Maryland Easements and Rights of Way

What are the Maryland laws that apply to roads, trails, paths and rights of way? This is the law of easements: a right held by one person to use land owned by another. There can be “private” roads, shared driveways, paper roads and community alleys – the use of these can be based on long use, or plats and deeds – each circumstance is unique. How do we know if we can use a right of way if we don’t actually own it? What if a neighbor tries to block a path we believe we can use?

Public roads are a clear example – we all know we can use them, but who actually owns them? Where does the right to use them come from? It seems clear enough when we merge onto Route 50 through Annapolis; but what about a road that eventually reduces itself down to a path to the water’s edge?

I recently had a case that went all the way to Maryland’s Supreme Court which looked at a stretch of property that showed as a road on a State Highway Administration plat, but which had not been used for vehicle traffic in living memory. Neighbors took steps to block my clients’ access; the County passed a law to close it as a road, leaving my clients’ substantial waterfront parcel effectively landlocked from the road system. We sued and eventually succeeded in proving that there was a road as shown on the plat, even though there was no pavement or tire tracks or other hallmarks of a road in the real world.

The neighbors that owned property surrounding the strip argued that if the road ever existed, it was washed away by erosion, or lost to adverse possession, or was abandoned. My clients were steadfast that it remained a road, because it was created as a road by the filing of a plat by the State Highway Administration, and accepted as such by the County.

The Supreme Court determined that the deed to the State Highway Administration delivered ownership of the land (the “fee title”) – ““all the land, together with the appurtenances thereto belonging, or in any wise appertaining, lying between the lines designated ‘right of way line’ as shown and/or indicated on the aforesaid plat.” A public road was created when the then owner offered the property for use as a road, and the State Highway Administration accepted it for use as a road – thus finding offer and acceptance and thereby dedication as a road. Once it was a public road, people (including my clients) could use it for ingress and egress until such a time as it was officially closed by the County.

With the decision, the case now goes back to the County Circuit Court for trial on inverse condemnation. Inverse condemnation arises when a government takes action which is the equivalent of taking property by eminent domain. We will show that, by closing the road, the County has reduced the value of the parcel and caused damages to its owners.

Dirk Schwenk is a Maryland Real Estate, Property, Civil Litigation and Maritime Lawyer from Annapolis, Maryland.  He provides civil litigation services in real estate issues, contract disputes, environmental and zoning issues, adverse possession and boundary disputes.  He graduated cum laude from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.

PropTalk: November 2017

After the Hurricane: Navigating the Adjustment Process

After the Hurricane: Navigating the Adjustment Process
By: J. Dirk Schwenk

 

 Not surprisingly, we are receiving a lot of calls about boats lost in Hurricane Irma and the other disasters of 2017.  The number of boats lost to sinking, flooding and high winds in the Carribean and South Florida is extreme.  For boat owners (and property owners) that are trying to deal with the adjustment of their claims with the insurance companies, here are some of the things you should be considering.

 

1. Facts, Photographs and Documents are the key.  Far and away the most important thing that adjusters need to get you paid is evidence of what you lost.  If the boat is on land and still contains your personal effects, that proof is likely to come down to just questions that can be answered by survey or inspection of the boat itself.  If the boat is sunk or lost, you will need to provide evidence of what was aboard — photographs, receipts, etc. – whatever you can put your hands on in addition to proof of the value of the boat.  If you can reach your boat, it is almost always worthwhile to inspect it yourself so you can be sure that the surveyor on scene (who has to look at hundreds and hundreds of claims) has reasonably captured the damage.

 

2. Start a File and a Timeline.  Unless things go perfectly, you will need to keep track of who you talk to, who you sent things to, etc.  Start a file.  You should also track the timeline of events.  You will need to follow up, so use the timeline to set times to do that before too much time passes.  If there were conversations or events before the storm that may effect coverage, make a timeline of those events, including notes on any discussions that may matter in the future.

