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    Gale Burns

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    TORTS: Trespass: Privileged Entry

    Posted by Gale Burns on Fri, Apr 27, 2012 @ 10:04 AM

    The Lawletter Vol 36 No 11

    Matt McDavitt, Senior Attorney, National Legal Research Group

    While a person's entry upon the land of another without consent ordinarily constitutes tortious trespass, there are exceptions to the rule, including privileged entry based on necessity.  Factually, privileged entry might occur in a circumstance where a person's property or dependents (i.e., an animal or a child) enters or wanders onto the property of another and necessity dictates that for the parent or owner to retrieve his or her property or offspring, he or she must enter the lands of another.  This so-called "privileged entry" exception appears in the Restatement (Second) of Torts:

    (1)        One is privileged to enter land in the possession of another, at a reasonable time and in a reasonable manner, for the purpose of removing a chattel to the immediate possession of which the actor is entitled, and which has come upon the land otherwise than with the actor's consent or by his tortious conduct or contributory negligence.

    (2)        The actor is subject to liability for any harm done in the exercise of the privilege stated in Subsection (1) to any legally protected interest of the possessor in the land or connected with it, except where the chattel is on the land through the tortious conduct or contributory negligence of the possessor.

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    Topics: legal research, torts, Matt McDavitt, The Lawletter Vol 36 No 11, privileged entry, permission unobtainable or futile, trespass, necessary retrieval of property or dependent, entry must be reasdonable

    "It's Not Delivery. It's DiGiorno®."—A Short Note on TILA's Notice and Delivery Requirements

    Posted by Gale Burns on Thu, Feb 2, 2012 @ 13:02 PM

    February 7, 2012

    Steve Friedman, Senior Attorney, National Legal Research Group

    The Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1692–1692p, is a federal consumer protection statute intended "to promote consumers' 'informed use of credit' by requiring 'meaningful disclosure of credit terms[.]'"  Chase Bank USA v. McCoy, 131 S. Ct. 871, 874 (2011) (quoting 15 U.S.C. § 1601(a)).  Pursuant to its authority under TILA, the Board of Governors of the Federal Reserve System has promulgated Regulation Z, codified as 12 C.F.R. part 226, "which requires credit card issuers to disclose certain information to consumers."  Id.  Among other things, TILA and its implementing Regulation Z give the consumer-borrower a remorse period in which to rescind a transaction.

    Significantly, when the TILA notice is provided in writing, as opposed to electronically, Regulation Z requires that lenders "deliver two copies of the notice" and that such notice include "[t]he date the rescission period expires."  12 C.F.R. § 226.23(b)(1).  Ordinarily, the rescission period is three business days, see 15 U.S.C. § 1635(a), but that period is extended to three years if the requisite notice of the right to cancel is not delivered to the borrower, see 12 C.F.R. § 226.23(a); see also 15 U.S.C. § 1635(f).  This distinction proved critical in a recent case from the U.S. Court of Appeals for the Ninth Circuit.

    In Balderas v. Countrywide Bank, No. 10-55064, 2011 WL 6824977 (9th Cir. filed Dec. 29, 2011), a Spanish-speaking couple alleged that they had been pressured by a bank and its representatives to enter into a mortgage loan that the bank knew they could not afford and on terms they did not agree to.  Among other theories, the plaintiffs sought to rescind the entire transaction, alleging that they had been given defective copies of TILA's notice of right to cancel in that the notice did not include the date on which their right to rescind expired.  However, the district court granted the bank's Rule 12(b)(6) motion to dismiss, because the court determined that the plaintiffs had been entitled under TILA to only a three-day rescission period, which had elapsed prior to the filing of their lawsuit.  The court's decision was based upon a copy of a nondefective notice-of-right-to-cancel letter bearing the plaintiffs' signatures, attached as Exhibit 14 to the complaint, that included an acknowledgment that the plaintiffs had received two copies of said notice.  Upon the plaintiffs' appeal, the Ninth Circuit reversed and remanded.

    Initially, the appellate court recognized that the plaintiffs' signatures on the disclosure statement did not conclusively prove that it had been delivered to them as required by TILA. "[P]roviding someone a document long enough to sign it does not comply with 12 C.F.R. § 226.23(b)(1), which requires the lender to 'deliver' copies of the Notice of the Right to Rescind to the consumer." Id. at *3.  By using the word "deliver," Regulation Z undoubtedly commands that the consumer be allowed to keep the notice.  See also 12 C.F.R. § 226.17(a)(1) (the requisite written disclosures must be provided "in a form that the consumer may keep").  The court drove this point home by relating a couple of common-sense analogies:  "When you have pizza delivered, you don't sign for it and let the deliveryman take it back to the restaurant.  And when a newspaper boy delivers a paper, he doesn't show you the headlines and then return it to the printer."  2011 WL 6824977, at *3.

