Saturday, June 15, 2013

Ex-Investment Bankster Accused By His 86-Year Old Mom Of Strong-Arming Her Out Of Dead Hubby's Will, Swiping $500K+ Proceeds From Sale Of Marital Home

In New York City, the New York Post reports:

  • A former Lehman Bros. banker strong-armed his 86-year-old mother out of her husband’s will — and took a half-million dollars from the sale of her Fifth Avenue home, she charges in a lawsuit.

    Helen Bacanovic, who stood by her older son Peter’s side when he was convicted of perjury in the 2004 Martha Stewart trial, lost her husband, Rabe, in January.

    Her younger son, Paul, 49, filed a will with the court in February that named him as its “sole executor” and “left [Helen] no money,” the Manhattan Supreme court papers charge.

    But his ailing mom insists in an ongoing Manhattan Surrogate’s Court case that Rabe’s “signature on page seven of the purported will appears to be a forgery.”

    In that proceeding, Paul argues that his parents were separated when his dad died and that his dad willingly signed over his $220,000 estate to Paul’s kids.

    His mom says she “suffered a stroke” on March 13 “and is in desperate need of money for her medical care and maintenance.” She adds that she sold the two-bedroom condo that she and Rabe owned at 923 Fifth Ave. for $1.6 million last spring and now lives on East 67th Street.

    But, she says, Paul swiped $515,000 from that sale. He claims in legal papers that was to repay a $500,000 loan he gave his parents.

    A lawyer for Paul yesterday declined to comment until after they’ve reviewed the lawsuit. His brother, Peter, 51, declined to comment outside his mother’s new Upper East Side digs.

Chicago City Council OKs Ordinance Requiring Foreclosing Banksters To Offer Existing Renters In Tenant-Occupied Homes Either Rent-Controlled Lease Or $10,600 Relocation Payment As Protection From Unwanted Boot

In Chicago, Illinois, WBEZ Radio 91.5 FM reports:

  • The Chicago City Council on Wednesday afternoon approved protections for renters whose units have entered foreclosure. The ordinance passed in a 45-4 vote after more than a year of organizing by tenant advocates.

    The measure, dubbed Keep Chicago Renting, will require the foreclosing bank to provide the tenants a rent-controlled lease until selling the property or pay them a “relocation assistance” fee of $10,600 per unit. The goal is to keep renters in their homes and keep the buildings from standing vacant and breeding crime.
  • An earlier version of the proposal, introduced by Ald. Richard Mell (33rd) last July, would have prohibited post-foreclosure evictions outright except under narrow circumstances such as the tenants’ failure to pay rent.

    Mayor Rahm Emanuel’s administration worried that version might not withstand legal challenges. Instead of the eviction ban, the city pushed for requiring the banks to pay the relocation fee. Negotiations between City Hall and tenant advocates dragged on for months. The sides did not finalize the amount of the fee until last week.

More On Sovereign Citizens & The Use Of 'Paper Terrorism' To Take Over Possession Of Homes, Cloud Land Titles

In Montgomery County, Maryland, the PotomacPatch reports:

  • The Jan. 5 takeover of an unoccupied Bethesda mansion may sound pretty far-fetched and even a bit wacky, but it's serious stuff, the head of the Montgomery County Police Department's Vice and Intelligence Unit said Wednesday in an interview with Patch.

    MCPD released photos Tuesday of a suspect in the case, which has been deemed a burglary of the home in the 7000 block of Natelli Woods Lane. Another man, who is charged in the burglary, told police that he claimed the vacant mansion as a member of the Moorish Nation.

    "It's a very conspiratorial, very organized crime," MCPD Sgt. Kenneth Penrod said.

    The so-called Moorish Nation is composed of self-defined Moorish nationals who believe the U.S. government is not legitimate. Moorish nationals believe they are descended from the Moors, who once inhabited the land now governed by the United States, they say. Because the U.S. took the land from the Moors illegally, they argue, they have the right to take over property—like the burgled Bethesda mansion.

    The Moorish Nation is one of several groups that adhere to a sovereign citizen ideology—"a conspiratorial belief system that argues that most Americans are not subject to most tax and criminal laws promulgated by the government," according to the Southern Poverty Law Center.

    Members of sovereign citizen groups often use "paper terrorism," filing bogus tax documents claiming ownership of a property and filing liens against the government trying to uphold the law, Penrod said. So far, this has happened mostly in southern states—including Virginia, Georgia and North Carolina—although New York City has seen it too, he said. This creates a lot of paperwork in the courts, because once a lien is filed, it's hard to get it removed, Penrod said.
For more, see 'Moorish National' Burglary of Bethesda Mansion Part of Larger, Potentially Violent Conspiracy (Case is Montgomery County's first property takeover by members of a sovereign citizen group).

Friday, June 14, 2013

Minnesota Couple Claiming Sovereign Citizen Immunity From Prosecution Get Nearly Two Years For Filing $114 Billion In Bogus Liens Against Gov't Officials In Retaliation Over Home Foreclosure

In Ramsey County, Minnesota, the Pioneer Press reports:

  • A former Minneapolis couple who filed fake liens against public officials were sentenced Friday to nearly two years in prison after a judge denied their attempt to withdraw their guilty pleas.

    Thomas Eilertson, 45, and Lisa Eilertson, 49, were taken into custody immediately upon sentencing by Ramsey County District Judge Lezlie Ott Marek.

    "These people are selfish, they're bullies -- in fact, they are paper terrorists," said John Ristad of the Ramsey County attorney's office.

    On Thursday, the couple sent a 97-page fax to the court, Ristad said. Among the documents were IRS forms "with my name, (County Attorney) John Choi's name, Judge (Teresa) Warner's name and, Your Honor, your name," Ristad said.

    The fax also included evidence of "attempts to bully the local newspapers, demanding retractions and threatening sanctions," Ristad said.

    The judge agreed with Ristad that the Eilertsons had violated the plea agreement by failing to remove liens they had filed against officials such as Hennepin County Sheriff Rick Stanek, Hennepin County Attorney Mike Freeman and Steven Bruns, an attorney who represented the lender during the foreclosure of the Eilertsons' Minneapolis home.

    The paperwork for the lien removal was sent to the Eilertsons' new address in Coleraine, Minn., but the couple returned it, unopened. They also failed to return calls from the probation department to set up a pre-sentence investigation interview, the judge said.

    Thomas Eilertson said he had "no idea" that Ristad was going to be sending the paperwork for the lien removal. He also said he believed that "with the rescission of the plea, everything went back to square one."

    The judge said that since she had not ruled until Friday on the Eilertsons' motion to withdraw their pleas, they should have continued as they were ordered at the plea hearing. It was "very clear what they needed to do" before sentencing, Marek said.

    Had the Eilertsons complied with terms of the plea agreement, they would have been given stayed prison sentences, with a maximum of four months in the Ramsey County workhouse.

    Thomas Eilertson called Ristad's description of some of the couple's recent actions "blatant lies." "I object to prison," he said. "I'm not a criminal."

    He asked the judge to delay his entry into prison for two days so he could prepare the couple's 12-year-old daughter "for what's about to happen to our family." The judge said no. "Oh, my god," Lisa Eilertson whispered. Thomas Eilertson then asked for a stay of sentence pending an appeal, but Marek again denied the request. "Oh, no, please," his wife said. A deputy told her to be quiet.

    The Eilertsons filed false liens against 12 victims, using the name "Blessings of Liberty," according to criminal complaints filed in Ramsey County District Court.

    The Hennepin County sheriff's office referred the case to St. Paul police for investigation because several victims are Hennepin County officials.

    The Eilertsons' activities stemmed from 2009, when their home at 4448 Cedar Ave. S. in Minneapolis went into foreclosure. They were evicted in July 2010.

    A person they corresponded with online gave them instructions on how to file Uniform Commercial Code liens against people in retaliation for their economic problems. They were told that filing under the name "Blessings of Liberty" shielded them from civil and criminal liability. (It did not.)

    The Internet acquaintance said the liens, which are claims against an asset, would allow the Eilertsons to "do death by a thousand paper cuts." The liens, filed in 2009 and 2010 with the Secretary of State's office in St. Paul, totaled $114 billion.

    "We never wanted to file liens against anybody," Lisa Eilertson said Friday. "We just wanted answers." Asked if she wanted to say anything more before her sentencing, Lisa Eilertson said, "I don't consent. I don't consent to this."

    Marek signed an order Friday directing the Secretary of State's office to remove the liens.