 

 3. Insurance Policies and Coverage Exclusions.  All marine insurance carries with it an obligation for an insured (you) to use utmost good faith in submitting an application for insurance.  All policies will also have a number of specific exclusions which may range from certain kinds of maintenance to the requirement that the boat be hauled during hurricane season or be brought North during hurricane season.  If you have a claim, it is highly recommended that you read your insurance policy focusing on the exclusions to coverage, and see if there is a likely exclusion that may be applied to your claim.  If so, you may need to consult with counsel or other professionals concerning how best to assure that coverage is available.

 

4. Identify Team Members.  For a major claim, particularly a disputed claim, there are number of people that may be needed to achieve success.  A competent, respected surveyor that does not also work for your insurance company is very valuable.  It is wise to identify an attorney to discuss the policy and to be sure that any reports on the loss are both accurate and unlikely to trigger a policy exclusion.  Your attorney will need to see both our policy and any report of claim you have made, at minimum.  Finally, a person who can be boots on the ground at the boat and at the yard to track repairs and make sure that the boat is secure while it awaits repairs is very valuable.

 

  J. Dirk Schwenk is a Maryland lawyer in Real Estate law, Waterfront Property, Civil Litigation and Maritime Law from Annapolis, Maryland.  He graduated cum laude (with honors) from the University of Maryland School of Law in 1997 and has been in private practice in Maryland ever since.

Anne Arundel County Maritime Industry Advisory Board Member

anne-arundel-county-advisory-board

Lien Sales – The Times Just Changed.

In October, 2014, the Maryland Court of Special Appeals issued a decision concerning Maryland’s lien and recovery business.  Lien and recovery companies are hired by mechanics and marinas to collect overdue charges for repairs and storage on vehicles and boats. At least as long as I have been practicing, lien companies have added a “processing fee” to the amount owed, and required that the boat or vehicle owner pay the processing fee in addition to the overdue charges in order to get their boat or vehicle back.  If the owner didn’t pay up, then the vehicles were put up for auction.  In Allstate Lien and Recovery Corp. v. Stansbury, however, the vehicle owner fought back.  Mr. Stansbury asserted that including a $1000 processing fee in the amount required to redeem the vehicle was an unfair and deceptive practice, and violated Maryland’s laws against unfair debt collection.  The trial court, and now the Court of Special Appeals, agreed that the inclusion of the processing fee was a violation of the Consumer Protection Act and the Consumer Debt Collection Act.

Violations of the Consumer Protection Act and Consumer Debt Collection Act both have significant consequences.  Consumer Protection Act violations are grounds for shifting attorneys’ fees from the consumer to the business — which means that Allstate Lien and Recovery in this case is likely to be responsible for tens of thousands of dollars (even hundreds of thousands) of fees for Mr. Stansbury’s lawyers.  A violation of Consumer Debt Collection allows for “damages of emotional distress and mental anguish suffered with or without accompanying injury.”  This means that a jury is free to award money for distress and upset, even without any kind of physical symptoms, if the debt collector has acted badly.  Since the lien and recovery company is the agent of the mechanic or marina — those businesses may also be on the hook if the lien and recovery company acts badly.

You are warned.  The unlawful $1000 processing fee may be costing Allstate Lien and Recovery (or hopefully their insurer) hundreds of thousands of dollars beyond what they paid their own attorneys to defend the case.

With those warnings, when does a garageman’s lien attach?  Here is the statute:

 

(a)(1) Any person who, with the consent of the owner, has custody of an aircraft and who, at the request of the owner, provides a service to or materials for the aircraft, has a lien on the aircraft for any charge incurred for any:

(i) Inspection, maintenance, repair, servicing, or rebuilding;

(ii) Storage, parking, handling, or tiedown; or

(iii) Parts, accessories, materials, or supplies.

(2) The operator of any airport on which an aircraft lands or which is otherwise used by an aircraft has a lien on the aircraft for any landing fee, flight fee, or other charge so incurred.

(3) A lien is created under this subsection when any charges giving rise to the lien are incurred.

