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Property Law Legal Research Blog

MORTGAGES: Mortgagor Entitled to Truth-in-Lending Disclosures Even if Not Personally Liable on Loan

Posted by Alistair D. Edwards on Tue, Mar 15, 2016 @ 13:03 PM

The Lawletter Vol 41, No 3

Alistair Edwards, Senior Attorney, National Legal Research Group

     The Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., requires a mortgage lender (a mortgagee) to provide certain disclosures to the borrower (mortgagor). If these disclosures are not made, the borrower may have the right to rescind. Under TILA, when a loan is secured by the borrower's principal dwelling, the borrower may rescind the loan agreement if the lender fails to deliver certain forms or to disclose important terms accurately. TILA requires creditors to provide borrowers with clear and accurate disclosures of terms dealing with things like finance charges, annual percentage rates of interest, and the borrower's rights. Failure by the lender to deliver these disclosures may permit a borrower to rescind the loan transaction.

      However, is a person who is not personally liable on the loan but who is the owner of the dwelling that is used to secure the loan entitled to the TILA disclosures and the right to rescind? Recently, in Lakeview Loan Servicing, LLC v. Pendleton, 2015 IL App (1st) 143114, ___ N.E.3d ___ (not yet released for publication), the Appellate Court of Illinois considered this exact issue.

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Topics: TILA, Regulation Z, mortgages, Alistair D. Edwards, disclosure to owner of dwelling if not mortgagor, Lakeview Loan Servicing v. Pendleton

MORTGAGES: A 2009 Amendment to the Truth in Lending Act, 15 U.S.C. § 1641(g), Is Not Retroactive

Posted by Steven G. Friedman on Wed, Feb 24, 2016 @ 10:02 AM

The Lawletter Vol. 41, No. 2

Steve Friedman, Senior Attorney, National Legal Research Group

     The federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601–1667f, was enacted to, among other things, "protect the consumer against inaccurate and unfair credit billing and credit card practices." Id. § 1601(a). Prior to 2009, TILA required that borrowers be informed if the servicer of their mortgage loan changed, but there was no such notice requirement if the owner of their mortgage loan changed. To impose the latter requirement, Congress enacted Public Law No. 111-22, 123 Stat. 1632 (2009).

     Specifically, the following new text was added to TILA: "[N]ot later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer[.]" 15 U.S.C. § 1641(g)(1). Notably, if the new creditor does not comply, the borrower may bring suit to recover actual damages, a statutory penalty of up to $4,000 for individual claims ($1 million for a class action), plus costs and attorney's fees. See id. § 1640(a).

     In a recent case out of the U.S. Court of Appeals for the Ninth Circuit, the appellate court was presented with an issue of first impression: Is the new requirement in § 1641(g) retroactive? See Talaie v. Wells Fargo Bank, 808 F.3d 410 (9th Cir. 2015).

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Topics: Truth in Lending Act, mortgages, Steven G. Friedman, retroactive application

PROPERTY: Drafting the Renewal Clause in a Lease

Posted by D. Bradley Pettit on Thu, Dec 17, 2015 @ 13:12 PM

The Lawletter Vol 40 No 11

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Topics: enforceability, Brad Pettit, property, land lease agreement, renewal clause

PROPERTY: Duty of Mineral Rights Lessee/Purchaser to Inform Lessor/Vendor About Deal in Place to Resell Rights to Third Party for Much Higher Price

Posted by Alistair D. Edwards on Mon, Dec 14, 2015 @ 11:12 AM

The Lawletter Vol 40 No 11

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Topics: property, Alistair D. Edwards, mineral rights

PROPERTY: Enforceability of Clause in Residential Property Lease Seeking to Shield Landlord from Liability for Injuries Caused by Mold or Fungus

Posted by D. Bradley Pettit on Thu, Oct 1, 2015 @ 16:10 PM

The Lawletter Vol 40 No 8

Brad Pettit, Senior Attorney, National Legal Research Group

     In 2014, an Indiana appellate court considered the issue of whether a landlord can enforce a provision in a residential lease contract that seeks to protect it from liability for personal injuries caused by fungus or mold on the leased premises. In Hi-Tec Properties, LLC v. Murphy, 14 N.E.3d 767 (Ind. Ct. App.), transfer denied, 20 N.E.3d 851 (Ind. 2014), a tenant who leased an apartment that was below ground level brought suit against her landlord, alleging, inter alia, that mold in the apartment had aggravated her preexisting asthma and caused other injuries. The landlord defended against the tenant's claim by pointing to a clause in the parties' lease agreement that read in pertinent part as follows:

