Articles Posted in Real Estate & Property Law

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The Real Estate Settlement Procedures Act (RESPA) creates a cause of action for “borrower[s],” 12 U.S.C. 2605(f). Tara and Nathan Keen got a loan and took out a mortgage when they bought their house. Both of them signed the mortgage; only Nathan signed the loan. The pair later divorced. Nathan gave Keen full title to the house. He died shortly afterward. Although Tara was not legally obligated to make payments on the loan after Nathan died, she made payments anyway so she could keep the house. She later ran into financial trouble, fell behind on those payments, and contacted the loan servicer, Ocwen. After unsuccessful negotiations, Ocwen proceeded with foreclosure. The house was sold to a third-party buyer, Helson. Soon after foreclosure, Tara sued both Ocwen and Helson, alleging that Ocwen violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601, which requires that loan servicers take certain steps when a borrower asks for options to avoid foreclosure. Tara alleged that Ocwen failed to properly review her requests before it foreclosed on her house. The Sixth Circuit affirmed the dismissal of Keen’s RESPA claims. RESPA’s cause of action extends only to “borrower[s].” Keen was not a “borrower” because she was never personally obligated under the loan agreement. View "Keen v. Helson" on Justia Law

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The Sixth Circuit affirmed the district court's grant of summary judgment to Columbia Gas on Landowners' state-law trespass and unjust enrichment claims involving underground storage of natural gas. In regard to the trespass claims, the court held that Landowners failed to show that Columbia Gas interfered with the possessory interest in their subsurface where each Landowner had admitted that they have not used and do not intend to use their subsurface. In regard to the unjust enrichment claims, the court held that Columbia Gas need not file a cross-appeal in order to preserve its argument to affirm the damages judgment on the ground that Columbia Gas has no underlying liability. Furthermore, Landowners' unjust enrichment claims failed because Landowners could not show, as they must, that they conferred a benefit upon the defendant. View "Baatz v. Columbia Gas Transmission, LLC" on Justia Law

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The surface and mineral estates of “Tract 46” in Pike County, Kentucky have been severed for a century. Pike and Johnson own the surface estate as tenants in common. Pike also owns the entirety of the coal below and wants to mine. In 2013, Pike granted its affiliate a right to enter the land and commence surface mining. Despite Johnson’s protestations, Kentucky granted a surface mining permit. Mining commenced in April 2014. In 2014, as the result of a federal lawsuit, the Secretary of the Interior determined that the permit violated the Surface Mining Control and Reclamation Act of 1977 (SMCRA), 30 U.S.C. 1250. The deficiencies in the original permit were remedied; Kentucky issued an amended permit the same year. The Secretary then confirmed that the permit complied with federal law. Johnson sued again. An ALJ, the district court, and the Sixth Circuit affirmed, first finding that Johnson exhausted its administrative remedies to the extent required by SMCRA. The ALJ’s application of Kentucky co-tenancy law, instead of the state’s rules of construction for vague severance deeds, to uphold the issuance of Elkhorn’s permit and the Secretary’s termination of the cessation order was not arbitrary, capricious, or contrary to law. View "M.L. Johnson Family Properties, LLC v. Bernhardt" on Justia Law

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A chapter 7 trustee sought a declaration that a refinanced mortgage only encumbered the interest of the person specifically defined within the body of the mortgage as a “Borrower/Mortgagor.” The mortgage instrument listed the co-debtor's wife as a “Borrower” in the signature block but the mortgage did not specifically name her as a “Borrower” within the text of document other than in the signature block. The bankruptcy court regarded the mortgage as ambiguous under these circumstances, considered extrinsic evidence, and concluded that the property was fully encumbered by the mortgage. Pending appeal, the Ohio Supreme Court answered certified questions, stating that the failure to identify a signatory by name within the body of the mortgage instrument did not render the agreement unenforceable against the signatory’s in rem rights as a matter of law and that when a mortgage is properly signed, initialed and acknowledged by a signatory who is not named within the document itself, the mortgage is not invalid as a matter of law. The Bankruptcy Appellate Panel affirmed, concluding that the mortgage encumbered the rights of both husband and wife. View "In re Perry" on Justia Law

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Oakes filed a Chapter 7 bankruptcy petition in 2013, including Franklin, Ohio real property, valued at $160,000. PNC holds a mortgage lien on the property, which was filed in 2003. That mortgage lien was not executed in accordance with the Ohio law; Oakes’ signatures were not acknowledged before a notary public. In 2013, Ohio Rev. Code 1301.401(C) was enacted, providing that “Any person contesting the validity or effectiveness of any transaction referred to in a public record is considered to have discovered that public record and any transaction referred to in the record as of the time that the record was first filed with the secretary of state or tendered to a county recorder for recording.” The Chapter 7 Bankruptcy Trustee sought to avoid the PNC mortgage because it was not properly recorded. In the meantime, the Ohio Supreme Court held that O.R.C. 1301.401 applied to all recorded mortgages and acts to provide constructive notice of a recorded mortgage, even if that mortgage was deficiently executed. The bankruptcy court denied PNC’s motion for judgment, finding that the statutory constructive notice had no effect on a trustee’s avoidance powers as a judicial lien creditor. The Bankruptcy Appellate Panel and Sixth Circuit affirmed. A bankruptcy trustee may avoid a deficiently executed mortgage when acting as a judicial lien creditor. View "Harker v. PNC Mortgage Co." on Justia Law

