Consumer Protection

No statute of limitations bars a claim to set aside a forged deed and subsequent mortgage

/ Adverse Possession, Consumer Protection, Mortgages, Real Estate Transactions, Statute of Frauds, Title Issues

The New York Court of Appeals had reaffirmed the traditional rule that forged deeds do not convey title. It has clarified that no statute of limitations bars a challenge to a forged deed even if the purported owner has subsequently transferred interests in the land to a subsequent mortgagee who had no notice of the forgery. Faison v. Lewis, 32 N.E.3d 400 (N.Y. 2015). The Court ruled that the third party purchaser is not a “bona fide” purchaser protected by the recording act because a forged deed can never be the basis of a valid transfer even if the third party did not know and could not have known about the forgery. To do otherwise would allow the forger to “steal” property and get away with it.

Supreme Court will decide whether a bakery must sell wedding cake to a same-sex couple as required by Colorado public accommodations law

/ Antidiscrimination Law, Consumer Protection, Religious Freedom, Trespass

On June 26, 2017, the Supreme Court took certiorari in this case under the name, Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n. (No. 16-111). The Colorado Court of Appeals has affirmed the Civil Rights Division’s that a bakery must sell wedding cakes to same-sex couples if they would ordinarily do so to male-female couples. Mullins v. Masterpiece, 2015 Colo. App. LEXIS 121, 2015 COA 115 (Colo. App. 2015). State law prohibits discrimination on the basis of sexual orientation in public accommodations, and neither the state statute itself nor the constitution entitles the providers of goods and services to engage in proscribed discrimination for religious reasons. The court rejected the bakery’s contention that it was acting on the basis of an opposition to same-sex marriage rather than an intent to discriminate on the basis of sexual orientation. The court held that it did not matter that the bakery would sell baked goods other than a …

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Supreme Courts affirms disparate impact claims under the Fair Housing Act (with a caveat)

/ Antidiscrimination Law, Consumer Protection, Fair Housing Act, Real Estate Transactions

The United States Supreme Court announced its decision in Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., 2015 WL 2473449, — U.S. — (2015), upholding disparate impact claims under the Fair Housing Act (FHA), 42 U.S.C. §3601 et seq. The case involved a challenge to criteria used by a state agency on where to give tax credits that subsidize construction of low-income housing. Plaintiff is a nonprofit organization that promotes housing for low-income families. It claimed that the agency’s formula steered housing to poorer areas and thus perpetuated or aggravated racial segregation in housing. The specific question taken by the Supreme Court was whether disparate impact claims are at all available under the Fair Housing Act. The Court decided that they are but limited them because of constitutional principles. The Court noted that earlier cases had upheld disparate impact claims in employment discrimination when the statutes focused on consequences of …

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Postforeclosure judicial process satisfies due process clause

/ Consumer Protection, Due Process, Mortgages, Real Estate Transactions, Title Issues

The Sixth Circuit has ruled that nonjudicial foreclosure satisfies constitutional due process requirements because the homeowner/borrower was given notice of the foreclosure and notice of who to cure the default or seek a loan modification and how to redeem the property (get it back) after the foreclosure sale during a six-month redemption period. Garcia v. Fed. Nat’l Mortg. Ass’n,  782 F.3d 736 (6th Cir. 2015). These statutory procedures satisfied the constitutional right to notice and an opportunity to be heard before being deprived of a property right.

Foreclosure complaint can subject law firm & bank to a claim for violating the Fair Debt Collection Practices Act (FDCPA)

/ Consumer Protection, Mortgages, Real Estate Transactions

The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., regulates the processes by which debts are collected. The Third Circuit has agreed with other courts in holding that the filing of a foreclosure complaint can subject both the plaintiff bank and the lawyers filing the complaint to liability under the FDCPA. In the case of Kaymark v. Bank of America, N.A., 783 F.3d 168 (3d Cir. 2015), the allegation was that the complaint sought payments that were not yet due — a demand that violated the FDCPA. The Court applied the holding of the Supreme Court case of Heinz v. Jenkins, 514 U.S. 291 (1995) that had established that lawyers are “engage[d] in consumer-debt-collection activity” when they file lawsuits.

