Justia Real Estate & Property Law Opinion Summaries

David and Kelli Nilsson, who were divorced, held a half interest in certain property in Reno as tenants in common. After the divorce, Kelli and the parties’ children lived on the property, and David lived elsewhere. Several years later, David filed for bankruptcy. On his schedule of real property assets, David claimed an interest in the Reno property as half-owner with Kelli. David then claimed the property as exempt from inclusion in his bankruptcy estate based in part on the homestead exemption. The bankruptcy trustee (Trustee) objected to the claimed exemption because David did not reside on the Reno property, David did not record a declaration of homestead, and David could not now record a valid declaration of homestead on the property. David responded that he could claim the exemption because his children still lived on the property. The bankruptcy court certified a question to the Nevada Supreme Court without ruling on the Trustee’s objection. The Court answered that a debtor must actually reside on real property in order to claim properly a homestead exemption for that property. View "In re Nilsson" on Justia Law

The debtors borrowed money secured by mortgages on real estate. The mortgages were recorded by the lenders to ensure the priority of their liens. The recorded mortgages did not state the maturity date of the secured debt or the interest rate. Those terms were included in the promissory notes, which were incorporated by reference in the mortgages. The debtors filed for bankruptcy. The trustees filed adversary complaints under 11 U.S.C. 544(a)(3), seeking to avoid the mortgages because they did not state the maturity dates or interest rates. In one case, the bankruptcy court granted summary judgment in favor of the trustee, but the district court reversed and granted judgment for the lender. In the other case, the bankruptcy court granted summary judgment in favor of the lender. The Seventh Circuit held that the trustee’s so-called “strong-arm” power to “avoid … any obligation incurred by the debtor that is voidable by—a bona fide purchaser of real property … from the debtor” could not be used to avoid the mortgages under a 2013 amendment to the Illinois statute on the form for recorded mortgage, 765 Ill. Comp. Stat. 5/11. View "Bruegge v. Farmer State Bank of Hoffman" on Justia Law

Horsfall worked as a real estate agent for First Weber, 2001-2002, and was the listing agent on First Weber’s contract with Call, who was trying to sell property. The contract gave First Weber exclusive rights collect commissions for sale of the property during the listing period and an exclusive right to collect commissions from sales to defined “protected buyers” for one year after the listing expired. The Acostas made an offer on the property and became “protected buyers.” Call’s contract with First Weber ended in August and at the same time, Horsfall left First Weber to establish his own brokerage, Picket Fence. In October, the Acostas contacted Horsfall. Without involving First Weber, Horsfall resuscitated the transaction with Call. The Acostas and Call executed a sales contract for the Call property. Picket Fence received a $6,000 commission, inconsistent with Horsfall’s status as First Weber’s agent under the earlier contract and in violation of Wisconsin real estate practice rules. Six years later, First Weber sued Horsfall in state court, asserting r breach of contract, tortious interference, and unjust enrichment. The state court entered a judgment against Horsfall for $10,978.91. Horsfall filed for Chapter 7 bankruptcy, listing First Weber as a creditor. First Weber responded that its judgment was non‐dischargeable under 11 U.S.C. 523(a)(6), as involving “willful and malicious injury.” The bankruptcy court, district court, and Seventh Circuit found the debt dischargeable. View "First Weber Grp., Inc. v. Horsfall" on Justia Law

The Debtor leased a building and, during liquidation in bankruptcy, assumed the lease, 11 U.S.C. 365, and sold the leasehold interest (and other assets) to Tenant. The bankruptcy judge approved the transaction in 2007, after Landlord did not object to the Debtor’s assertion that Landlord did not have any outstanding claim against the Debtor. The approval barred any claims based on pre‐sale events. The lease requires Tenant to maintain the roof. In 2010 the Landlord sued Tenant in state court, based on that obligation. By motion in the closed bankruptcy proceeding, Tenant asked the bankruptcy court to interpret the 2007 order as blocking the claim. The bankruptcy judge concluded that the order did not affect continuing obligations such as the duty to keep leased premises in good repair; Landlord requested a prospective remedy, not damages. The district court disagreed, ruling that Landlord can enforce the good‐repair clause only to the extent that defects in the roof first occurred after the lease’s assumption in bankruptcy. The Sixth Circuit dismissed an appeal for lack of jurisdiction, because the district court did not enter an injunction. The court expressed hope that the bankruptcy judge or the district judge will attend to several issues inherent in both opinions. View "Harrison Kishwaukee, LLC v. Rockford Acquisition, LLC" on Justia Law

Appellant obtained a loan from a Bank for a home equity line of credit secured by a second mortgage on her home in Rowley, Massachusetts. Appellant later sold her home but did not notify the Bank of the sale. Appellant later took advantage of a mistake made on the part of the Bank and obtained $124,200, the exact limit on the home equity line. After Appellant failed to pay back the $124,200 drawn from the home equity account, the Bank commenced foreclosure proceedings on the Rowley property. The new owners were insured by Old Republic National Title Insurance Company, which paid the debt, took an assignment of all of the Bank's rights against Appellant, and sued Appellant in state court. A default judgment was entered against Appellant. Thereafter, Appellant filed for bankruptcy. Old Republic sought a determination that its pre-petition judgment was excepted from discharge as a debt. The bankruptcy court determined that Appellant's debt was not dischargeable in bankruptcy because it was for money Appellant obtained by false pretenses and because it was a debt arising from willful and malicious injury. The First Circuit Court of Appeals affirmed, holding that the bankruptcy court was correct to find the debt to be non-dischargeable. View "Old Republic Nat'l Title Ins. Co. v. Levasseur" on Justia Law