23. Mold. Lessee acknowledges that no evidence of mold was observed in the living unit prior to leasing. Lessee also agrees to notify Lessor in writing within ten (10) days of observing any mold. Lessor shall then have two (2) weeks within which to remediate the conditions at no cost to Lessee. As part of the consideration of this lease, Lessor shall have no personal liability for personal injury or property damage as a result of any mold, fungus, etc. . . . In any event, Lessee releases and agrees to save harmless, Lessor and their agents for personal injury and suffering, mental anguish, medical expenses, lost wages, etc., to themselves and or family members.

Id. at 771 (court's emphases omitted).

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Topics: Brad Pettit, property law, residential lease, landlord liability

PROPERTY: Stranger-to-the-Deed Rule Did Not Invalidate Right of First Refusal

Posted by Alistair D. Edwards on Wed, Sep 9, 2015 @ 10:09 AM

The Lawletter Vol 40 No 7

Alistair Edwards, Senior Attorney, National Legal Research Group

     Under the stranger-to-the-deed rule, a deed with a reservation or exception by the grantor in favor of a third party, a so-called stranger to the deed, does not create a valid interest in favor of that third party. For example, a reservation in a deed purporting to create a life estate in a third party (a stranger) may very well be ineffective. Many jurisdictions still adhere to some form of the stranger-to-the-deed rule.

     What happens, though, when a grantor gives a deed containing a right of first refusal in favor of a third party or parties? In other words, the grantor did not create a right of first refusal in himself but in favor of a stranger to the transaction. The effect of a right of first refusal, also called a preemptive right, is to bind the selling party to not sell without first giving the person holding the right the opportunity to purchase the real property at the price specified. But does the stranger-to-the-deed rule invalidate a right of first refusal given to the third party/stranger?

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Topics: Alistair Edwards, property, right of first refusal, reservation, The Lawletter Vol 40 No 7, stranger-to-the-deed rule

LANDLORD-TENANT: Apartment Tenant May Have Claim for Breach of Implied Warranty of Habitability Based on Another Tenant's Harassing Behavior

Posted by Alistair D. Edwards on Mon, Jul 6, 2015 @ 15:07 PM

The Lawletter Vol 40 No 5

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Topics: property, Alistair D. Edwards, habitability, breach of implied warranty, landlord-tenant, The Lawletter Vol 40 No 5

MORTGAGES: Notice of the Truth Shall Set You Free: Timely Assertion of the Right of Rescission Under the Truth in Lending Act

Posted by Steven G. Friedman on Thu, Mar 19, 2015 @ 10:03 AM

The Lawletter Vol 40 No 1

Steve Friedman, Senior Attorney, National Legal Research Group

     The federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601–1677, was enacted to ensure "a meaningful disclosure of credit terms" to give consumers the opportunity to make informed credit decisions. Id. § 1601(a). In relevant part, TILA grants consumers a right to rescission, no questions asked, under certain circumstances. See id. § 1635(a); 12 C.F.R. § 226.15(a)(3). Once a consumer validly exercises the right to rescind, the entire transaction is voided without any liability or encumbrances. See 15 U.S.C. § 1635(b); 12 C.F.R. § 226.15(d)(1).

     To effectively rescind, however, consumers must timely do so. Specifically, consumers must notify the lender prior to the later of "midnight of the third business day following the consummation of the transaction or the delivery of the [requisite disclosures under the Act]." 15 U.S.C. § 1635(a). Although the second alternative seems open-ended, the Act further states that in no event shall the right of rescission extend beyond "three years after the date of consummation of the transaction or upon the sale of the property, whichever comes first." Id. § 1635(f). But what exactly must be exercised no later than three years after the transactionCthe notice of intent to rescind, or the lawsuit seeking rescission? Abrogating the law of the Eighth Circuit Court of Appeals and applying the plain language of TILA, the U.S. Supreme Court held that it was the former. See Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015), rev'g 729 F.3d 1092 (8th Cir. 2013).

