Hello everybody.  With the rainy season upon us, it is once again timely to review the laws pertaining to property damage liability caused by rainwater run-off, surface water flow and landslides emanating from a neighbor’s land.

Even if water flow and landslides are natural occurring disasters, very often they could have been averted had a nearby neighbor paid more attention to the slope or stability of his own property.  Where that inattention results in significant water damage or causes a landslide onto another owner’s property, lawsuits frequently follow.

One of my core beliefs is that there is entirely too much litigation in California.  I suspect that most AOA members would agree with me on that point.

However, where damage to one’s own real estate is substantial, such as by earth movement which devastates an apartment building or rainwater, which undermines the structure, the owner of that property (who may not have insurance coverage for the slide or for such water damage) looks around to determine if someone else might be responsible for the loss.  Typically, the owner justifiably seeks sources of money outside his own wallet for payment of the cost to restore his property.

So while I believe that our society is far too litigious, I also believe that there are many instances where litigation is appropriate because a neighbor or someone else was a significant contributing factor to the event causing the damage.

The main categories of persons who might legally bear or share in the responsibility for property damage caused by surface water flow or earth movement are neighboring owners, sellers, brokers, geologists, architects and engineers.

Responsibility of Neighboring Owners

If damage is caused by a flow of water from a neighbor’s land, such as by rainwater or other surface water runoff, that neighbor may be responsible to the adjoining owner for the injury.  That is true whether the water itself causes the damage or results in a landslide causing the loss.

In the important case of Burrows v. State of California (260 Cal.App.2d 29), the California Court of Appeal summarized the rules of responsibility arising from water damage as follows:

“1. If the upper owner is reasonable and the lower owner is unreasonable, the upper owner wins; 2.  If the upper owner is unreasonable and the lower owner is reasonable, the lower owner wins and 3.  If both the upper and lower owner are reasonable, the lower owner also wins.”

In another important case, the California Supreme Court rejected the Common Law doctrine that once immunized landowners from damages to adjacent properties caused by natural conditions of the land.  In Sprecher v. Adamson (30 Cal.3d 358), the high Court held that a landowner has a duty to act reasonably in managing his property to avoid damaging adjoining properties even if he has not graded his property or otherwise altered its terrain from its original natural condition.

Thus, if rainwater flow itself or other surface water runoff (such as by a sprinkler and drainage system which channels water) from another landowner’s property causes damage, the court will determine whether the party from whose land the water was discharged acted reasonably or unreasonably in maintaining his land.

The court will also evaluate whether the owner of the abutting damaged property acted reasonably in protecting his land.

Finally, the court will compare the conduct of both the owner who discharged the water (or allowed it to be discharged) with that of the abutting owner whose land was damaged by the run-off.  The court (or jury) will then determine liability based on a comparison of the reasonableness of each party.

Responsibility of Sellers

In the context of the sale of real property, including apartment buildings, California law no longer solely follows the Common Law doctrine of “caveat emptor.”  Translated from Latin, that expression means “buyer beware.”  Instead, California also applies the principle of “Let the seller disclose.”  That is to say, a seller is required to disclose to a buyer all material defects in the property or land he is marketing which are known to the seller but not likely to be known by or observable to the buyer absent such a disclosure.

Accordingly, if the seller knows that his property has been subject to previous slides or earth movement (whether inherent in his own land or due to runoff water emanating from a neighbor’s land), that information should be disclosed to the buyer, preferably be in writing.  If the buyer acquires the property without such knowledge and thereafter the improvements or land is destroyed by a slide or the discharge of water, the seller may be monetarily liable to the buyer based on a theory of fraudulent concealment.

Similarly, California law imposes a duty on sellers of all types of property, including multi-family residential structures, to disclose to buyers all known facts materially affecting the value of the desirability of property offered for sale where such facts are known or accessible only to the seller (or his broker) and the seller also knows that those facts are not known to or within the reach of the diligent attention and observation of the buyer.

In the early and famous case of Lingsch v. Savage (213 Cal.App.2d 729), the appellate court explained the duty of disclosure this way:  If the seller knows that there is a subterranean creek in his back yard or an unexploded bomb buried in the basement, the seller must disclose it even though the contract might contain an “AS IS” provision.

In instances where landslides or other ground movement occur after the sale of property, the seller may be held responsible for failing to make a disclosure of the instability of the land if the seller experienced previous slides but failed to alert the buyer to them.

On the other hand, a seller is ordinarily not required to conduct an investigation of his property to discover defects about which he does not already know.  As between the buyer and the seller, the buyer is responsible for conducting his own investigation about potential defects which are not known to the seller.  To that extent, the concept of caveat emptor still applies.

Responsibility of Brokers

Unlike a seller, both the seller’s and buyer’s real estate licensees may have a duty to inspect, not just a duty to disclose.  For example, Civil Code Section 2079 imposes an obligation on the listing agent of residential real property consisting of one to four residential units to “conduct a reasonably competent and diligent visual inspection of the property” and disclose observable, material defects to the buyer.  The theory is that a broker has a more trained eye to discover potential problems with the property (such as cracks in a walkway or concrete patio which may indicate prior earth movement) than does the buyer.  Note however, the duty of inspection imposed on the listing broker does not apply if the property exceeds four residential units or is commercial or industrial property, or is unimproved land.

