PropertyLines@haywardlaw.net

So what is a “Power of Attorney” anyway?

Chances are, if you are like most individuals, you’re not quite sure what a power of attorney is or does.  Most people know that it is a legal document that they may need, but aren’t sure why it’s needed or where to start.

A power of attorney is a legal document that gives another person the authority to manage some or all of your financial affairs.  Regardless of whether you foresee the potential for becoming disabled or even incapacitated, truth is - life is unpredictable.  And if you are prepared, you need not fear.  There is peace of mind for the individual who decides, in times of competency and good health, to nominate individuals who are capable and trustworthy to take care of your financial affairs should you not be able to do so.

First of all, let’s simplify some of the legal terms.  A power of attorney is created when you (called the principal) give someone else (called the attorney-in-fact) written permission to act on your behalf.  In understanding the term “attorney-in-fact”, I suggest you do yourself a favor and mentally ignore the word “attorney” and substitute it with the word “representative”.  After all, that’s what attorneys are, they are representatives of others.  When you grant another person “a power of attorney” you are designating them as your representative.  Your representative (or attorney-in-fact) does not have to be an attorney and they rarely are.  They are usually a close confidant such as a spouse, relative, or friend.

Your representative will only have as much power to manage your financial affairs as you give them and you must be capable and competent in order to grant that power.  You may grant only a limited power of attorney that permits your representative to do only specific acts, such as making deposits and withdrawals from the bank.  Or, you could grant a general power of attorney that permits your representative to handle all of your financial affairs.  How much power to grant to your representative is a determination that only you should make with the advice of a competent estate planning attorney.  Please be advised that a power of attorney does not deal with health decisions.  A separate document called an “advanced physicians directive” or “medical directive” deals with health care issues.

A power of attorney does not take away your right to make your own decisions about financial matters.  Just because you have granted a power of attorney to another individual does not mean that you can no longer make your own decisions.  What I typically do for my clients is draft a letter on the client's behalf, addressed to the individual(s) appointed as an attorney-in-fact, explaining the circumstances in which the nominated individual can use this power. It is like handing someone you trust a spare key to your residence for safe keeping should they ever need to access the house (e.g. like while you are away on vacation) with a letter instructing them not to use the key under ordinary circumstances and specifying when they must use the key.  The bottom line is that notwithstanding your grant of authority to act on your behalf, you are always legally in control until you become incapacitated.  Additionally, assuming you are capable, you can terminate or revoke a power of attorney at any time by notifying the representative in writing. 

In Oregon, the power of attorney is durable, which means that it remains in effect should you become incapacitated.  When you die, the power of attorney dies with you.  At that point, your personal representative, as declared in your will, would then have the authority to move forward in managing your estate.  If you have a revocable living trust, then your successor trustee would have said authority.

This blog posting is for informational purposes only and the reading thereof does not create a lawyer-client relationship.

What duties does a seller of real property have to disclose the condition of said property to the buyer?

The topic of disclosure deals essentially with misrepresentation/fraud. Liability for such can be established in either a tort (civil wrongdoing) lawsuit, suit for breach of contract, or both. This posting discusses tort liability only.

Tort misrepresentation/fraud law

The initial determination to be made in a buyer’s dispute with his seller is whether his case is one of A) active concealment of facts known to the seller (e.g. the seller’s installation of new carpet over termite damaged floors) or the B) nondisclosure of facts known to the seller (e.g. no disclosure of termite damage not readily visible to buyer/ineffective inspectors). There are reported cases dealing with each situation. This blog posting limits its discussion to the nondisclosure of facts.

Nondisclosure case law in Oregon generally follows the principles outlined in the Restatement (Second) of Torts §§ 550-551. Section 551 (1) states the general principle of the rule. It says a seller’s failure to disclose facts that "he knows may justifiably induce the other to act or refrain from acting" in a purchase is the same as an overt misrepresentation of facts when the seller has a duty to the buyer to disclose the facts or matters in question. Therefore, the first question to ask is whether the seller owes the buyer a duty to disclose. It may appear on its face that the answer is always "yes", however, such is not the case. Section 551 (2) of the Restatement (Second) of Torts tells us when there is a duty. They are situations (a) through (e) as follows, with hypothetical examples in parentheses:

(2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated,

(a) matters known to him that the other is entitled to know because of a fiduciary or other similar relation of trust and confidence between them (examples: Son selling property to his father; Business owner selling property to her business partner); and

(b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading (example: Buyer asks Seller whether the irrigation pump in the front yard is functional. Seller responds that he has never used the pump, but believes the pump itself works, which is true, but does not mention that the power connection to said pump was never reconnected to the main circuit breaker after seller’s last remodeling job); and

