Real Cases in Real Estate by Andrea Lee Negroni, Esq. – Sept. 20th Update

Real Cases in Real Estate by Andrea Lee Negroni, Esq. – Sept. 20th Update

Real Cases in Real Estate is a weekly update on real estate law, with legal principles illustrated and explained by lawsuits from around the country. The topics are wide-ranging for appeal to a broad spectrum of readers including lawyers, homeowners, investors and the general public. Andrea Lee Negroni, a Washington DC attorney and legal writer with 25 years of experience in financial services and mortgage law, contributes the case summaries.

Followers of Real Cases in Real Estate will learn and be entertained by lawsuits involving nuisance, trespass, zoning violations, deed restrictions, title insurance, public utilities, mechanics liens, construction defects, adverse possession, foreclosure and eviction, divorce and marital property rights, tenants' rights, and more. Real Cases in Real Estate uncovers the unpredictable, amusing, and sometimes outrageous disputes between next-door neighbors, contractors and homeowners, condo boards and residents, real estate brokers and homebuyers, and zoning administrators and developers.

Each fully cited case summary highlights the essential law of the case and explains the principal legal theories and concepts relevant to the outcome. Plain language treatment makes Real Cases in Real Estate accessible to lawyers and laymen alike.

Whether you follow real estate law professionally or as a hobby, you'll find something new and useful every week in Real Cases in Real Estate.

 

Updates for week of Sept 20th, 2010

Authors Note: This week's cases demonstrate the importance of following each and every requirement in foreclosure proceedings. As the housing and foreclosure crisis continues, various protective aspects of state foreclosure laws are being invoked defensively by distressed homeowners and courts sympathetic to them. Non-compliance with the foreclosure laws is increasingly likely to lead to invalidated foreclosure sales or dismissal of foreclosure complaints.

Washington Property Owners Holding Title as Tenants in Common are Entitled to Separate, Individual Notices of Foreclosure or the Foreclosure Sale is Void. 

Sy Nguyen and Lyly Nguyen owned two separate parcels of land in Seattle, which comprised a single residential property, with a house on one of the parcels and a garden on the other. They conveyed the property to Van, but by mistake only one of the two parcels was described in the deed from the Nguyens to Van. The parcel that was not conveyed was the subject of delinquent real estate taxes. Eventually, King County foreclosed its tax lien and the parcel was sold.

The Nguyens attempted to vacate the foreclosure sale on the grounds they did not receive proper notice; since they held title as tenants in common, they said they were entitled to separate notices of the sale and Kings County sent only a single notice addressed to the two of them. Washington statutes are clear that the "person or persons whose name or names appear on the treasurer's rolls as the owner or owners" are entitled to notice. The Washington Supreme Court has held that failure to comply with the statutory notice provisions constitutes a defect that deprives the court of jurisdiction over a tax foreclosure. This decision observes that "one cannot safely assume that all tenants in common will live at the same address or that they will all see the notice."

One possible outcome is that the foreclosure could be upheld against the person who received the notice and not against the person who did not, but in this case, the court concluded that the entire foreclosure proceeding was void. The assignee of the tax sale purchaser argued that the sale should be upheld based on the county's "substantial compliance" with the notice statute, but the court disagreed, because a single notice addressed to two separate owners "did not even amount to substantial compliance."

Lexis.com subscribers can view the enhanced version of Homeowners Solutions, LLC v. Nguyen, 148 Wn. App. 545 (Wash. Ct. App. 2009)

Non-subscribers can use lexisOne's Free Case Law search to view the free, un-enhanced version of Homeowners Solutions, LLC v. Nguyen, 148 Wn. App. 545 (Wash. Ct. App. 2009)

 

Assignee of a New York Mortgage That Does Not Submit Evidence of Ownership of the Promissory Note Lacks Standing to Foreclose the Mortgage.

Deutsche Bank National Trust Company, as trustee, filed a foreclosure complaint. The plaintiff failed to submit evidence of assignment of the mortgage note. The decision in this case applies New York law to determine whether the plaintiff in a foreclosure lawsuit has standing to foreclose, in the context of recent laws designed to protect New York homeowners during the residential foreclosure crisis.

In 2008, New York adopted a law that requires a voluntary conference between the lender and borrower, at the borrower's request, before a high-cost or subprime mortgage can be foreclosed if the mortgaged property is occupied by the borrower. In 2009, the law was amended to require that the parties negotiate in good faith at the settlement conference.

In addition, the real property law was recently amended to require mortgagees to affirmatively allege in a foreclosure proceeding that they own the note and mortgage. Earlier, in 2006, New York adopted a law (the Home Equity Theft Prevention Act) that requires the foreclosing party to provide a specific notice to the homeowner about assistance with the foreclosure process. All these laws are intended to preserve "the precious asset of home equity."

Despite laws intended to put brakes on residential foreclosures, the plaintiff in this case filed a foreclosure suit without demonstrating that it had legal ownership of the note. The foreclosure complaint stated "upon information and belief" that the plaintiff held the mortgage. The New York court said this statement did not satisfy the requirement for an affirmative allegation of ownership. Moreover, the note presented was not endorsed, and "absent assignment or delivery of the note, the assignment of a mortgage is a nullity" in New York. The foreclosure complaint was dismissed without prejudice.

Lexis.com subscribers can view the enhanced version of Deutsche Bank Nat'l Trust Co. v. McRae, 2010 NY Slip Op 20020 (N.Y. Sup. Ct. 2010)

Non-subscribers can access Federal Case Law, Codes, Shepard's® Citations, Administrative, Legislative, and Secondary Sources using lexisOne's Research Value Package