards.
Vermont reform includes limits on residential density to no more than five or more units per acre, allows multi-family housing up to fourplexes when served by sewers and duplexes elsewhere, limits required parking to 1.0 or 1.5 spaces per unit, restricts the use of the onerous statelevel development review process, and requires administrative approval for plats and minor subdivisions.
Rhode Island makes it easier to acquire discretionary development permission, broadly revises and clarifies several categories of development approval, creates a statewide density bonus of 5 to 12 units per acre for developments 25 percent to 100 percent deed-restricted to low- and moderate-income housing, and streamlines the approval process.
For more details on zoning reform in these states, see Eli Kahn & Salim Furth, Breaking Ground: An Examination of Effective State Housing Reforms in 2023 (Mercatus Center 2023), http://tinyurl. com/2tw252x9. Not all states reformed zoning in 2023. Other states that considered but did not pass high-profile reforms include Arizona, Colorado, New York, and Texas. These reforms may be resubmitted. Some state reforms are being litigated, usually without success.
Stratospheric housing overburden motivates zoning reform. Zoning contributes to housing overburden because exclusive single-family zoning dominates residential areas and excludes affordable housing. Exclusive residential zoning can include excessive setbacks, building heights, and low-density zoning. Zoning reform can eliminate these zoning barriers and improve opportunities for affordable housing. n
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Is a longer argument better than a shorter one? Or a longer contract? How about a longer will or trust? For example, I have reviewed revocable trust agreements with similar dispositive goals drafted by estate planning attorneys throughout the country that range from under 10 pages to over 60.
According to the online will preparation service USLegalWills.com, the typical will is at least four or five pages long. So, is a 40-page will necessarily better? There is no categorical imperative here, but when it comes to word count, perhaps there is a lesson or two to be learned.
In a recent case, a significant dispute arose over the formatting of documents, with one side arguing that the other’s court filings violated the court’s local rule that all lines must be doublespaced, except for indented quotations, headings, and footnotes. According to the court’s ruling, the party challenging the filings claimed:
[A]ll widely-used word processing programs, including Microsoft Word, Google Documents, and Apple Pages, use 28 “points” of spacing when set to double-space lines, but, [sic] Plaintiffs have been using twenty-four points between each line. Defendants contend that the spacing of Plaintiffs’ documents has allowed them to include approximately twenty-seven lines on each page, rather than the twenty-three lines per page that results from
“standard double spacing.” Defendants request that Plaintiffs be ordered to use the default spacing for Microsoft Word, Google Docs, and Apple Pages “to ensure a level playing field going forward.”
Jones v. Varsity Brands, LLC, No. 2:20-cv02892-SHL-tmp (W.D. Tenn. Nov. 14, 2023) (Order Denying Defendants’ Motion to Require Adherence with Formatting Requirements of Local Rule 7.1) (citations omitted). The court denied the motion and concluded that the length of an argument is no guarantee of its success and indeed could result in more confusion, not clarity. The judge admonished the parties and “encouraged [them] to spend their valuable time focusing on the merits of this case, and certainly not figuring out how many sometimes-useless words will fit on a page.” Id. at 3. Further, the order advised that the “last thing” any party needs is more words on a page. Id.
More isn’t necessarily better. Crafting an articulate, pithy document requires crystal-clear thought. Too short, and important provisions can be omitted; too long, and key points can become muddled. Effort is required to achieve precision at an ideal length.
But the Varsity Brands case also points out another lesson, particularly for writings intended to be persuasive. Overwording (a term I just made up) can raise doubts about intent. Queen Gertrude observed in Hamlet: “The lady doth protest too much, me thinks.” Act 3, Scene 2. Lady Macbeth’s protestations of love and fidelity perhaps were too excessive to be believed.
Let’s return to the Varsity Brands pleadings dispute. In the first footnote to the Order, the judge notes, with a bit of wit—or frustration:
Reading between the slightly larger spaced lines, it appears that Defendants initially raised this issue in an attempt to extend their time to file a reply in support of their Motion for Summary Judgment. On September 28, 2023, counsel for Defendants sent an email to Plaintiffs’ counsel pointing out the spacing issue and stating,
Please advise if you will agree to a joint motion seek ing an order allowing Plaintiffs to refile their sum mary judgment papers in full compliance with Local Rule 7.1(b), extending Defendants’ reply dead line to two weeks after Plaintiffs’ resubmission, and allowing Defendants 50 pages to allocate across their reply briefs. If we can not agree, Defendants intend to file a motion to strike Plaintiffs’ summary judgment submissions seeking the same relief filings and allocating 50 pages across the reply briefs.
Recently, I was assisting with some ninth-grade English homework. The assignment was to write an essay on perhaps one of the funniest short plays I know, Oscar Wilde’s The Importance of Being Earnest. In about 50 pages, Wilde’s wit lifts a mirror to the pretentiousness and superficiality of several societal mores. The writing is crisp and remains on point. As we practice our honorable profession, assisting our clients to achieve their goals and justice, may the words we select prove to be productive, and not useless or worse. n
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