Title Issues

Estoppel by deed does not require reliance

/ Consumer Protection, Estates and Future Interests, Leaseholds, Real Estate Transactions, Statute of Frauds, Title Issues

The Pennsylvania Supreme Court has reaffirmed and applied the doctrine of estoppel by deed in the case of Shedden v. Anadarko E. & P. Co., L.P, 136 A.3d 485 (Pa. 2016) and distinguished it from the doctrine of equitable estoppel. Equitable estoppel “recognizes that an informal promise implied by one’s words, deeds or representations which leads another to rely justifiably thereon to his own injury or detriment, may be enforced in equity” while “[i]n contrast, the doctrine of estoppel by deed precludes one who conveys an interest in land that he does not own, but subsequently acquires the title thereto, from denying the validity of the first conveyance.” In this case, an owner leased oil and gas rights to a 62-acre parcel while actually owning only 50% of them. When the owner later acquired the other 50% of the oil and gas rights, the doctrine of estoppel by deed folded those …

Estoppel by deed does not require reliance Read More »

Banks that foreclose without legal authority to do so commit the tort of wrongful foreclosure

/ Consumer Protection, Estates and Future Interests, Mortgages, Real Estate Transactions, Title Issues

The California Supreme Court held in Yvanova v.  New Century Mortgage Corp.,, 365 P.3d 845 (Cal. 2016), that a borrower has standing to prove that a nonjudicial foreclosure was wrongful because an assignment by which the foreclosing entity purportedly took a beneficial interest was void, thereby depriving the foreclosing party of any authority to foreclose through a trustee’s sale.  In a follow up case, Sciarratta v. U.S. Bank Nat’l Ass’n, 2016 Cal. App. LEXIS 399 (2016), the Court of Appeals held that foreclosure by an entity with no power to foreclose is, by itself, the tort of wrongful foreclosure. Even if the borrower is in default, and someone has the right to foreclose, that does not mean that any person with a claim can bring the foreclosure. Only a party with a better claim to title — someone with the legal authority to foreclose — can oust a peaceable possessor from their home. …

Banks that foreclose without legal authority to do so commit the tort of wrongful foreclosure Read More »

Prescriptive easement granted for underground utility lines

/ Easements, Title Issues, Trespass

An easement may be acquired by prescription if one engages in visible (“open and notorious”) use of another’s property in a continuous manner for the period of the statute of limitations. Most state presume such uses are permissive although a growing minority of states presume permission. A crucial requirement is that the use be visible to the servient estate owner. How then could underground utility lines (which are obviously hidden) be sufficiently visible to be acquired by prescription? The Massachusetts Land Court ruled that an owner can acquire an easement by prescription for underground utility lines if physical clues on the land would put a reasonable owner on notice that the lines exist. Dunning v. Larsen, 2015 WL 5920263 (Mass. Land Ct. 2015). In this case the dominant estate owner also was using a road over the servient estate and the utility lines were underneath that road. While the lines themselves …

Prescriptive easement granted for underground utility lines Read More »

Buyer may sue seller for fraudulent failure to mention flooding problem despite “as is” clause in real estate sales contract

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

When real estate contracts contain an “as is” clause or state that the buyer is not relying on any oral statements made by the seller, some courts hold that the buyer cannot sue the seller for fraud even if the seller lied about the condition of the premises or failed to reveal material facts any reasonable buyer would want to know. But other courts allow claims for fraud on the ground that sellers cannot be allowed to immunize themselves from liability for fraud by contract language. In McNulty v. Chip, 116 A.3d 173 (R.I. 2015), buyers of a home experienced serious flooding within weeks of buying the place. Rather than an all-or-nothing solution, the Court held that the sales contract had not been worded specifically enough to protect the seller from a fraud claim. While the contract said that the property was being sold “as is,” nothing specific was stated about …

Buyer may sue seller for fraudulent failure to mention flooding problem despite “as is” clause in real estate sales contract Read More »

Colorado Supreme Court holds that an option that can be canceled any time before its exercise does not violate the traditional rule against perpetuities

/ Real Estate Transactions, Restraints on Alienation, Title Issues

The Colorado Supreme Court has held that the traditional rule against perpetuities does not invalid an option, even if it has no time limit, if it can be canceled at any time before its exercise, at least where the price for the option is set at the market value of the property and it was agreed to by sophisticated parties. Atlantic Richfield Co. v. Whiting Oil & Gas Corp., 320 P.3d 1179 (Colo. 2014). The court reasoned that what mattered was not the lack of time limitation but whether the option imposed an unreasonable restraint on alienation and concluded that it did not under these circumstances.

Developer stopped from converting golf course into housing by implied servitude arising out of marketing the golf course as an amenity for nearby homes previously sold by the developer

/ Easements, Servitudes, Statute of Frauds, Title Issues

A developer marketed homes as being next to a golf course with the golf course noted on sales material and the recorded plat. When the developer later tried to convert the golf course into residential lots, the homeowners sued, claiming an implied servitude. Despite the lack of any express covenant in the deeds, the court found the presence of the golf course with the designation as a “golf course” to be sufficient to find the property restricted to golf course purposes. Riverview Cmty. Grp. v. Spencer & Livingston, 337 P.3d 1076 (Wash. 2014). Similar cases include Agua Fria Save the Open Space Ass’n v. Rowe, 255 P.3d 390 (N.M. 2011); Reagan v. Brissey, 844 N.E.2d 672 (Mass. 2006).

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.

Washington Supreme Court joins courts that reverse the presumption of permissiveness for prescriptive easements

/ Adverse Possession, Easements, Servitudes, Title Issues

In general, possession of property owned by another is presumed to be non-permissive. Thus, one can obtain property by adverse possession if one actually possess real property in a visible manner for the statute of limitations without regard to proof of lack of permission. Many courts apply the same presumption to claims for prescriptive easements. The reason is that some border cases (such as use of a strip of property for driveway purposes) may involve both an adverse possession claim and a prescriptive easement claim and it is thought to be irrational to reverse the presumptions for the two doctrine. A significant minority of courts however now reverses the presumption when a prescriptive easement is claimed on the ground that neighbors often allow neighbors to make limited uses of their property and that such neighborly accommodations are generally informal grants of permission for such uses. It seems wrong to punish …

Washington Supreme Court joins courts that reverse the presumption of permissiveness for prescriptive easements Read More »

Third Circuit supports MERS, holds that Pa. law does not require mortgage transfers to be recorded to be valid

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

Pennsylvania statutes have language that might have been interpreted to require transfers of interests in land (through deeds or mortgages) to be recorded to be valid. If true, that would have undermined the MERS system of mortgage registration. But the Third Circuit gave MERS a win and interpreted Pennsylvania law to recognize mortgage transfers at the moment they are signed; recording is not required for the transfer of the property interest to be valid but is simply for the convenience of the parties and subsequent conveyees. The case, Montgomery Cty. v. MERSCORP, Inc, 2015 U.S. App. LEXIS 13482 (3d Cir. 2015), is another win for MERS among the federal Circuit Courts in a series of cases that challenged its business model. The result of the case, as with other MERS-registered mortgages, is that there is no longer a public record of mortgage transfers since those records appear, if at all, on the …

Third Circuit supports MERS, holds that Pa. law does not require mortgage transfers to be recorded to be valid Read More »

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.

Scroll to Top