Real Cases in Real Estate by Andrea Lee Negroni, Esq. – Oct. 18th Update

Real Cases in Real Estate by Andrea Lee Negroni, Esq. – Oct. 18th 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 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. subscribers can view the enhanced version of In 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 Manner.

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. subscribers can view the enhanced version of First Am. Title Ins. Co. v. Kapchan, 2010 N.J. Super. Unpub. LEXIS 784 (App.Div. Apr. 12, 2010)

Non-subscribers can access State Case Law, Codes, Full Jurisdictional Shepard's® Citations and more using lexisOne's Research Value Package.