NC AG Slams Brakes On Real Estate Operator Allegedly Peddling Homes Using Land Contract/Contract For Deed Racket; Would-Be Buyers In Possession Under Unrecorded Purchase Agreements Say Their Land Was Mortgaged Out From Under Them By Seller

From the Office of the North Carolina Attorney General:

  • A North Carolina company that nearly cost more than 20 Surry County residents their homes has been barred from selling real estate in installments, Attorney General Roy Cooper announced today.

    “People who wanted a place of their own made payments in good faith but almost lost their homes anyway,” Cooper said. “We work to stop deceptive land deals to keep consumers from getting hurt.”

    Cooper alleges that Nichols Land Company misled consumers who entered into installment contracts with the company, promising them that they would own the property in time but then borrowing against it and defaulting on those loans. As a result, more than 20 consumers nearly lost their homes to foreclosure.

    Under a judgment approved by Wake County Superior Court Judge G. Wayne Abernathy on Tuesday, Nichols Land Company (Nichols) and its managers, James A. Nichols, Samuel J. Nichols, Roger L. Nichols, and Tina Nichols, are permanently barred from selling real estate through installment sales.

    The court order prohibits the defendants from any property sales where the consumer agrees to pay the purchase price in five or more payments while the defendants retain title to the property. If the defendants violate the order, they will have to pay $200,000 in civil penalties.

    As outlined in Cooper’s complaint, Nichols began offering Surry County land for sale through installment contracts starting in 2000. Under these contracts, consumers were told that if they put down a non-refundable deposit, paid monthly installments, and paid the annual property taxes to Nichols rather than to local government, they would eventually own a piece of property after a period of years.

    Cooper contends that in 2007, Nichols borrowed a total of $600,050 from two banks, using the land it had supposedly sold to consumers as collateral. Nichols continued to market and sell properties even after taking out loans against them. When Nichols failed to repay the loans, the banks began to foreclose on the properties.

    As alleged in court filings, Nichols continued to accept payments from buyers and never informed them about the impending foreclosures.

    Many buyers were already living on the properties and had spent their own money to improve them by putting in wells, septic systems, foundations and driveways. Consumers would have lost their homes—and the money they’d spent buying and improving the property— if the banks hadn’t agreed to extend them credit to prevent the foreclosures.
For the North Carolina AG press release, see Surry County real estate seller banned from installment sales, AG says (Nichols Land Company took payments for land, didn’t tell residents that banks were foreclosing).

Elderly Tenant Scores $800K Jury Verdict Over Landlord For Knowingly Leasing Apartment To Her Despite Having Failed To Cure Existing Bedbug Infestation He Was Notified Of Weeks Earlier

In Anne Arundel County, Maryland, The Baltimore Sun reports:

  • Faika Shaaban developed an itchy rash the day she moved into an Annapolis apartment in the fall of 2011. The hundreds of bites, the lesions and the resulting scarring were from bedbugs. She had no idea that she'd rented an apartment whose landlord had been notified of a potential bedbug infestation only weeks earlier, according to her lawsuit against the landlord.

    An Anne Arundel County jury awarded the 69-year-old woman $800,000 this week, an amount that lawyers familiar with such cases said was the highest they have seen. Most of that — $650,000 — was in punitive damages, more than she had sought.

    The case highlights the growth in bedbug lawsuits nationwide. And it demonstrates the ire of jurors not only over the insects but also over landlords who they feel didn't deal with a known infestation, said Shaaban's attorney, Daniel W. Whitney of Towson. "She lost practically everything due to this," he said.

    He said it was the jury's "opportunity to send a message to the community, to landlords, that you must abate it."

    The defendant, landlord Cornelius J. Barrett and West Street Partnership, which owns the property and of which Barrett is a general partner, did not respond to the lawsuit, according to Whitney and court records. He could not be reached to comment.

    In a 2002 case, a jury awarded $382,000 to a brother and sister who said they were besieged by bedbugs at a Motel 6 in Chicago when they stayed in a room that management knew was infested.

    Whitney has more than 75 bedbug cases, nearly all in Maryland, and said he's turned away hundreds of potential bedbug clients in the past two-and-a-half years.

    "You are going to see a rapid growth of bedbug claims over the next decade. There are enough lawyers who are getting trained so that people will be able to find lawyers, so that people will find a way to get relief," said lawyer Tom Campbell of Birmingham, Ala., who advises other lawyers.

    This week's verdict has landlords taking notice.

    A landlord doesn't put bedbugs in a unit, yet "the landlord is being faced with the burden of fixing this problem," said Ben Frederick, president of the Property Owners Association of Greater Baltimore.

    Landlords are pushing to shift responsibility onto tenants in leases that say that if bedbugs don't turn up before or soon after a tenant moves in, the tenant must pay for extermination.

    Greg Countess, assistant director of advocacy at the Maryland Legal Aid Bureau, said he is increasingly seeing leases that give the landlord reason to terminate a lease and evict a tenant if the landlord can prove a tenant brought in bedbugs. Many landlords, he said, push tenants to buy renters' insurance "to protect property that might be lost due to a bedbug infestation."

    "The first time, I will come in and spray. If you don't do all the steps we tell you to do, like clean the bed linen and the clothing, then the next spray is on you. Or you live with them," said Sharon Hooper, president of the Carroll County Landlord Association, who said she has her units regularly inspected by pest control companies.

    "Most landlords are documenting, 'Here's what we do,'" said Adam Skolnik, executive director of the Maryland Multi-Housing Association. "We have some landlords who are doing pre-inspections of the unit with dogs that are trained to find bedbugs."
For the story, see Bedbug lawsuits on the increase (Maryland award of $800,000 sets record, lawyers say, as landlords move to hold tenants responsible).

76-Year-Old Widow Living On Food Stamps, Social Security Leads Fight To "Clean Up Part Of What Has Become A Really Ugly System" That Leaves Tax-Delinquent Homeowners Vulnerable To Tax Lien Investors Running Inflated Fee Ripoffs; Out-Of-Town-Based Outfit's Attempted $4,221 Clip To Satisfy Unpaid $469 Bill Triggers Battle

In Louisville, Kentucky, the Courier-Journal reports:

  • Rose Harper, a 76-year-old widow who lives on food stamps and Social Security, “darn-near fainted” in February when she learned Tax Ease Lien Servicing was foreclosing on her Portland house over a $469 tax bill someone else didn’t pay four years ago.

    “To this day, I just don’t understand it,” said Harper, who lives in the home on North 17th Street with two grown sons, a grandson and 10 cats.

    The foreclosure stems from a Jefferson County property tax bill that Harper’s former landlord failed to pay in 2009 — a debt Harper and her son Deddo Goldsmith inherited when they bought the home in 2011. Harper said she has lived in the house, assessed at $28,880 for taxes, since 1974.

    Dallas-based Tax Ease, one of the biggest purchasers of overdue tax bills in Jefferson County, now demands $4,221 to settle the bill — an amount Harper and Goldsmith are challenging as excessive in a class-action countersuit filed in April.

    John Dwyer, a Louisville attorney representing Harper and Goldsmith, said the countersuit is an effort to “clean up part of what has become a really ugly system” in which companies like Tax Ease try to reap a bigger return on their investment in tax debt by overcharging homeowners to settle unpaid bills.

    When homeowners don’t pay their taxes, companies like Tax Ease can pay the bill and then charge the homeowner 12 percent interest plus fees until the overdue tax — and interest — are paid.

    In addition to the interest, state law allows such investors to add pre-litigation costs, attorney fees and other costs to the final tab. The Harper and Goldsmith suit claims Tax Ease inflated these charges, some of which were paid to affiliated companies.
  • The other counterclaimants in the class action are Phillip and Karyn Julian, owners of a home on West Kentucky Street near Victory Park, who got a $3,993 payoff demand from Tax Ease for a 2009 tax bill that was originally $461, according to the suit and Courier-Journal research.
  • The single biggest charge [in dispute] is $961 in legal fees charged by [...] Hayden, Craig & Grant, to file the foreclosure on Harper’s home. The counterclaim says $961 is unreasonably high for a foreclosure complaint containing multiple errors that appeared to be “generated by an automatic template.”
  • The suit alleges that Tax Ease used what [what are described as] “shell” companies to provide services at inflated costs, which pumped up the bill and increased its return on investment.

    For example, the list of charges Tax Ease gave Harper and Goldsmith includes a $595 fee “estimate” for a title report prepared by a company called Blue Grass Abstract.

    Blue Grass Abstract is an affiliate of Tax Ease, and Kentucky records show it has the same Dallas address as Tax Ease. Phillip Migicovsky, a Texas resident, is involved with both companies, according to the counterclaim.

