Tucson Land Use Law Blog

Tucson Land Use Law Blog

Insight & commentary on local land use and real estate issues

The Drone Slayer – Drones & Trespassing

Posted in Drone Law

In July 2015, William Merideth was cited for criminal mischief and wanton endangerment after shooting down a drone hovering in his “backyard.”  Merideth told police that he shot the drone because he did not know if the drone was operated by “a predator looking at my children.” Bullitt County Judge Rebecca Ward cleared Mr. Merideth of first-degree endangerment and criminal mischief charges, ruling: “I think it’s credible testimony that his drone was hovering from anywhere, for two or three times over these people’s property, that it was an invasion of their privacy and that they had the right to shoot this drone,” Judge Ward told the court.  Three witnesses allegedly testified that they saw the drone hovering below tree line.

The drone owner, David Boggs, on the other hand, said he flew his drone more than 200 feet above the property and didn’t hover it in Meredith’s backyard.

Boggs was incredulous at the ruling:

“When I came back in and she was going to make her ruling, she didn’t look at the video, she didn’t look at the telemetry data, and there were no witnesses called on behalf of the state,” he added. “She didn’t care what the video said. She believed what the neighbor said and that the drone was below the tree line. The judge didn’t look at the video, paid no consideration to the video. I’m just shocked, beyond shocked. The police officers were shocked. So in essence what she’s saying is that if a news helicopter flies over your house, you can shoot it down, too. There was no regard to the truth whatsoever. None.”

The law on this issue is very murky.  The Federal Aviation Administration (“FAA”) says drones can’t fly “near people”, but its guidelines don’t specify a distance.  In United States v. Causbythe U.S. Supreme Court held that a landowner’s property rights do not extend indefinitely up “to the sky,” but that a landowner does hold exclusionary property rights in at least some of the low-altitude “non-navigable” airspace directly their parcels.  The standard is that a “a property owner owns only as much air space above his property as he can practically use. And to constitute an actionable trespass, an intrusion has to be such as to subtract from the owner’s use of the property.”  This standard for airspace trespass has been adopted by the Restatement (Second) of Torts.

This issue is not going away and the issue of what rights a landowner has in the airspace between the ground and the “navigable airspace” controlled by the FAA remains an unresolved issue.

By the way, if you are interested and want to support Meredith’s position, grab yourself a Drone Slayer t-shirt – http://www.ebay.com/itm/Drone-Slayer-T-Shirts-/261993918914?var=&hash=item3d000df1c2.

s-l500

 

 

Recovering Fees & Costs in a Tax Lien Foreclosure Case

Posted in Tax Lien Foreclosure, Uncategorized

So, you have likely heard it pitched that there is little risk investing in tax liens.  By and large, that maxim rings true.  Most people purchase tax liens because they can achieve a very high interest rate and know that the lien they have purchased is secured by the underlying real property.  The dynamics of the Arizona tax lien market have changed over time with more and more investors and large hedge funds and banks gobbling up tax liens at very low interest rates.  If you are a tax lien investor that has a number of liens that are ready to begin the judicial tax lien foreclosure process, you need to be aware of a few potential risks in moving forward.

The most crucial aspect that any attorney handling an Arizona tax lien foreclosure matter can do is to verify the addresses of all interested parties and get them served with a copy of the Summons and Complaint as quickly as possible.  Under Arizona Revised Statutes Section 42-18206, if an interested party (owner of record, deed of trust beneficiary, judgment creditor, etc.) redeems the tax lien after having been served in the tax lien foreclosure action, the tax lien holder has the right to pursue the party that redeemed the tax lien for all fees and costs incurred in pursuing the tax lien foreclosure.  This is a crucial protection built into the statutory framework to protect tax lien investors and make those investors more willing to take on the risk of purchasing tax liens.

The risk of course is that an interested party may redeem the tax lien in the time between when it was first filed and when the person or entity redeems the tax lien.  If this happens (and it certainly can happen for any number of reasons), the tax lien holder will be left holding the bag for costs and fees incurred with no recourse.  The upside, I suppose, is that the tax lien holder, if the lien was indeed purchased three years prior, will have the accrued interest to offset any losses incurred.

While getting a judgment is some protection, that judgment will be worthless if the person redeeming the tax lien has no assets to execute against.  In the case of a person redeeming who owns the subject property of the tax lien case as their primary residence, there is no chance of executing against that property to satisfy your judgment for fees and costs.  In the case of a property that is NOT the primary residence, the tax lien investor may execute against the property to satisfy the judgment, subject to the owner’s statutory right of redemption, which is six months.

