[WSBARP] 3 story house meets 2 story CCR restriction

Fri Mar 23 11:09:20 PDT 2018

I would advise the client that this may affect the future marketability of the property and that the title policy with endorsement will only come into play in the event of actual damages and a loss through enforcement.

Nestor Gorfinkel, Attorney at Law

Licensed in Washington & Florida

Florida Civil-Law (International) Notary

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of marc holmeslawgroup.com
Sent: Friday, March 23, 2018 10:12 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Cc: kim walawrealty.com <kim at walawrealty.com>
Subject: Re: [WSBARP] 3 story house meets 2 story CCR restriction

The title company has offered the following endorsement which seems to address the primary concern.  The last sentence says the express terms of the endorsement controls over other inconsistent provisions of the policy so that seems to address the concern about prior knowledge of the insured.  

I have just asked what coverage limits and deductibles would apply to a claim covered by this endorsement and if and how the restrictive language in it would apply to a hypothetical where the house is destroyed in a fire and a neighbor seeks to enforce the covenant to prevent it being rebuilt as a 3 story house.

Assuming those answers are acceptable, does this seem like adequate assurance of coverage? Anything else to be concerned about?

Marc Holmes

Holmes Law Group PLLC

2303 W. Commodore Way, # 306

Seattle WA 98199

HolmesLawGroup.com <http://holmeslawgroup.com/> 

marc at holmeslawgroup.com <mailto:marc at holmeslawgroup.com> 

Ofc: 206-357-4224

Cell: 206-849-0853

From: wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com>  <wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com> > On Behalf Of Gregory L. Ursich
Sent: Tuesday, March 20, 2018 5:09 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> >
Cc: kim walawrealty.com <kim at walawrealty.com <mailto:kim at walawrealty.com> >
Subject: Re: [WSBARP] 3 story house meets 2 story CCR restriction

Marc: The Title policy will not protect the new homeowner if they buy with knowledge of the violation. One of the main exclusions of a title policy is that any known condition to the buyer is excluded from coverage. -Greg Ursich, Inslee Best

Sent from my iPhone

On Mar 20, 2018, at 2:50 PM, marc holmeslawgroup.com <http://holmeslawgroup.com>  <marc at holmeslawgroup.com <mailto:marc at holmeslawgroup.com> > wrote:

Thank you all for the detailed responses both on and off list.  The CCRs are from the 40s and did create the functional equivalent of an Architectural Control Committee but our working assumption is that it and the HOA generally have been defunct for many years.  We’re trying to confirm this but it’s not the end of the story either way as the CCRs very clearly give all lot owners the right to enforce the CCRs in a private action.

Some asked about the stories of the house in question.  The third floor contains multiple bedrooms and bathrooms and a court order to remove it would be devastating to the property.  I haven’t visited the site yet but from the listing photos it seems pretty clear that the 1st floor is built on grade with very little if not zero below grade.  The MLS listing calls it a “Multi-Level” home and the available options they had to choose from were 2 story with basement, tri-level, or multi-level.

Arguing it is not a 3 story house seems ill advised to say the least.

As for the 22T, yes we have one and have given notice of disapproval.  Now we’re trying to figure out if there’s a reasonable way forward or if it’s time to take our ball and go find another home.  Unfortunately, it appears to be the latter.

Marc Holmes

Holmes Law Group PLLC

2303 W. Commodore Way, # 306

Seattle WA 98199

HolmesLawGroup.com <http://holmeslawgroup.com/> 

marc at holmeslawgroup.com <mailto:marc at holmeslawgroup.com> 

Ofc: 206-357-4224

Cell: 206-849-0853

From: wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com>  <wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com> > On Behalf Of John McCrady
Sent: Tuesday, March 20, 2018 1:01 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> >
Subject: Re: [WSBARP] 3 story house meets 2 story CCR restriction

Beware of Item 4 of the Exclusions:

Risks:

a. that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; 
b. that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; 
c. that result in no loss to You; or 
d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28.

I would probably want to request affirmative coverage against that matter.

John McCrady

Counsel

Puget Sound Title Company

5350 Orchard Street West

University Place WA 98467

253-476-5721

j.mccrady at pstitle.com <mailto:j.mccrady at pstitle.com> 

From: wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com>  [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of marc holmeslawgroup.com <http://holmeslawgroup.com> 
Sent: Tuesday, March 20, 2018 11:27 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> >
Cc: kim holmeslawgroup.com <http://holmeslawgroup.com>  <kim at holmeslawgroup.com <mailto:kim at holmeslawgroup.com> >
Subject: [WSBARP] 3 story house meets 2 story CCR restriction

We have a client set to buy a brand new 3 story house and, lo and behold, the builder didn’t notice or ignored a CCR restriction limiting homes to no more than 2 stories.  Title company says the ALTA Homeowner’s policy covers this and points to a “covered risk” provision that reads: 

You are forced to correct or remove an existing violation of any covenant, condition or restriction affecting the Land, even if the covenant, condition or restriction is excepted in Schedule B.  However, You are not covered for any violation that relates to: 

a.	Any obligation to perform maintenance or repair on the Land; or 
b.	Environmental protection of any kind, including hazardous or toxic conditions or substances. 

unless there is a notice recorded in the Public records, describing any part of the Land, claiming a violation exists.  Our liability for this Covered Risk is limited to the extent of the violation stated in that notice. 

We’re not aware of any publicly recorded notice of that the 3rd story is a violation.  Does this seem like adequate protection for the buyer or a recipe for disaster? 

Marc Holmes 

Holmes Law Group PLLC 

2303 W. Commodore Way, # 306 

Seattle WA 98199 

HolmesLawGroup.com <http://holmeslawgroup.com/>  

marc at holmeslawgroup.com <mailto:marc at holmeslawgroup.com>  

Ofc: 206-357-4224 

Cell: 206-849-0853 

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