    The $595 estimate for a title report is “up to 800 percent above the usual and customary rate” for Jefferson County, according to the suit. The counterclaim references a 2011 order from a judge in Shelby County allowing Tax Ease to charge $100 for a “title search.” State law allows tax investors like Tax Ease to recoup “actual, reasonable” attorney fees when foreclosing to enforce their liens.
  • Tax Ease’s list of charges also includes $100 for a second affiliated company, Lien Data Services, to perform an “address check” using Jefferson County PVA records, a service that has a “maximum statutory cost” of $2, according to the counterclaim.

Thursday, June 13, 2013

B.C. Regulator: Many Scam Victims Left Destitute After Being Conned By Dubious Investment Peddler Into Borrowing Against Their Homes To Buy Shaky Securities

In Vancouver, British Columbia, The Vancouver Sun reports:

  • A Victoria-area financial adviser has been accused of illegally selling more than $65 million worth of high-risk securities to hundreds of investors, many of them seniors, leaving a trail of financial devastation.

    In a notice of hearing Thursday, the B.C. Securities Commission alleged that from June 2007 to December 2010, David Michaels — doing business as Michaels Wealth Management — advised 484 clients to purchase more than $65 million worth of “exempt-market” securities without being registered to advise in securities.

    The notice also alleges he defrauded investors by “repeatedly and falsely” claiming that he gave up his earlier registration as a stockbroker because he had lost faith in the stock market when, in fact, he had relinquished his licence in the face of an investigation.

    The notice says he targeted retirees through monthly seminars, a weekly show on CFAX 1070 radio and one-on-one meetings, and that he promoted the securities as being less risky than publicly traded stocks and in some cases recommended that investors borrow against their homes to finance the purchases.

    The securities were, in fact, extremely risky. They included investments in a couple of oil and gas start-up companies, a company that bought insurance policies at a discount from terminally ill people, and a long-term care facility development in Sidney.

    For Michaels, it was a very lucrative business. According to the notice, he collected nearly $5.8 million in commissions and marketing fees from the issuing companies during the material period.

    For investors, however, the investments were disastrous: “Almost all of the roughly $65 million invested by Michaels’ clients is now worthless, leaving many of them destitute while their home equity loans remain,” the notice alleges.
For more, see B.C. Securities Commission launches hearing in alleged $65-million investor fraud (Victoria-area financial advisor David Michaels accused of perpetrating massive fraud).

For the British Columbia Securities Commission press release, see BCSC alleges that Vancouver Island man illegally advised hundreds of people and perpetrated fraud.

For the formal charges, see Notice of Hearing: In re Michaels.

Feds Get $4.6M For Luxury Park Avenue Apartment, Seek To Unload Long Island Mansion For $4.5M In Connection With Madoff Ponzi Scheme Forfeiture Score

In New York City, the New York Post reports:

  • The New York mansion that once belonged to the brother of Bernard Madoff is on the market for $4.5 million. Peter Madoff's Old Westbury estate on Long Island has been listed by the US Marshals Service. Madoff, who pleaded guilty last year to falsifying documents and lying to regulators as part of his brother's Ponzi scheme, was sentenced to 10 years in prison.

    He was ordered to forfeit his family's assets as part of the plea deal.

    The 1935 mansion has five bedrooms and five bathrooms. The property also boasts a tennis court, swimming pool and pool house.

    The US Marshals Service has already sold Peter Madoff's Park Avenue apartment for $4.6 million. The proceeds are going to victims of the Ponzi scheme.

SC Feds Score Title Transfer Freeze On Home Co-Owned By Suspect Facing Federal Gambling Charges; Will Seek Residence Forfeiture If Prosecution Leads To Conviction

In Columbia, South Carolina, The State reports:

  • The fallout from Irmo bookie Brett Parker’s killing of his wife and sports betting clerk is not over, even though he is now in a state prison.

    He and his father, Jack Parker, along with a third man, Douglas E. Taylor, are expected to stand trial later in the summer on federal gambling charges. As part of that case, the federal government is trying to seize Lake Murray property and a bank account from Brett Parker’s parents.

    U.S. District Judge Cameron McGowan Currie earlier this month issued a restraining order to prevent Jack and Linda Parker from selling their 5,300-square-foot home on 1.96 acres near Ballentine and from cashing out a $67,302 certificate of deposit at First Citizens Bank. The Lake Murray property has a tax value of $520,700, according to Richland County tax records.

    The federal government will ask that the Parkers forfeit those assets if Jack Parker is convicted, according to court documents. Linda Parker has not been charged or indicted.

    The father and son, along with Taylor, were indicted in February on federal gambling charges in the wake of Brett Parker’s arrest on two murder charges in Richland County. Brett Parker was convicted Tuesday in the shooting deaths his wife, Tammy Jo Parker, and Bryan Capnerhurst, his sports betting clerk. Prosecutors said he killed his wife and then attempted to frame Capnerhurst as a way to escape a failing marriage and mounting debt from his own gambling habit. He stood to gain $1.1 million from his wife’s estate.

Controller For Community Association Mgt. Company Admits Guilt For Diverting $950K+ In HOA Funds For His Own Personal Use; Defendant Agrees To Forfeit Residence After Using Some Fraudulently-Obtained Proceeds To Pay Down Home Mortgage

From the Office of the U.S. Attorney (Sacramento, California):

  • Chris Barna, 35, of Manteca, pleaded guilty [] to one count of bank fraud for his role in embezzling more than $950,000 from his employer M & C Association Management Services Inc., United States Attorney Benjamin B. Wagner announced.
  • According to court documents, Barna was the controller for M & C, a company that provides community association management and developer services to numerous community associations in in Northern California.

    From April 2007 through May 2011, Barna misappropriated approximately 300 checks payable to M & C from third parties, 40 checks payable to third parties from M & C as well as two checks payable to the parent company of M & C. Barna forged the endorsements on the checks or wrote “deposit only.” He had the checks deposited into various bank accounts he controlled at Wells Fargo Bank. Barna then manipulated financial accounting records at M & C as part of an effort to conceal the fraud.

    As part of the plea agreement, Barna agreed to pay full restitution to M & C and to forfeit his residence in Manteca. He had used some of the proceeds of the fraud to pay down the mortgage of the house.
For the U.S. Attorney press release, see Stockton Corporation Controller Pleads Guilty To Embezzling More Than $950,000.

Thanks to Cynthia Stephens for the heads-up on this story.

Wednesday, June 12, 2013

Trash-Out Subcontractor For Now-Notorious Foreclosure Property Management Outfit Pinched For Allegedly Pilfering $42K+ From Home

In Wolcott, Connecticut, the Republican American reports:

  • A Maryland man was charged Wednesday with stealing more than $42,000 worth of valuables and a handgun from a Breezy Knoll home while working for a subcontractor of a property management company, according to court documents.

    The property management company, Safeguard Properties, was the focus of a recent report by the Huffington Post(1) in which a former employee claimed he had received a "constant barrage" of complaints about subcontractors breaking into homes to steal heirlooms, artwork and weapons.(2)
For more, see Maryland man tied to theft in Wolcott.

(1) See Safeguard Properties Internal Documents Reveal Rampant Complaints Of Thefts, Break-Ins.

(2) For those homeowners who've been screwed over by wrongful trash-outs, lock-outs, etc. by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

NH Supremes: OK For Debtor To Shelter Cash From Creditor Claims By Purchasing Primary Residence, Then Invoking State Homestead Protection Against Forced Sale To Intentionally Stiff Judgment Creditor

From a recent Opinion Summary:

  • Petitioner Christina Deyeso appealed a superior court order that denied her petition for a declaratory judgment and injunctive relief, and awarded summary judgment in favor of respondent Jules Cavadi, permitting the forced sale of Deyeso's home.

    Deyeso and Stephen Barnes have three children together but never married. Deyeso is currently married to Keith Walsh, with whom she lives in Stratham[, New Hampshire] at a home that she purchased in 1997.

    Cavadi held a 1991 judgment against Barnes. In September 2004, in a common-law "reach and apply" action, he sued Barnes and Deyeso in a Massachusetts trial court, alleging that Barnes paid for certain real estate held in Deyeso's name in Massachusetts and New Hampshire, including the Stratham property.

    A Massachusetts superior court found that Barnes had an equitable interest in the Property valued at $94,854, thus entitling Cavadi to an equitable lien on the Property in that amount. After accounting for mortgages on the property, the equity value remaining in the Property was $72,373.41.

    Deyeso appealed the Massachusetts trial court's decision to the Massachusetts Supreme Court, which upheld the portion of the trial court's order declaring Barnes's interest in the Property to be $94,854.

    Cavadi then obtained an order in Massachusetts allowing a public auction of the Property to recover the amount of Barnes's interest. Deyeso claimed that both she and her husband were entitled to homestead protection under RSA 480:1 (Supp. 2012), which, given the prior mortgages, would leave no equity for Cavadi in the event of a forced sale.