(b)(1) Any person who, with the consent of the owner, has custody of a boat and who, at the request of the owner, provides a service to or materials for the boat, has a lien on the boat for any charge incurred for any:

(i) Repair, rebuilding, maintenance, servicing, or wet or dry wharfage;

(ii) Storage; or

(iii) Parts or accessories.

(2) A lien is created under this subsection when any charges giving rise to the lien are incurred.

(c)(1) Any person who, with the consent of the owner, has custody of a motor vehicle and who, at the request of the owner, provides a service to or materials for the motor vehicle, has a lien on the motor vehicle for any charge incurred for any:

(i) Repair or rebuilding;

(ii) Storage; or

(iii) Tires or other parts or accessories.

(2) A lien is created under this subsection when any charges set out under paragraph (1) of this subsection giving rise to the lien are incurred.

(d)(1) A park owner has a lien against a resident’s mobile home, if the park owner obtains a judgment against the resident under Title 8A, Subtitle 17 of the Real Property Article, and the resident fails to yield and render possession of the premises as ordered by the court.

(2) A lien under this subtitle shall be:

(i) Stayed if the resident files an appeal in accordance with Title 8A, Subtitle 17 of the Real Property Article; and

(ii) Extinguished if the resident redeems the premises in accordance with Title 8A, Subtitle 17 of the Real Property Article.

(3) A lien is created under this subsection when the resident fails to yield and render possession of the premises as ordered by the court.

Md. Code Ann., Com. Law § 16-202 (2014).

If you are owed money for repairs, storage or maintenance, here are the steps you should follow:

  1. retain possession unless and until paid in full;
  2. act promptly to hire a competent lawyer or lien sale company to prepare the statutory notices of lien.
  3. Accept payment in full — don’t add in charges that cannot be substantiated.

Baylaw, LLC can prepare statutory notices for a reasonable flat fee and walk you through the process of getting paid or obtaining title.  Please email Dirk Schwenk dschwenk@baylawllc.com, or Jeff Toppe jtoppe@baylawllc.com for details.

 

Contracts to Purchase or Sell Real Estate

For most people, if they encounter a real estate contract, it will be a prefabricated agreement presented by a real estate agent.  It may seem as if it is a final document, created by experts, and protecting your interests.  To a degree it will, but it is also there to protect the brokers and the other party, and many of its terms can be negotiated.  Remember that brokers and agents are typically paid out of the proceeds of the deal.  This means that they they have a strong incentive to get you to go through with the deal, even if it may not be in your best interest.  If you grow concerned — get a knowledgeable lawyer — the fees will be much cheaper than making a mistake.   This article is broken up into three sections: 1) Basic requirements for a contract; 2) disclosure considerations; and 3) investigation that is worthwhile to do when entering into a real estate contract.

Maryland Real Estate Contracts — basic requirements: 

There are only a few required elements to a real estate contract — most of the rest is filler required by statute and terms that help the brokers to enforce their right to receive a fee (and to protect themselves in the event of future litigation).

1. A writing, signed by the parties, that identifies the property and the basic terms of the contract:

In Maryland, as in most states, there is no enforceable contract to transfer land unless there is at least a written document identifying the property and the nature of the contract and signed by the seller.  The relevant code states no “interest in land may be assigned, granted, or surrendered, unless it is in writing signed by the party assigning, granting, or surrendering it, or his agent lawfully authorized by writing, or by act and operation of law.  Md. Code Ann., Real Prop. § 5-103.

2. Statutory Disclosures

There are a long list of disclosures that are required to be placed in Maryland real estate contracts by statute.  These include everything from the application of the Critical Areas laws, to notices about where deposits are placed by the broker, to sections on the homeowners associations, to land that cannot be used for residential purposes.  (See Maryland Real Property Article Section 14-117).  It should be noted, however, that failure to include those provisions does not render the contract void — it just means that a seller can sued for the failure to disclose, if the failure causes damages.  “Unless specifically provided, a contract for sale is not rendered invalid by the omission of any statement referred to in this section.”

