Real Estate Transactions

Foreclosure purchaser cannot use self-help to evict tenant at will

/ Leaseholds, Real Estate Transactions

New Hampshire law allows tenancies to be created at-will; that means they can be terminated by either party at any time. When the landlord lost the property through foreclosure, the tenancy ended automatically and no new landlord/tenant relationship was established merely because the tenant kept living on the property. Nor did a state statute that specifically prohibited self-help eviction, N.H. Ev. Stat. §540-A, apply in such a case. Nonetheless, the New Hampshire Supreme Court ruled that summary process was available to evict recover possession of the property and that this available procedure impliedly removed the self-help option. Evans v. J Four Realty, LLC, 62 A.3d 869 (N.H. 2013).

Right of entry held to be compensable under the takings clause

/ Estates and Future Interests, Real Estate Transactions, Takings, Title Issues

The Texas Supreme Court held that a transfer of land to a city with an option to repurchase if the property were ever used for non-park purposes constituted a fee simple subject to condition subsequent and that the right of entry was a property right for purposes of the takings clause and compensable when then city failed to honor the condition. El Dorado Land Co., L.P. v. City of McKinney, 395 S.W.3d 798 (Tex. 2013). The deed provided that the conveyance was “subject to the requirement and restriction that the property shall be used only as a Community Park” and gave the grantor the right to repurchase the property at the price the city paid for it or the current fair market value whichever was less if the property were not used for the designated purpose. Although the repurchase right was called an option to purchase, the Texas Supreme Court interpreted it …

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Court uses equitable considerations to give legal force to a forged deed to protect one of two innocent victims who had less ability to prevent the harm

/ Mortgages, Real Estate Transactions

In Pasqualino v. Washington Mutual Bank, 982 N.E.2d 72 (Mass. App. Ct. 2013), the court was forced to decide which of two innocent parties should bear the financial burden of a forged deed. Although the normal rule is that a forged deed is a nullity and conveys nothing, in this case, the court protected the party that relied on the forged deed because the original owner contributed to the problem by making the forger the trustee of the property. The property was originally conveyed by Salvatore Pasqualino to a trust controlled by his son Ronald. The father Salvatore knew his son used aliases in his real estate business and the recorded documents listed the trust of the trustee of the trust as “Jonathan Pasqualino III,” an alias used by Ronald. Ronald subsequently forged a deed from the trust to a fictitious buyer who then took out a $166,600 loan from …

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Massachusetts court enjoins company from preparing and selling deeds because it constitutes the unauthorized practice of law

/ Mortgages, Real Estate Transactions

The superior court in the Commonwealth of Massachusetts granted a preliminary injunction against a company called ANADeeds, Inc. to stop it from preparing and selling deeds and other legal instruments for the conveyance of property in Massachusetts. Real Estate Bar Ass’n v. ANAdeeds, 2012 Mass. Super. LEXIS 380 (Mass. Super. Ct. 2012). Judge Lauriat explained that “[i]n Massachusetts, drafting a deed constitutes the practice of law,” citing Real Estate Bar Ass’n of Massachusetts (REBA) v. Nat’l Real Estate Info. Servs., 946 N.E.2d 665 (Mass. 2011).

Lawyers held to be “debt collectors” that can be held liable for false statements in connection with a foreclosure

/ Consumer Protection, Mortgages, Real Estate Transactions

In Glazer v. Chase Home Finance, 704 F.3d 453 (6th Cir. 2013), the Six Circuit found lawyers who initiated a foreclosure may be “debt collectors” subject to the Federal Debt Collection Practices Act (FDCPA), 15 U.S.C. §§1692 to 1692p, if they regularly perform this function, and thus may be liable for making “false, deceptive or misleading representations” in connection with the foreclosure.