(c) subsequently acquired information that he knows will make untrue or misleading a previous representation that when made was true or believed to be so (example: Buyer asks Seller whether a line of mature fruit trees on the rear of the property are located on the property. Seller says they are and that he has cared for them for the entire seven years he’s lived on the property. A week later, yet still prior to closing, the next door neighbor notifies Seller that his just completed survey shows the fruit trees are on his (neighbor’s) property. Buyer never raises the question about the fruit trees again and Seller never mentions his conversation with neighbor); and

(d) the falsity of a representation not made with the expectation that it would be acted upon, if he subsequently learns that the other is about to act in reliance upon it in a transaction with him (example: Buyer is really excited about the prospect of purchasing Seller’s home on the river. Seller is reasonably confident that Buyer will buy property because she is enamored with the idea of river living, although she has not committed yet. Seller, in his own excitement over a potential sale, adds on for good measure that he just completely rewired the shop to accommodate projects requiring higher capacity power. Buyer does not respond to this comment. A week later, Buyer’s husband visits the property, walks around the shop and proclaims what a great deal it is that it has been rewired. Now that husband is on board, the Buyers decide to purchase); and

(e) facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts (example: Buyer tours home and environs, notices a small, but lush garden and an irrigation canal in the rear of the property. Buyer is an avid gardener and expresses his pleasure in knowing that the residence has access to such quantities of water. Seller, or seller’s agent, knows that the Seller opted out of the irrigation district (and therefore has no rights to said canal) and that once a property opts out, it cannot get back in.)

The listed occurrences are highly factual. Therefore, the would-be plaintiff must be able to establish by clear and convincing evidence (plaintiff’s standard of proof in a fraud case) that sufficient facts are present to determine that a duty really does exist and that there was a breach of that duty. See Felonenko v. Siomka, 55 Or.App. 331, 334, 637 P.2d 1338,1340 (1981).

As one can readily conclude from the hypothetical situations above, much of the facts have to do with what was orally represented or what was not said at all. Which begs the question, what is a buyer to do if in situation (d) the seller changes his story and says the wife of the buying couple was mistaken, that he (seller) never made any such claim to rewiring? What then?

Here is where keeping a journal of all conversations can help, not that you will pull out said journal and quote from it on the witness stand later on, but it will permit you to remember all of the representations that are made. Why go through this effort? Well, at some point, you will likely review the seller’s "Property Disclosure Statement" which is required by Oregon law (except for new construction, foreclosed homes, sales from trusts/estates, or from a government agency) to be filled out by the seller.

Take out your journal and compare it with what the seller is representing on the Property Disclosure Statement BEFORE you close. If something doesn’t jive, you can either work it out or discover early on that the seller is not trustworthy. You may learn that this just is not the house for you, which could save you a lot of headaches in the long run. Remember, litigation is a last resort. You want to avoid it if at all possible. However, if you do have to stick to your guns, they had better be loaded. If rewiring was done to the shop, make sure seller puts it on the disclosure statement, even as an addendum if necessary. The seller’s checking the box that the wiring is functional (which is really all that is asked) is not the same as representing that the wiring is all new and functional. Then, if seller is foolish enough to continue to perpetuate the lie for fear he won’t sell his house, you’ve got hard evidence of his misrepresentation. Remember, you will have to prove your case by CLEAR and CONVINCING evidence. Even if there are five separate misrepresentations and you have only two documented, that will affect the seller’s credibility at a hearing as to the remaining three issues. Most nondisclosure cases never see trial by jury because of mandatory language in the contract of sale that commits both parties to first seek mediation and arbitration. However, your evidence can still persuade a mediator or arbitrator.

The trick with representations is to fix them into some kind of tangible form, whether in the disclosure statement, your journal, or in the minds of believable and intelligent witnesses. A lot of these disputes are the result of miscommunication. The exercise of writing journal entries will cause you to pay more attention to what is being said, by whom, and when. It will also cause you to ask more questions and receive needed clarifications up front.

This blog posting is for informational purposes only and the reading thereof does not create a lawyer-client relationship.

Do I Need to Copyright My Song?

So, you have written a song or recorded an album.  While basking in your sense of creative accomplishment, beware of those who would steal your creative genius.  What took you potentially several weeks to create can be swiped in seconds - especially in the digital age.  At some point, you’ve probably (and hopefully) thought, “Should I copyright my work?”

When asked the aforementioned question by a client, my response is, “You already have a copyright, but it’s virtually worthless without registration.”  As a songwriter, you have the right to own the copyrights in your original works. Your copyrights are considered property, just like an automobile or guitar.  These rights come from Article VIII of the United States Constitution.  Since the adoption of the Constitution, Congress has further expanded and defined copyright protection in Title 17 of the United States Code.