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Topics: Truth in Lending Act, mortgages, right of rescission

PROPERTY: Is an Oil and Gas Lease Subject to the Implied Covenant of Good Faith

Posted by Gale Burns on Mon, Feb 2, 2015 @ 13:02 PM

The Lawletter Vol 39 No 11

Alistair Edwards, Senior Attorney, National Legal Research Group

     It is well established that an oil and gas lease can be subject to certain implied covenants or duties. These can include, for example, the implied covenant or duty of the lessee to reasonably develop the leased property, to use reasonable care and due diligence in its operations, to act as a reasonably prudent operator, and to market. However, few courts have explored the issue of whether an oil and gas lease is subject to the basic implied covenant of good faith and fair dealing traditionally found in contracts.

     Recently, in Yoder v. Artex Oil Co., 2014-Ohio-5130, 2014 WL 6467477 (Ct. App.), the Ohio Court of Appeals held that an oil and gas lease is subject to the implied covenant of good faith and fair dealing found in contracts. To support its conclusion, the court relied on several secondary sources, as well as Ohio law. The court explained:

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Topics: oil and gas lease, good-faith covenant, implied duties

PROPERTY: Farmer's Music Concerts on His Farm Were Not Protected by the Tennessee Right to Farm Act

Posted by Gale Burns on Mon, Sep 30, 2013 @ 16:09 PM

The Lawletter Vol 38 No 7

Alistair Edwards, Senior Attorney, National Legal Research Group

     Going all the way back to the Woodstock Festival held at Max Yasgur's 600‑acre dairy farm in New York state in 1969, outdoor music concerts have regularly been held on farmlands.  Naturally, these concerts can cause certain inconveniences for the neighbors of the farms.

     Recently, in Shore v. Maple Lane Farms, LLC, No. E2011‑00158‑COA‑R3CV, 2013 WL 4428904 (Tenn. Aug. 19, 2013) (not yet released for publication), a farmer's neighbor filed suit against the farmer for holding outdoor concerts on his farm, asserting a claim for nuisance.  The farmer defended, in part relying on the Tennessee Right to Farm Act, which purports to insulate farm operations from nuisance suits and provides in pertinent part that "it is a rebuttable presumption that a farm or farm operation . . . is not a public or private nuisance."  Tenn. Code Ann. § 43‑26‑103(a).  As used in the Act, "farm operation" is a broad term intended to include all activities connected "with the commercial production of farm products or nursery stock."  Id. § 43-26-102(2).

     However, the court refused to apply the Act to the amplified  music concert being held at the farm. In its analysis, the court explained that "the Tennessee Right to Farm Act would apply to the noise generated by the concerts at Maple Lane Farms if these concerts are somehow connected 'with the commercial production of farm products or nursery stock.'" 2013 WL 4428904, at *12. Although the court considered the concerts to be a clever "marketing and promotion effort to further the income of the farming operation," it did not consider this marketing activity to be the "commercial production of farm products or nursery stock."  Id. 
The court explained:

     We find it significant that the General Assembly chose to use the word "production" alone in its definition of "farm operation." It did not include "marketing," as other states have done in similar contexts. Marketing activities are not mentioned elsewhere in the Tennessee Right to Farm Act, and we have found no reference to marketing in the legislative history of the Act or any of its amendments. Based on the text and the legislative history of the Tennessee Right to Farm Act, no conclusion can be reached other than that, when it enacted the Act, the General Assembly was focused on the activities related to the production of farm products—that is to say, growing or raising these products. The General Assembly was not focused on the marketing of farm products for sale.

*               *             *

     Despite our diligent search, we have found nothing that suggests the General Assembly
considered noise from amplified music concerts held on a farm to necessarily have a connection with producing farm products. Nor have we found any basis to conclude that the General Assembly considered music concerts to be some sort of farm operation. The plain language of the Tennessee Right to Farm Act reflects a close connection between producing farm products and the conditions or activities shielded by the Act.

Id. at *12, *14 (footnotes omitted).

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Topics: legal research, The Lawletter Vol 38 No 7, property, . Right to Farm Act did not bar nuisance claim, Shore v. Maple Lane Farms, outdoor concert, noise not part of farm operation

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