3. A Deed

After a contract is reached, a deed is required to be filed in order to complete the transfer of property.  A deed is a somewhat more technical instrument, but its basic requirements are a sufficiently specific description of the property, identifications of seller and buyer, and it has the seller’s signature, property witnessed.  To be effective against someone else trying to claim ownership, it must be filed and indexed in the land records.

Maryland Real Estate Contracts — Thinking About Your Contract:

Aside from the boilerplate in a contract, there some things you should pay close attention to:

1. Special Disclosures:  As a purchaser, you can request specific disclosures from the seller – here are some you may want to consider:

a. Mold, mildew, flooding.  If there is any one thing that can ruin a house, its water damage, mold and mildew.  You definitely want to carefully look for any sign of water damage, including the kind of painting and repairs that might indicate past damage.  You can — and if there is any doubt you should — specifically request that the sellers disclose in writing any past water damage, mold, mildew or repairs.

b. Past litigation.  If there has been a past case concerning the house, such as against a homeowners association or neighbor, you probably want to know what that case was about.

c. Any unpermitted additions or structures.  If there is anything on the property that was not permitted, you want to know about it before you purchase not after — it can be very difficult to remedy such a situation.

2. Deadlines and Conditions.  If the contract is conditional (say on disclosure of water damage), and that condition is not fulfilled, then be sure to know exactly how and when to rescind the offer.

3. How much is the broker being paid?  If you are a seller, this item is negotiable, and it is a zero sum game.  Any money that your broker gets, is money out of your pocket.

4. “Other”:  Many contracts contain a blank term for special agreements — this often turns out to be the most important term in the deal.  Is there a boat that is supposed to transfer?  Is there a plan to lease the house back to the seller for a period after closing?  These things need to be written down clearly if they are going to be enforceable.

5. Homeowners Associations, Condo Associations and Improvement Associations.  If you are buying property in a subdivision, you definitely want to know what the covenants are and how they are enforced in the community.  This information should be available as part of the mandatory disclosures — READ IT!  You don’t want any surprises.  If it is not given to you, it should be on file in the land records of the County — find it or have your attorney get it for you.

Maryland Real Estate Contracts — Investigation Before Contract

Any contract requires a certain amount of trust with the other party — here are some things that are relatively easy to find, and very important to know:

1. Is the other party going to run to Court?  Most people never end up in trial – they never sue their neighbors – they just go about their business and pay their bills.  Some people are not like that — they always end up suing (or being sued by) the people that they deal with.  If someone makes you an offer on your house (or you make an offer on their house) take a few minutes to find out whether the other party is a repeat litigator — if they are, there had better be a good explanation or the hassle may take away from the joy of the transaction.

2. Are there proper permits?  Go to the planning department in the County where the property is — ask whether there are any issues with the property.  They can help.  You do not want to buy a house based on an addition that will need to be torn down.

3. Is there a bad neighbor?  Few circumstances are worse than buying a house only to find that you live in fear of your neighbor.  Many bad neighbor situations are the result of a dispute about the true boundaries — a survey can help you determine if there any encroachments either way.

4. What is the neighborhood/house/street really like?  Go to the property without the agent.  Walk along the street at night.  Is it what you want?  If not, move on.

Good luck!

J. Dirk Schwenk is a Maryland Real Estate, Waterfront Property, Civil Litigation and Maritime attorney from Annapolis, Maryland.  He provides civil litigation services in contract disputes, environmental and zoning issues, adverse possession and boundary disputes.  He does real estate law, including preparing and filing deeds.  He graduated cum laude (with honors) from the University of Maryland School of Law and has been in private practice in Maryland ever since.

 

 

 

The End is Near — Settlement and Dispute Resolution

As a lawyer it sometimes feels as though you work and work but nothing is ever fully resolved.  This month has been different for me – I have actually put the final signatures on settlements of four different kinds of cases — all central to the kind of work that I do.  The cases included:

1. a dispute on the location of a boundary as it pertained to riparian rights and a pier location;

2. a dispute on insurance coverage on damages to a boat;

3. a dispute between a purchaser and broker on a boat purchase; and

4. a dispute over erosion control efforts on community property.

