Legislative and Case Law Update

1
Legislative and Case Law Update

• J. Cliff McKinney
• Quattlebaum, Grooms, Tull Burrow PLLC
• 111 Center Street, Suite 1900
• Little Rock, Arkansas 72201
• 501-379-1700

2
Government always makes things better
3
Solving the Broadway Bridge Crisis

• Just read the papers

4
More Government at Work
5
And finally
6
You Paid for this study
7
Housing Sales Rise

• Sales of existing homes rose in July even with
  constraints of affordable inventory, and the
  national median price is showing five consecutive
  months of year-over-year increases, according to
  the National Association of Realtors. Monthly
  sales rose in every region but the West, where
  inventory is very tight.
• Total existing-home sales, which are completed
  transactions that include single-family homes,
  townhomes, condominiums and co-ops, grew 2.3
  percent to a seasonally adjusted annual rate of
  4.47 million in July from 4.37 million in June,
  and are 10.4 percent above the 4.05 million-unit
  pace in July 2011.
• Lawrence Yun, NAR chief economist, said housing
  affordability conditions are very good. Mortgage
  interest rates have been at record lows this year
  while rents have been rising at faster rates.
  Combined, these factors are helping to unleash a
  pent-up demand, he said. However, the market is
  constrained by unnecessarily tight lending
  standards and shrinking inventory supplies, so
  housing could easily be much stronger without
  these abnormal frictions

• 2.3 Increase Modest but Positive
• Once the residential market returns
• So will the commercial market
• We all know retail follows rooftops

8
Home Prices Rising

• THE WALL STREET JOURNAL
• Updated August 28, 2012, 1052 a.m. ET
• Home Prices Post First Gain in Two Years
• U.S. home prices in June posted their first
  year-over-year increase in nearly two years as
  more buyers chased fewer homes for sale during
  the first half of 2012, according to an index
  released Tuesday.
• The SP/Case-Shiller index of 20 metropolitan
  areas showed home prices rose 0.5 from a year
  ago in June, ending a streak of 20 straight
  monthly declines. Home prices are still down by
  nearly 31 from their 2006 peak, returning to
  mid-2003 levels.
• Since prices began their steep decline in 2006,
  they had previously posted year-over-year
  increases in just eight months during 2010, when
  home-buyer tax credits fueled a burst of sales
  activity.
• Reuters Sale prices of U.S. homes were up in
  June, the SP Case-Shiller indexes showed
  Tuesday.
• Today, prices are rising amid sharp declines in
  the number of homes for sale as banks are taking
  back fewer foreclosed homes and traditional
  sellers have held out for better prices.
  Meanwhile, record-low mortgage-interest rates
  have dramatically increased the purchasing power
  of buyers. Also, investors have scooped up
  bargain-priced foreclosures that can be converted
  into rental properties.

• 0.5 Median Price increase again, modest but
  positive
• Reversed a 20 month decline
• Housing Prices still only back to 2003 levels.

9
Housing Starts Edge Down 1.1 Percent, Permits
Rise In July

• August 16, 2012 - Nationwide housing production
  edged down 1.1 percent to a seasonally adjusted
  annual rate of 746,000 units in July, according
  to newly released figures from HUD and the U.S.
  Census Bureau. However, builders pulled more
  permits for planned new-home projects than they
  have in any month since August of 2008.

10
Planned U.S. store openings up 11 percent in July

• U.S. retailer store-opening plans hit a four-year
  high in July, according to RBC Capital Markets,
  whose research team tracks 2,000 chains each
  month. The retailers in the firms database say
  they plan to open 78,325 stores over the next 24
  months, up 11 percent from the 2-year period
  ended in 2011 and 0.6 percent from June. Dollar
  General, Family Dollar, Five Guys Burgers and
  Fries, and Subway have the most new stores on the
  drawing board, according to the RBC report.

