Justia Real Estate & Property Law Opinion Summaries

Peoples Bank loaned Debtors $214,044, secured by a mortgage recorded in 2004. In 2008, Debtors obtained a $296,000 construction loan from Banterra, secured with a second mortgage on the same property. Banterra was aware of the first mortgage, but did not know was that in 2007, Debtors obtained a second loan from Peoples, for $400,000, secured by another mortgage on a different piece of property. The 2004 Peoples mortgage contained a cross-collateralization provision, stating that “In addition to the Note, this Mortgage secures all obligations … of Grantor to Lender … now existing or hereafter arising,” and a provision that “At no time shall the principal amount of the Indebtedness secured by the Mortgage … exceed $214,044.26 … “Indebtedness” … includes all amounts that may be indirectly secured by the Cross-Collateralization provision.” In 2010 Debtors filed a Chapter 11 bankruptcy petition. The balance due on Peoples 2004 loan was then $115,044.26. Debtors received permission and sold the property for $388,500.00. Out of these proceeds, Peoples claimed the balance due on the 2004 loan plus partial payment of the 2007, up to the cap. The Bankruptcy Court found in favor of Peoples. The district court reversed. The Seventh Circuit reversed, upholding the “plain language” of the cross-collateralization agreement. View "Peoples Nat'l Bank v. Banterra Bank" on Justia Law

In 2006, when the real estate market was strong, Burke, a citizen of Ireland, signed a contract with the developer for the Trump International Hotel & Tower in Chicago, to buy a condominium unit and two parking spaces in the Trump Tower. The total purchase price was $2,282,130, which included $150,000 for the parking spaces. Burke deposited $456,426 in earnest money. Burke later refused to close the purchase and, after the developer declined to refund his earnest money, he sued, claiming that the developer made a material change when it placed parking on the Trump Tower’s sixth floor. The Seventh Circuit affirmed dismissal, noting that the documents he signed demonstrate that Burke was on notice that the use of the sixth floor for parking was a possibility. The agreement was not void for lack of mutuality with respect to provisions for breach, as the developer had an obligation to act in good faith to convey the condominium. View "Burke v. 401 N. Wabash Venture, L.L.C." on Justia Law

Westerfield was a lawyer working for an Illinois title insurance company when she facilitated fraudulent real estate transfers in a scheme that used stolen identities of homeowners to “sell” houses that were not for sale to fake buyers, and then collect the mortgage proceeds from lenders who were unaware of the fraud. Westerfield facilitated five such transfers and was indicted on four counts of wire fraud, 18 U.S.C. 1343. She claimed that she had been unaware of the scheme’s fraudulent nature and argued that she had merely performed the typical work of a title agent. She was convicted on three counts. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence, to admission of a codefendant’s testimony during trial, and to the sentence of 72 months in prison with three years of supervised release, and payment of $916,300 in restitution. View "United States v. Westerfield" on Justia Law

In 2003 the Jacksons obtained a $282,500 home mortgage refinancing loan with a 30-year fixed interest rate of 5.875% from AWL. They used a mortgage broker, MFMS, to apply for the loan. The Jacksons allege that other defendants have been “involved with the mortgage process in various capacities.” The Jacksons went into default in March 2010. Although there was no foreclosure action, the Jacksons initiated an action to quiet title on the property in December 2011. They claimed that defendants negligently evaluated the Jacksons’ ability to repay the loan and that the loan contract was substantively and procedurally unconscionable. The district court dismissed all counts. The Seventh Circuit affirmed. View "Jackson v. Bank of Am. Corp." on Justia Law

Anchor Mortgage Corporation and its CEO, Munson, were convicted under the False Claims Act, 31 U.S.C. 3729(a)(1), of making false statements when applying for federal guarantees of 11 loans. The district court imposed a penalty of $5,500 per loan, plus treble damages of about $2.7 million. The Seventh Circuit affirmed, rejecting an argument that defendants not have the necessary state of mind, either actual knowledge that material statements were false, or suspicion that they were false plus reckless disregard of their accuracy. The court noted that Anchor submitted bogus certificates that relatives had supplied the down payments that the borrowers purported to have made, when it knew that neither the borrowers nor any of their relatives had made down payments and represented that it had not paid anyone for referring clients to it, but in fact it paid at least one referrer. View "United States v. Munson" on Justia Law

