Title Issues

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

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,...

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

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...

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Prescriptive easement granted for underground utility lines

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...

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

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...

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No statute of limitations bars a claim to set aside a forged deed and subsequent mortgage

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...

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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

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. ...

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

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...

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

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,...

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Postforeclosure judicial process satisfies due process clause

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...

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