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FEDERAL ISSUES
12
THE FINANCIAL INSTITUTIONS EXAMINATION FAIRNESS
AND REFORM ACT (HR 3461)

• NOW, UNDER DODD FRANK, LOANS WITHOUT PAYMENT OR
  OTHER DEFAULT MAY FACE A REQUIRED WRITE DOWN
•   
• BECAUSE THE APPRAISAL SHOWS A COLLATERAL VALUE
  DECLINE
•  
• THE INCREASE IN REFINANCING PRESSURES FOR THESE
  PERFORMING LOANS, ALONG WITH THE 1.4 TRILLION OF
  COMMERCIAL LOANS THAT COME DUE IN THE NEXT 2
  YEARSSHRINKS SUPPLY OF MONEY
•   
• HR 3461 WOULD FIX THAT SITUATION VIA DIRECTIVE TO
  REGULATORS NOT TO REQUIRE A LOAN WRITE DOWN OR
  PLACEMENT ON NON-ACCRUAL SOLELY DUE TO AN
  APPRAISAL

13
Flood Insurance H.R.4348

• The Biggert-Waters Flood Insurance Reform Act of
  2012 (July 6, 2012)
• Extended the National Flood Insurance Program
  until September 30, 2017
• 5,600,000 property owners rely on the NFIP
• Replaces the uncertainty we have faced over the
  past 5 years resulting from 17 short-term
  extensions and 2 periods where the program was
  actually allowed to expire

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GSEs/CMBS/Secondary Finance Market

• NOVEMBER 9, 2011 LETTER FROM NAR PRESIDENT TO
  CONGRESS URGING SUPPORT OF THE BILL
•  
• REAL ESTATE IS THE CORNERSTONE OF OUR NATIONS
  ECONOMY. NAR RESEARCH SHOWS THAT COMMERCIAL REAL
  ESTATE SUPPORTS MORE THAN 9 MILLION JOBS AND
  GENERATES BILLIONS OF DOLLARS IN TAX REVENUE.
  MOREVOER, OUR RESEARCH ALSO INDICATES 1 MILLION
  ADDITIONAL HOME SALES WILL GENERATE AN ADDITIONAL
  500,000 PRIVATE SECTOR JOBS. IN NEARLY ALL PAST
  ECONOMIC DOWNTURNS, IT HAS BEEN REAL ESTATE THAT
  HAS PULLED THE ECONOMY THROUGH. THEREFORE, AS WE
  WORK TO REFORM AND REBUILD OUR REAL ESTATE
  FINANCING SYSTEM, REALTORS BELIEVE THAT IT IS
  IMPERATIVE THAT ALL REAL ESTATE FINANCE
  INSTRUMENTS IN OUR ARSENAL BE UTILIZED.
•  

• WHAT FORM OF GOVERNMENT SPONSORED ENTERPRISES, IF
  ANY WILL REPLACE FNMA/FREDDIE MAC?
•  
•  
• -WILL THE REPLACEMENT HAVE ANY GOVERNMENT BACKING
  OR BE LEFT SOLELY TO THE PRIVATE SECTOR?
•  
•   
•  
• -COULD WE SOON SEE THE END OF THE 30 YEAR
  MORTGAGEWE ARE ONE OF AND MAYBE THE LAST COUNTRY
  ON EARTH THAT HAS SUCH A PRODUCT?
•  

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The Obama GSE/Housing Plan

• The Dodd-Frank Wall Street Reform and Consumer
  Protection Act of 2010 mandated that the Treasury
  Department present a plan for reforming Fannie
  Mae and Freddie Mac by the end of January 2011.
  On February 11, 2011, the Obama Administration
  released its proposal for restructuring the
  housing finance system.
• The proposal offers three options for
  restructuring the secondary mortgage market (1)
  full privatization, (2) a guarantee mechanism
  that would step up during times of crisis, and
  (3) a privatized system with a federal
  catastrophic reinsurance if private capital
  proved to be insufficient.
• The proposal also favors higher down payments for
  GSE and FHA mortgages, lower GSE and FHA loan
  limits, and higher GSE guarantee fees (g-fees)
  and FHA premiums, which the Obama Administration
  believes are appropriate changes to give
  sufficient incentive for the private sector to
  resume making mortgages without FHA or GSE
  involvement. NAR has serious concerns with the
  Administration proposals.

