Justia Real Estate & Property Law Opinion Summaries

Petitioners executed a promissory note and mortgage in favor of Mortgage Electronic Registrations Systems, Inc. The notary acknowledgment on the mortgage was left blank. The mortgage was subsequently recorded with the county recorder. The interest in the mortgage was later assigned to Bank. Thereafter, Petitioners initiated a Chapter 13 bankruptcy and commenced an adversary proceeding seeking to avoid the mortgage as defectively executed. The bankruptcy court determined that its interpretation of Ohio Rev. Code 1301.401 would be dispositive in this case and certified to the Supreme Court questions of state law concerning whether section 1301.401 has an effect on the case. The Supreme Court answered that section 1301.401 applies to all recorded mortgages in Ohio and acts to provide constructive notice to the world of the existence and contents of a recorded mortgage that was deficiently executed under Ohio Rev. Code 5301.01. View "In re Messer" on Justia Law

The Smiths lived in a Joliet home, title to which passed to wife in 2004 as an inheritance. Real estate taxes had gone unpaid in 2000, resulting in a tax lien. At a 2001 auction, SIPI purchased the tax lien and paid the delinquent taxes—$4,046.26—plus costs and was awarded a Certificate of Purchase. Smith did not redeem her tax obligation. SIPI recorded its tax deed in 2005 and sold the property to Midwest for $50,000. In 2007, the Smiths filed for Chapter 13 bankruptcy relief and sought to avoid the tax sale. The bankruptcy judge and the Seventh Circuit found a fraudulent transfer (11 U.S.C. 548(a)(1)(B)) because the property was not transferred for reasonably equivalent value, but found Midwest a subsequent transferee in good faith. The 1994 Supreme Court decision, BFP v. Resolution Trust, that a mortgage foreclosure sale that complies with state law is deemed for “reasonably equivalent value” as a matter of law, does not apply in Illinois. Unlike mortgage foreclosure sales and some other states’ tax sales, Illinois tax sales do not involve competitive bidding where the highest bid wins. Instead, bidders bid how little money they are willing to accept in return for payment of the owner’s delinquent taxes. The lowest bid wins; bid amounts bear no relationship to the value of the real estate. View "Smith v. Sipi, LLC" on Justia Law

In 2004, Laura Sheedy refinanced property she owned. For the transaction, Sheedy executed a promissory note and mortgage in favor of Washington Mutual Bank (WAMU). The mortgage was eventually assigned to Deutsche Bank National Trust Company. JPMorgan Chase National Association (Chase) serviced the loan. Deutsche Bank subsequently commenced foreclosure proceedings. Thereafter, in 2010, Sheedy filed for protection under Chapter 13 of the Bankruptcy Code. As part of her plan, Sheedy raised a series of allegations of lender liability. In 2011, Sheedy filed this adversary proceeding to have the bankruptcy court resolve her lender liability claims, adding that Deutsche Bank and Chase (together, the Secured Creditors) were liable for fraud deceit, and misrepresentation on the basis that WAMU provided her with inaccurate or false information concerning the terms of the note and the mortgage. The bankruptcy court granted summary judgment in favor of the Secured Creditors. The district court affirmed. The First Circuit affirmed, holding that all of Sheedy’s claims were either time-barred or without merit. View "Sheedy v. Deutsche Bank Nat’l Trust Co." on Justia Law

Angie Moffo lived rent free for eight years in a home owned by her brother-in-law, Doug Rich. After Rich filed for Chapter 7 bankruptcy, the appointed bankruptcy trustee, Stephen Rupp, filed suit against Moffo for back rent under Utah’s Uniform Fraudulent Transfer Act, asserting that Rich had defrauded his creditors by allowing Moffo to live in the house rent free after he became insolvent. The district court concluded that Moffo was the recipient of a fraudulent transfer and entered a $34,200 judgment against Moffo. The Supreme Court vacated the judgment entered against Moffo, holding that Rich did not transfer an asset to Moffo within the scope of the Act because the home was fully encumbered by a mortgage, and any rents were not the property of Rich. Remanded with instructions to enter summary judgment in favor of Moffo. View "Rupp v. Moffo" on Justia Law

The Debtors’ chapter 13 plan provided for cure of any defaults and maintenance of regular monthly mortgage payments on real property, pursuant to 11 U.S.C. 1322(b)(5). The Bank failed to file a proof of claim and did not receive any disbursements for the mortgage debts. After their chapter 13 discharge, the Debtors sought a determination that the Bank’s liens had been discharged. The bankruptcy court determined that the liens had passed through the bankruptcy, but that the amount of debt secured by each should be reduced by the amount that the Bank would have been paid if it had filed proofs of claim. The Sixth Circuit Bankruptcy Appellate Panel reversed the reduction of the debt amount. Although a secured creditor is not required to file a proof of claim to preserve its lien, its failure to do so affects its right to payment under a chapter 13 plan. The Debtors or the Trustee could have filed a proof of claim on the Bank’s behalf, so that the Debtors would not have exited bankruptcy in default on the debt. Excess cash of more than $9,000 was returned to the Debtors after the plan was consummated. If the decision to reduce the debt were affirmed, the Debtors would gain a windfall. View "In re: Matteson" on Justia Law