Court holds that a seller has no duty to reveal that a murder/suicide took place in the house

/ Consumer Protection, Real Estate Transactions

A Pennsylvania trial court held that a seller had no duty to reveal that a murder/suicide took place in the house. Milliken v. Jacono, 60 A.3d 133 (Pa. Super. Ct. 2013). The court interpreted a state statute that required sellers to reveal “material defects” and found that events that had happened in the house were not a “material defect” in the physical structure of the property. The court declined to find any common law duty to reveal the information on the ground “an expansion of required seller disclosures from the physical to the psychological is a massive expansion in the character of disclosure. It requires the seller to warn not only of the physically quantifiable but also of utterly subjective defects.” Id. at 140. A dissenting opinion would have found such an obligation because “[r]eputation and history can have a significant effect on the value of realty.” Id. at 145 (Bender, J., dissenting).

HUD rule prohibits LGBT discrimination in mortgage lending and other programs it administers

/ Antidiscrimination Law, Mortgages, Real Estate Transactions, Sexual Orientation

In 2012, HUD adopt an Equal Access Rule that prohibits lenders from discriminating on the basis of actual or perceived sexual orientation, gender identity or marital status in granting mortgages insured by the Federal Housing Administration (FHA). 24 C.F.R.Parts 5, 200, 203, 236, 400, 570, 574, 882, 8991, 982 (77 Fed. Regis. 5662 (Feb. 3, 2012). The rule applies to all housing programs administered by the department. In January 2013, HUD entered a settlement with Bank of America over a claim that it refused to grant a mortgage to a lesbian couple. See article. It was promulgated under HUD’s general statutory authority to promote the “goal of a decent home and a suitable living environment for every American family,” 42 U.S.C. §1441.

California Homeowner Bill of Rights regulate foreclosures

/ Consumer Protection, Leaseholds, Mortgages, Real Estate Transactions

California passed a statute on Jan. 1, 2013 called the California Homeowner Bill of Rights (Assembly Bill 278, ch. 86, adopted July 11, 2012) (effective Jan. 1, 2013). Among other things, it prohibits banks from proceeding with foreclosures if the homeowners is seeking a loan modification and it requires the bank to act on qualified applications for loan modifications. Cal. Civ. §2923.5.It also subjects banks to a penalty for recording unverified documents. Cal. Civ. §2924.17. It also prevents eviction of tenants who have fixed-term leases as long as those leases last even if the landlord loses the property to foreclosure before the end of the lease term and even if the lease was created after the mortgage. Cal. Civ. Proc. §1161b(b).

Will of real estate may be governed by the law of the situs of the property rather than the decedent’s domicile at death

/ Real Estate Transactions, Title Issues, Wills and Inheritance

The traditional rule is that title to real property is determined by the whole law of the situs of the property, meaning both the substantive law of the situs and its choice-of-law rules. Thus title is determined by whatever law would be applied at the situs. This rule has been rejected in some cases in recent years because personal property on death is determined by the law of the domicile of the decedent and if different rules are applied to real property located elsewhere and personal property, the decedent’s wishes may be ignored or perverted. However, many courts adhere to the traditional rules as occurred in In re Estate of Latek, 960 N.E.2d 193 (Ind. Ct. App. 2012), a court at the decedent’s domicile (Illinois) refused to accept a will for failure to comply with Illinois will execution requirements but the court in Indiana (where the property was located) refused …

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Ambiguous “survivor” reference creates a tenancy in common rather than a joint tenancy

/ Estates and Future Interests, Real Estate Transactions, Wills and Inheritance

A deed granting an interest to two siblings (Roger & Dana Waid) “or the survivor” was interpreted as created a tenancy in common rather than a joint tenancy. Young v. Waid, 2012 WL 2947590, (W.Va. 2012). Following the death of Roger, Dana would have had a 100 % interest in the property if they held as joint tenants (because of her right of survivorship) but only a 50 % interest (with 50% held by Roger’s heir or devisees) if they held as tenants in common. Applying an interpretive presumption in favor of tenancies in common, the West Virginia Supreme Court noted that the deed did not use the words “joint tenancy” or “right of survivorship” and that it was possible the words “to the survivor” were mere surplusage. The court found the language not clear enough to constitute an intent to create a right of survivorship, effectively privileging giving each sibling (and …

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