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CASE UPDATES: Broker Disclosures; Reconciling Nonconforming Structures and Variance Rules; New Santa Cruz County Medical Cannabis Cultivation Ordinance


Coldwell Banker Residential Brokerage Company, Inc. v. Superior Court, (2014) 117 Cal.App.4th 158, was a real estate non-disclosure case.  After a house buyer and her minor child moved into their newly purchased house, they both developed asthma caused by toxic mold that was allegedly not disclosed by the seller’s broker, and they both sued the seller’s broker for personal injuries and property damages under multiple causes of action including fraud (nondisclosure/concealment), emotional distress and nuisance.

To review, the general statutory disclosure rule is this: A real estate broker has a duty to a prospective purchaser of residential real property “to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective purchaser all facts materially affecting the value or desirability of the property that an investigation would reveal….” (Civ. Code § 2079(a)), to act reasonably and in good faith (Civ. Code §2079.16), and to “disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the parties.” Ibid.  Furthermore, the specification of items for disclosure contained in the statutory form Disclosures Upon Transfer of Residential Property (Civ. Code § 1102 et seq.), “does not limit or abridge any obligation for disclosure created by any other provision of law or which may exist in order to avoid fraud, misrepresentation, or deceit in the transfer transaction.”  Civ. Code § 1102.8.  This means that brokers must disclose all material facts even if they are not of a type listed in the Disclosure Upon Transfer form.

The issue in the Coldwell Banker case was whether the seller’s broker breached any disclosure duties or other duties of care as to the buyer’s child.  The court held that the seller’s real estate broker owed no duties to the buyer’s minor child, and therefore could not be liable to the child for misrepresentation and fraud (concealment) arising from failures to disclose certain defects, because the child was not a party to the purchase and sale agreement, because the child was not an intended beneficiary and because the child was not relying on the broker.  The court likened this case to an earlier published case holding that an owner’s guests who were injured when a rotted deck failed could not maintain a nondisclosure lawsuit against the seller’s broker. (FSR Brokerage, Inc. v. Superior Court (1995) 35 Cal.App.4th 69.)


In Eskeland v. City of Del Mar, (2014) 224 Cal.App.4th 936, the court held that the City of Del Mar could grant a variance for setback requirements for the construction of a new house on the existing house’s building footprint even though the new house was not permitted under legal nonconforming use rules.  The subject parcel was zoned residential with an irregular shape and steep slopes.  The existing house encroached on the 20-foot setback by approximately 11 feet, but was deemed legal nonconforming, (which means there was no setback encroachment at the time the house was built).

The City’s “conformities” ordinance provided that if a remodeling project costs less than 50 percent of the building’s value it can be approved so long as the nonconformities are not enlarged, extended or expanded, but if the project costs more than 50 percent of the building’s value, the owner will not be entitled to maintain any nonconformities and all current zoning regulations must be complied with.  Because the project in this case (full demo and rebuild) exceeded 50 percent of the existing building’s value, the setback encroachment was not allowed as a nonconforming use, so instead, the owners applied for and were granted a variance.

A group of neighbors opposed the variance, and then filed suit, arguing that the “conformities” ordinance constituted an absolute prohibition on the expansion of nonconformities and effectively superseded the variance provisions in the City’s zoning ordinance.  The court disagreed, however, finding the variance sections of the zoning ordinance to be independent of, and not precluded by, the conformities sections.   Note that this case involved the court’s interpretation of the particular nonconforming structures and variance rules of the City of Del Mar; other jurisdictions’ rules may differ and lead to a different outcome.


On February 25, 2014, the Santa Cruz County Board of Supervisors adopted Ordinance No. 5176, which added new Chapter 7.126 to the Santa Cruz County Code relating to the cultivation of medical cannabis, which became effective at the end of March. Ordinance No. 5176 essentially permits the limited cultivation of medical cannabis — by right and without county approval. Ordinance No. 5176 has numerous requirements and exceptions that require careful analysis considering site-specific facts and zoning requirements, but here are the basic rules:

Every “medical cannabis cultivation business”:

  • Must be located outside the urban services line and located in a zone district designed as SU (Special Use), TP (Timber Production), CA (Commercial Agriculture), A (Agriculture), AP (Agricultural Preserve), or RA (Residential Agriculture);
  • Must be on parcels at least one acre in size or, if in an RA district, at least five acres;
  • Must be located more than 600 feet away from any school or park;
  • May only transfer or deliver its product to a “medical cannabis business” located in Santa Cruz County;
  • The number of plants at any given location must not exceed 99 plants OR the total garden canopy must not exceed 1,000 square feet (on 1 to 5 acre parcels), 2,000 square feet (on parcels more than 5 and less than 10 acres), or 3,000 square feet (on parcels more than 10 acres), with setbacks from habitable structures that increase with acreage;
  • Outdoor cultivation must be fully enclosed by a secured, opaque fence at least 6-feet high, which is not visible from any public right of way;
  • Lighting must not be visible between 6 p.m. and 9 a.m.; and
  • The operation must comply with all Santa Cruz County environmental, water use, and health and safety requirements, including building and grading permit requirements.

©2014 Miles J. Dolinger. This article is not intended to and does not constitute legal advice or a solicitation for the formation of an attorney-client relationship.

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Miles J. Dolinger
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