    The trial court then ruled in favor of Deyeso, concluding that, although her husband could claim the homestead protection due to his lack of ownership, her homestead interest prevailed over Cavadi's equitable lien. Cavadi then moved for reconsideration, and the the trial court eventually granted Cavadi's motion, concluding that, Deyeso's "conduct in this case amounts to fraudulent behavior" and, therefore, permitted the court to use "its equitable powers to negate [her] homestead exemption."

    Upon review, the New Hampshire Supreme Court reversed: "[Even] assuming, however, that Deyeso accepted the money from Barnes with the knowledge that he sought to avoid satisfying his debt to Cavadi, RSA 480:1 protects her homestead interest in the Property. . . . We therefore agree with Deyeso that, in the absence of a showing of fraud, deception, or other misconduct in the procurement of the funds used to purchase, invest in, or improve a homestead, the statutory homestead exemption applies - even when a judgment debtor's funds are so used with the intent of hindering or avoiding a creditor's legitimate claims."(1)
Source: Opinion Summary: Deyeso v. Cavadi.

For the ruling, see Deyeso v. Cavadi, No. 2012-315 (N.H. May 14, 2013).

(1) From the New Hampshire Supreme Court ruling on the protections afforded by state law to homeowners in the state, and the application of the law in this case:
  • RSA 480:1 provides that "[e]very person is entitled to $100,000 worth of his or her homestead, or of his or her interest therein, as a homestead."

    RSA 480:4 (2001) lists four exceptions to the operation of the homestead right: (1) "the collection of taxes"; (2) "the enforcement of liens of mechanics and others for debts created in the construction, repair or improvement of the homestead"; (3) "the enforcement of mortgages which are made a charge thereon according to law"; and (4) "the levy of executions as provided in this chapter."

    The purpose of the homestead exemption is to secure to debtors and their families the shelter of the homestead roofStewart v. Bader, 154 N.H. 75, 88 (2006). The exemption "protect[s] the family from destitution, and . . . protect[s] society from the danger of its citizens becoming paupers." 40 Am. Jur. 2d Homestead § 1, at 381-82 (2008).

    It also "promote[s] the stability and welfare of the state by encouraging property ownership and independence on the part of the citizen." Id. § 4, at 385 (footnotes omitted); see Comment, State Homestead Exemption Laws, 46 Yale L.J. 1023, 1030-31 (1937) ("Another aim of these laws was undoubtedly to protect and encourage home ownership, not only as a stimulus to diligence and high morals, but also as a means of enlisting the individual's self-interest in the preservation of established rights and in the promotion of general prosperity.").

    Statutory homestead protections are remedial in nature, and to effectuate their public policy objective are "universally held . . . to be liberally construed[;] . . . everything is to be done in advancement of the remedy that can be given consistently with any construction that can be put upon it." Barney v. Leeds, 51 N.H. 253, 276 (1871); see Buxton v. Dearborn, 46 N.H. 43, 44 (1865) ("[T]he statute should have a liberal interpretation to accomplish the object of the law, which was to leave, for the upholding and support of a debtor's family, a property where they lived not exceeding [the specified amount] in value, that should be exempted from levy and attachment for his debts.").

    Cavadi does not contend that any of the RSA 480:4 exceptions applies to defeat Deyeso's homestead claim. Rather, he relies upon our decision in Chase to assert a "general rule that where the statutory exemptions to the homestead act do not apply, a court may apply equity principles to defeat the homestead if circumstances warrant." The trial court, for its part, reasoned that "the equitable issues raised" in this case are, although not factually analogous, as compelling as those raised in Chase.

    As Deyeso observes, however, in Chase we invoked equitable principles to reach beyond the literal language of the homestead exceptions because there had been "fraud and egregious conduct" in obtaining the funds used to refinance the homesteadChase, 155 N.H. at 26 (noting that forgery had been used to obtain mortgage loan).

    No such fraud or egregious conduct is present here: notwithstanding Cavadi's allegations, there is no evidence in the record that Barnes wrongfully obtained the funds used to invest in Deyeso's home.

    Instructive is the court's decision in Havoco of America, Ltd. v. Hill, 790 So. 2d 1018 (Fla. 2001), a case we discussed in Chase. In that case, Havoco obtained a $15 million judgment against Hill on December 19, 1990, arising out of Hill's efforts to eliminate Havoco from a contract. Havoco, 790 So. 2d at 1019. Hill purchased a homestead property on December 30, and the judgment became enforceable on January 2. Id. Hill later filed for bankruptcy protection and claimed the property as a homestead exempt from collection by Havoco. Id. at 1019-20.

    The Eleventh Circuit Court of Appeals certified the following question to the Florida Supreme Court: "Does Article X, Section 4 of the Florida Constitution exempt a Florida homestead, where the debtor acquired the homestead using non-exempt funds with the specific intent of hindering, delaying, or defrauding creditors . . .?" Id. at 1019. After an extensive review of the precedents in which Florida courts allowed equitable liens to defeat the homestead protection, the court in Havoco answered that question in the affirmative. Id. at 1021-28.

    Notably, we opined in Chase that the Florida Supreme Court's approach to this question "str[ikes] the proper balance between" the purposes of the homestead laws, on the one hand, and established equitable principles on the otherChase, 155 N.H. at 26.

    For all relevant purposes, the facts of this case are indistinguishable from those of Havoco. Like Hill, Barnes had a judgment against him and used non-exempt funds in the purchase of exempt homestead property. He did so, in the Massachusetts trial court's view, in an effort to "defraud" Cavadi. We note here that the Massachusetts Supreme Judicial Court deemed the trial court's finding of fraud unnecessary in deciding the common-law reach and apply action before it. Cavadi v. Deyeso, 941 N.E.2d 23, 37 (Mass. 2011) ("Cavadi's nonstatutory [reach and apply] claim required no proof of a fraudulent conveyance."). Thus, the trial court in this litigation should not have relied upon the Massachusetts trial court's unnecessary factual findings relating to fraud in ruling on Cavadi's motion for summary judgment.

    Even assuming, however, that Deyeso accepted the money from Barnes with the knowledge that he sought to avoid satisfying his debt to Cavadi, RSA 480:1 protects her homestead interest in the Property.

    Cavadi does not allege that Barnes obtained the funds through fraud or misconduct. Rather, it appears that, as did Hill in Havoco, Barnes used non-exempt funds — i.e., money that would otherwise be subject to attachment by Cavadi — to pay for a homestead.

    We therefore agree with Deyeso that, in the absence of a showing of fraud, deception, or other misconduct in the procurement of the funds used to purchase, invest in, or improve a homestead, see 40 Am. Jur. 2d, supra § 89, at 472 ("When money fraudulently obtained is used to purchase a home, the homestead exemption is not a shield for the home buyer."), the statutory homestead exemption applies — even when a judgment debtor's funds are so used with the intent of hindering or avoiding a creditor's legitimate claims, see Willis v. Red Reef, Inc., 921 So. 2d 681, 684 (Fla. Dist. Ct. App. 2006) ("In essence, non-exempt assets may be converted into an exempt homestead even if this is done with an actual intent to hinder, delay, or defraud creditors."). A person who receives non-exempt funds from a debtor, and uses such funds to purchase, invest in, or improve a homestead with the knowledge that the debtor intends to avoid paying the creditor, is protected under this rule a fortiori.

    Our ruling comports with the homestead statute's historic objective of protecting the homes of debtors from the claims of unsecured creditors. As explained by the New Mexico Supreme Court: "[E]xperience has taught that in the long run obligations are more likely to be fulfilled by those whose connections with the community are stabilized by a protected interest in a relatively permanent place of abode than by those not so anchored." Coppler & Mannick, P.C., v. Wakeland, 117 P.3d 914, 917 (N.M. 2005) (quotation omitted).

    To the extent that our ruling means that the claims of otherwise deserving creditors may be defeated or delayed by those who seek to avoid their debts, RSA 480:1 expresses the legislature's intent to place the security of families in their homes before the interests of unsecured creditors. Cavadi is just such an unsecured creditor; he has made no showing that Barnes engaged in fraud or other illegality to procure the funds used to purchase Deyeso's homestead. His claim, therefore, must yield to the protection of the homestead law. Cf. 40 Am. Jur. 2d, supra § 4, at 384-86.

    Cavadi contends that the trial court's conclusion squares with the application of equitable principles in the partition of real property. He argues that the provisions of RSA chapter 547-C (2007 & Supp. 2012) (Partition of Real Estate) "empower[ ] the trial court with broad equitable power and discretion to partition property and to extinguish other existing rights in property," which is "precisely what the trial court did here."

