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Richman v. Hartley

California Court of Appeals, Second District, Sixth Division

March 20, 2014

RANDALL S. RICHMAN, Plaintiff and Appellant,
v.
MARK HARTLEY, as Trustee, etc., Defendant and Respondent.

Superior Court County of Ventura, Henry J. Walsh, Judge, No. 56-2011- 00401599-CU-BC-VTA.

Page 1183

[Copyrighted Material Omitted]

Page 1184

COUNSEL

Law Office of Richard L. Francis & Associates, Richard L. Francis and Charles W. Oaks for Plaintiff and Appellant.

Goldenring & Prosser, Peter A. Goldenring and James E. Prosser for Defendant and Respondent.

OPINION

O'DONNELL, J.[*]

In a sale of real property improved with one to four dwelling units, the seller is required to deliver to the buyer a real estate Transfer Disclosure Statement (TDS) pursuant to the Transfer Disclosure Law. (Civ. Code, § 1102 et seq.)[1] In this case the seller did not provide a TDS because the property is "mixed-use, " i.e., improved with both residential and commercial buildings. We conclude that a TDS is required in any transfer of real property "improved with or consisting of not less than one nor more than four dwelling units, " even if the property also has commercial uses. (§ 1102, subd. (a); see § 1102.6.)

This appeal is from a summary judgment in favor of the buyer, respondent Mark Hartley, as trustee of the Mark Hartley Family Trust (Hartley), and against the seller, appellant Randall S. Richman (Richman), who sued Hartley for breach of a real estate purchase agreement. The trial court found that Richman was required as a matter of law to deliver a TDS. Because he did not do so, he failed to demonstrate his own performance under the purchase agreement and Hartley was entitled to summary judgment. On appeal,

Page 1185

Richman contends that the disclosure requirement applies only to transfers of properties that are solely residential in nature, and not to transfers of mixed-use properties. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

In April 2007, Hartley entered into a written agreement with Richman to purchase Richman's real property on Oak Street in Ventura (the Oak Street property). The property is a single parcel improved with two structures: one commercial building and a residential duplex. The terms of the parties' agreement were set forth in a form entitled "Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate (Non-Residential)" (the Agreement).

Paragraph 9.1 (a) of the Agreement provides that: "Seller shall make to Buyer, through escrow, all the applicable disclosures required by law (See AIR Commercial Real Estate Association ('AIR') standard form entitled 'Seller's Mandatory Disclosure Statement') and provide Buyer with a completed Property Information Sheet ('Property Information Sheet') concerning the property...." Paragraph 26 of the Agreement provides that "Sale will be non contingent and property shall be sold in an 'AS IS CONDITION' with all [its] faults." Under a simultaneously executed lease agreement, Hartley leased the property from Richman for two years.

Escrow was scheduled to close on or before April 14, 2009. Hartley managed the property under the lease agreement from 2007 to 2009, but failed to close escrow, citing Richman's failure to deliver the disclosure documents required by Paragraph 9.1 (a) of the Agreement, including the TDS required by the Transfer Disclosure Law for transfers "of real property... improved with or consisting of not less than one nor more than four dwelling units." (§ 1102, subd. (a); see § 1102.6.) It is undisputed that Richman did not provide any disclosures, including a TDS.

Richman sued Hartley for breach of the Agreement. Hartley moved for summary judgment, asserting that Richman's failure to deliver the TDS and the other disclosures required by Paragraph 9.l (a) of the Agreement negated his breach of contract action against Hartley.

The trial court granted Hartley's summary judgment motion. The trial court found that the Transfer Disclosure Law applied to the transfer because of the presence of the two dwelling units on the property and, therefore, that a TDS was one of the "applicable disclosures required ...


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