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Coastal Commission to inform the parties that the condominium
development project was in violation of the State of California’s
(State) public easement over patented tidelands.5 Soon after,
the State declared that the Phase I and II properties were
located on tidelands and were subject to a public trust easement
in favor of commerce, navigation, and fishing.
Because of the State’s claim regarding the public easement,
the closing of escrow was delayed. CDC requested that
petitioners further extend escrow past the September 1, 1990,
closing date. On September 5, 1990, Mr. Steinman referred the
State’s easement claim to First American Title Insurance Co.
(First American) for resolution under petitioners’ title
insurance policy, which had been issued April 2, 1979.
Around October 1990, petitioners and CDC began negotiating a
“Third Amendment to Agreement for Purchase and Sale of Real
Property and Escrow Instructions” (Third Amendment) in order to
establish terms for a further extension of the Phase II escrow.
During these negotiations, CDC was aware of the State’s easement
claim but wanted to ultimately close the Phase II escrow if the
claim could be satisfactorily resolved. Also during this time,
petitioners took the position that CDC had an unconditional
obligation to purchase Phase II and the fact that the City of
5 This letter also informed the parties that the
development project violated the Alquist-Priolo Special Studies
Act since the planned location of one of the buildings was
directly over the trace of an active earthquake fault. Such a
location is prohibited. This matter was resolved by CDC.
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