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Husband-To-Wife Title Transfer Doesn't Halt Forced Lot Merger

The owner of two parcels that the City of Berkeley wants to merge may not avoid the merger with a paper transfer of title to his wife, the First District Court of Appeal has ruled. However, the court stopped short of canceling the grant deed, ruling only that the city may be entitled to an injunction prohibiting further transfer of the property title.

The Subdivision Map Act permits cities and counties to force the merger of contiguous parcels under common ownership if one of the parcels is substandard or if its development would create a hazard. In 2004, Berkeley began the process of merging undeveloped, substandard lots in the Panoramic Hill area because the exceptionally steep area lacks good vehicle access, has inadequate sewage capacity, and is particularly susceptible to fire and earthquake damage.

On September 28 and again on September 30, 2004, the city notified Maarten Kalway that it was in the process of merging his two lots, one on Mosswood Road and one on Arden Road. Both parcels are on dead-end streets lacking adequate room for fire trucks to turn around, and the 5,000-square-foot, undeveloped Mosswood parcel is far smaller than the 9,000-square-foot minimum required by zoning.

Kalway, who had inherited the real estate, told the city that he had deeded the Mosswood parcel to his wife, Mary Kalway, on September 27. The city Planning Commission concluded the transfer was completed solely to the Subdivision Map Act's purpose, so the commission went ahead with the two-lot merger.

The Kalways then sued the city. The Alameda County Superior Court ruled for the city and canceled the grant deed. The Kalways appealed, and the First District issued the slightly confusing decision that the city can force the lot merger but cannot cancel the grant deed.

The Kalways admitted that they undertook the title transfer to avoid the forced lot merger. Essentially, they argued that because Maarten Kalway held title to one parcel and Mary Kalway held title to the other lot on the date the city notified them of the merger process, the city could not force the merger.

However, the First District determined that the map act allows "local agencies to look past the paper title in determining whether properties are under common ownership for purposes of the merger statues."

The map act balances the public's interest in orderly community development with private property rights, the court noted. "To allow owners such as the Kalways to avoid merger, and the salutary effects of the act, by means of a paper transfer of ownership, is inconsistent with the purpose of the act and the balance struck by its provisions," Justice William Stein wrote for the court. "The Kalways' interpretation, if adopted also would discourage open discussion and planning by local agencies, as it would create a loophole for any property owner receiving advance warning of a potential merger."

"In sum, where two or more properties have the same owner in substance, even if not in form, they may be merged if the act's substantive conditions for merger exist and its procedural requirements are met," the court ruled.

Nevertheless, the court ruled that neither it nor the city could cancel the grant deed. The court did determine that Mary Kalway "has no right to further transfer title to the illegally created Mosswood Road parcel except back to Mr. Kalway, and the city may be entitled to a prohibitory injunction against either or both of the Kalways to prevent the further conveyance of the parcel." But the court declined to issue such an injunction.

The Case:
Kalway v. City of Berkeley, No. A112569, 07 C.D.O.S. 6290, 2007 DJDAR 7895. Filed May 31, 2007.
The Lawyers:
For Kalway: Jonathan Quint, (510) 595-9130.
For the city: Zach Cowan, city attorney's office, (510) 981-6950.

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