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Saginaw, Michigan requires owners of vacant property to register their property. The registration form says that owners must permit the city to enter their property if it “becomes dangerous as defined by the City of Saginaw Dangerous Building Ordinance.”. Several property owners refused to register. The city imposed a fine. Claiming they had no obligation to consent to unconstitutional searches of their property, the owners filed suit. The Sixth Circuit affirmed the dismissal of the suit. The registration form and the ordinance, as implemented by the city, only ask for something that the Fourth (and Fourteenth) Amendment already allows—a warrantless search of a building found to be dangerous. The court noted the safeguards the ordinance provides before a property is declared dangerous. Because the registration form requires the property owner to allow entrance to his property only after a fair administrative process determines the building is dangerous, it does not require the waiver of any Fourth Amendment rights. View "Benjamin v. Stemple" on Justia Law

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In 2000, Ann Arbor passed an ordinance requiring certain homeowners to undergo structural renovations to their homes to alleviate stormwater drainage problems affecting the city and surrounding areas. The city paid or reimbursed the homeowners for the renovations. In 2014, homeowners affected by the ordinance sued in Michigan state courts, alleging that the city’s actions amounted to a taking without just compensation under the Michigan Constitution; they filed an “England Reservation” in an attempt to preserve federal takings claims for subsequent adjudication. The homeowners lost in state court and then filed suit in federal court, citing the Fifth Amendment and 42 U.S.C. 1983. The district court dismissed the Fifth Amendment claim as issue precluded and the section 1983 action as claim precluded. The Sixth Circuit affirmed. The court did not address whether Michigan law is coextensive with federal law. If the takings jurisprudence of the two constitutions is coextensive, then issue preclusion bars subsequent litigation of the federal takings claims after litigation of the state takings claims. If the takings jurisprudence of the two constitutions is not coextensive, then claim preclusion bars subsequent litigation of the federal takings claim because it should have been brought with the state claim in the first instance in the Michigan court. View "Lumbard v. Ann Arbor" on Justia Law

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Robert died in July 2015, owing a mortgage amount of $113,358.12 on his Detroit home; the monthly mortgage payments. For five months following his death, the mortgage went unpaid. Bayview Loan Servicing sent a delinquency notice to the home in December 2015, showing an unpaid balance of $5,813.95. In November 2016, Bayview foreclosed and purchased the home by sheriff’s deed at public auction. Bayview sold the home to Tran. In May 2017, Robert’s estate filed a complaint, alleging four causes of action against Bayview, including lack of standing to foreclose under the Garn-St. Germain Depository Institutions Act of 1982, 12 U.S.C. 1701j-3 and MICH. COMP. LAWS 445.1626. The district court held that the Garn-St. Germain Act does not authorize a private right of action and did not apply to the’ claims. The Sixth Circuit vacated, concluding that the district court lacked jurisdiction to hear the case because the federal statute does not create a cause of action, and the federal issue nested inside the state law cause of action is not substantial. View "Estate of Cornell v. Bayview Loan Servicing, LLC" on Justia Law

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Evendale property owners who wanted to rent their properties had to obtain a permit by allowing the building commissioner to inspect the property or sign a sworn affirmation that the property complied with the code. The commissioner also could inspect structures if he suspected a violation. If the building was occupied, the commissioner was to present credentials and request entry. For unoccupied structures, the commissioner was to make a reasonable effort to locate the owner and ask to inspect. Should someone refuse entry, the commissioner could use “remedies provided by law.” Vonderhaar owns 13 rental properties, over half of Evendale's rental homes. Vonderhaar filed a purported class action under the Fourth Amendment, claiming the code authorized warrantless searches, and the Fifth Amendment, claiming the code required permit applicants to attest to compliance. The district court granted a preliminary injunction, concluding that the inspection procedures facially violated the Fourth Amendment. Evendale subsequently amended its code to allow owners applying for rental permits to “[p]rovide a written certification” from an architect or engineer attesting that a building meets Village standards and adding that when a commissioner suspects a violation, the commissioner may “seek a search warrant based on probable cause.” The Sixth Circuit vacated the injunction for lack of standing. The Village never relied on the code to conduct a warrantless search and the plaintiffs have no risk of impending injury. View "Vonderhaar v. Village of Evendale" on Justia Law

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Tennessee Valley Authority (TVA) operates the coal-fired electricity-generating Gallatin Fossil Plant on a part of the Cumberland River called Old Hickory Lake, a popular recreation spot. The plant supplies electricity to approximately 565,000 households in the Nashville area but generates waste byproducts, including coal combustion residuals or coal ash. The plant disposes of the coal ash by “sluicing” (mixing with lots of water) and allowing the coal ash solids to settle unlined man-made coal ash ponds adjacent to the river. The plant has a permit to discharge some coal combustion wastewater, which contains heavy metals and other pollutants, into the river through a pipe. Other wastewater is allegedly discharged through leaks from the ponds through the groundwater into the Cumberland River, a waterway protected by the Clean Water Act (CWA), 33 U.S.C. 1251. The district court found that TVA violated the CWA because its coal ash ponds leak pollutants through groundwater that is “hydrologically connected” to the Cumberland River without a permit. The theory is called the “hydrological connection theory” by the federal Environmental Protection Agency (EPA). The Sixth Circuit reversed, finding no support for the hydrological connection theory in either the text or the history of the CWA and related environmental laws. View "Tennessee Clean Water Network v. Tennessee Valley Authority" on Justia Law