    As explained above, however, equitable principles may be applied to reach beyond the literal language of the exceptions of RSA 480:4 only when there has been fraud, deception, or other misconduct in the procurement of funds spent on a homestead.

    For the reasons stated above, we also reject Cavadi's contention that he prevails upon theories of unjust enrichment, unclean hands, or in pari delicto.

Minnesota Supremes Void Mortgage On Home Solely-Owned & Mortgaged By Wife Where Earlier Title Transfer To Her By Ex-Co-Owner Hubby Lacks Express Waiver Of Homestead Rights

From a recent Opinion Summary:

  • Respondent credit union sought to foreclose on the homestead that Appellant and her husband (Husband) owned. The district court granted summary judgment to Appellant after concluding that the mortgage Appellant signed with Respondent was void under Minn. Stat. 507.02 because it was not also signed by Husband.

    The court of appeals reversed, concluding that the mortgage was valid because Husband had quitclaimed all of his interest in the homestead property to Appellant before the mortgage was executed.

    The Supreme Court reversed, holding that the mortgage signed by Appellant in favor of Respondent was void because (1) the mortgage at issue here did not meet any of the statutory exceptions to the signature requirement in section 507.02; and (2) Husband's quitclaim deed did not constitute an explicit waiver of his rights under the homestead statute.(1)
Source: Opinion Summary: Marine Credit Union v. Detlefson-Delano.

For the ruling, see Marine Credit Union v. Detlefson-Delano, No. A11-1925 (Minn. May 22, 2013).

(1) From the court ruling ('Antonio' is the hubby; 'Detlefson-Delano' is the wife):
  • The principal dispute in this case is over what effect, if any, Antonio's quitclaim deed to Detlefson-Delano has on the statutory requirement that he sign any conveyance of the homestead in order for the conveyance to be valid.[3]
  • MCU first argues that Antonio was not required to sign the mortgage because the quitclaim deed transferring his interest in the homestead to Detlefson-Delano fits within an exception to the signature requirement because it was a conveyance between spouses.

    Minnesota Statutes § 507.02 unambiguously provides, in relevant part, that "[if] the owner is married, no conveyance of the homestead . . . shall be valid without the signatures of both spouses" unless one of the statutory exceptions applies.

    The mortgage at issue here is a conveyance separate from the quitclaim deed between Antonio and Detlefson-Delano and must independently fit under one of the statutory exceptions in order to be valid without the signatures of both spouses.

    It is not a mortgage for purchase money under section 507.03,[4] nor is it a conveyance between spouses pursuant to section 500.19, subdivision 4.[5] Finally, it does not involve a severance of a joint tenancy pursuant to section 500.19, subdivision 5.[6] Therefore, under the plain language of section 507.02, the absence of Antonio's signature on the mortgage renders it void unless Antonio had expressly waived his rights under the homestead statute before Detlefson-Delano executed the mortgage. See Dvorak, 285 N.W.2d at 677.

    MCU also argues that the mortgage is valid without Antonio's signature because the quitclaim deed transferring Antonio's interest in the homestead to Detlefson-Delano waived Antonio's homestead rights. Clearly, Detlefson-Delano had the right to convey the real estate that she owned. However, under the second paragraph of section 507.02, which provides that a "spouse, by separate deed, may convey any real estate owned by that spouse, except the homestead, subject to the rights of the other spouse therein," Detlefson-Delano had no right to convey the homestead unilaterally. Minn. Stat. § 507.02 (emphasis added).

    While section 507.02 does not specifically provide that a waiver of one spouse's homestead rights is an exception to the signature requirement, we have said that homestead rights may be waived even though they are constitutional in nature. See Argonaut Ins. Co. v. Cooper, 261 N.W.2d 743, 744 (Minn. 1978). However, a party may waive those rights only "by an act which evidences an unequivocal intention to do so." Id. The presumption is against such a waiver. Gale v. Hopkins, 165 Minn. 177, 181, 206 N.W. 164, 165 (1925).

    A waiver of one's homestead rights must generally be express in order to be valid. For example, in Argonaut Insurance Company v. Cooper, we held that language in an indemnity agreement in which one party agreed to "waive and abandon . . . all rights to claim any of the property, including the respective homesteads, as exempt from levy, execution, sale or other legal process" was a proper waiver of homestead rights because the party "clearly listed the [homestead] as security" and had therefore "waived his constitutional and statutory right to claim any of his [homestead] property as exempt." 261 N.W.2d at 743-45.

    In contrast, we are reluctant to conclude that a party has waived homestead rights when the purported waiver consists of general language without mention of the specific homestead property. For example, in Benning v. Hessler, we held that a waiver as to a party's "right and benefit of any law . . . exempting property, real, or personal, from sale on judgment execution" was not a valid waiver of homestead rights. 144 Minn. 403, 403-04, 175 N.W. 682, 682-83 (1920). We reasoned:

    The waiver . . . binds no specific property. It does not purport to be a charge upon property. It is in terms but a waiver. It describes nothing and creates a lien upon nothing. It cannot be said that the debt sued upon is a charge in writing on the premises in question. It does not subject the homestead to a levy under the execution.
    Id. at 405, 175 N.W. at 683.

    Whether Antonio waived his homestead rights turns on the language of the quitclaim deed between Antonio and Detlefson-Delano, which we review de novo. See In re Stisser Grantor Trust, 818 N.W.2d 495, 502 (Minn. 2012). The quitclaim deed states that Antonio "does hereby remise, release and quitclaim . . . all the right, title, interest and claim" that he had in the property to Detlefson-Delano. However, the quitclaim deed does not include an express waiver of Antonio's homestead rights.

    Additionally, the deed suffers from the some of the same flaws as the purported waiver in Benning. It is completely silent as to any language that would charge the property, create a lien upon it, or subject it to execution by creditors. Therefore, we conclude that Antonio did not waive his homestead rights through the execution of the quitclaim deed.

    In conclusion, we hold that both spouses must sign a conveyance of the homestead to a third party pursuant to Minn. Stat. § 507.02 unless (1) a statutory exception to the signature requirement applies or (2) one spouse has explicitly waived his or her rights under the homestead statute.

    Because the mortgage at issue here does not meet any of the statutory exceptions and because Antonio's quitclaim deed did not contain an explicit waiver of his rights under the homestead statute, we reverse the court of appeals decision and conclude that the mortgage signed by Detlefson-Delano in favor of MCU is void pursuant to Minn. Stat. § 507.02.


Miami Official Cites 98 Small Neighborhood 'Mom & Pop' Assisted Living Facilities, Other Group Homes For Allegedly Scoring Improper Real Estate Tax Exemptions/Discounts By Making Bogus Homestead Claims

In Miami, Florida, The Miami Herald reports:

  • Already the focus of intense scrutiny by lawmakers and elder advocates, Florida’s troubled assisted-living industry has taken another hit: Miami-Dade’s new property appraiser has accused scores of the homes’ owners of gaining improper homestead exemptions that could cost taxpayers millions of dollars.

    This month, the Miami-Dade Property Appraisers’ Office issued $1.7 million in tax liens against assisted-living facilities that claimed homestead exemptions — resulting in a discount on their property taxes — to which they were not entitled, the office said. Under Florida law, an ALF owner must live on the property in order to qualify for a homestead exemption — which lowers the tax burden only for the portion of the facility in which the owner lives, not for any part of the home that generates income.

    Of close to 200 homes that were cited by the department, 98 were ALFs or other group homes where the owner did not live on-site — meaning they were not eligible for any tax relief.
  • Under Florida law, violations of the homestead statute are assessed back taxes with a 50 percent penalty and 15 percent interest. Lopez-Cantera said his office also referred the ALFs on his list to the Miami-Dade state attorney’s office, but added prosecutions are unlikely because the tax-avoidance was only a misdemeanor.
  • Pat Lange, who is the executive director of the state’s largest ALF industry group, the Florida Assisted Living Association, said she was “struck” by Miami-Dade’s failure to catch the ALF tax cheaters, given the large amount of money at stake. “We applaud Lopez-Cantera for taking this action, if it was done appropriately,” she said.

    But, Lange added, her group is concerned that some of the ALFs on the county’s scofflaw list may not actually be ALFs. The state licenses a variety of congregate living arrangements, Lange said, and a news release issued by the property appraiser’s office left open the possibility that some of the homes being fined might be adult family care homes, or other types of group homes that may be entitled to a homestead exemption.

