April 2025 Judicial Update

Our state and federal appellate courts stay busy hearing cases all year long. As always, AAR’s Legal Team has compiled information about the cases that impact the real estate industry. Read on to learn more.

United States Supreme Court

Eleventh Circuit

Broad Interpretation of the Fair Housing Act

The Eleventh Circuit Court of Appeals recently considered the case of Watts v Joggers Run Property Owners Association, Inc.. In it, Ms. Watts, an African American woman, sued her former Property Owners Association for discrimination in violation of the Fair Housing Act (“FHA”). Ms. Watts described a broad range of racially motivated discrimination, including differing enforcement of rules and access to facilities for her and her family as compared to other residents. These discriminatory acts eventually led Ms. Watts to sell her home. The District Court ruled that although the Property Owners Association’s conduct against Ms. Watts was “reprehensible,” it didn’t violate the specific sections of the FHA that Ms. Watts cited in her complaint. However, the Eleventh Circuit Court of Appeals disagreed, finding that “discrimination against a homeowner by an HOA violates the FHA.” In coming to this decision, the Court of Appeals noted that the protections of the FHA were intended to be broad, so any interpretation of the law should also be broad.

Alabama Supreme Court

Ad Valorem Taxes for Properties Owned by Legal Entities

The Alabama Supreme Court recently issued an opinion in Faust v WPI, LLC, a case involving a property owned by an LLC. In that case, a married couple owned a condominium which was designated as “Class III” residential property for ad valorem taxes. The couple later decided to form an LLC for estate planning purposes and transferred the condominium into the LLC’s ownership. After the transfer, the property was re-designated as “Class II” and as a result, the ad valorem taxes increased. The couple (through their LLC) sued the local Revenue Commissioner, requesting reclassification back to “Class III” and a refund of the additional taxes paid. The Circuit Court ruled in the couple’s favor, but the Alabama Supreme Court overturned the lower court’s ruling. To maintain its original classification, the property would need to either be a “single-family owner-occupied residential property” or a dwelling. However, the Court found that it was impossible for the property to be either of these, since it was owned by an LLC. A corporate entity, they reasoned, can’t “occupy” a condominium, nor does it have a “dwelling”. Therefore, the Supreme Court ruled that the re-designation of the condominium’s tax status was proper.

Active Tenants Can’t Challenge a Landlord’s Title

Another recent Alabama Supreme Court case, Hembree Insurance Trust v Maples Industries, Inc., involved a landlord-tenant dispute. In that case, Hembree leased an industrial building to Maples. One of the terms of the lease was that Maples was responsible for any repairs that needed to be made to the property’s roof. When the roof incurred damage and Maples failed to repair it, Hembree sued. In response, Maples requested that the court dismiss the lawsuit, arguing that Hembree was not the true owner of the property and therefore, the lease was void. The Circuit Court ruled in Maples’ favor. However, the Alabama Supreme Court remanded the case back to the Circuit Court for further consideration because Alabama law bars a tenant who is in possession of a property from challenging the landlord’s title to the property. (Similarly, Alabama law bars a landlord from arguing that there is a defect in the landlord’s title if a tenant is in possession of the property.)

Alabama Court of Civil Appeals

Importance of Legal Consultation

The Alabama Court of Civil Appeals heard an appeal regarding a dispute over the intended meaning of certain language in a document which transferred real property from one person to another. In Thrift and Landrum v Sparks, the owner of a property, Sparks, deeded the property to Landrum, who then gifted the property to another person (Thrift). Sparks argued that he retained a life estate in the property, meaning that he would own and be permitted to use the property for the rest of his life. However, Landrum argued that Sparks sold the property to him, and that he allowed Sparks to continue living at the property, but that Sparks did not retain a life estate. At trial, it was revealed that Sparks had not directly consulted with the attorney who drafted the sale paperwork. Ultimately, the Court of Civil appeals sided with Landrum in finding that Sparks did not retain a life estate. The important lesson from this case is not who prevailed in the end, but rather the importance of consumers consulting with an attorney as to the effect of any sale and/or transfer documents.

Slow Changes to the Land Versus Quick Changes

Canaan Land Ministries v Jones is a recent Alabama Court of Civil Appeals case involving a boundary line dispute. In that case, two west-east adjoining properties were divided by a pond and a creek. Both properties’ deeds identified the pond and creek as the dividing line, with the eastern property’s property line running down the western bank of the pond and creek. Eventually, a dam which created the pond failed, causing the pond to disappear and the creek to change course. This led to a dispute as to the boundary between the properties. One property owner argued that the property lines did not change and that they should still be marked by where the banks of the pond and creek previously were. The other argued that the lines should shift with the new location of the creek. The Alabama Court of Civil Appeals explained that when a boundary line is affixed to a shore or bank of a body of water whose location changes, the speed of the change determines whether the boundary line is to move. In the case of small, gradual changes, the boundary line moves with the body of water. For example, a river that slowly shifts its course over time will also cause the boundary line to shift slowly over time. However, large-scale, sudden changes (“avulsions”) do not impact the boundary line. In this case, since the shift was caused by the sudden failure of a dam, it was considered an avulsion, and the boundary line did not change.

Adverse Possession and Timber Land

One case, Rayonier Forest Resources, LP v Hudson and Hudson, involved a claim of adverse possession. Adverse possession is a legal doctrine that allows a person to claim ownership over a property if they occupy that property for a specific period, without the owner’s permission, and meet other various requirements. Two such requirements are that the claimant’s occupation of the land must be visible and known (“open and notorious”) and that it must go against the true owner’s right to the property (“hostile”). In this case, a timber company claimed adverse possession over a portion of the adjacent property. To demonstrate that its use of the land was “open, notorious, and hostile,” the timber company pointed to the fact that it marked trees in accordance with forestry best practices, placed signage on some trees, and harvested timber from all areas of the land that were suitable for timber harvest (and maintained the remaining land according to forestry best practices). The Circuit Court ruled that these actions weren’t sufficient to establish ownership over the full area that the timber company was trying to claim because the timber company was not harvesting timber from the full area. However, the Court of Civil Appeals noted that harvesting timber is only one way of demonstrating “open, notorious, and hostile” use of land. Instead of only considering timber harvest, the Circuit Court should’ve considered any act that a true owner of rural, wooded land would ordinarily perform. As such, the case was sent back to the Circuit Court for further consideration.