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Covered Bonds (S. 1835)

• Would provide an alternative to traditional loan
  securitization
• Either residential pools
• Or
• Commercial Mortgage Backed Securities (CMBS)
• Would allow for a mix of financial institution
  assets to serve as collateral for a
  Bondresidential, commercial even (limited to
  20) state and federal debt obligations
• Would provide a new placement source for
  financial institution assets
• New potential source of commercial finance

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ARKANSAS ISSUES
18
STAR Bonds

• Sales Tax Anticipated Revenue Bonds
• Passed as Senate Joint Resolution 5
• Will be on November Ballot
• Much like TIF legislation
• But avoids school conflict

19
Proposed Constitutional Amendment 1-Highways

• Temporary 1/2 Sales Tax Financing a 10-Year Bond
  Issue and Providing Annual Revenue to Cities and
  Counties.
• Support 40,000 Jobs Without Raising Taxes on
  Groceries, Medicine or Gasoline.
• Continue Construction and Improvement of a
  Four-Lane Highway System Connecting All Parts of
  the State.
• Make Arkansas Roads Safer for Everyone, Including
  School Buses, Emergency Vehicles and Drivers
  Sharing the Road with Big Trucks.
• Make it Easier and More Desirable for Business
  and Industry to Locate and Expand in Arkansas.
• Provide Local Revenue for Cities and Counties to
  Improve County Roads and Fix City Streets.

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Arkansas Sends Medical Marijuana Law to the
Ballot

• Arkansas Business
• The proposal would allow Arkansans with
  qualifying conditions to purchase marijuana from
  non-profit dispensaries with a doctor's
  recommendation. Qualifying conditions include
  cancer, glaucoma, HIV, AIDS and Alzheimer's
  disease.
• If a patient lives more than 5 miles from a
  dispensary he/she may grow their own?
• The proposal acknowledges that marijuana is
  illegal under federal law.

• If voters approve the measure in November,
  Arkansas would become the first medical pot state
  in the South
• Talk Business Hendrix College Poll
• Q A proposal to allow the use of medical
  marijuana may also be on the ballot. It would
  provide Arkansans the ability to use medical
  marijuana for serious debilitating medical
  conditions with a doctors recommendation, and to
  allow patients to purchase their medicine at a
  regulated not-for-profit dispensary. If the
  election were held today, would you vote to allow
  for medical marijuana sales?
• 47 Yes46 No7 Dont Know

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Act 185 Restrictive Covenants

• Addresses the holding in Rausch Coleman Homes,
  2009 Ark. App. 225. If there are separate
  restrictive covenants dealing with duration and
  amendment, they are to be read independently of
  each other so that the durational requirement
  will not prohibit amendment of the covenants
  during the duration. Ark. Code Ann. 18-12-103.

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STATUTORY FORECLOSURES

• THE IN RE JOHNSON MESS
• CAUSED ARKANSAS FORECLOSURES TO COME TO A
  COMPLETE HALT
• CAUSED TITLE INSURANCE COMPANIES TO CEASE
  INSURING ANY TITLE WITH A STATUTORY FORECLOSURE
  IN ITS CHAIN OF TITLE
• MADE ARKANSAS LOOK REALLY GREATFOR AWHILE -- IN
  THE FORECLOSURE CHARTS

23
Statutory Foreclosure Fix

• In re Johnson, 460 B.R. 234 (Sept. 28, 2011)
• JPMorgan Chase Bank v. Johnson, 470 B.R. 829 (May
  11, 2012)
• The decision of the bankruptcy court was reversed
  by Judge Leon Holmes
• But, still issues linger with regard to out of
  state lenders, servicing companies
• Any entity with a mortgage loan in Arkansas but
  not registered with bank department or
  secretary of state
• Implication for Arkansas non lender friendly
• ARA to seek a fix for this problem in the 2013
  general assembly

