{"id":973,"date":"2016-06-29T10:44:30","date_gmt":"2016-06-29T17:44:30","guid":{"rendered":"http:\/\/fiduciarydutiesblog.com\/?p=973"},"modified":"2016-06-29T10:44:30","modified_gmt":"2016-06-29T17:44:30","slug":"taylor-v-nu-digital-marketing-inc-remedy-of-unlawful-detainer-notwithstanding-contract-for-sale","status":"publish","type":"post","link":"https:\/\/fresnolawyerblog.com\/?p=973","title":{"rendered":"Taylor v. NU Digital Marketing, Inc. – Remedy of Unlawful Detainer Notwithstanding Contract for Sale"},"content":{"rendered":"

The remedy of unlawful detainer is available in three situations under California law, most commonly when a tenant holds over after termination of the lease, or when the tenant continues to occupy the property after breach of the lease.<\/p>\n

Less commonly, unlawful detainer is available to an owner “against an employee, agent, or licensee whose relationship is terminated,” and in the third situation, to a purchaser at a foreclosure sale against the former owner and other occupants.<\/p>\n

In Taylor v. NU Digital Marketing, Inc<\/strong>. (2016) 245 Cal.App.4th 283, the parties entered into a hybrid contract.\u00a0 Although styled a contract for sale, the court held that the contract actually was a lease, seemingly tied to an option to purchase, such that the remedy of unlawful detainer was available to the owner.<\/p>\n

Note to potential purchasers<\/strong>: An unrecorded “contract of sale” that does not include a deed from the owner to the purchaser is an invitation for trouble.\u00a0 The court will want to fit the contract into one of its traditional modes of analysis.\u00a0 As the following decision shows, the court might view the document as a lease, with potentially disastrous consequences to the purchaser.\u00a0 Be careful when you try to be creative in making a grant of real property.<\/p>\n

Now to the facts.\u00a0 In August 2012, the parties entered into an agreement entitled \u201cContract of Sale Residential Property.\u201d\u00a0 The contract provided that \u201cplaintiffs (designated \u2018Seller\u2019 in the agreement) agreed to sell a piece of property to defendant (designated \u2018Buyer\u2019 therein) for $1.25 million subject to the following terms and conditions:<\/p>\n

\u201cParagraph 1 required defendant to \u2018consummate\u2019 the purchase \u2018within 60 months of the execution date of the agreement\u2019 by making \u2018payment\u2019 of the purchase price, i.e.,\u00a0 $1.25 million through [escrow].\u201d<\/p>\n

Comment<\/strong>: That sounds like an option, exercisable in 60 months.\u00a0 An option to purchase is not the same a contract for sale.\u00a0 The option must be exercised by act of the grantee, while the contract for sale is enforceable per se.<\/p>\n

\u201cParagraph 2 purported to divide the purchase price into five components: (1) a grant of equity in defendant corporation (referred to as the \u2018Equity Grant\u2019); (2) payment of all property taxes and insurance costs from the move-in date; (3) payment of all homeowners association fees and any related penalties or special assessments; (4) the \u2018Down Payment\u2019; and (5) \u2018Probationary Installment\u2019 payments of $2,300 per month for 60 months (also referred to as \u2018Probationary Payments\u2019).\u201d<\/p>\n

The dispute arose when \u201cthe probationary installment payments increased to $4,216.48 in accordance with the provision allowing for an upward adjustment of such payments to match plaintiff’s adjustable rate mortgage payment.\u201d<\/p>\n

\"Fresno<\/a>
\nNow the conflict comes into sharper focus<\/strong>.\u00a0 If you \u201crented\u201d a property, with a fixed purchase price, and paid 100% of the owner\u2019s mortgage payments plus property taxes plus homeowners association fees, then you might believe you had purchased the property.\u00a0 But this court did not agree \u2013 \u201cIn addition to awarding possession to plaintiffs, the court awarded damages in the amount of $31,683.68 and declared the agreement forfeited.\u201d<\/p>\n

The court started by explaining that \u201cUnlawful detainer actions are authorized and governed by state statute.\u00a0 The statutory scheme is intended and designed to provide an expeditious remedy for the recovery of possession of real property \u2026 Unlike the foregoing situations, a vendee in possession of land under a contract of sale who has defaulted in the payment of an installment of the purchase price, is not subject to removal by the summary method of unlawful detainer.\u201d<\/p>\n

Held the court, “The relationship created by the agreement must be characterized by reference to the rights and obligations of the parties and not by labels \u2026 While defendant also agreed to purchase the property within the lease term, possession of the property was conditioned upon payment of the probationary installments, which entitled defendant only to continued possession, and were therefore rent.\u201d<\/p>\n

\u201cProbationary payments\u201d in a real estate contract?\u00a0 I never heard of such a thing, and neither had the court.\u00a0 Taylor v. NU Digital Marketing, Inc.<\/strong> (2016) 245 Cal.App.4th 283<\/p>\n","protected":false},"excerpt":{"rendered":"

The remedy of unlawful detainer is available in three situations under California law, most commonly when a tenant holds over after termination of the lease, or when the tenant continues to occupy the property after breach of the lease. Less commonly, unlawful detainer is available to an owner “against an employee, agent, or licensee whose […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,5,8],"tags":[],"class_list":["post-973","post","type-post","status-publish","format-standard","hentry","category-case-law","category-developments","category-real-property"],"_links":{"self":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/973"}],"collection":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=973"}],"version-history":[{"count":0,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/973\/revisions"}],"wp:attachment":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}