Part of the due diligence in investing in tax liens is fully understanding the ramifications of all potential outcomes before diving in.

Arizona – When Does a Tax Lien Expire?

Posted in Uncategorized

When does an Arizona tax lien certificate of purchase expire?  This was the only issue in Span v. Maricopa County Treasurer, a 2014 Arizona Court of Appeals decision.  While this decision may not be used to cite as precedent in any case by an attorney, the discussion from the Court is useful for anyone holding tax liens in Arizona.

Arizona Revised Statutes Section (“A.R.S.”) 42-18208(A) states: If a tax lien that was purchased pursuant to A.R.S. Section 42-18114 on or before August 31, 2002 is not redeemed and the purchaser or the purchaser’s heirs or assigns fail to commence an action to foreclose the right of redemption on or before ten years from the date that the lien was purchased, the certificate of purchase or registered certificate expires and the lien is void.

When a property owner is delinquent on taxes, the County secures payment by selling a tax lien at auction.  The purchaser of a tax lien receives a certificate of purchase, known as a tax lien certificate, which then entitles the holder of the tax lien to a deed if certain statutory conditions are met.  Additionally, the certificate holder has the option of paying any subsequent delinquent taxes outside of the auction process.  The payment for such additional liens is then added to the original certificate of purchase.

Prior to 2002, there was no time limit for a tax lien holder to redeem the certificate of purchase or foreclose on the property.  In 2002, the Arizona Legislature amended A.R.S. Section 42-18201 to include a ten-year statutory lifetime for tax liens purchased at auction pursuant to A.R.S. Section 42-18114 from and after the date of the act.  The Legislature added some additional exceptions in the years after this.

In a very straightforward holding, the Court ruled that a tax lien expires ten years after its purchase, regardless of whether a buyer later pays subsequent taxes on the same property.  The Court reasoned: “It is clear from the plain language and history of A.R.S. Section 42-18127, –18201, and –18208 that the Legislature intended certificates of purchase to expire after ten years unless the purchaser begins a foreclosure action on the right of redemption before that time. Thus, any lien purchased through auction expires ten years from the date of purchase absent a timely foreclosure action. The statute does not provide that paying subsequent taxes tolls or extends this ten-year period.”

So, be careful not to lose your entire investment in a tax lien by failing to take action before the lien expires.

 

Changes in Arizona Anti-Deficiency Law

Posted in Foreclosure Topics

The Arizona Supreme Court just issued an Opinion in BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, holding that Arizona’s residential anti-deficiency statute, Arizona Revised Statute Section 33-814(G), does not bar a deficiency judgment against an owner of vacant property.  The Court specified that for the anti-deficiency protections to apply, a “dwelling” must have been completed.  The Court’s decision directly overrules a recent Arizona Court of Appeals decision in M&I Marshall Bank v. Mueller

The Mueller decision created great potential for uncertainty and the high Court was unwilling to let that uncertainty stand.  The Mueller court had held that the anti-deficiency statute applied to trust property containing a partially completed home because the borrower intended to live in it upon its completion.  The Mueller Court cited two policy considerations in extending the anti-deficiency protections to an unfinished dwelling: (1) if the statute’s protections turn on whether a structure is occupied, borrowers facing foreclosure would be induced to camp out in unfinished structures so they could claim to be “utilizing” the property as a dwelling; and (2) it seems unfair that a borrower who lives in a completed dwelling for a day would be entitled to anti-deficiency protection, while a homeowner who has yet to move in would not.

The Arizona Supreme Court ruled that neither of these rationales are warranted.  The Court ruled that the first scenario cannot occur given the Court’s holding that there must be a completed structure on the property suitable for dwelling purposes.  And, as to the second policy concern, even the homeowner who has not yet moved into the completed residence would be entitled to anti-deficiency protection under the Court’s interpretation of the statute.

This case helps tighten the anti-deficiency case law one more step and puts to rest the uncertainty that the Mueller case was certain to create.

