Justia Real Estate & Property Law Opinion Summaries

Wife serves in the U.S. Air Force and executed a military power of attorney designating husband as her attorney-in-fact during her deployment overseas. Husband presented a photocopy of this instrument to the Fayette County Clerk to recording an original deed and mortgage in the real property index records. The clerk’s office rejected the copy as inauthentic and refused to record the documents. The district court dismissed their suit under 42 U.S.C. 1983, which claimed that rejection of the power of attorney violated 10 U.S.C. 1044b. That statute sets the minimal requirements for executing a military power of attorney and prohibits states from imposing additional requirements. During the pendency of appeal, the couple submitted an original military power of attorney and the documents were recorded. The Sixth Circuit affirmed. The unnotarized copy of the power of attorney lacked an essential element of a military power of attorney and did not qualify for 1044b(a) protections.

Federal tax assessments against husband arose out of his failure to file returns, report income, or pay tax, 1986 through 1993. Unpaid taxes, penalties, and interest totaled $901,052.17 as of January 2010. Wife paid $40,227.30 in full satisfaction of a separate assessment based on an audit of her 2000 return, resulting in dismissal of claims against her personally. The district court granted summary judgment to the government with respect to the assessment against husband and reduced the tax liability to judgment. The government moved for foreclosure of the lien and sale of the entire property. Since the property was held by the couple as tenants by the entirety, husband’s individual tax lien attached to his partial contingent survivorship interest in the property, which would have minimal value if sold separately. The court found that the property would bring $160,000 at a foreclosure sale and was subject to a mortgage of $14,572.36. Wife, age 60, testified to her limited income and sentimental attachment to the home where she had lived for 29 years. The court declined to force a sale (26 U.S.C. 7403). The Sixth Circuit reversed and remanded for reconsideration under the "Rodgers" factors.

Plaintiff's bank, Firstar, erroneously dishonored her check for her April 2002 monthly mortgage payment to Aames. Firstar issued an "official check" to Aames on April 8, 2002 but also failed to honor that check. Aames notified plaintiff of default on April 20 and assessed a late fee. Firstar ultimately honored her personal check as well as one of two official checks, resulting in two mortgage payments received for the month of April. Plaintiff did not submit a payment for May. Aames sent notice that it had assigned the mortgage to Ocwen, which began dunning plaintiff and her husband, who is not a co-borrower, for the May payment, despite proof of the double payment. No assignment was recorded. Ocwen made endless collection calls, despite cease and desist requests and registry on the federal “Do Not Call” directory; threatened foreclosure; assessed late fees; and reported derogatory information to the credit reporting agencies. Plaintiffs alleged violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692. The district court dismissed, concluding that neither defendant was covered under the Act as neither was a debt collector. The Sixth Circuit reversed, stating that defendants cannot "have it both ways."

In 2009, Debtor filed a chapter 13 petition that was dismissed for failure to file a plan or schedules. Two months later, she filed a pro se chapter 7 petition which was dismissed for failure to produce proper documentation. She soon filed another pro se petition, under chapter 11. Debtor is the owner of 10 parcels of real estate from which she earns $5,340.00 per month in rental income, although she asserts that most of the properties are currently vacant. One of her creditors asserted, and the court agreed, that she was using bankruptcy stays to prevent foreclosure and live rent free. In dismissing the petition the court ordered that: "Debtor, or anyone in contractual privity with the Debtor or anyone having or purporting to have a possessory interest in the real property located at… is permanently barred from ever listing said Property or the debt owed to Creditor in a future bankruptcy petition," 11 U.S.C. 105; 362(d)(4). The Sixth Circuit affirmed dismissal with prejudice for 180 days and the order granting in rem relief against the specific property, insofar as it applies to Debtor and anyone in contractual privity with the Debtor.

In 2006 debtors sublet land from lessees on a 30-year recorded lease and purchased a three-story cottage on the land by bill of sale. The lease refers to removal of the structure upon termination of the lease and requires approval by the lessor of any liens or mortgages. The landowner consented to a mortgage on the cottage and leasehold. Two years later, debtors filed a voluntary Chapter 7 petition and listed the cottage as real property, with a secured claim of $235,000. The Trustee sought to avoid security interests held by the bank and landowner, arguing that the cottage was a chattel so that a lien could only be perfected by filing a financing statement with the Ohio Secretary of State. The bankruptcy court ruled that the mortgage was valid, concluding that the cottage was a fixture. The Sixth Circuit affirmed. To avoid the security interest (11 U.S.C. 544) the trustee had to show that the cottage was chattel. The cottage is highly integrated with the land and unlikely to be moved or dismantled; there was no proof that the parties intended that it be chattel. Security interests in both the cottage and leasehold were properly secured.

