South Carolina prohibits transfer fee covenants
South Carolina joins the growing list of jurisdictions that bans transfer fee covenants. 2012 S.C. Acts 106, codified at S.C. Code §27-1-70.
Real Estate Transactions
First Circuit allows MERS to assign mortgages to the mortgage holder
State courts have disagreed about whether MERS (Mortgage Electronic Registration Systems) has standing to foreclose on property or to assign whatever interest it has in the mortgage to the bank that holds the mortgage currently so that that bank can bring foreclosure proceedings. Some courts have held that MERS has no property interest in the mortgage but is a mere agent for the mortgage owner so it cannot bring foreclosure proceedings itself or assign the mortgage to anyone else. Bain v. Metropolitan Mortgage Group, Inc., 285 P.3d 34, 36–37 (Wash. 2012) (because MERS does not hold the note, it can neither initiate nonjudicial foreclosure proceedings not assign an interest in the note to a trustee who can do so). But others have held that MERS may initiate foreclosure proceedings in its own name and/or assign the mortgage to someone else. Gomes v. Countrywide Home Loans Inc., 121 Cal. Rptr. 3d …
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HUD issues final regulations defining disparate impact claims under the Fair Housing Act
The Department of Housing & Urban Development (HUD) has issued final regulations defining the standards to make a claim that a neutral policy has a disparate impact on a protected group in a manner that constitutes unlawful discrimination under the federal Fair Housing Act, 42 U.S.C. §3601 et seq. The regulations are at 24 C.F.R. 100.500 and can be found here. The rule affirms that disparate impact claims are available under the Fair Housing Act and identifies an approach to proving them to respond to the variation that exists among Circuits on what the legal test is for disparate impact in this area. Here is the test: 1. Plaintiff must show a discriminatory effect either because defendant’s policies or actions result in a disparate impact on a protected group or because those policies or actions promote segregation. 2. Defendant then has the burden to showthat its practice is necessary to achieve …
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Foreclosure denied when the lender obtained assignment of the note and mortgage after filing the foreclosure action
In Federal Home Loan Mortgage Corp. v. Schwartzwald, 2012 Ohio 5017, 2012 Ohio LEXIS 2628 (Ohio 2012), the Supreme Court of Ohio joined other courts that have refused to allow banks to foreclose if they cannot prove by written evidence at the time of foreclosure that they have a legal right to foreclose. In this case, Federal Home Loan commenced a foreclosure action before it obtained an assignment of the promissory note and mortgage securing the loan, although it attempted to “cure” that defect by obtaining the assignment later. The Supreme Court of Ohio reversed lower court rulings that had decided that the cure would allow the foreclosure to proceed; instead, it held that state law required lawful standing at the time the foreclosure action was brought. It cited cases from other states that denied standing to MERS (Mortgage Electronic Registration Systems) because it did not possess any interest in the note …
Washington Supreme Court holds MERS cannot initiate private deed of trust foreclosures
In Washington state, lenders typically use the deed of trust form for mortgages where the lender is the “beneficiary” of the trust and the “trustee” has the power to act to protect the beneficiary’s interest by foreclosing on the property if the borrower defaults on the note (the underlying loan). MERS is typically listed as the beneficiary of the deed of trust rather than the lender that actually issued the loan (and signed the note) in order to avoid having to record future assignments of the mortgage; the deed of trust is recorded listing MERS as the beneficiary rather than the lender that issued the note to the borrower/homeowner. Interpreting the meaning of the word “beneficiary” in state foreclosure statutes, the Washington Supreme Court agreed with other courts that have held that MERS is not actually the beneficiary of the note and thus has no power to initiate a nonjudicial …
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Implied beach easement found from recorded plans and sales statements
A Massachusetts court has held that owners of lots near the ocean had an implied easement of access to the beach because recorded plans drafted in 1892 showed an unenumerated lot with access to the ocean and the developer had advertised the lots as “Shore Lots” with a “Cool breeze all the time, good bathing, boating and fishing, nice beach, no undertow, shade trees on several of the lots.” Leahy v. Graveline, 82 Mass.App.Ct. 144, — N.E.2d —, 2012 WL 2819395 (Mass. Land Ct. 2012). The case represents an application of the recent decision in Reagan v. Brissey, 844 N.E.2d 672 (Mass. 2006) that similarly found implied rights to use open land depicted on a subdivision map.
Court affirms that nonuse does not extinguish an old easement
The Supreme Judicial Court of the Commonwealth of Massachusetts has reaffirmed that even longstanding non-use of an easement will not extinguish it or cause it to lapse because of prescription. Cater v. Bednarek, — N.E.2d —, 462 Mass. 523 (Mass. 2012). To extinguish an easement by prescription requires acts inconsistent with the easement that put the easement owner on notice that its uses are being disrupted. Moreover, if the servient estate owner makes only part of an easement inaccessible, it is extinguished only as to that part but not the rest. In addition, the court held that, where a deed does not specify the dimensions of the easement, it must be interpreted to establish dimensions that are reasonably necessary for the enjoyment of the dominant estate; the easement is not limited to the purposes for which the dominant estate was used at the time the easement was created. Moreover, if the easement …
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Homeowners’ Association sign regulations violate free speech rights under state constitution
The Supreme Court of New Jersey held in Mazdabrook Commons Homeowners’ Ass’n v. Khan, — A.3d —, 2012 WL 2120868 (N.J. 2012), that the free speech clause of the state constitution guarantees the right to post political signs on one’s property and that any covenants or rules of a homeowners association to the contrary are unenforceable. The owner in this case posted a sign inside the window of his townhouse and a second sign inside his door. Those signs supported his own candidacy for town council. The Association’s rules banned all signs other than “for sale signs.” The court distinguished its earlier ruling in Committee for a Better Twin Rivers v. Twin Rivers Homeowners’ Ass’n, 929 A.2d 1060 (N.J. 2007), which upheld minor restrictions on sign placement by property owners who were members of the association and did not involve an election to a state or local public office as was …
Mass high court prospectively requires banks to physically possess the note as well as the mortgage in order to foreclose
In Eaton v. Fed. Nat’l Mortgage Ass’n (Fannie Mae), 2012 Mass. LEXIS 488 (Mass. June 22, 2012), the Supreme Judicial Court of Massachusetts held that a foreclosing party must be in physical possession of both the note and the mortgage (or be acting on behalf of someone who does) when bringing a foreclosure proceeding. However, the ruling applies only prospectively to foreclosures that occur in the future, with the exception that the plaintiff in Eaton that convinced the Court to clarify this rule can take the benefit of it. The refusal to apply the rule retroactively was based on the belief that the law may have been unclear beforehand and that it was the case that many people acted without regard for this principle in the past.
Easements implied by prior use or by necessity
The Massachusetts Land Court has reaffirmed that easements can be implied from prior use if they were used before severance of the two parcels and are “reasonably necessary” for use of the dominant estate while easements by necessity require the dominant estate to be inaccessible but for the easement. Black v. Klaetke, 20 LCR 120, 2012 Mass. LCR LEXIS 56 (Mass. Land Ct. 2012).