Resolution of a case is always a team effort that includes dedicated clients that are willing to do the hard work of obtaining facts and facing the risk that a case does not go their way.  Patience and appropriate strategy a must.  If the opportunity presents itself to obtain results through negotiation and settlement, the entire team must have a clear idea of the achievable goals and be ready to compromise as needed.

Dispute on Boundaries, Riparian Rights and Pier Location

In Calvert County, Maryland, our client owned a property with a house at the end of a street in an incorporated town.  When the town was designed, his lots did not reach the water and the town owned a strip of land which included the entire waterfront.  Over time, however, erosion ate through the land between his property in the water, so that some lots in the subdivision were entirely submerged, and my client had a small cove that provided access to the bay.  The town took ownership of the submerged lots and a small remaining parcel that was still above water, leading my clients to worry that the town intended to put a walkway around his property which would isolate his property from the bay and decrease his privacy.

We filed a declaratory judgment action stating that he had obtained riparian rights when the water reached his property and asserting adverse possession over the land next to his lot.  After discussions with the Town stemming from the suit, it came to light that the town was willing to forego putting in a walkway if it could get an easement along the water to install a flood control berm.  Although the negotiations were difficult, we eventually reached an agreement that allowed for my client to have a location that allowed him to install a pier for access to the Chesapeake Bay; maintained my client’s privacy; and met the town’s needs for installation of flood control.

Dispute on Insurance Coverage on Boat Insurance

In Anne Arundel County, Maryland, we had a client whose boat had water enter into the core of his boat hull and eventually cause rot and damage.  When the boat was on jackstands at the marina, the hull partially crushed and required significant fiberglass and core repairs.  The client filed a claim under his hull insurance policy but surveys were inconclusive as to how the water entered the hull.  We filed suit asserting coverage under the all-risks policy of marine insurance, arguing that if the source of the water was not known, then none of the exclusions to the policy supported the denial of coverage.  We were unable to resolve the dispute through discussions with the adjuster, so we filed suit seeking a declaration of coverage.  Resolution was difficult and lengthy, but the client obtained money for repairs that he would not have had if he accepted the denial of coverage.

Dispute on failed erosion control project

Controlling erosion is a major issue for waterfront owners and waterfront communities, and the quality of contractors and erosion control projects is highly variable.  With new requirements preventing bulkheads and restricting hard shorelines, poor work can increase erosion or worse, leave large loose stones that can injure or even kill unsuspecting community members.  We recently obtained an insurance settlement to allow for reconstruction of a failed erosion control project on community land — the project was so bad that it required installation of “keep off” signs on the community’s main beach area as well as environmental citations against the contractor and a community board member.  Resolution required changing the way that the community’s erosion control funds were managed and contracts awarded, as well identifying appropriate experts to testify on the deficits with the project.  The Court’s intervention was required to determine significant related issues about the nature of the community’s land and covenants as well.  Perseverance was required — luckily it was a community that had leaders and community members that were willing to carry through with a difficult job to the end.

Dispute with Buyer and Broker in Boat Purchase Contract

One of the most interesting aspects of boat purchase/boat broker and boat tax cases is that they often involve many different states.  This case was no different.  The contract called for arbitration in New Jersey, where my client was located.  The boat was located and seat rialed in Tennessee.  The listing broker broker was in Alabama and the buyer was located (and the boat was delivered to) Illinois.  The buyer alleged that there were undisclosed problems with the boat and filed suit in Illinois (where he signed the contract).  Right away, the case involved the tension between arbitration and litigation; maritime and State common law; and the substantive law of multiple states — and all of that before getting to the question of whether the purchase contract’s terms protected my broker-client.  My client’s first questions to me concerned whether I was comfortable working across so many jurisdictional lines and areas of law.  Luckily those issues come up in most significant boat purchase disputes, and I had an idea of how to mitigate the issues of the Plaintiff having filed in Illinois.