24
Acknowledgment Fix

• In re Stewart, 422 B.R. 185 (Dec. 21, 2009)
• Omission of the name and use of the pronoun he
  in the acknowledgment combined to invalidate the
  acknowledgment.
• In re Beene, 354 B.R. 856 (Nov. 27, 2006)
• Jurat was an improper acknowledgement
• Given under my hand and seal this 24th day of
  November, 2003. Signed by Notary

25
Defective Acknowledgement Cure Passed in 2005

• 18-12-208. Defects
• (a) All deeds, conveyances, deeds of trust,
  mortgages, marriage contracts, and other
  instruments in writing affecting
• or purporting to affect the title to any real
  estate or personal property situated in this
  state, which have
• been recorded and which are defective or
  ineffectual because
• (1) Of failure to comply with 18-12-403
• (2) The officer who certified the acknowledgment
  or acknowledgments to such instruments omitted
  any words
• required by law to be in the certificate or
  acknowledgments
• (3) The officer failed or omitted to attach his
  or her seal to the certificate

• Most Arkansas lawyers and title professionals
  felt the defective acknowledgment statute would
  prevent outcomes such as Stewart and Beene

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An Attempt to Correct

• State of Arkansas
• 89th General Assembly A Bill
• Regular Session, 2012
• For An Act To Be Entitled
• AN ACT TO AMEND ARKANSAS CODE TITLE 18, CHAPTER
  12, REGARDING DEFECTS IN ACKNOWLEDGEMENTS IN
  RECORDED INSTRUMENTS, TO CORRECT DISCREPENCIES
  BETWEEN TITLE 18, CHAPTER 12, SECTION 207 AND
  TITLE 16, CHAPTER 47, SECTION 107 AND TITLE 16,
  CHAPTER 47, SECTION 207 AND FOR OTHER PURPOSES.
•  
• Subtitle
• AN ACT REGARDING THE FORM OF ACKNOWLEDGMENTS AND
  ADDRESSING DEFECTS IN ACKNOWLEDGEMENTS IN
  RECORDED INSTRUMENTS AND FOR OTHER PURPOSES.
•  

• The Arkansas REALTORS Association will work on
  legislation and anticipates assistance and
  support from numerous organizations including
• The Arkansas Land Title Association, Arkansas
  Community Bankers, Arkansas Bar Association and
  Arkansas Bankers Association

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I hear you knocking

• HB1781 An Act to Provide Notice of Land Surveys
  to Adjoining Landowners Would have required
  surveyors to give 25 days notice to adjoining
  landowners before conducting a survey. The bill
  was referred to interim study by the Joint
  Interim Committee on Agriculture, Forestry
  Economic Development.

28
Act 1198Commission on the Study of
Landlord-Tenant Laws

• Requires the governor to call the first meeting
  of the Commission.
• The Commission is charged with studying,
  reviewing and reporting, by Dec. 31, 2012, on the
  landlord-tenant laws in Arkansas and other
  states.

• Commission Members
• Steve Giles (Chair) (Little Rock
  attorney)(Governor appointee)
• Lynn Foster (Vice-Chair)(UALR Law Professor)
• Marshall Prettyman (Arkansas Legal Services
  Partnership)(UofA Law)
• John Phelps (Jonesboro attorney)(Bar)
• Dr. Jay Barth (Hendrix professor)
• Howard Warren (Landlords Association)
• Robin Miller (ARA)
• Russ Altizer (Affordable Housing Assoc)
• Jim Cargill (Arkansas Bankers Assoc)

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(No Transcript)
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Act 145Prohibition of Certain Transfer Fee
Covenants

• Prohibits private transfer fee covenants whose
  sole purpose is to pay developers for years after
  the completion of a house or subdivision. Private
  transfer fees arise after a homes original sale,
  often unbeknownst to the buyer and seller.
  Arkansas now joins approximately half the states
  in banning them. The statute does not affect any
  such covenants recorded before its effective
  date. Ark. Code Ann. 18-12-107.

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Act 172Illegally Recording Instruments

• Increases the penalties for persons who file a
  false instrument for the purpose of harassing a
  judge, prosecuting attorney or law enforcement
  officer.
• A felony in some cases.