Tuesday, June 11, 2013

Bankruptcy Appeals Panel OKs Foreclosing Lender's Pursuit Of Deficiency Judgment Despite Failing To File Action Within State Law-Mandated 90-Day Period After Non-Judicial Sale


  • Pierce v. Carson (In re Rader), 488 B.R. 406 (9th Cir. BAP 2013) -

    A chapter 7 trustee objected to the unsecured deficiency claim of a mortgage lender that remained after the lender obtained relief from the automatic stay and proceeded with a foreclosure. The trustee contended that the claim should not be allowed because the lender did not comply with a state law requirement that an action must be commenced within 90 days after a non-judicial sale to preserve the deficiency claim.

    The bankruptcy court overruled the trustee’s objection, and on appeal the bankruptcy appellate panel affirmed.
  • The Rader courts took a diametrically opposite approach. [...] However, on a broader note, the court concluded that the state statute was preempted by the Bankruptcy Code.

Oregon Supremes Issue Split Decision In MERS Foreclosure Cases

In Salem, Oregon, The Oregonian reports:

  • The Oregon Supreme Court on Thursday cleared the way for banks to return to their preferred out-of-court method of foreclosure.

    The high court found that Mortgage Electronic Registration Systems Inc., a lending industry cooperative for cataloging loan ownership, can't foreclose on mortgages itself -- as was common in the early years of the foreclosure crisis -- because it's not the beneficiary of a deed of trust.

    The court did rule in favor of MERS and lenders, however, by ruling that not all transfers in ownership of a loan need to be recorded in county records before out-of-court foreclosures can proceed. With those ownership records now considered complete, foreclosures can proceed outside the court system at a lower cost to lenders.

    The recording decision reverses part of a ruling by the Oregon Court of Appeals, a lower court, that had been the final word in state law until Thursday. After the appellate court issued its decision in July 2012, most lenders diverted their foreclosures into the court system to avoid possible legal challenges.
  • The rulings came in the form of two opinions. The decision in Brandrup v. ReconTrust Co. (PDF), written by Justice David V. Brewer, answers four questions sent to the state's high court by the U.S. District Court in Portland, which was considering several foreclosure challenges. As a federal court, it defers to state law in foreclosure matters.

    In the other, Niday v. GMAC Mortgage LLC (PDF), Brewer wrote an opinion that applied the answers it set out in Brandrup and affirmed the appellate court's finding. The Supreme Court ruled MERS didn't prove it has authority to foreclose non-judicially, and it remanded real estate agent Rebecca Niday's foreclosure case back to the circuit court that had granted summary judgement against her.

Wells First To Settle Fair Housing Suit Alleging It Maintained & Marketed REOs In White Neighborhoods Better Than In Black Neighborhoods, Turning Those Vacant Homes Into Dilapidated Eyesores; Suits Against Two Other Banksters Remain Pending

The Blog of Legal Times reports:

  • Wells Fargo Bank agreed to pay $42 million to settle a complaint that it failed to maintain foreclosed properties in minority neighborhoods, turning the vacant houses into dilapidated eyesores.

    The National Fair Housing Alliance and member organizations sued Wells Fargo in April 2012, alleging in an administrative complaint filed with the U.S. Department of Housing and Urban Development that the bank violated the Fair Housing Act.

    The complaint alleged Wells Fargo’s so-called "real estate owned" properties in white areas were much better maintained and marketed than the properties in African-American and Latino neighborhoods. For example, houses in minority areas often had ill-kept yards, broken doors, peeling paint or boarded-up windows.

    “Many neighborhoods across the country have been seriously damaged by the foreclosure crisis, including the impact of [real estate owned] homes on property values, curb appeal, and tax revenue for schools,” said Shanna Smith, head of the National Fair Housing Alliance. “Our joint efforts will help lay the foundation for the industry to get some of those neighborhoods back on their feet.”

    The housing groups filed similar complaints against Bank of America and U.S. Bancorp, which are still pending.

    Wells Fargo—represented by Skadden, Arps, Slate, Meagher & Flom partners Anand Raman and Joseph Barloon, who are both based in Washington—is the first to settle.

    According to the plaintiffs, who turned to Joseph Sellers and Peter Romer-Friedman of Cohen Milstein Sellers & Toll, it’s the first-ever agreement regarding the equal maintenance and marketing of bank-owned homes.

    Wells Fargo agreed to provide $27 million to the fair housing organizations to promote home ownership, property rehabilitation and development in 19 communities of color, including areas of Baltimore, Washington D.C. and Prince George’s County.

    Another $3 million goes to the housing organizations to cover costs and attorney fees. The bank will also pay HUD $11.5 million to support neighborhoods in an additional 25 cities.
Source: Wells Fargo Pays $42 Million in Fair Housing Case.

See also:

Application Of State Law's 40-Year Look-Back Provision Allows Wild Deed To Extinguish Earlier-Created Valid Property Interests, Serve As Root Of Title; Wyoming Supremes On Applying Statute: We Have No Choice - Our Hands Are Tied ... To Rule Otherwise Would 'Undercut The Operation & Purpose Of The Entire [State Marketable Title] Act!"

From a recent Opinion Summary:

  • Plaintiffs owned property that was conveyed by warranty deed to J.A. Reed.

    In 1968, Reed conveyed the property to Julianne Biggane, and in 2006, the Biggane Trust transferred the property to Plaintiffs.

    Prior to Reed's transfer of the property to Biggane, a pole line easement across the property was granted to PacifiCorp's predecessor in interest. Reed, however, signed the easement grant as president of Continental Live Stock Company, rather than in his personal capacity, at a time that the company had no interest in the underlying land.

    Therefore, the easement was a "wild deed."(1)

    At issue before the Supreme Court was whether a "wild deed" can be the "root of title" under the Wyoming Marketable Title Act. This case arose when Plaintiffs filed an action seeking to have the easement declared invalid because it emanated from a wild deed.

    The district court held that the Act validated PacifiCorp's easement across Plaintiffs' property.

    The Supreme Court affirmed, holding that a wild deed may constitute the root of title under the Act, and a wild deed serving as a root of title that does not bear a defect "on its face" is not an "inherent defect" in the chain of record title under the Act.(2)
Source: Opinion Summary: Esterholdt v. PacifiCorp.

For the court ruling, see Esterholdt v. PacifiCorp., 2013 WY 64 (Wy. May 22, 2013).

(1) For those wondering what the hell a "wild deed" is, the Wyoming Supreme Court answers the question ifootnote 1 of the ruling:
  • A "wild deed" is "[a] recorded deed that is not in the chain of title, usu. because a previous instrument connected to the chain of title has not been recorded." Black's Law Dictionary 477 (9th ed. 2009).

    Such a deed has also been called a "maverick" deed. Conine & Morgan, supra ¶ 1, at 187.

    The more genteel definition is "a stray, accidental or interloping conveyance." Exchange Nat'l Bank of Chicago v. Lawndale Nat'l Bank of Chicago, 243 N.E.2d 193, 196 (Ill. 1968).
(2) From the ruling:
  • Can a "wild deed" be the "root of title" under the Act?

    [¶12] This is a question of first impression for this Court. Not surprisingly, courts across the nation have not been uniform in answering the question. Jay M. Zitter, Annotation, Construction and Effect of "Marketable Record Title" Statutes, 31 A.L.R.4th 11, 21-29 (1984).

    The district court agreed with the appellees and with the courts of Florida and Oklahoma that a wild deed suffices as a root of title. See Mobbs v. City of Lehigh, 655 P.2d 547, 550 (Okla. 1982) (void tax deed can be root of title); City of Miami v. St. Joe Paper Co., 364 So.2d 439, 446-49 (Fla. 1978) (fraudulent deed in claimant's chain of title did not negate effect of the Act); and Marshall v. Hollywood, Inc., 236 So.2d 114, 120 (Fla. 1970) (same).[6]

    The Illinois case relied upon both below and in this Court by the Esterholdts is Exchange Nat'l Bank of Chicago v. Lawndale Nat'l Bank of Chicago, 243 N.E.2d 193, 195-96 (Ill. 1968) (giving effect to a wild deed under the statute could result in stranger to title divesting record owner of title).

    [¶13] Even without the conclusions of the district court and the guidance of the Florida and Oklahoma cases, we would be hard-pressed to apply our rules of statutory construction to the Act and find that a wild deed could not be a root of title. A full recitation of those rules would be cumbersome, and is not necessary here. Instead, we will repeat a few of the central guiding principles: (1) our primary purpose is to give effect to legislative intent; (2) we first make an inquiry into the ordinary and obvious meaning of the words of the statute; and (3) if a statute is unambiguous, we simply give effect to its plain meaning. Union Pac. Res. Co. v. Dolenc, 2004 WY 36, ¶ 13, 86 P.3d 1287, 1291 (Wyo. 2004).