The Future of the Pecan Groves

Posted in Uncategorized

The Arizona Daily Star reports that Farmers Investment Co., which owns nearly 7,000 acres stretching nearly fourteen miles from Pima Mine Road to Continental Road in the Sahuarita and Green Valley area is looking to how to plan for the long-term use of this giant expanse.  The Sahuarita Planning and Zoning Commission will weigh in tonight on Farmers Investment Co.’s plans to develop the pecan farm into a master-planned community with a proposed 1,900 acres set aside for homes, 1,100 acres for businesses, and another 2,400 acres for planned mixed-use projects.

Drones – Smugglers & Drunken Larks

Posted in Drone Law

Seems drones are in the news more than ever.  A recent U.S. drone strike killed two suspected al Qaeda militants in Yemen this week, which is the first attack since U.S.-backed President Abed Rabbo Mansour Hadi said he was resigning, leaving Yemen in a state of political chaos.  Meanwhile, here in the United States, a drunken federal employee crashed his “quadcopter” onto the White House’s grounds, evading the White House radar system, which is designed to catch much bigger threats.

This incident highlights the increasing issues surrounding drone use in the United States, which include privacy, safety, land use and more.  While commercial drone users continue to wait for the Federal Aviation Administration to issue guidance regarding commercial use of drones in the United States, drug smugglers certainly are not waiting for such guidance.  A drone used by a drug smuggler from Mexico recently crash-landed just south of the U.S. border city of San Ysidro, California, in a failed drug delivery this week, Tijuana Municipal Police said.  Here is a fun video talking about it.  Drug Smuggling Drone

Federal Aviation Administration Settles Case with Raphael Pirker

Posted in Drone Law

Raphael Pirker, a videographer who was fined $10,000 by the Federal Aviation Administration (“FAA”) in 2011 for for illegally operating the his five-pound drone for commercial purposes and operating it in a “wreckless manner,” just settled with the FAA for $1,100.  Pirker’s original case was dismissed by an Administrative Law Judge (“ALJ”) with the National Transportation Safety Board (“NTSB”) last March.  The ALJ ruled this past March that Mr. Pirker’s plastic-foam drone was a model aircraft and was not subject to FAA rules for manned aircraft, which directly cast doubt on the FAA’s authority to regulate drones.  However, the full NTSB board in November overturned the ALJ’s decision on appeal by the FAA, ruling that drones are aircraft and subject to aviation laws, affirming the FAA’s regulatory power over the devices.

In settling the first FAA drone enforcement case, Pirker issued a lengthy statement stating: “We are pleased that the case ignited an important international conversation about the civilian use of drones, the appropriate level of governmental regulation concerning this new technology, and even spurred the regulators to open new paths to the approval of certain commercial drone operations. The decision to settle the case was not an easy one, but the length of time that would be needed to pursue further proceedings and appeals, and the FAA’s new reliance on a statute that post-dates Raphael’s flight, have diminished the utility of the case to assist the commercial drone industry in its regulatory struggle.”

Meanwhile, five separate bills are currently before the Virginia General Assembly that would restrict the use of drones in Virginia, including two that would let localities prohibit even hobbyists from flying small unmanned aircraft.  As reported by Craig Zirpolo of Capital News Service, the Association for Unmanned Vehicle Systems International, a nonprofit advocacy group with more than 7,000 members, worries that outright bans on the use of drones by individuals could stifle the personal liberties of pilots. The group also fears that such bans could prevent businesses from flying model aircraft if the FAA opens the door to commercial use of drones.  Virginia already restricts the use of drones by government and law enforcement agencies. In 2013, the General Assembly passed a two-year moratorium regulating government drones, making Virginia the first state to do so.

Now that the drawn out legal battle over the FAA’s regulatory power over drones has settled, we are forced to wait for the FAA to issue its long-awaited rules governing the commercial use of drones, which the FAA is required to complete in September 2015.  Don’t hold your breath that it will meet this congressional mandate.

Drones – The Looming Battle of Preemption

Posted in Uncategorized

The long-standing issue of federal preemption in the immigration context has found a new corollary in the battle over how states, counties, and municipalities are dealing with the rise in drone use.  As drone use continues to increase, states and municipalities are trying to determine whether their broad police powers are sufficient to regulate drones, and how such regulations might be affected by the regulatory authority of the federal Federal Aviation Administration (“FAA”).  The FAA, which is part of the Department of Transportation, is responsible for the safety of civil aviation, and drone use has fallen under its regulatory authority.  With the proliferation of recreational drone use and the likelihood that commercial drone use will only expand, does the FAA’s regulatory authority preempt local regulation?  This question is unsettled and will inevitably be dealt with in the years to come.

