Justia Real Estate & Property Law Opinion Summaries

Defendant and her then-husband bought a condo for $525,000 with the intention of making it their primary residence. To finance the purchase, the couple took out a mortgage with the Plaintiff bank. Defendant did not sign the note but consented to her husband doing so. The mortgage contained a "future advances" clause, which granted Plaintiff a security interest in the Mortgage covering future funds Defendant's husband might borrow.Four years later, Defendant's husband borrowed additional funds from Plaintiff to keep his business afloat. Defendant did not sign the note. A few months later, Defendant's husband filed for Chapter 7 bankruptcy and the condo was sold for $650,000, approximately $250,000 of which was deposited in escrow. The couple divorced and Defendant moved out of the state.In Defendant's husband's bankruptcy case, the court held a portion of the escrowed sale proceeds must pay down his business notes pursuant to the mortgage’s future advances clause and that he could not claim a homestead exemption. Plaintiff was granted summary judgment on its claims that Defendant's proceeds were also subject to the future advances clause and that Plaintiff could apply those proceeds to Defendant's husband's business note.Defendant appealed on several grounds, including unconscionability, contract formation, and public policy, all of which the court rejected, affirming the district court's granting of summary judgment to Plaintiff. View "Sanborn Savings Bank v. Connie Freed" on Justia Law

Debtor executed a security deed for a piece of property. She acknowledged the deed to her closing attorney who certified the acknowledgment on the deed’s final page.Under Georgia law, a deed must be attested by two witnesses, and at least one of them needs to be an official such as a notary or court clerk. Here, the deed was invalid because the attorney was a notary, but he failed to attest to the deed. The error was discovered a few years later when the debtor filed for Chapter 7 bankruptcy. Under federal law, a bankruptcy trustee may void a deed if it is voidable by a bona fide purchaser. The managing trustee noticed the problem and sued the loan companies to keep the property in the bankruptcy estate. The loan companies argue that they have produced what the statute requires to save a problematic deed: an affidavit from a “subscribing witness.” Here, the court reasoned that a person becomes a subscribing witness only when she attests a deed, and the closing attorney did not do so. Therefore, the loan companies’ interest in the real property is voidable. View "Pingora Loan Servicing, LLC, et al. v. Cathy L. Scarver" on Justia Law

In 2007, Olsen granted Country Visions a 10-year right of first refusal on Wisconsin land. The right was recorded in local property records. Olsen subsequently dissolved and, in 2010, its former partners filed for bankruptcy. Country Visions was not notified and was not listed in the bankruptcy proceedings. Under an agreed plan, ADM became the owner of the Wisconsin land. Country Visions was not given an opportunity to exercise its right of first refusal. In 2015, ADM arranged to resell the property. Country Vision sought compensation in state court.ADM asked the bankruptcy court to enforce the “free and clear” sale and prohibit the state court litigation, citing 11 U.S.C. 363(m). The bankruptcy court and district court denied ADM’s request. The Seventh Circuit affirmed. Good-faith purchasers are protected by section 363(m) but ADM was not a good-faith purchaser and must defend the state court litigation. ADM had actual notice of the right, in a title report, but did not notify the bankruptcy court; as a non-party, Country Visions could not be expected to appeal the order approving the sale. View "Archer-Daniels-Midland Co. v. Country Visions Cooperative" on Justia Law

The Supreme Court held that a recorded judgment lien attaches to homestead property where the judgment debtor has equity in excess of the amount exempt under Arizona law.Pacific Western Bank (PWB) obtained a California judgment against Todd McLauchlan that was domesticated and recorded in Arizona. McLauchlan later filed a Chapter 7 bankruptcy petition identifying an ownership interest in a residence and claiming the statutory homestead exemption in the residence. PWB filed a proof of claim, $552,497 of which was secured by the recorded judgment lien. The remaining $115,985 was unsecured. After McLauchlan received his discharge he sold the residence and realized $56,852 in excess of the $150,000 homestead exemption. PWB filed a motion seeking a determination that McLauchlan's bankruptcy discharge did not affect its interest secured by its recorded judgment. At issue was whether, under Ariz. Rev. Stat. 33-964(B), judgment liens attach to homestead property. The Supreme Court answered in the affirmative. View "In re McLauchlan" on Justia Law

In this appeal arising out of an adversary action filed in a Chapter 11 proceeding in the Bankruptcy Court for the District of Massachusetts the First Circuit affirmed the judgment of the bankruptcy court allowing the debtor to avoid a mortgage, holding that there was no error in the bankruptcy court's judgment.After Debtor filed for Chapter 11 bankruptcy Debtor commenced an adversary proceeding against U.S. Back seeking to "avoid" the mortgage because her name was missing from the certificate of acknowledgment. The district court granted Debtor's motion. The district court affirmed. The First Circuit affirmed, holding that summary judgment was properly granted for Debtor because the omission of Debtor's name from the certificate of acknowledgment was a material defect under Massachusetts law. View "U.S. Bank, N.A. v. Desmond" on Justia Law

The Supreme Court affirmed the judgment of the district court exercising jurisdiction over the underlying fraudulent conveyance action and avoiding all of Paul Morabito's transfers to Superpumper, Inc., Sam Morabito, Snowshoe Petroleum, Inc., and Edward Bayer, individually and as trustee of the Bayuk Trust (collectively, Superpumper) and awarding Paul Morabito's bankruptcy trustee (Trustee) the subject property or the value thereof, holding that the district court did not err.Paul and Consolidated Nevada Corporation entered into a settlement agreement with JH Inc., Jerry Herbst, and Berry-Hinckley Industries (collectively, the Herbsts) for $85 million and later defaulted on the agreement. After a bankruptcy court adjudicated Paul as a Chapter 7 debtor the Herbsts filed a fraudulent transfer action against Paul and Superpumper, the transferees of Paul's assets. The state district court avoided all of Morabito's transfers to Superpumper and awarded the Trustee the subject property or the value thereof. The Supreme Court affirmed, holding (1) the district court had subject matter jurisdiction over the fraudulent conveyance action; (2) Superpumper waived its in rem jurisdiction argument; and (3) the district court did not abuse its discretion in allowing attorney-client communications to be admitted into evidence at trial. View "Superpumper, Inc. v. Leonard" on Justia Law