32
Lets Screw Up Every Deed

• HB1209 An Act to Modify the Requirements for
  Recordation of a Deed Would have required a
  statement on the deed listing the monetary
  consideration and the value and type of any
  nonmonetary consideration. The bill was withdrawn
  by the author.

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DEEDS
34
Grant, Bargain and Sell

• There are no implied warranties of title.
• The magic words grant, bargain and sell imply
  some of the warranties of title.
• Without the exact magic words, or express
  warranties, then the deed is without warranty of
  title regardless of the title of the deed.

35
Grant, Bargain and Sell

• The warranties created by grant, bargain and
  sell has one special warranty in it.
• The magic words create only a special warranty
  against encumbrances.
• This has the effect of limiting liability under
  the covenants of seisin, right to convey and
  quiet enjoyment to defects in title caused by the
  grantor only, and not any of his predecessors in
  title.

36
The Deed Study

• Sample of 311 deeds filed in Pulaski County in
  June 2011.
• 79.1 labeled General Warranty
• 20.6 labeled Special Warranty
• 17.7 drafted by Arkansas-licensed attorneys
• 76.6 drafted by title agents using forms
  prepared by Arkansas-licensed attorneys
• 2.3 drafted pro se

37
The Deed Study

• Average purchase price was 171,551.
• Median purchase price was 135,000.

38
The Riddle Problem

• Riddle v. Udouj (371 Ark. 452) (2007)
• Fence not exactly on the property line
• Boundary by acquiescence established
• Breach of the covenant of seisin is decided on
  the basis of who has possession at the time of
  the conveyance

39
The Deed Study

• 67.8 contained an express exception to the
  covenants of title
• subject to easements, restrictions or
  encumbrances which may appear of record
• The Riddle problem
• Not fixed merely by excepting matters of record
  because the boundary dispute is not necessarily a
  matter of record
• Only 4.2 of the deeds had language that would
  prevent a Riddle claim

40
The Deed Study

• Only 30.9 of the deeds contained an express
  exception for prior mineral reservations.
• None of the deeds contained a mineral reservation
  in favor of the grantor.

41
The Deed Study

• 29.7 of the special warranty deeds failed to
  include the phrase grant, bargain and sell,
  thus failing to convey any of the present
  covenants of title.
• Only 1.2 of the general warranty deeds failed to
  include the phrase grant, bargain and sell

42
The Deed Study

• Though included as part of the covenants
  automatically created by grant, bargain and
  sell, 99.7 of all deeds still contained an
  express covenant of either special or general
  warranty in the deed.

43
Suing the Heirs

• In Smiley v. Thomas (1952), Brice Williams
  conveyed a warranty deed with no exceptions to a
  Mr. and Mrs. Thomas in 1929, but Williams did not
  own one-half of the mineral interests.
• Williams died in 1936.
• In 1950, the Thomases sued a third party
  unsuccessfully to quiet title to the mineral
  rights in themselves. After losing the quiet
  title action, the Thomases sued Jodie Smiley, the
  sole heir of Brice Williams.

44
Smiley v. Thomas

• Smiley argued in defense the statute of
  limitations, laches, and the statute of
  nonclaims.
• The court held these arguments were without
  merit, without citing any authority as to how
  recovery could be had as against an heir of the
  decedent fourteen years after his death. The
  court held that eviction had occurred when the
  decree in the 1950 quiet title suit was rendered.

45
(No Transcript)
46
SPECIAL NOTE

• New required transfer tax affidavit
• I certify under penalty of false swearing that
  documentary stamps or a documentary symbol in the
  legally correct amount has been placed on this
  instrument.

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Major RecentCases
48
Parks v. Rogers Group, Inc.

• February 9, 2011
• Arkansas Court of Appeals
• Parks (landlord) signed a lease in 2001 with
  Rogers Group (tenant). Toward the end of the 5
  year term, Parks notified Rogers Group that it
  wanted to terminate the lease.
• Lease provided that it would be renewed
  automatically for one year terms until the tenant
  gave the landlord written notice of termination
  at least 30 days before the end of the term.