Appellants filed a promissory note that was secured by a deed of trust on their property. At the time that Appellants defaulted, Respondent was the holder of the note and Mortgage Electronic Registration Systems, Inc. (MERS) was the beneficiary of the deed of trust securing the note. After Appellants filed for bankruptcy, MERS assigned its interest in the deed of trust to Respondent. Before the assignment was recorded, Respondent filed a proof of claim in Appellants’ bankruptcy claiming that it was a secured creditor. Respondent then filed a motion for relief from the automatic bankruptcy stay so that it could foreclose on Appellants’ property. Appellants argued that Respondent was not a secured creditor because it did not have a unified note and deed of trust when the bankruptcy petition was filed. The United States Bankruptcy Court certified two questions of law to the Supreme Court concerning the legal effect on a foreclosure when the promissory note and deed of trust are split at the time of foreclosure. The Supreme Court concluded (1) when the promissory note is held by a principal and the beneficiary under the deed of trust is the principal’s agent at the time of foreclosure, reunification of the note and the deed of trust is not required to foreclose; and (2) as a matter of law, the recording of an assignment of a deed of trust is a ministerial act. View "In re Montierth" on Justia Law

The Kawaharas loaned the Allisons $400,000. The Allisons executed a note to the Kawaharas in that amount secured by a deed of trust on a Reno property. The note was delivered in 2009 but was not recorded until 2011. When the Allisons’ car dealership became delinquent in taxes, the State Department of Taxation recorded certificates of tax lien against the Allisons. The lien was created and recorded in 2010. The Allisons filed for bankruptcy in 2011. The U.S. Bankruptcy Court for the District of Nevada approved the sale of the Reno property. The bankruptcy court certified two questions to the Nevada Supreme Court concerning the priority of the competing liens on the Reno property. The Supreme Court concluded (1) a recorded tax lien cannot be recognized as a mortgage lien, and therefore, the Department cannot claim to have recorded a mortgage lien when it filed a tax lien certificate; (2) the deed of trust had priority over a tax lien levied under Nev. Rev. Stat. 360.473; and (3) the Department’s tax lien is considered a judgment lien under section 360.473(2), and Nevada recording statutes do not protect judgment creditors against prior unrecorded conveyances. View "State, Dep't of Taxation v. Kawahara" on Justia Law

This dispute stemmed from a house that Debra Stevenson and her son Eugene Smith both own. After Stevenson refinanced her mortgage twice and then filed for bankruptcy, HSBC filed suit in Bankruptcy Court seeking equitable subrogation, which permits courts to declare that the owner of a mortgage (HSBC) has the same rights as an earlier-in-time owner of another mortgage (Wells Fargo). Only Stevenson signed the paperwork for the second refinancing with HSBC and Smith refused to sign because he thought the interest rate was too high. HSBC went ahead with the mortgage in full without Smith's signature. The court affirmed the Bankruptcy Court's conclusion that HSBC is entitled to equitable subrogation and rejected Stevenson and Smith’s claims that the mortgage is invalid under D.C. and federal lending laws. The court affirmed the judgment. View "In Re: Debra M. Stevenson" on Justia Law

This appeal stemmed from plaintiffs' complaint to cancel and discharge a creditor's judgment lien held by defendant Citi Mortgage, Inc. (Citi). Following the conclusion of Chapter 7 bankruptcy proceedings the Superior Court entered a default judgment in favor of Citi against plaintiffs, and by virtue of its docketing of that judgment, Citi obtained a lien on all of plaintiffs real property in New Jersey. Four years later, plaintiffs instituted a Chapter 7 bankruptcy proceeding in the United States Bankruptcy Court. Because plaintiffs listed the law firm that had represented Citi, rather than Citi itself in their Chapter 7 petition, the bankruptcy court did not provide notice of the proceeding to Citi. After the bankruptcy trustee abandoned two of plaintiffs' New Jersey properties, the bankruptcy court discharged plaintiffs' debt and closed their Chapter 7 case. Citi did not attempt to levy on plaintiffs property at any time prior to the bankruptcy filing and did not seek to enforce its lien in the wake of plaintiffs bankruptcy discharge. More than three years after the bankruptcy discharge, plaintiffs filed this action under N.J.S.A. 2A:16-49.1, which permits a debtor whose debts have been discharged in bankruptcy, to apply to the state court that has entered a judgment against the debtor, or has docketed the judgment, for an order directing the judgment to be canceled and discharged. The trial court granted Citi's motion for summary judgment and dismissed plaintiffs' claim. The court acknowledged that a judgment creditor, such as Citi, who has not levied on the debtor's property prior to the debtor's filing of a bankruptcy petition, may enforce its valid lien following the bankruptcy discharge, but must do so within the year following the discharge. The Appellate Division affirmed the trial court. Finding no reversible error, the Supreme Court affirmed the Appellate Division for substantially the same reasons. View "Gaskill v. Citi Mortgage, Inc." on Justia Law

Defendants were creditors of Plaintiff who obtained final judgments against Plaintiff. A levy of execution was made on Plaintiff’s real property. Plaintiff subsequently received a discharge under Chapter 7 of the Bankruptcy Code. Plaintiff did not seek or obtain a ruling from the Bankruptcy Court avoiding any of Defendants’ liens. Thereafter, Plaintiff filed a complaint to remove the judicial liens. The judge entered judgment in favor of all three defendants, including two defaulting defendants, ruling that Defendants’ liens remained. The Supreme Judicial Court affirmed, holding that Defendants’ liens survived the bankruptcy discharge as a matter of federal and state law. View "Christakis v. Jeanne D’Arc Credit Union" on Justia Law