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.
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.
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
follow real estate law professionally or as a hobby, you'll find something new
and useful every week in Real Cases in Real Estate.
for week of Oct. 18th, 2010
Lawyer's Involvement in Real Estate Closings Constituted
Misconduct Warranting Suspension from Practice of Law.
Mr. Fayssoux, a South Carolina real estate attorney, was
involved in multiple real estate closings that were handled by individuals who
were later investigated and convicted for wire, mail, and/or bank fraud.
The South Carolina Supreme Court considered whether Fayssoux's involvement in
the real estate transactions violated the rules of professional conduct and the
lawyer disciplinary rule.
James Byrd, Eric Byrd and others were involved in schemes to
acquire real estate and sell it at inflated prices. These schemes harmed
both the purchasers of the real estate and the lenders who made loans to the purchasers.
Loans were made to individuals who would not have otherwise been approved and
these loans were contrary to the lenders' policies and procedures.
Fayssoux was involved in closing some of these transactions, though he claimed
he was unaware of the criminal activity. He also said he stopped closing
transactions for the Byrds when he recognized that some of the things they were
asking him to do, such as "flip" transactions, would constitute
misconduct. Mr. Fayssoux self-reported the transactions to the Office of
Disciplinary Counsel (ODC).
The ODC concluded that although Fayssoux's actions did not
necessarily constitute criminal activity, twenty-eight of the real estate
closings that Mr. Fayssoux was involved with had irregularities that constituted
lawyer misconduct, such as incorrect information on the HUD-1 and sham
mechanics liens. The South Carolina Supreme Court noted that this type of
misconduct would normally warrant an attorney's suspension from the practice of
law, but that a public reprimand was warranted here because Mr. Fayssoux
self-reported the misconduct, cooperated with the disciplinary investigation,
and had no prior disciplinary history.
Lexis.com subscribers can view the enhanced version of
re Fayssoux, 381 S.C. 637 (S.C. 2009)
Non-subscribers can use lexisOne's Free Case Law
search to view the free, un-enhanced version of In re Fayssoux, 381 S.C. 637 (S.C. 2009)
A New York Lawyer Who Settled a Single New Jersey
Mortgage Loan is Subject to Personal Jurisdiction in New Jersey by a Title
Insurer Claiming the Lawyer Failed to Settle the Transaction in a Professional
Five heirs of a property owner were entitled to the proceeds
of a loan made on a New Jersey property. The lender's closing instructions
required the settlement agent to pay them $30,000 each. The New York lawyer who
handled the settlement of the loan charged $895 for his services and issued
checks to the five heirs. These checks were returned uncashed by the title
company with instructions from an outside party to issue a single check to the
widow of one of the siblings of the five. That check was cashed by the
recipient and the five heirs made claims against the title company on the basis
they had been deprived of the money to which they were entitled. The
title insurer settled with the five for $30,000 each.
The title insurer then sued the New York lawyer to recover the
$150,000 paid out. The New York lawyer claimed New Jersey did not have personal
jurisdiction over him because his office, the parties involved, and all loan
settlement activities took place outside New Jersey. However, the New Jersey
appeals court found the New York lawyer was subject to personal jurisdiction in
New Jersey because New
Jersey real estate was "at the
core of the loan transaction." The real estate provided sufficient contact
between the lawyer and the State of New Jersey.
The decision uses the term nidus, with the court saying
the Princeton property served as the "nidus from which the loan
transaction and the ensuing disputes developed." My Black's Law Dictionary
doesn't include this word, but an online dictionary defines nidus as "a point or place at which something originates, accumulates,
or develops." Since the heirs' claims to loan proceeds sprang from a loan
on New Jersey property, the lawyer handling the loan closing was subject to
jurisdiction in New Jersey.
Lexis.com subscribers can view the enhanced version of
Am. Title Ins. Co. v. Kapchan, 2010 N.J. Super. Unpub. LEXIS 784 (App.Div. Apr.
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Jurisdictional Shepard's® Citations and more using lexisOne's Research Value Package.