New Jersey Supreme Court confirms state constitution’s grant of free speech rights to enable a coop owner to disseminate written information to co-owners

/ Condominiums and Homeowners Associations, Consumer Protection, Free Speech, Trespass

While the US Constitution’s free speech provisions in the first amendment apply only to state action, both California and New Jersey have interpreted their state constitutions to grant individuals free speech rights in some cases in relation to private parties. In both states, citizens have the right to distribute leaflets in shopping centers. In Dublirer v. 2000 Linwood Avenue Owners, Inc., 2014 WL 6777311 (N.J. 2014), a resident wanted to run for a seat on the Board of Directors of the coop and sought to distribute materials relevant to his campaign and he was prevented from doing so by the coop board. The Supreme Court of New Jersey held that the coop rule banning soliciting and distributing written materials in the building was unreasonable and a violation of the resident’s state constitutional free speech rights. The ruling reaffirmed and expanded on the rulings in earlier cases that protected free speech rights of owners in common-interest communities …

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Robo-signing mortgage servicer may have violated state false document statute

/ Consumer Protection, Mortgages, Real Estate Transactions, Statute of Frauds, Title Issues

The Ninth Circuit held that a mortgage servicer that allegedly engaged in robo-signing may well have violated an Arizona statute, Ariz. Rev. Stat. § 33-420, that criminalizes filing false property title documents with the state recording offices. In re Mortg. Electronic Registrations Systems, Inc (Robinson v. Am. Home Mortg. Serv. Inc.), 2014 WL 2611314, 2 014 U.S. App. LEXIS 10934 (9th Cir. 2014). There was  evidence that trustee’s sale documents were notarized in blank and signed later by a person other than the one who was supposed to sign the document. Such signings were also done in bulk (robo-signing) and because not signed by the correct person were forged. In addition, notaries are supposed to witness the signature not notarize a blank document before any signature appears. The case is notable because the servicer was MERS (Mortgage Electronic Registration Systems, Inc.). Judge William Fletcher engaged in a detailed discussion about the advantages …

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Contractual power to modify condo declaration held to be complete defense to claim of deceptive conduct under state consumer protection law

/ Condominiums and Homeowners Associations, Consumer Protection, Real Estate Transactions, Servitudes

The Seventh Circuit found no deceptive conduct within the meaning of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) when a condo developer substantially changed the governing documents after the condo sales. Goldberg v. 401 North Wabash Venture LLC, 2014 WL 2579939 (7th Cir. 2014). The case concerned Trump Tower in Chicago which contains hundreds of residential condominium units and hundreds of hotel condominium units as well as substantial retail space and other facilities. The purchase agreement gave TrumpOrg the “right, in its sole and absolute discretion, to modify the Condominium Documents.” Writing for the three-judge panel and applying Illinois law, Judge Posner held that this clause was sufficient to immunize TrumpOrg from any claim of deceptive conduct. Thus the hotel condo owners had no rights when TrumpOrg “greatly curtailed the owners’ rights in the hotel facilities.” Nor did the conduct violate the statute governing condominiums.

Owners who lost title to their homes through nonjudicial foreclosure are entitled to raise defenses to eviction

/ Consumer Protection, Mortgages, Real Estate Transactions, Title Issues

The Supreme Judicial Court of the Commonwealth of Massachusetts has ruled that owners may make affirmative defenses to eviction claims by banks that acquired title to their property through a private or nonjudicial foreclosure. Bank of America v. Rosa, 466 Mass. 613 (2013). Those defenses may challenge the way in which the bank acquired title to the property through the foreclosure process and and power of the bank to foreclose in the first place. They may also include any equitable defenses that would defeat the claim for a right to possession of the property (the right to evict).

Housing discrimination by town officials still a problem

/ Antidiscrimination Law, Consumer Protection, Due Process, Fair Housing Act, Leaseholds, Real Estate Transactions

A number of recent cases has revealed the persistence of racial discrimination affecting municipal decisions about housing. The Sixth Circuit found, for example, in Hidden Village, LLC v. City of Lakewood, Ohio, 734 F.3d 519 (6th Cir. 2013), that town officials may have engaged in a campaign of harassment designed to induce African American residents to move out of town. The case involved a Lutheran religious organization that helped young people released from foster care or juvenile detention to enter society. The organization found a helpful landlord willing to rent apartments to the organization’s clients. At first the town officials argued that this amounted to an institutional use in violation of the zoning law but the town planning commission found otherwise. At that point, the complaint alleges that town officials began a campaign of police harassment that involved citations for minor offenses and unreasonable searches of apartments. The Sixth Circuit concluded that …

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