The owner (an Asian Indian) of 60-room hotel in a manufacturing district near a major highway in Oak Forest, a Chicago suburb, sued the city, charging racial discrimination in zoning (42 U.S.C. 1981, 1982) and that the zoning ordinance was unconstitutionally vague, based on the city’s refusal to allow it to sell the hotel for conversion to a retirement home to be owned by a church in which most of the membership is African-American. The city claimed that a retirement home would not be “highway oriented” and, after the plan was proposed, amended its ordinance so that the hotel became nonconforming, and denied a special use permit. The owner later lost the hotel in foreclosure; it is now operating as a hotel under new ownership. The district court granted the defendants summary judgment. The Seventh Circuit affirmed, noting numerous irregularities in the zoning process, but stating that the owner presented no evidence that any comparable facility, serving a white clientele, has ever been permitted by Oak Forest in a comparable district. View "Parvati Corp. v. City of Oak Forest" on Justia Law

In 2002, U.S. Health entered into a 20-year lease for a nursing home and adjacent property owned by Lock. Before mid-2006, U.S. Health assigned the lease to Americare without obtaining Lock’s written consent, a required by the lease. Two lawsuits followed. One charged that U.S. Health had violated a provision of the lease under which it was required to fund a replacement reserve and resulted in a stipulated judgment in Lock’s favor of $679,287.96, plus prejudgment interest. The next day, U.S. Health filed a motion to set aside the judgment. Days later, the parties stipulated to a new judgment of $485,430.56 with attorneys’ fees to be agreed by June 10, and entry of a supplemental judgment. After extensions, the court entered a final judgment of $485,430.56, plus post-judgment interest at 5.13 percent. The court later granted Lock’s motion for fees of $29,238.85. Weeks later, the court granted Lock’s motion under Federal Rule of Civil Procedure 60(b)(2) and (3) to modify the judgment to include Americare as a judgment debtor because it had only then learned that U.S. Health, without the necessary authorization from Lock, had assigned its lease to Americare. The Seventh Circuit affirmed, finding that it had jurisdiction. View "Lock Realty Corp. IX v. U.S. Health, LP" on Justia Law

Plaintiffs are 250 purchasers of timeshare interests in a resort in San José del Cabo, Mexico. They bought the interests between 2004 and 2006 from a Mexican company, DTR, which no longer exists. Each contract stated that “in case of controversy … the parties hereby agree to submit themselves to the applicable laws and competent courts of the City of Mexico, Federal District, expressly waiving any other forum that may correspond to them by reason of their present or future domiciles.” Plaintiffs allege that Raintree and Starwood defrauded them by “pretend[ing] to have a Mexican subsidiary (DTR) take in money for [villas] that would never be built.” The district court dismissed for improper venue. The Seventh Circuit affirmed, noting that, even if the contracts of sale are fraudulent, it doesn’t follow that the clause is. The clause is not "unclear, in illegible print, in Sanskrit or hieroglyphics, or otherwise suggestive of fraudulent intent." There is no evidence that the defendants tried to mislead the plaintiffs concerning the meaning of the clause, or selected a foreign forum to make it difficult for the plaintiffs to enforce their rights under the contracts. Mexico was where the contracts were to be performed. View "Adams v. Raintree Vacation Exch., LLC" on Justia Law

Enviro-Chem conducted waste-handling and disposal operations at three sites north of Zionsville, Indiana, until it ceased operations in 1982, leaving considerable amounts of pollutants. The U.S. Environmental Protection Agency undertook cleanup and identified potentially responsible parties (PRPs), including former owners, their corporate entities, and their insurers. A trust was established to fund cleanup and trustees sued to recover cleanup costs under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9607(a) (CERCLA), the Indiana Environmental Legal Actions Statute (ELA), and more. Work continues at the site at issue. The district court dismissed, in part, on limitations grounds, construing the complaint as seeking contribution. The Seventh Circuit reversed dismissal of three counts, holding that claims to recover costs incurred pursuant to the 2002 Administrative Order by Consent between the EPA and PRPs and that related claims, including the ELA claim, were not moot. The court upheld denial of an insurer’s motion for summary judgment on preclusion grounds. View "Bernstein v. Bankert" on Justia Law

Plaintiff owns three tracts, zoned agricultural, and challenged a 2009 amendment to the Winnebago County zoning ordinance that makes it easier to obtain permission to build a wind farm. She claimed that a wind farm on adjacent land would deprive the property “of the full extent of the kinetic energy of the wind and air as it enters the property, subjecting it to shadow flicker and reduction of light, severe noise, possible ice throw and blade throws, interference with radar, cell phone, GPS, television, and other wireless communications, increased likelihood of lightening damage and stray voltage. increased electromagnetic radiation, prevention of crop dusting, drying out her land, and killing raptors. The district court dismissed. The Seventh Circuit affirmed, characterizing the claim as simply that a wind farm adjacent to plaintiff’s property would be a nuisance. There is no merit to the claim that the amendment violates plaintiff’s constitutional rights. It is a “modest legislative encouragement of wind farming,” within the constitutional authority, state as well as federal, of a local government.View "Muscarello v. Winnebago Cnty. Bd." on Justia Law