Real Cases in Real Estate by Andrea Lee Negroni, Esq. – January 10th Update

Real Cases in Real Estate by Andrea Lee Negroni, Esq. – January 10th 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 the Week of January 10th, 2011

Reverse Mortgage Law Doesn't Provide a Private Right of Action Against the Lender

Dottie Brown was 93 years old when her son took out a reverse mortgage on her condominium and converted the proceeds of the mortgage to his own use. Through her guardian, Dottie sued her son and his girlfriend and the reverse mortgage lender. Between the time Dottie signed the power of attorney to her son and the time of the closing of the reverse mortgage, she suffered a stroke that rendered her mentally incompetent. Three days after the stroke she was placed in a long term care facility.

The reverse mortgage agreement required Dottie to live in the property secured by the mortgage, but at the time of the closing, she had already been institutionalized. Nevertheless, acting under the power of attorney, her son signed the mortgage documents, and deposited $198,000 of the loan proceeds in a joint account he shared with his mother. He then transferred $20,000 into his girlfriend's account and $150,000 into his own.

Dottie's guardian sued the reverse mortgage lender for violation of federal reverse mortgage laws, but the Washington appeals court found that the reverse mortgage program, 12 U.S.C. §1715z-20, does not provide a private right of action against lenders for violations of the reverse mortgage law. Neither the language of the statute nor any "rights-creating" language support private lawsuits against lenders for violation of this law. The guardian also sued the lender under the state Consumer Protection Act, but this claim was also dismissed, because the lender's alleged complicity in allowing the son to commit fraud against his mother did not have the capacity to deceive a substantial portion of the public.

Dottie's guardian was left with only her claims against Dottie's son and his girlfriend.

Lexis.com subscribers can view the enhanced version of Brown v. Brown, 157 Wn. App. 803 (Wash. Ct. App. 2010)

Non-subscribers can use lexisOne's Free Case Law search to view the free, un-enhanced version of Brown v. Brown, 157 Wn. App. 803 (Wash. Ct. App. 2010)

 

Using its Equitable Powers, a Minnesota Court Reforms a Deed.

Lawrence and Norman Erdman owned lakefront property in Minnesota which they intended to convey to their son and daughter-in-law, Wayne and Kathy, subject to the rights of their other children to use the land for 50 years. They signed three documents to achieve their purpose, but one of these, a general warranty deed, recorded before the lease, had the effect of voiding the lease rights of Wayne's siblings.

All eight children of the Erdmans testified in the case, saying they were aware of the intended conveyance to Wayne and their parents' intention that they be able to use the property for 50 years. The Erdman siblings had used the property regularly for many years before Wayne decided to build on the property. The Minnesota appeals court reformed the deed, concluding that even though the deed was recorded prior to the lease, the deed did not express the grantors' understanding that all their children would have the right to use the property under a lease.

The warranty deed resulted from a mutual mistake of the parties, said the court. Wayne and Kathy claimed they were not mistaken in accepting the deed, but their testimony was not credible because they acted inconsistently with their desire to exclude their siblings by renting to them for 27 years before announcing their intention to build.

The court upheld reformation of the deed, holding it subject to the 50-year lease to the group of siblings. Wayne and Kathy's argument based on violation of the Minnesota recording act also failed, because the recording law protects bona fide purchasers, a description inapplicable to them based on their personal knowledge of the rights of others to the property.

Lexis.com subscribers can view the enhanced version of Pellman v. Erdman, 2010 Minn. App. Unpub. LEXIS 226 (Minn. Ct. App. Mar. 16, 2010)

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