The phrase “abatement” generally deals with stopping or interrupting an ongoing process. In the legal world, abatement refers to a court process by which a judge requests an action to cease or be suspended due to different factors. For example, a claim may be abated if a case has already been filed with the same parties and subject matter.

More specifically, in tort law, abatement may occasionally also refer to an order by a judge requesting that a person ceases performing activities that would constitute a nuisance.

What Is a Nuisance?

Nuisance is the unreasonable or illegal use of property that causes damage to others by stopping them from enjoying their property. Nuisance includes noxious smells, deafening noises, unauthorized burning of materials, the posting of lewd or offensive signs or pictures, and unlawful gambling. In some situations, the nuisance may be a crime.

A nuisance may also be grounds for eviction if a tenant is a responsible party. A public nuisance is a nuisance that affects several public members or the public at large, such as the toxic fumes disgorged from a factory.

Private nuisance only affects a limited number of individuals, such as constant loud music affecting your neighbors.

What Is Civil Tort Law?

Civil tort law is a vast area of the law that surrounds wrongdoing by one person against another.

A tort is a civil wrong, other than a breach of contract, that causes injury or loss. The individual or entity that commits the iniquity can be held responsible for the loss or damage they cause.

Tort law aims to compensate victims and hopefully deter or discourage wrongdoing. Tort law delivers a way for injured parties to recover monetary damages for the foreseeable damage caused by, or was the direct result of, the other party’s breach of their duty of care. The standard of care is a reasonable person in a similar situation.

Wrongdoing includes things that cause physical or financial injury, pain and suffering, violate privacy, property, or constitutional rights, or harm a reputation.

Different Types of Real Estate and Property Exchanges

Property exchange is a lawful alternative to the regular acquisition and sale of property which usually supplies the taxpayer or property owner with an income tax break. The profits from the sale of a property are subject to taxation by the U.S. government. Nevertheless, an exchange “trading” one property for another destroys any taxable gains from the transaction.

Some of the most common concepts involved in property exchange include:

  • 1031 Exchange: A 1031 exchange permits a taxpayer to exchange a current property for a comparable replacement property. Because the funds involved in a 1031 exchange pass through a qualified intermediary’s hands, and all proceeds from the sale of the first property are invested in the replacement property, there are no taxable gains.
  • Like-Kind Exchange: A like-kind exchange is the same as a 1031 exchange. Like-kind exchanges refer to exchanging similar property types or “like-kind” property. For instance, exchanging one building (real property) for another building (also real property) is a like-kind exchange.
  • Boot: “Boot” or “boot received” refers to taxable property or gain received from a 1031 exchange.

What Is Section 1031?

A 1031 exchange is a trade of one investment property for another. Most swaps are taxable as sales, but if your exchange meets the necessities of 1031, you’ll have no tax or limited tax due at the time of exchange.

As the IRS sees it, you can change the form of your investment without recognizing a capital gain, allowing your investment to continue to grow tax-deferred. There’s no limitation on how often you can do 1031 exchanges. You can rollover the gain from one investment property to another many times. Although you may earn a profit on each exchange, you evade paying tax until you sell the property for money. At that point, you’ll pay only one tax at a long-term capital gains rate. Capital gains rates are presently 15% or 20%, depending on income, and 0% for some lower-income taxpayers.

Most exchanges must be of like-kind. “Like-kind” is just a representation. The property doesn’t have to be identical. You can swap an apartment for undeveloped land or a farm for a strip mall. The laws are enforced liberally. You can trade one business for another. However, the 1031 provision is for investment and business property. Although the regulations can apply to a former residence under certain circumstances, and there are also ways to use 1031 for swapping vacation homes, the loopholes are limited.

What Is a Transfer of Interest?

A transfer of interest is when title to property or assets switch from one individual to another. This is usually achieved through a sale, though it can also happen through a gift. Transfers of interest typically refer to the exchange of real property, such as a house or apartment complex. Nevertheless, the term can include non-physical assets, such as stocks or copyrights. Transfer or change of interest typically indicates that the full title has passed in full from the original owner to the “transferee” (the recipient of the title).

Will a Case Be Abated If There Has Been a Transfer of Interest?

Traditionally, a case was abated or discontinued if the property underwent a transfer of interest. Yet, current laws usually allow a case to continue even if a transfer of interest has been. Now, federal laws overseeing civil procedure specifically handle the issue of “abatement due to transfer of interest.” Many states have laws that authorize a case to persist even if there has been a transfer of interest.

A case is no longer subject to abatement merely due to a transfer of interest.

If there has been a transfer of interest, a judge can order the action to continue by:

  • Keeping the claim in the name of the party who originally owned the interest
  • Replacing the transferee for the original party in the case, or
  • Directing the transferee to participate in the action as a joint party alongside the original party

Many states have passed “revival statutes,” which allow the transferee to revive an abated claim due to a transfer of interest. Therefore, having a case be abated due to a transfer of interest has weakened over time. This is because multiple jurisdictions facilitate interest transfers and try to avoid hindering such exchanges.

One standard exception to these laws has to do with the involvement of corporations in a lawsuit. If there has been a transfer of interest involving a corporation, and the corporation disbands or discontinues operations, the action will abate without an option of revival. A dissolved corporation is analogized to a “dead person.” Thus, the action cannot persist as such and will be abated.

Should I Hire a Lawyer for an Abatement Based on Transfers of Interest?

If you face a legal issue involving a transfer of interest, it is to your benefit to contact a real estate lawyer to discuss your choices. As mentioned, the laws regarding abatement can differ from state to state.

While most states do not completely abate a case if there has been a transfer of interest, some exceptions can be this rule. Therefore, it may be critical to ask your attorney what the laws of your jurisdiction state regarding abatements.