49
Parks v. Rogers Group, Inc.

• Parks sued Rogers Group for a declaration that
  the landlord has a right to terminate the lease.
• Court held that the terms of the lease
  effectively created a perpetual lease.
• The leased property was a rock quarrycould this
  be a distinction?

50
Fairpark, LLC v. Healthcare Essentials

• February 23, 2011
• Arkansas Court of Appeals
• Landlord gave tenant a build-out allowance of
  28,000 but did not specify in the lease that
  Tenant would be responsible for the difference.
  The finish out cost 65,000.
• Tenant refused to pay the difference.

51
Fairpark, LLC v. Healthcare Essentials

• Tenant and Landlord argued about the 37,000
  deficit and tried different options for resolving
  the dispute including reducing the size of the
  Tenants space and adjusting rent.
• During the negotiations, the air conditioner
  broke. Landlord did not fix the air conditioner,
  allegedly to hold the Tenant hostage to resolve
  the 37,000 issue.

52
Fairpark, LLC v. Healthcare Essentials

• The Court found that the Landlord breached its
  obligation in the lease to keep the premises in
  good working order.
• The Court found that the written lease, which
  failed to specify that the Tenant would be
  responsible for excess building costs, left the
  Landlord responsible for the entire finish-out
  costs.

53
Garner v. XTO Energy, Inc.

• October 12, 2011
• 2011 Ark. App. 606
• Garner and XTOs predecessor signed a mineral
  lease for a term of five years and so long
  thereafter as oil, gas, or other hydrocarbons
  were produced or deemed to be produced from the
  premises or lands pooled therewith.

54
Garner v. XTO Energy, Inc.

• Thirteen days before the expiration of the 5 year
  term, XTO started drilling.
• Garner sued for a declaration that the lease
  terminated at the end of the five years because
  there was no production.
• Paragraph 6 of the lease defined operations to
  include preparation of a drilling site and
  drilling.
• The lease survived challenge.

55
Hipp v. Vernon L. Smith Associates

• October 12, 2011
• 2011 Ark. App. 611
• Kenneth and Tammy Hipp executed an oil and gas
  lease. The lease included an initial 5 year term
  with an additional five year option.
• The Hipps claim that the leasing agent told them
  there were no options terms.
• The Hipps did not read the lease.

56
Hipp v. Vernon L. Smith Associates

• Hipps sued alleging fraud in the inducement and
  violations of the Arkansas Deceptive Trade
  Practices Act (ADTPA).
• Court dismissed the suit, holding that the
  lessors failure to read the lease will not
  support a claim of fraud to toll the statute of
  limitation for either fraudulent inducement or
  the ADTPA.

57
Mauldin v. Snowden

• October 26, 2011
• 2011 Ark. App. 630
• Snowden owned the surface and the minerals.
• On the same day, Snowden conveyed the minerals to
  his company, Cenark Oil, and sold the surface to
  Flory. The deed did NOT contain a reservation of
  mineral rights.

58
Mauldin v. Snowden

• Six years later, Flory sold the surface to
  Mauldin, but the deed did not include a
  reservation of mineral rights.
• A year later, Cenark Oil conveyed the minerals
  back to Snowden.
• Mauldin sued for the mineral estate under the
  doctrine of after-acquired title or,
  alternatively, breach of the deed covenants from
  Flory and Snowden.

59
Mauldin v. Snowden

• Flory and Snowden filed a counterclaims asking
  for reformation of the deeds due to mutual
  mistake to include a reservation of the mineral
  rights.
• Flory and Snowden convinced the court by clear
  and convincing evidence that Mauldin knew no
  minerals were to be conveyed and that no
  consideration was paid for the minerals.

60
Gurlen V. Henry Management

• December 15, 2010
• Arkansas Court of Appeals
• Gurlen leased an apartment and an off-site
  storage facility.
• The apartment manager invited Gurlen to move her
  off-site property to an on-site storage unit on
  the premises.
• The manager said there would be no charge until
  the apartment decided how much to charge in the
  future for units.