    [¶14] We note first that the statutory definition of "root of title" is "that conveyance or other title transaction in the chain of title of a person purporting to create the interest claimed by the person. . . ." (Emphasis added.) Wyo. Stat. Ann. § 34-10-101(a)(v). This definition clearly refers to an instrument in any person's chain of title that purports to create that person's claimed interest. The instrument must have been recorded at least forty years in the past.

    [¶15] Next, Wyo. Stat. Ann. § 34-10-103 provides that any person meeting certain criteria not relevant or contested here, who has an unbroken chain of title of record to the claimed property interest for forty years or more, has a marketable chain of title under the Act. The facts set forth above, see supra ¶¶ 4, 5, show that PacifiCorp meets the requisite criteria, and that there has been nothing recorded to divest PacifiCorp of its interest in the easement. Wyo. Stat. Ann. § 34-10-104.

    Finally, the provisions of Wyo. Stat. Ann. § 34-10-105 make it clear that the establishment of a marketable record title under the Act renders "null and void" all interests whose existence "depends upon any act, transaction, event or omission that occurred prior to the effective date of the root of title."

    [¶16] In the law review article mentioned above, two University of Wyoming College of Law professors recognized that wild deeds are given operative effect under the Act. Conine & Morgan, supra ¶ 1, at 198 ("[T]he Act is capable of . . . recognizing a new title, free of all prior claims and defects, in a grantee holding under a wild or maverick deed."). Conine & Morgan note that the Act is based upon the Model Marketable Title Act, with its essential provision being

    "that if a person has an unbroken record chain of title for a specific number of years back to his "root of title" (i.e., the most recent transaction in his chain of title that has been of record for the specified length of time), all conflicting claims and interests which are based on a title transaction prior to that root of title are extinguished."
    Conine & Morgan, supra ¶ 1, at 183.

    The Act therefore does not require the claimant to be a bona fide purchaser, or that he or she has been in possession of the land. Id. at 190. Further, the Model Marketable Title Act was drafted to apply its benefits to any interest in land, including easements. Id. at 193 (citing Note, The Indiana Marketable Title Act of 1963: A Survey, 40 Ind. L.J. 21, 27 (1964) and Note, The Minnesota Marketable Title Act: Analysis and Argument for Revision, 53 Minn. L. Rev. 1004, 1015 (1969)).

    [¶17] We cannot find anything in the Act that suggests that a wild deed cannot be the root of title for a contestant in a controversy under the Act. In fact, such an interpretation would render the methodology of the Act pointless. The Act does not contemplate simply reviewing the chain of title of the purported landowner back through time immemorial, with the purported landowner retaining title so long as there is nothing in his or her record chain of title interfering with that retention of title.

    Instead, the statutory methodology is to go back forty years from the date of the controversy, and then go back to the first root of title filed before that date. So long as the chain of title of the person holding that root of title is not disrupted, he or she holds marketable title. In that sense, the concept of the potential validity of a wild deed is written into the Act as if it appeared on its face.

    Is a "wild deed" an inherent defect in the chain of title?

    [¶18] Wyo. Stat. Ann. § 34-10-104(a)(i) provides that marketable title (as that term is defined in the Act) is subject to "[a]ll interests and defects which are inherent in the chain of record title." Relying upon an Oklahoma case and a Florida case, the district court determined that a defect not appearing on the face of the deed was not an inherent defect. See Allen v. Farmers Union Coop. Royalty Co., 538 P.2d 204, 209 (Okla. 1975) (mineral deed that recited grantor's interest both as "oil, gas, and other minerals," and as "oil, gas, coal, iron, and other minerals and mineral royalty" was inherently defective on its face and could not serve as root of title); and Reid v. Bradshaw, 302 So.2d 180, 183-84 (Fla. Dist. Ct. App. 1974) (conveyance of homestead without signature of both husband and wife was an inherent defect on face of deed, and could not serve as root of title).

    [¶19] We have, for the most part, already answered this question with our answer to the first question. If a wild deed can, as we have found, serve as root of title in a chain of title under Wyo. Stat. Ann. § 34-10-101(a)(v), it goes without saying that it cannot, at the same time, be an inherent defect in that chain of title under Wyo. Stat. Ann. § 34-10-104(a)(i).

    The purpose of the Act is to facilitate land title transactions by putting a forty-year limit on title searches, plus the amount of time between the forty-year period and the root of title. Where there is no defect on the face of the root of title, and the "inherent defect" in the chain of title can only be determined by examining title records preceding that date, the purpose of the Act would be thwarted.

    In the present case, the defect in the easement, i.e., that Reed signed it on behalf of a company having no interest in the property, is only determinable by examining the title records preceding the date of the easement. Therefore, it is not an inherent defect to which the root of title is subject under Wyo. Stat. Ann. § 34-10-104(a)(i).

    [¶20] Clearly, this is an astonishing result. That a wild deed can extinguish an earlier valid ownership interest seems contrary to traditional concepts of real property law. However, the purpose of the Act is to simplify and facilitate land title transactions by allowing reliance on a 40-year record chain of title and extinguishing older interests. Wyo. Stat. Ann. § 34-10-102. See also Conine & Morgan, supra ¶ 1, at 185.

    Were we to ignore the plain language of the Act and interpret it as some courts have done to be inapplicable when a claim is based upon a wild deed, we would, as Conine & Morgan have said, undercut the operation and purpose of the entire Act.

    The legislature's intent was that the simplification of title be a paramount goal over the preservation of ancient property interests not properly retained under the Act. Consequently, the courts must take care in holding that the intent of the legislature did not extend that far in circumstances which might have appeared unjust prior to the passage of the Act. The Act is purposefully far-reaching and a narrow judicial interpretation can easily effect a judicial repeal of the legislation.
    Conine & Morgan, supra ¶ 1, at 201 n.61.


    [¶21] A wild deed, as defined herein, may constitute the "root of title" under Wyo. Stat. Ann. § 34-10-101(a)(v), and a wild deed serving as a root of title that does not bear a defect "on its face" is not an "inherent defect" in the chain of record title under Wyo. Stat. Ann. § 34-10-104(a)(i). We affirm the district court.

Bankruptcy Appeals Court: Homeowner's Challenge To Foreclosing Bankster's Right To Enforce Promissory Note Requires Evidentiary Hearing; Order Granting Automatic Stay Relief Reversed

From a recent ruling by a 3-judge Bankruptcy Appellate Panel for the 10th Circuit Court Of Appeals:

  • A mortgage creditor may seek stay relief to pursue its nonbankruptcy law remedies in enforcing its mortgage on a debtor’s home. But, as in any other civil proceeding, that creditor must demonstrate standing to invoke the court’s jurisdiction and the bankruptcy court has an affirmative obligation to determine whether its jurisdiction has been properly invoked.

    Here, the debtor, Dianna Kay Steinberg (“Debtor”), challenged the bank’s standing by questioning whether it had the right to enforce the note.

    The bankruptcy court granted the motion without providing an opportunity for a hearing on that very important threshold issue.

    Debtor appeals the bankruptcy court’s order granting Bank of America, N.A.’s (“BOA”) motion for relief from the automatic stay to foreclose on its interest on her home.

    We REVERSE the order of the bankruptcy court and REMAND the motion for a determination whether the creditor holds the note or may enforce the note on some other legal basis.(1)
For the rest of the court's ruling, see In re Steinberg, BAP No. WY-12-082 (10th Cir. BAP May 30, 2013) (unpublished).

Thanks to Deontos for the heads-up on this court ruling.

(1) From the court's ruling:
  • Once the issue of BOA’s standing to enforce the Note was raised, the bankruptcy court was required to resolve it on the merits.

    Indeed, the Tenth Circuit has previously said as much in In re Miller. There, the Tenth Circuit held that a secured creditor must demonstrate that it has a “right to payment” by adducing evidence that it possesses the note.

    And in In re Thomas, we held that if a secured creditor’s possession of the note is challenged, the bankruptcy court has a “duty to ensure that debtors are not subjected to legal challenges by those without standing to do so” by conducting an evidentiary hearing at which the creditor must demonstrate either its possession of the note or some other legal basis for being able to enforce it.

    Here, the bankruptcy court granted BOA’s motion without conducting any inquiry into that important threshold issue. Because the bankruptcy court had an affirmative obligation to determine whether BOA has standing, it abused its discretion in granting relief from stay when it failed to conduct an inquiry into whether BOA had possession of the original note.

    We therefore reverse the order of the bankruptcy court and remand the motion for a determination whether BOA holds the Note or may enforce the Note on some other legal basis.