In addition, a broker (particularly the buyer’s broker) might have a duty to recommend to a buyer of any type of hillside property that the buyer should obtain a geologic report.  Failure to make such a recommendation may be construed by a jury to be negligent and, hence, render the licensee liable for the damages the buyer sustains following a geologic failure, for example.

Responsibility of Geologists

A geologist who is hired by a buyer to evaluate the stability of land will be liable to his client for failing to report adverse ground conditions which other geologists would have likely recognized.  In other words, if a geologist undertakes to prepare a hillside stability report for a purchaser, he needs to be careful that the report is as accurate as modern science allows it to be.  In the event of a subsequent movement of earth or damage by subsequent rainwater runoff from a neighbor’s land, his report will be tested against the standard in the industry of other competent geologists had they been hired to perform the same service.  If the report fails to disclose adverse conditions which other geologists would disclose, the hired geologist may be held monetarily accountable.

Responsibility of Engineers and Architects

The focus of engineers and architects is different than that of a geologist.  A geologist is retained specifically for analysis of ground conditions, whereas architects and engineers usually have broader concerns or at least concerns which address matters other than geology.  Their liability to a property owner is likely to be more attenuated and less assured than the geologist who fails to disclose any material adverse condition of the land.

Nevertheless, architects and consulting engineers will be held to a standard of skill and care as would be customarily possessed by other consultants licensed in the same field.

Additional Comments

As I expressed above, I believe that there is entirely too much litigation in California, not to even mention the country as a whole.  Still, judicial action may be indicated if someone else is at fault for significant damage caused to an abutting property owner’s land but refuses to accept the responsibility.

In the case of damage from rain and surface water flow, the uphill neighbor will likely be liable for the loss.  Accordingly, an adjoining landowner, particularly one whose land has a higher elevation, should implement measures to avert damage to a neighbor’s property due to rain and other surface water runoff.

With respect to sellers and property consultants, they may be responsible under a theory that had proper disclosures been made or reports prepared, the buyer might have been able to implement preventative or mitigating measures.  Here, the best advice for a seller is to fully disclose known adverse conditions of his property.  For professional consultants preparing written reports, the best advice is similar, to wit: include in the reports all known or discoverable adverse conditions.

RECAP OF NEW 2019 RESIDENT MANAGER LAWS

As AOA members may recall from my article in the January issue of this magazine, on January 1, 2019 California’s employment laws for resident managers changed.  In general, the new statewide legislation mandates: (1) all resident managers must be paid no less than the minimum wage rate of $11.00 per hour, (2) employers may not credit any reduced or free rent against the minimum wages owed in amounts exceeding $621.28 for a single manager and $919.02 for a couple, (3) any reduced or free reduced rent may not be credited at all against the wages unless a properly drafted written employment contract between the employer and manager(s) provides for that credit, and (4) the maximum rent which may be charged for apartment units in which managers are required to live as a condition of employment is $621.28 for a single manager and $919.02 for a couple.  However, with respect to number “4,” the opportunity for the employer to charge more than those stated amounts of rent (but maxing out at 2/3 the fair market rental value) still exists if the manager’s employment contract includes a “check exchange” arrangement.

With respect to Los Angeles, the minimum wage applicable to resident managers who work in that city is presently $12.00 per hour, but rises to $13.25 per hour on July 1, 2019.  Numerous other cities in the state have their own minimum wage rates which are higher than the statewide minimum wage.  AOA members should research and then pay their managers those applicable higher rates.

Other recent statewide laws provide: (1) each resident manager is entitled to receive a minimum of 3 days or 24 hours (48 hours in Los Angeles) per year of paid sick leave for sick time they take off from work, (2) unused sick leave hours will roll over to the following year if not limited by a written employment contract between the owner and the manager, and (3) the employer must reimburse the manager for the cost of the reasonable business portion of the manager’s personal cell phone use if the manager is required to use the cell phone during the performance of his or her work.

Owners and management companies who have not revised their resident manager agreements to be consistent with the new 2019 legislation as well as the other recent laws should do so immediately.  Please review my column in the January 2019 issue of AOA’s magazine for a full and detailed discussion of all the new wage, hour and rent laws pertaining to resident managers.

Dale Alberstone is a prominent real estate attorney who has specialized in real property and resident manager law for 40+ years.  He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association.  He also testifies as an expert witness for and against other attorneys who have been accused of legal malpractice.

Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell.  An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity.

The foregoing article was authored in February 2019.  It is intended as a general overview of California law only and may not apply to the reader’s particular case.  Readers are cautioned to consult an advisor of their own selection with respect to any particular situation.

Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 269 S. Beverly Drive, Suite 1670, Beverly Hills, California 90212.  Telephone:  (310) 277-7300.