The First Circuit affirmed the judgment of the Bankruptcy Appellate Panel for the First Circuit (BAP) affirming the summary judgment entered by the bankruptcy court against the bankruptcy trustee (the Trustee) for an estate of two individuals, holding that an unrecorded mortgage in Puerto Rico is not a transfer of the debtor's property that is voidable by a bona fide purchaser that triggers the bankruptcy trustee's authority to avoid and preserve the lien.Jose Antonio Lopez Cancel and Carmen Nereida Medina Gonzalez acquired a property in Puerto Rico that they used as their primary residence. Banco Popular de Puerto Rico held the mortgage, but the mortgage was never recorded. The bankruptcy court treated the mortgage as a general unsecured claim covered by an earlier discharge order. The Trustee then filed this action to avoid the mortgage and preserve it on behalf of the bankruptcy estate, arguing that the unrecorded mortgage was a transfer of the debtor's property that was voidable by a bona fide purchaser. The bankruptcy court concluded that the Trustee could not avoid and preserve an unrecorded mortgage because, under Puerto Rican law, an unrecorded mortgage is not a property interest. The BAP affirmed. The First Circuit affirmed, holding that there was no error. View "Segarra Miranda v. Banco Popular de Puerto Rico" on Justia Law

In 2015, Ralph Isom filed for bankruptcy. Ultimately, a bankruptcy trustee for the estate settled with Isom’s primary creditor, Farms, LLC (“Farms”). As part of the settlement, the bankruptcy trustee conveyed a ten-acre parcel from the bankruptcy estate to Farms. Isom was living on the ten-acre parcel at the time. When Isom refused to vacate the ten-acre parcel, Farms initiated this forcible detainer action. The magistrate court entered judgment for Farms and ordered Isom to vacate the ten-acre parcel. Isom appealed to the district court, but also vacated the property as the magistrate court had ordered. Because Isom had vacated, and thus no longer occupied or owned the ten-acre parcel, the district court held that Isom’s appeal was moot. Further, the district court rejected the merits of Isom’s appeal. Isom appealed the district court’s decision on the merits, but failed to appeal the district court’s holding that his appeal was moot. The Idaho Supreme Court found that because Isom failed to raise, let alone argue against, the district court’s decision as it related to mootness, the issue was considered waived."Isom’s waiver is dispositive. As a result, we will not reach the merits of his appeal as it relates to the sufficiency of proof regarding the forcible detainer action." Judgment was thus affirmed. View "Farms, LLC v. Isom" on Justia Law

In 1998, Old Ben Coal Company conveyed its rights to the methane gas in various coal reserves to Illinois Methane. A “Delay Rental Obligation” required the owner of the coal estate to pay Methane rent while it mined coal in areas that Methane had not yet exploited. A deed, including the Delay Rental Obligation was recorded. A few years later, Old Ben filed for bankruptcy and purported to sell its coal interests “free and clear of any and all Encumbrances” to Alliance. Old Ben did not notify Methane before the bankruptcy sale but merely circulated notice by publication in several newspapers. Alliance later sought a permit to mine coal. Methane eventually sought to collect rent in Illinois state court. Alliance argued that Old Ben’s “free and clear” sale had extinguished Methane’s interest.The bankruptcy court held that Alliance was not entitled to an injunction. The district court and Sixth Circuit affirmed. The deed indicates that the Delay Rental Obligation runs with the land and binds successors; it “is not simply a personal financial obligation between” Old Ben and Methane. The covenant directly affects the value of the coal and methane estates. Methane was a known party with a known, present, and vested interest in real property, entitled to more than publication notice. View "Alliance WOR Properties, LLC v. Illinois Methane, LLC" on Justia Law

The Eighth Circuit affirmed the bankruptcy appellate panel's decision upholding the bankruptcy court's order that fully voided Waltrip's judicial lien on debtor's homestead. In this case, after Waltrip filed suit against debtor in October 2016 for breach of contract in Missouri state court, a fire damaged debtor's home. The homeowner's insurance policy paid debtor for damages and Waltrip obtained a consent judgment that gave Waltrip a judicial lien against the homestead property. The parties do not dispute that Waltrip had a valid, avoidable lien that was affixed to debtor's property before she filed her bankruptcy petition. At issue is the extent to which Waltrip's lien impairs debtor's claimed homestead exemption.The court concluded, under Missouri law, that when property is properly exempted under 11 U.S.C. 522, a debtor is the sole owner of the insurance proceeds covering the property. Without any precedent to support Waltrip's position, the court declined to include the amount of the insurance payout when calculating the fair market value of debtor's home on the petition date, and thus the court affirmed the bankruptcy court's ruling using the $3,000 to $6,000 valuation of the unrepaired, fire-damaged property as determined on the petition date. The court also concluded that, because Waltrip's lien is smaller than the extent of the impairment, the entirety of Waltrip's lien can be avoided. Finally, the court concluded that the bankruptcy court did not abuse its discretion in reopening the case to avoid the lien or in denying Waltrip's requests for attorneys' fees and costs related to the reopening. View "David G. Waltrip, LLC v. Sawyers" on Justia Law