Monday, June 10, 2013

Real Estate Brokerage Left Holding The Bag On $29K HUD Fair Housing Settlement Alleging That Since-Fired Sales Agent Inadvertently Left Voice Message With Black Prospective Homebuying-Customer Indicating Belief That White Neighbors Would Panic At Prospect Of Him Moving In

From the Department of Housing & Urban Development:

  • The U.S. Department of Housing and Urban Development (HUD) announced [] that LLB&B, Inc., a real estate company based in Mobile, AL, will pay $29,000 as part of a Conciliation Agreement resolving allegations that one of its agents refused to show a condominium to a prospective homebuyer because he is African American.

    The homebuyer alleged that he learned of the discrimination when the real estate agent inadvertently left a message on his telephone voicemail indicating her belief that white neighbors would ‘panic’ at the prospect of an African American neighbor.

    The Fair Housing Act makes it unlawful to discriminate in the sale or rental of housing based on, race, color, national origin, religion, sex, familial status, or disability. It also prohibits refusing to show a condominium to a prospective buyer and making statements that discriminate because of race or color.
  • Under the terms of the agreement, LLB agreed to pay the man $29,000, require fair housing training for all its employees, and include the fair housing logo in all its advertising.

    The case came to HUD’s attention when a man filed a complaint with HUD, alleging that a real estate agent with whom he inquired about the sale of a condominium inadvertently left a voicemail with him indicating she did not wish to deal with him because he is African-American.

    In the message, the real estate agent, referring to the white neighbors who lived near the condominium, allegedly stated, “Those people will panic when they see a black person drive up and look at it.” She added: “I called him back. He didn't answer so that was good! If I didn’t call him back he could sue me for prejudice.”

    The man shared the recording with a HUD investigator, who then shared it with the real estate company. Upon hearing the message, the owners of LLB&B terminated the agent’s employment.

3rd Circuit: Wheelchair-Bound Homeowner's Use Of ATV On HOA's Public Streets Not A 'Reasonable Accomodation' Under Fair Housing Act Where Benefit To Homeowner "Is Outweighed Substantially By The Potential Danger That [Its] Use Could Cause" To Community's Residents

From a recent Opinion Summary:

  • Plaintiffs and their son appealed the district court's summary judgment holding that they were not entitled under the Fair Housing Amendments Act of 1988, 42 U.S.C. 3601-3631, to an accommodation and a modification that they requested from the HOA.(1)

    Plaintiffs had requested a modification to add a ramp leading to the front door of their home(2) for use by their son, who required the use of a wheelchair. Plaintiffs also requested an accommodation to an HOA policy prohibiting the use of certain types of vehicles to allow the son to use an ATV within the community.(3)

    The court vacated the district court's holding on the merits of the modification request for the wheelchair access ramp because that claim was not ripe; affirmed the district court's holding with respect to the accommodation request for permission to use an ATV because that request was not "reasonable" within the meaning of the Act;(4) and affirmed the district court's denial of defendants' request for attorneys' fees and costs.
Source: Opinion Summary: Scoggins v. Lee's Crossing Homeowners Assoc.

For the ruling, see Scoggins v. Lee's Crossing Homeowners Assoc., No. 11-2202, No. 11-2373 (4th Cir. May 17, 2013).

(1) The Fair Housing Legal Clinic of The John Marshall Law School, Chicago Illinois, provided support in preparing the briefs for the homeowners in this case. The Clinic, a Qualified Fair Housing Organization, was established and staffed with full-time attorneys to train and educate law students how to represent victims of housing discrimination.

(2) 'Home' for the Scoggins is "a ten-acre lot [purchased] in 2002 in Lee's Crossing, a subdivision in Loudoun County, Virginia, where they built a home in which they have resided for several years."

The public streets within the Lee's Crossing subdivision are described as "unpaved, making it difficult for Jacob [plaintiff's partially-paralyzed son] to travel within the community using either his manual or power wheelchair."

(3) The restrictive covenants contain rules governing activities conducted on the common grounds of Lee's Crossing. These rules include a policy prohibiting the use of off-road vehicles such as ATVs on the common driveways and roads of the community.

(4) Part of the court's analysis and ruling on this specific point follows ('Jacob' is the plaintiff's partially-paralyzed son who requires the use of a wheelchair; his right to operate an ATV on the family's own 10-acre property is not at issue here):
  • Without question, the plaintiffs established that use of an ATV would make it easier for Jacob to travel on the unpaved roads of Lee's Crossing, and that it would be impractical for him to use his power wheelchair for this purpose because of the potential damage to the wheelchair's electronic components. Accordingly, the plaintiffs established that the use of an ATV would afford Jacob the benefit of easier transportation within the community.

    Nevertheless, the present record shows that such benefit to Jacob is outweighed substantially by the potential danger that use of the ATV could cause to the residents of the community. The defendants produced overwhelming evidence showing that the use of an ATV as a general matter within Lee's Crossing, and Jacob's use of such a vehicle in particular, present a significant threat to Jacob's own safety as well as to the safety of the other residents of the community.

    Among other items, the defendants included in the record a copy of the owner's manual (the manual) for the ATV model that Jacob sought to operate.

    The manual emphasizes that the use of the ATV is "FOR OFF-ROAD USE ONLY," and that the ATV does not conform to federal motor vehicle safety standards. The manual contains the additional warning that "the ATV does not have turn signals and other features required for use on public roads." Separately, the manual again states that "[y]ou should never ride your ATV on public streets, roads or highways, even if they are not paved. Drivers of street vehicles may have difficulty seeing and avoiding you, which could lead to a collision." (Emphasis added.)

    The evidence further showed that drivers traveling the roads of Lee's Crossing are permitted to operate their vehicles at speeds up to 35 miles per hour, in excess of the speed limits in effect on many public roads. Thus, it is of particular note that the Code of Virginia prohibits, as a general matter, the operation of any all-terrain vehicle "[o]n any public highway, or other public property." Va. Code § 46.2-915.1.

    We also observe that the defendants' expert witness, Gary E. Kilpatrick, a certified professional engineer with experience in the operation of ATVs, submitted a report describing the dangers inherent in operating an ATV in an area such as Lee's Crossing. In his report, Kilpatrick stated that "ATVs are designed specifically for operation on off-road dirt terrain," and that the tires of an ATV "do not handle well on hard packed dirt roads, graveled roads and hard surfaced paved roads." Kilpatrick further opined that ATVs are difficult for drivers of other vehicles to see and are not equipped with headlights, brake lights, or other devices to make them visible to other drivers on the road.

    In addition to this evidence concerning the general dangers of operating an ATV within Lee's Crossing, the defendants produced evidence showing the increased danger posed in ATV use by persons who have physical impairments. In his report, Kilpatrick stated that riding an ATV is physically demanding, and that, to operate an ATV safely, a rider must "have full use of his entire body, especially his hands, arms, torso and legs." Kilpatrick, who examined Jacob's medical reports, opined that the physical limitations caused by Jacob's partial paralysis render his use of an ATV very dangerous, and that the medication he takes to control spasms in his lower extremities poses additional dangers. Accordingly, Kilpatrick concluded that "because of the hazards associated with riding ATVs, the surrounding terrain and his physical limitations, [Jacob] is and will be a danger to himself, other drivers, [and] pedestrians" if he were allowed to operate an ATV within Lee's Crossing.

    The plaintiffs have not refuted the defendants' evidence that any operation of an ATV for other than off-road uses is inherently dangerous.[11] Instead, the plaintiffs challenge Kilpatrick's conclusion that Jacob's physical limitations make his use of an ATV exceptionally dangerous. The plaintiffs rely primarily on Jacob's own testimony, in which he stated that he could operate an ATV safely, and on a video recording of Jacob operating an ATV on the plaintiffs' property without incident.[12]

    Having considered this evidence alongside the defendants' evidence, we conclude that the plaintiffs have not presented facts sufficient to create an issue for trial whether Jacob could operate an ATV within Lee's Crossing without creating a danger to the residents of the community. Cf. Williams v. Giant Food Inc., 370 F.3d 423, 433 (4th Cir. 2004) (plaintiff's subjective belief about her abilities, absent sufficient objective corroboration, cannot defeat summary judgment).

    In light of this conclusion, we need not reach the other elements of the ATV request claim, including whether the request would be "necessary" to afford Jacob an equal opportunity to enjoy the Lee's Crossing community.[13]

    Accordingly, we affirm the district court's award of summary judgment in the defendants' favor on the ATV request claim, because the plaintiffs failed to establish that the proposed accommodation is "reasonable," within the meaning of the FHAA. See Bryant Woods, 124 F.3d at 604 (directing courts to consider the benefits of the proposed accommodation against the extent to which the legitimate purposes and effects of the regulation would be undermined by the accommodation).