Ute Mesa, a Colorado real estate developer, received a multi-million dollar loan to construct a single family home on property it owned in Aspen. To secure the loan, United Western Bank prepared a deed of trust incorrectly identifying Ute Mesa's sole member as the owner rather than Ute Mesa. The Bank filed suit seeking a reformation of the deed of trust and a declaration that it had a first priority lien on the property. Days later, the Bank filed notice of lis pendens in the county real property records. Ute Mesa filed for Chapter 11 bankruptcy relief, and continued as debtor-in-possession of the property. Ute Mesa then filed an adversary proceeding against the Bank to avoid the lis pendens as a preferential transfer. The bankruptcy court granted the Bank's motion to dismiss, and the federal district court affirmed. Ute Mesa argued on appeal that a "transfer of an interest in property" occurs when a bona fide purchaser cannot acquire an interest superior to that of a creditor. According to Ute Mesa, because the lis pendens prevented a bona fide purchaser from acquiring an interest in the property superior to the Bank’s interest, the lis pendens qualified as a transfer of an interest in the property. The Tenth Circuit affirmed the district court's decision, finding that a lis pendens is "merely a notice" and does not constitute a lien, therefore, no transfer occurred. View "Ute Mesa Lot 1, LLC v. First Citizens Bank & Trust, et al" on Justia Law

Earl and Harold Van Sickle appealed, and Hallmark & Associates, Inc., Frank Celeste, William R. Austin, Phoenix Energy, Bobby Lankford, and Earskine Williams, and Missouri Breaks, LLC, cross-appealed an amended judgment that held Missouri Breaks liable to the Van Sickles for unpaid pre-bankruptcy confirmation royalties and awarding the Van Sickles interest and attorney's fees. Upon careful consideration of the trial court record, the Supreme Court concluded the court did not err in holding Missouri Breaks liable under state law for pre-bankruptcy confirmation royalties owed to the Van Sickles. Furthermore, the Court concluded the district court did not abuse its discretion in awarding the Van Sickles attorney's fees and did not err in awarding them simple interest under the statute. View "Van Sickle v. Hallmark & Assoc., Inc." on Justia Law

Debtors owed delinquent real estate taxes to Summit County, Ohio, which sells outstanding tax obligations to investors as tax lien certificates. An investor purchasing such a certificate obtains a lien against the property and the right to pursue the taxpayer for the unpaid taxes, O.R.C. 5721.30-43. Plymouth filed a certificate showing its purchase of the Debtors’ tax obligation for $4,083.73 with a negotiated interest rate of 0.25%, “offered, sold, and delivered on November 3, 2010.” On October 3, 2011, Plymouth filed a second certificate, with a price of $2,045.44 and a negotiated interest rate of 18.00%. On April 17, 2012, Summit County filed a tax lien foreclosure complaint against the Debtors pursuant to pursuant to Plymouth's request for foreclosure. In May, 2012, the Debtors filed a chapter 13 plan and petition, proposing to pay interest on the tax certificates at the interest rates listed on the certificates. Plymouth filed a proof of claim based on both certificates in the amount of $10,521.46, including $2,120.00 in fees and the principal balance of $7,781.19 plus 18% interest from June 1, 2012 on both certificates. The Bankruptcy Court held that under Ohio law the appropriate interest rate for Plymouth’s tax claim was 0.25%. The Bankruptcy Appellate Panel affirmed. View "In re: Bowers" on Justia Law

Brookfield owns a shopping center that is subject to a first mortgage of $8,900,000, held by a trust, and a second mortgage for $2,539,375 that has been transferred to ValStone, which also serves as attorney in fact for the trust. Outside of bankruptcy, state law would allow ValStone to foreclose upon default on the second mortgage; ValStone could bid on the property at auction or receive proceeds from its sale. The second mortgage is a nonrecourse loan; if the proceeds of sale were not enough to repay the first mortgage or repay the second mortgage in full, ValStone could not pursue a deficiency claim for the outstanding debt. ValStone did not initiate foreclosure. Brookfield filed a Chapter 11 bankruptcy petition. Under its reorganization plan, Brookfield elected to retain ownership of the property, requiring the bankruptcy court to establish a judicial value by means of independent appraisals. The value is expected to be less than the amount of the first mortgage, which will leave the second mortgage unsecured by any equity. ValStone argued that 11 U.S.C. 1111(b)(1)(A) treats the claim as if it had recourse, so that its unsecured deficiency claim should be allowed. Brookfield argued that the claim should be disallowed because neither state law nor 11 U.S.C. 1111(b) give ValStone a deficiency claim against Brookfield. The bankruptcy court and the district court held that the claim was valid. The Seventh Circuit affirmed. View "B.R. Brookfield Commons No. 1 v. Valstone Asset Mgmt,, LLC" on Justia Law

Debtor filed a Chapter 13 petition in the bankruptcy court identifying his interest in his primary residence located in Maryland. On appeal, debtor and his spouse argued that the bankruptcy court erred in refusing to strip off a lien on the ground that the spouse's property interest was not part of the bankruptcy estate. The lien was against the property that debtor owned with his non-debtor spouse as tenants by the entireties. The court concluded that the statutory provisions authorizing a strip off, and applicable Maryland property law, did not permit a bankruptcy court to alter a non-debtor's interest in property held in a tenancy by the entirety. The court held that the bankruptcy court correctly determined that it lacked authority to strip off debtor's valueless lien because only debtor's interest in the estate, rather than the complete entireties estate, was before the bankruptcy court. Accordingly, the court affirmed the judgment. View "Alvarez v. HSBC Bank" on Justia Law