Around twenty states have already adopted laws regulating the use of drones.  According to the National Conference of State Legislatures, in 2014, 35 states considered UAS or drone-related bills and resolutions, and 10 states enacted new laws.  Much of the new legislation is focused on privacy issues, especially as it relates to law enforcement’s use of drones.  How the FAA intends to deal with the myriad of new state and local regulations remains to be seen.  The FAA has the broad regulatory mandate to regulate drone operations.  Indeed, the FAA is supposed to issue a regulatory framework for drone use by September 2015, but will likely miss this deadline due to the technical and regulatory obstacles that must be resolved before any such regulatory framework can be implemented nationwide.  Some have commented that the FAA faces so many hurdles that it is unclear whether drones can be integrated into civilian airspace.  One of the primary concerns is safety.  According to a Washington Post article from this summer, “drones rely on GPS signals to navigate and are controlled by pilots or operators on the ground via a two-way radio transmission link. But those links are not completely reliable, and it is common for operators to lose control of a drone for seconds or minutes at a time.  With no pilot in the cockpit, drones also lack the technology to see and avoid other aircraft, raising the risk of a midair collision. The inspector general called that problem the ‘most pressing technical challenge to integration.'”

Until the FAA acts, there is no question that state and local governments will continue to use their broad police powers to control drone use.  Until the FAA finally puts in place a regulatory framework, undoubtedly, questions about whether federal law will trump local regulations will persist.  Unfortunately, drone manufacturers, operators, and commercial entities seeking to employ drones will continue to lack unified guidance on what they can and cannot do.  The patchwork of state, county, and local regulations will persist until the FAA provides the necessary regulatory framework to allow drone use to expand.

Drones & Real Estate Agents

Posted in Real Estate

On July 12, 2014, Douglas Trudeau, a Realtor with Tierra Antigua Realty in Tucson, petitioned the Federal Aviation Administration (“FAA”) for an exemption from certain federal regulations to allow him to operate his PHANTOM 2 Vision + quad copter unmanned aircraft system (UAS) or “drone” to conduct aerial videography and cinematography “to enhance academic community awareness for those individuals and companies unfamiliar with the geographical layout of the metro Tucson area and augment real estate listing videos.”

On January 5, 2015, the Federal Aviation Administration (“FAA”) issued a 26-page “Grant of Exemption” to Mr. Trudeau.  Mr. Trudeau’s Grant of Exemption is the first commercial real estate photography regulatory exemption for a UAS.  The FAA’s Grant of Exemption was broken into four different sections of discussion: (1) the UAS; (2) the UAS Pilot in Command (“PIC”); (3) the UAS operating parameters; and (4) Public Interest.

Regarding the UAS, Trudeau represented that he would only operate his UAS in reasonably safe environments that are strictly controlled, are away from power lines, elevated lights, airports and actively populated areas and that he will conduct extensive preflight inspections and protocols, during which safety carries primary importance.  The FAA found that adherence to his proposed operating documents and the conditions and limitations describing the requirements for maintenance, inspection, and record keeping, were sufficient to ensure that safety would not be adversely affected.

Concerning the PIC issues, Trudeau asserted that while private pilots are limited to non-commercial operations, he can achieve an equivalent level of safety as achieved by current regulations because his UAS does not carry any pilots or passengers.  In his petition, Trudeau asserted that regarding operational training, he has flown numerous practice flights in remote areas as a hobbyist simulating flights for future commercial use to gain familiarization with the characteristics of his UAS’ performance under different temperature weather conditions.  Trudeau further stated that he practices computerized simulated flights to maintain adequate skills and response reflex time.  The FAA found that prior to operations the PIC must, at a minimum, hold a private pilot certificate, a third class airman medical certificate, and completed the minimum flight hour and currency requirements as stated in the conditions and limitations of the Grant of Exemption.

The third area that the FAA considered was the UAS operating parameters.  Trudeau provided numerous operating parameters that he would follow such as: operating his UAS below 300 feet and within a radius distance of 1000 feet from the controller to both aid in direct line of sight visual observation and operating the UAS for only 3-7 minutes per flight.  The FAA in its Grant of Exemption went into great detail as to each of the numerous operating parameters that Trudeau must meet to operate his UAS.

