Utah Court Declares Rental Agreement, Eviction Invalid; Future Trial To Determine Property Title In Lawsuit Between Homeowner, Sale Leaseback Peddler

In Taylorsville, Utah, KTVX-TV Channel 4 reports:

• A Taylorsville man faced with the prospect of losing his home turned to a foreclosure rescue company for help. But instead of help, he claims the company practically tricked him out of his home.

• Mark Jeffs was months late on his mortgage, and his bank was looking to collect. Jeffs says one day a man with a plan came knocking on his door, promising Jeffs he'd save his home. Jeffs claims that the man's company, Foreclosure Connection, helped catch him up with his mortgage and said they'd assume his mortgage from the bank. In return, Jeffs signed over the deed to his home but asserts that he didn't understand what he was doing at the time. "I thought my home was saved," Jeffs told ABC4 but continues, "a few months later I got an eviction notice." Turns out, Jeffs had in effect become a renter in his own home. And when the Taylorsville man couldn't afford to make payments to the foreclosure rescue company on his own home he was evicted. "They said it was a lease option," Jeffs told ABC4 and we asked, "did you understand what you were signing at the time? No."

• However, Jason Williams, owner of Foreclosure Connection says that simply isn't true. [...] The Foreclosure Connection owner says Jeffs knew exactly what he was doing, and in fact Jeffs fell behind in his payments to William's company that was why he was being evicted.

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• Williams could not elaborate further on his situation with Jeffs due to current litigation and an impending trial. But Williams did say that the Jeffs were frustrated because they fell behind, "when things don't go their way it's no longer a buy and sell, it's a loan because I lent them money."(1)

• Currently, the two head to court in December to find out who really owns the Taylorsville home. A judge has ruled that Jeffs lease and eviction are invalid but Williams still holds the deed to Jeffs' home.

For the story, see Homeowner claims "lender" tricked him out of home.

(1) Apparently, Williams, like many other sale leaseback peddlers, are clueless that one of the risks of entering into these types of transactions is the possible recharacterization of the deal from a sale leaseback arrangement into a secured loan through the judicial invocation of the centuries-old equitable mortgage doctrine. See, generally:

• When is a Sale-Leaseback an Equitable Mortgage?,
• Sale-Leasebacks: Things May Not Be What They Seem,
• Recharacterization Issues in Sale-Leaseback Transactions,
• Loan Participations: Recharacterization Issues,
• Recharaterzation Issues In Participating and "Equity Kicker" Mortgages,
• Clogging Revisited,
• To pay or not to pay: Claiming damages for recharacterization of sale leaseback transactions under owner's title insurance policies.