61
Gurlen v. Henry Management

• Gurlen did not tell the apartment manager which
  storage bins on-site she had decided to use.
• The apartment decided to start charging for
  on-site storage and posted notices informing
  residents that they needed to coordinate with
  management to keep the storage bins.
• Gurlen claims she did not see the notices.

62
Gurlen v. Henry Management

• After failing to respond to the notices, the
  apartment emptied the unclaimed bins and disposed
  of the property.
• The lease said
• All personal property placed on the leased
  premises, or in the storerooms or in any other
  portion of said premises or any place appurtenant
  thereto, shall be at the risk of the Resident

63
Gurlen v. Henry Management

• Landlord won at the trial court
• but LOST on appeal
• the landlords knowledge that Gurlen had stored
  property in the storage bins, but nevertheless
  destroyed the property, made the landlord liable
  for the destroyed property.

64
Garrett v. Fite

• 2009 Ark. App. 869
• December 16, 2009
• Question of whether the purchase agreement was
  valid.
• FiteSeller
• GarrettBuyer

65
Garrett v. Fite

• Property had a fair market value of 368,000
• Purchase price in the contract was 104,000
• Fites son-in-law, Wintory, was the broker for
  both Garrett and Fite in the real estate contract
• Wintory also did other work for Garrett

66
Garrett v. Fite

• Fite was in the business of buying and selling
  houses.
• Two years before the contract, Fite stated that
  he wanted 100,000 for the property.
• Garrett and Fite never met.

67
Garrett v. Fite

• But
• The record shows that Fite was vulnerable at the
  time of contracting. He had gout. And he was
  depressed about in-fighting among his children.
• Fite testified, I was just would have loved to
  fell in a place to just gone off and left
  everythingI didntdidnt care what happened.

68
Garrett v. Fite

• Wintory visited Fites home four separate times
  on the day the contract was signed.
• Fite testified, he simply gave in and signed it.

69
Garrett v. Fite

• Do you have any obligation to judge the mental or
  physical health of the seller?
• Do you have any obligation to judge whether the
  sale is for adequate consideration?
• What warnings should be given about familial
  relationships as part of a transaction?

70
Donathan v. McDill

• 304 Ark. 242
• December 21, 1990
• Tort of Interference with Business Expectancy

71
Donathan v. McDill

• Guy McDill was president of Hot Springs Title
  Company
• Raymond Donathan hired Hot Springs Title Co. to
  research title to a parcel that Donathan wished
  to purchase.
• McDill identified that the land was soon to be
  sold for nonpayment of taxes.

72
Donathan v. McDill

• McDill and Donathan both showed up at the tax
  sale and bid on the property.
• Donthan was the successful bidder at 2,800.
• The delinquent taxes were approximately 300.

73
Donathan v. McDill

• McDill contacted the owner of the land about the
  sale and notified the owner of its right to
  redeem the land by payment of the back taxes
  within 30 days of the date of the sale.
• McDill used his own money, channeled through Hot
  Springs Title Company, to redeem the property.
• McDill purchased the property from the estate.

74
Donathan v. McDill

• Donathans business expectancy was to purchase
  the land in question for 2800 from the
  commissioner unless the owner made a timely
  redemption. His expectancy was fulfilled. No
  authority is cited holding, or even suggesting,
  that causing such a contingency as redemption to
  occur constitutes tortious interference.

75
Donathan v. McDill

• Would it have made a difference if McDill was
  also a licensed attorney?
• Where is the line between being an attorney and
  being a title agent?

76
Windsong Enterprises v. Upton

• 366 Ark. 23
• March 23, 2006
• Tort of Interference with Business Expectancy

77
Windsong Enterprises v. Upton

• In 1997, Windsong purchased a tract at a
  foreclosure sale in Eden Isle Subdivision (the
  Southwinds Property).
• Southwinds was previously owned by Red Apple
  Enterprises Limited Partnership
• Windsong planned to develop condominiums on the
  Southwinds Property

78
Windsong Enterprises v. Upton

• After the foreclosure sale, Windsong discovered
  that the Property it acquired included parts of
  the Red Apple golf course.
• Red Apple Enterprises and Windsong could not
  agree on a price to return the golf course
  portion to Red Apple Enterprises.