Finally, the FAA considered the public interest.  Trudeau, in his petition, asserted that aerial videography for geographical awareness and for real estate marketing has been around for along time through manned fixed wing aircraft and helicopters, but for small business owners, its expense has been cost prohibitive.  Granting this exemption to him would allow him to provide this service at a much lower cost.  Further, he argued that his small UAS will pose no threat to the public given its small size and lack of combustible fuel when compared to larger manned aircraft. Trudeau also states that the operation of his UAS will minimize ecological damage and promote economic growth by providing information to companies looking to relocate or build in the Tucson metro area.  The FAA ruled that the Grant of Exemption is in the public interest.  The enhanced safety and reduced environmental impact achieved using a UAS with the specifications described by Mr. Trudeau and carrying no passengers or crew, rather than a manned aircraft of significantly greater proportions, carrying crew in addition to flammable fuel, gave the FAA good cause to find that the UAS operation enabled by the exemption is in the public interest.

Trudeau’s petition only received five comments after it was published in the Federal Register.  Four trade organizations and one individual submitted comments.  Three trade organizations voiced concern: (1) The Air Line Pilots International (ALPA); (2) the National Agricultural Aviation Association (NAAA), and (3) the United States Hang Gliding & Paragliding Association (USHPA).  Each group expressed its particular concerns about the proposed commercial use.

The Grant of Exemption went on to list thirty-three conditions that Trudeau must meet to operate his UAS for commercial use.  His exemption allows him to fly his UAS to enhance real estate listing videos.  Mr. Trudeau will have to obtain a Certificate of Waiver or Authorization (“COA”) that ensures the airspace for his proposed operation will be safe, and that he has taken proper steps to see and avoid other aircraft.  In addition, his COA must mandate flight rules and timely reporting of any accident or incidents.

Trudeau’s exemption is clearly the start of what is likely to be many, many petitions to the FAA for commercial use of drones.  How the unquestionable increase in commercial drone use will be met by local governments remains to be seen.  Indeed, half of the state governments in the U.S. have already formally considered legislative action to address drone operations.  Around ten states have already enacted legislation regarding drones use.  Because the FAA claims that it regulates all airspace, issues of federal preemption coming up against state “police powers” are likely to arise as well.  This is an exciting new area of law with many, many issues to be considered.

Fueling a New Bubble

Posted in Real Estate

So, Fannie Mae and Freddie Mac, the beleaguered government sponsored agencies, which were seized by the US government during the financial crisis, recently announced programs to back loans to low and moderate income borrowers who would only be required to put down three percent, a two percent reduction in what Fannie and Freddie have required.  Fannie Mae argues that the primary barriers to homeownership for first time home buyers is saving money for down payments and closing costs, and it wants to change that.

Fannie Mae and Freddie Mac certainly had their role in the last housing market run-up and the attendant crash, such that the taxpayers were forced to pump over $187 billion to prop them up (all of which has been paid back and more).  Not surprisingly, they are  targets of much criticism after announcing these new plans to broaden home ownership, which many feel will lead to another housing bubble.

Freddie Mac’s program is called “Home Possible Advantage”, and will be open to anyone who meets certain requirements, but first-time home buyers must participate in a home ownership education and counseling program. All participants will have to pay for private mortgage insurance.  Homeowners with Freddie Mac mortgages could also refinance under the program, but would not be able to take any cash out as part of the process.

Fannie Mae’s program will be available to anyone who has not owned a primary residence for the past three years. Private mortgage insurance will be required, and at least one borrower must complete an acceptable pre-purchase home buyer education and counseling program.  Borrowers with Fannie Mae mortgages will be able to refinance and can take out up to $2,000 to cover closing costs, but will not be allowed to remove equity from their home.  Fannie Mae will also require that at least one of the borrowers is a first-time home buyer.  Fannie Mae will also allow for the down payment to paid by a gift from someone else.

While both programs require mortgage insurance, unlike and FHA loan, the borrower can drop the insurance without having to re-finance, as the mortgage insurance will drop off as soon as the borrower can prove the value of the property has risen below 80% loan to value.  The loans would be allowed only for fixed-rate mortgages on single-family homes that would be the borrower’s primary residence and would require full documentation of the ability to repay the mortgage.

With more substantial safeguards in place for these loans, this may prove a boon to a sluggard housing recovery.  Either way though, Freddie and Fannie will continue to be ceaseless targets of criticism, as they have been for years.  We shall see how these programs play out.

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