Technically, a copyright comes into existence the moment the work is “fixed” into any tangible medium of expression.  A “tangible medium” can be anything that records your work, whether it’s notes on paper, music on an mp3 file, or a performance saved on a digital hard drive in either audio or video format.  Therefore, if you have written the song out in notation, you own the copyright to that notation.  If you go beyond notation and actually perform the song in a recording, you have a sound copyright, which is a separate and distinctive property right from the notated song notes or written lyrics.  However, if you merely fashion a song in your head while walking down the street, it’s not “fixed” in a tangible medium, and therefore, not copyrightable.  Same is true if you play the tune in your garage a hundred times without recording the song in tangible form (e.g. audio/video tape, CD-r, MP3 or digital hard disc recorder) or on paper (in notation, tablature, etc.) - there is no copyright protection.

Copyright without registration is virtually worthless
Let’s say you did “fix” the song and it is “protected” by copyright.  Then you go about town performing your song.  It’s a smash hit!  Everyone loves it.  So much so, that a fellow musician decides to take your song, or at least do a variation of it. A month later, he’s got a smash hit - at your expense.  You each demand the other stop performing the song because it’s “yours”.  Who will be able to prove that they were the original author?  This hypothetical illustrates why you register your work.

Registering your copyright acts as evidence that you are in fact the author of your creative expression.  Such evidence can be used to order copyright infringers (e.g. the “other musician”) to cease and desist from copying, distributing, or performing your work.  Furthermore, it allows you to file suit in Federal Court under the Copyright Act to seek collection of money damages - which can be anywhere from $750 to $30,000 per infringement.  If the infringement is proved to have been “willfull”, the damages can as high as $150,000.

Intellectual property is intangible, but still property that is protected by law
Each of us has a distinctive understanding of property rights.  Even children realize that the essence of “owning” something is the right to exclude all others from the use or possession of the subject “thing” or property.  This concept is easily understood when speaking of tangible property, items we can literally touch or hold like a telephone or a baseball.  The person who purchases a new Porsche owns that vehicle.  He has legal right to exclude everybody else from driving, washing or otherwise using that car.  This concept of ownership applies as well to intangible property, like a musical tune or a poem (otherwise known as “intellectual property”).  The author of a poem is not necessarily interested in excluding all others from using the paper on which his poem is written.  The poet wants to protect the expression of the poem.  Copyright law is what protects the creative expression of the poem from theft.

Theft of intellectual property takes several forms.  It could be as simple as another person claiming to be the work’s author (e.g. the example above) and representing to the world that the creative genius of a song’s tune or lyrics are his.  Such assertions lay a foundation for claims to profits derived from the  work.  Equally offensive can be the association of the work with a message or product with which the author does not agree.  For example, Senator John McCain’s use of John Mellancamp’s songs “Our country” and “Pink Houses” at McCain’s political rallies in the 2007-08 Republican Primaries drew criticism from the rock star.  Mr. Mellancamp does not share Mr. McCain’s political philosophy and demanded that McCain’s campaign cease from using his music - a demand that was quickly adhered to.

Copyright law does not protect ideas, it protects the expression of an idea.  The protection of ideas and inventions is the realm of patent and trade secret law.  Copyright protection is more than the exclusive right to make copies of the work.  In fact, copyright law grants a “bundle” of rights.  There are five separate property rights.  They are as follows:

    1.    The right to reproduce (copy) the work.
    2.    The right to prepare derivative works (another work based upon your work).
    3.    The right to distribute the work.
    4.    The right to perform the work publicly.
    5.    The right to display the work publicly.

While copyright is often associated with the protection of music or movies, it can be obtained for any work deemed to be creative expression, including literary works, dramatic musical works (plays, musicals, etc.), dance choreography, graphic designs, blueprints, sculptures, and architectural works.

A word about “Works made for hire”
Furthermore, a musician should be aware that he cannot lay claim to ownership of a work (and therefore copyright) if said work was created in a “work for hire” situation.  If Stephen Spielberg commissions John Williams to write a musical score for Spielberg’s new film with the understanding that the work is for the film, Spielberg will be considered the author of the work and thus its rightful copyright holder.  Another example of the “work for hire” scenario is the reporter employed by the newspaper.  While the reporter is the originator of the articles he writes, the employing newspaper is considered the author of the articles for purposes of copyright because the articles were written within the scope of the reporter’s employment.

Summary
In summary, the moment an author “fixes” his work in a tangible form, the work is protected under law, but an evidentiary hurdle must be cleared to prove you are the author of the work instead of the other guy.  To avoid this hurdle, register your copyright!  You don’t need to hire an attorney to register your copyright.  You can figure out the application process yourself online at the Copyright Office website.  However, when you hire a competent copyright attorney, he or she can counsel you further on additional copyright issues, such as duration and publication issues, proper notices, international protection, and your responsibilities as a copyright holder.

This blog posting is for informational purposes only and the reading thereof does not create a lawyer-client relationship.