79
Windsong Enterprises v. Upton

• The Bill of Assurances could be amended with more
  than 50 of the landowners approving.
• Red Apple Enterprises owned 48 of the Eden Isle
  Subdivision.
• Friends and relatives of the owners of Red Apple
  Enterprises owned enough of the Eden Isle
  Subdivision to amend the subdivisions bill of
  assurances.

80
Windsong Enterprises v. Upton

• In alleged retaliation for Windsong not selling
  the golf course back to Red Apple Enterprises,
  Red Apple Enterprises and its friends amended the
  bill of assurances to restrict Southwinds to
  single-family residential use only.

81
Windsong Enterprises v. Upton

• Donathan v. McDill is the apposite and
  controlling case.
• Compare Windsong Enterprises, Inc. v. Upton, 91
  Ark. App. 149, stating
• Finally, we reject out-of-hand Uptons
  suggestion that this court somehow erred in
  distinguishing Donathan v. McDill. We are not
  aware of anything that requires us to cite
  inapposite authority.

82
Windsong Enterprises v. Upton

• Is there a duty of good faith?
• When is it OK to hurt someones business for
  revenge or leverage?

83
Campbell v. Asbury Automotive

• Arkansas Supreme Court Case
• April 14, 2011
• Unauthorized Practice of Law (UPL)

84
Campbell v. Asbury Automotive

• Statutes relating to the practice of law are
  merely in aid of, but do not supersede or detract
  from the power of the judicial department to
  define, regulate, and control the practice of
  law, and the legislative branch may not, in any
  way, hinder, interfere with, restrict, or
  frustrate the powers of the courts.

85
Campbell v. Asbury Automotive

• Allows a private lawsuit against non-lawyers who
  engage in the practice of law.
• Class Action against Car Dealers for charging
  document preparation fees.
• So, what is the definition practicing law???

86
Campbell v. Asbury Automotive

• well, there isnt one
• Arkansas Bar Association v. Block (1959)
• We believe it is impossible to frame any
  comprehensive definition of what constitutes the
  practice of law. Each case must be decided upon
  its own particular facts.The practice of law is
  difficult to define. Perhaps it does not admit
  of exact definition.

87
Campbell v. Asbury Automotive

• So what is permitted??
• Creekmore v. Izard (1963)
• A real estate broker, when the person for whom
  he is acting has declined to employ a lawyer to
  prepare the necessary instruments and has
  authorized the real estate broker to do so, may
  be permitted to fill in the blanks in simple
  printed standardized real estate forms, which
  forms must be approved by a lawyerwithout charge
  for the simple service of filling in the blanks.

88
Cambell v. Asbury Automotive

• Pope County Bar Assn, Inc. v. Suggs (1981)
• (1) That the person for whom the broker is acting
  has declined to employ a lawyer to prepare the
  necessary instruments and has authorized the
  broker to do so and
• (2) That the forms are approved by a lawyer
  either before or after the blanks are filled in
  but prior to delivery to the person for whom the
  broker is acting and
• (3) That the forms shall not be used for other
  than simple real estate transactions which arise
  in the usual course of the broker's business and

89
Campbell v. Asbury Automotive

• Pope County Continued
• (4) That the forms shall be used only in
  connection with real estate transactions actually
  handled by such brokers as a broker and
• (5) That the broker shall make no charge for
  filling in the blanks and
• (6) That the broker shall not give advice or
  opinions as to the legal rights of the parties,
  as to the legal effects of instruments to
  accomplish specific purposes or as to the
  validity of title to real estate.

90
Campbell v. Asbury Automotive

• Filling out forms IS the practice of lawbut
  non-lawyers with a real estate license have
  limited permission from the Arkansas Supreme
  Court to do so