In 2006, plaintiffs contracted with defendant to purchase a condominium for $395,900. They made cash deposits of $11,877 and executed a note for $19,795. When notified of a closing date in 2009, plaintiffs' counsel sent defendant a letter rescinding the agreement and requesting return of the deposits. Defendant declined. Plaintiffs' complaint alleged violation of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1701, for failing to provide a printed property report, and failure to include a provision notifying plaintiffs that if defendant failed to furnish a property report before execution of the purchase agreement, they had the right to revoke the purchase agreement within two years of its signing. They also asserted a claim under the Michigan Condominium Act, Mich. Comp. Laws 559.184. The district court held that the claim for rescission was untimely, stating that a purchaser must notify the seller of rescission within two years after the signing, but a has an additional third year to bring suit if the seller refused to honor the rescission. The Sixth Circuit affirmed that the claim for automatic rescission was untimely, but reversed dismissal of the state law claim and remanded. Equitable rescission may be available under 15 U.S.C. 1709.

The debtors bought their house in 1994 and, after a Chapter 7 discharge in 2004, refinanced. The loan closed in California, although the house was in Michigan, and the debtors signed a note, but did not sign a mortgage. The loan was funded and assigned to appellant. A few months later, they filed a Chapter 13 petition and the lender produced a recorded mortgage, ostensibly signed by the debtors in Michigan. The Bankruptcy Court found that the signatures were forged. On remand from the district court, it imposed an equitable mortgage on the house. The district court reversed, finding the mortgage void ab initio. The Sixth Circuit affirmed. The district court properly considered the issue, held that the mortgage was void, and declined to impose an equitable mortgage because the assignee is subject to the defense of unclean hands, as was the original lender.

Plaintiffs paid off their home mortgage early and were charged a $30 "payoff statement fee" and a $14 "recording fee" in connection with the prepayment. They challenged the fees as violations of the mortgage contract, of state laws, and of the federal Real Estate Settlement Procedures Act, 12 U.S.C. 2601. The district court dismissed the suit as preempted by the federal Home Owners’ Loan Act, 12 U.S.C. 1461, and for failure to state a claim under RESPA. The Sixth Circuit held that the other claims were properly dismissed, but remanded a breach of contract claim. A Michigan Usury Act claim was preempted by HOLA; plaintiffs failed to state a claim under the deed recording statute, the state consumer protection law, or RESPA, which does not apply to charges imposed after the settlement. The court rejected a claim by the FDIC, appointed as receiver for the defendant-lender, that the court had been deprived of jurisdiction by the Financial Institution Reform, Recovery, and Enforcement Act, 12 U.S.C. 1281(d).

Debtors borrowed $157,291.77, secured by their home and took a second loan for $15,870, using their truck as security. They filed Chapter 7 bankruptcy protection and signed a reaffirmation agreement committing to pay those two debts. They stopped making payments; the truck had been stolen. The bank filed an unsecured claim. The trustee sought to avoid the mortgage as not properly perfected; the matter was resolved by agreement. The bank bought the property at auction, re-sold it at a profit of $33,400 and filed an unsecured claim for the full balance of the mortgage. The bankruptcy court allowed the claim; the bank received a total of about $37,000 in payments as an unsecured creditor on the two loans. The bank then sued the debtors in Kentucky state court, seeking about $89,000 on the real property loan and about $11,500 on the truck loan. The bankruptcy court reopened the case and voided the reaffirmation agreement on the ground of mutual mistake because the parties signed the agreement based on the false assumption that the bank held secured interests in the real property and the truck, which would have allowed debtors (rather than the bankruptcy estate) to retain ownership. The district court and Sixth Circuit affirmed.

In 1999 Debtor borrowed $75,558.93 secured by a recorded mortgage lien, encumbering real property and all improvements and fixtures. The property contains a manufactured home, with a plate indicating compliance with federal manufactured home standards. The lender's notes indicated that in 1997, the mobile home was gutted and rebuilt as a house. Debtor did not acquire a separate title to the manufactured home; it is unclear whether such a certificate ever issued. In 2009, Debtor filed a petition for chapter 13 relief. He sought to avoid the lien pursuant to 11 U.S.C. 544 because the Bank failed to perfect its lien on the manufactured home pursuant to Kentucky law. The bankruptcy court granted summary judgment to Debtor. The Sixth Circuit affirmed, first holding that Debtor had derivative standing to seek to avoid the lien. Regardless of the issuance of a certificate of title, Debtor has an interest in the home that is part of the bankruptcy estate. Under Kentucky law, a mobile home is personal property; perfection of a lien requires notation on the certificate of title. The mobile home had not been converted to real property and the lender did not perfect a lien on personal property.