This was a rare case in which there was an intense week of work preparing motions to dismiss or stay the action in Illinois.  We argued that the contract called for Arbitration in New Jersey, and that therefore the suit in Illinois could not go forward there.  Since there was some question about whether the arbitration clause would be enforced, we also argued that since boat was delivered to the purchaser in Tennessee, that was the appropriate State if the case was not going to be in New Jersey.  Ultimately we were able to reach a rapid resolution prior to the Court ruling on the motions.

Offshore Flagging

When purchasing a new yacht it is imperative to consider the potential liability stemming from sales tax, use tax, employment laws and potential casualties.  Prior to July, 2010, when Florida’s tax cap took effect, we often recommended mitigating these potential liabilities by “flagging” (registering) yachts offshore with a “flag of convenience” country, including the British Virgin Islands, St. Vincent and the Grenadines, and the Marshall Islands.
With Florida’s change however, (see, Florida Tax Cap), there is no longer a strong incentive to flag yachts offshore if they are intrerested in being based in the state of Florida. In many cases, therefore, we are now recommending that offshore boats file the appropriate papers and register with Florida. Many boats will begin to see savings in registration fees, fuel and other carrying costs (as comparted to the $18,000 payment to Florida) in just two to three years. We can assist with that process.

For appropriate boats, however, we can take you through the offshore flagging process by:

  • Helping you to choose the correct foreign flag for your yacht
  • Forming your “offshore” International Business Company
  • Drafting all necessary paperwork to limit contractual liability
  • Recording and registering your yacht with our team of agents
  • Providing necessary financial, insurance and crewing advice
  • Having an attorney attend and coordinate offshore closing
  • Ensuring proper Coast Guard approval of your registration

Our firm prides itself on its innovation and understanding of unique yacht transactions, foreign registration, and offshore closings.  If you are considering purchasing a yacht or you have already signed a purchase agreement please contact our attorneys to see if offshore flagging could help to mitigate your liability and save you significant money.

Insurance Defense and Coverage

Our insurance practice is closely related to our advanced maritime and admiralty practice.  In maritime and vessel-related casualties we provide litigation support in the areas of:

  • Insurance Defense
  • Bad Faith Claims
  • Excess and Surplus Lines
  • General Negligence
  • Subrogation and Recovery
  • Fraud and Insurance Crimes
  • Property and Casualty Insurance
  • Reinsurance

In addition to marine insurance litigation, we assist clients in drafting, reviewing and analyzing policy language for marine insurance policies of all types.

Civil Litigation & Dispute Resolution

In the United States there are many alternative systems for the resolution of disputes.  There are state and federal courts, formal and informal arbitration and mediation systems, and, of course, negotiation and settlement.  There are powerful pros and cons to all of these options.  For instance, government backed courts are essentially free to users, but representation in the courts can be expensive and justice can be slow.  For arbitration and mediation, the proceedings are private, and may more expedient, but there are often significant up-front fees for the arbitrator or mediator, and there may not be an enforceable resolution at the end of the day.  In every forum there are rules and procedures, case law, contract and statutory authority, and facts that are subject to human interpretation.

How does one find a way through such a murky environment?  The answer is simple: representation that is familiar with the issues, rules and venue, and that is willing to work hard for you.  At Baylaw, LLC we provide dispute resolution and civil litigation with a specialized focus on: Admiralty and Maritime, Riparian Rights and Waterfront Property, Insurance Defense and Coverage, Commercial Contracts and Torts, Class Action  law.  You will find our lawyers in state and federal court on many types of cases, but in these areas we bring an additional set of strengths.

Many times we are asked by prospective clients to assess the likely outcome of a case.  To provide such an assessment, we must know the facts of what occurred, the governing law, the rules of procedure, and even then there is often no easy answer.  If you have discussed your case with an an attorney that describes the case as simple or clear cut, you should seek a second opinion.

If you have a matter that requires representation, we invite you to contact us.  We do not handle some areas of the law but our attorneys are always available to evaluate your claim.  If we cannot take your case, we can often assist in locating an attorney in the practice area that you require.