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    Topics: legal research, Truth in Lending Act, TILA, Regulation Z, consumer-borrower remorse period, rescission period extended if notice of right to c, "deliver" mandates notice borrower is al, complaint not proper use for document production, distinct standard for review of motion to dismiss, property law, Steve Friedman

    PROPERTY: Seller of Home May Be Liable to Purchasers for Failure to Disclose a Murder-Suicide Involving the Home's Prior Owners

    Posted by Gale Burns on Tue, Jan 17, 2012 @ 17:01 PM

    The Lawletter Vol 36 No 6                                   

    Alistair Edwards, Senior Attorney, National Legal Research Group

    For obvious reasons, one's decision to purchase or not to purchase a home may be impacted by the knowledge that there was a previous murder or suicide (or a combination of both) at the home.  Does the seller have a duty to disclose this sort of information to a potential purchaser?  Does the failure to disclose this information before the sale is accomplished amount to an actionable fraud or a negligent misrepresentation on the part of the seller?

    Recently, in Milliken v. Jacono, 2011 PA Super 254, 2011 WL 5936768, a Pennsylvania court suggested that a home seller may be required to disclose to a potential purchaser that the house had been the site of a murder-suicide involving the home's prior owners.  First, the court considered whether there was a duty to disclose this information under Pennsylvania's Real Estate Seller Disclosure Law ("RESDL"), 68 Pa. Cons. Stat. §§ 7301–7315.  The RESDL requires that a seller of residential real estate disclose to a buyer any material defect with the property.  See 68 Pa. Cons. Stat. § 7303.  The court indicated that the murder-suicide history would constitute a material defect under the RESDL if it were to have a significant adverse impact on the value of the property.  The court went on to hold that there was a genuine issue of material fact on the issue of a material defect under the RESDL, thereby precluding the defendant seller's and real estate agents' motion for summary judgment on the purchaser's claim for a RESDL violation.

    Likewise, the court also held that there were genuine issues of material fact as to the purchaser's claims for fraud and negligent misrepresentation (as well as the Unfair Trade Practices and Consumer Protection Law claim).  As with the RESDL claim, the court held that there were factual disputes concerning whether the murder‑suicide incident was a material defect.  With respect to the fraud claim, the court commented:

    Whether a fact is material in the context of a fraud claim hinges on whether the transaction would have been consummated if the other party knew of the fact. See Skurnowicz v. Lucci, 798 A.2d 788, 793 (Pa.Super.2002).  Here, Buyer has alleged that had she known of the murder suicide, she would not have purchased the property.  R. at 268a.  Based on the foregoing, we conclude that whether Sellers and Agents failed to disclose a material fact was a question for the jury.  See Alloway v. Martin, 434 Pa.Super. 518, 644 A.2d 201, 204 (Pa.Super.1994) (stating that "fraud is a question of fact for the trier‑of‑fact to decide").  Accordingly, we conclude that the trial court erred in granting Sellers and Agents summary judgment on Buyer's fraud claim.

    2011 WL 5936768, at *6.

    It is important to consider that the above decision was based purely on Pennsylvania law.  Other state courts have also had an opportunity to consider the issue of a seller's (or real estate agent's) duty to disclose the type of information involved in
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    Topics: legal research, The Lawletter Vol 36 No 6, property law, dislcosure of murder-suicide under Pennsylvania la, actionable fraud, negligent misrepresentation, Real Estate Seller Disclosure Law, failure to disclose constitutes a material defect, adverse impact on property value

    PROPERTY LAW: What Constitutes "Unearned" Fees Charged to Borrowers Under RESPA § 8(b)?

    Posted by Gale Burns on Fri, Oct 21, 2011 @ 15:10 PM

    October 25, 2011

    Steve Friedman, Senior Attorney, National Legal Research Group

    Congress enacted the Real Estate Settlement Procedures Act ("RESPA") of 1974, 12 U.S.C. §§ 2601-2617, in response to the need for significant reforms in the residential real estate settlement process.  See RESPACReal Estate Settlement Procedures Act Home Page (last visited Oct. 12, 2011) ("[RESPA] insures that consumers throughout the nation are provided with more helpful information about the cost of the mortgage settlement and protected from unnecessarily high settlement charges caused by certain abusive practices.").

    Indeed, the legislation expressly states that it is intended to, among other things, eliminate "kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services."  12 U.S.C. § 2601(b)(2).  To that end, § 8(b) of RESPA provides as follows:  "No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed."  Id. § 2607(b).

    The U.S. Department of Housing and Urban Development, the federal agency responsible for enforcing RESPA, has asserted that four types of overcharging schemes are prohibited by § 8(b):

    1.         Fee splitting, where two or more persons split a fee, any portion of which is unearned;

    2.         Mark-ups, where a service provider charges the borrower for services performed by a third party in excess of the cost of the services to the service provider but keeps the excess itself [without providing any additional goods or services];

    3.         Undivided unearned fees, where a service provider charges the borrower a fee for which no correlative service is performed; and

    4.         Overcharges, where a service provider charges the borrower for services actually performed but in excess of the service's reasonable value.

    Freeman v. Quicken Loans, 626 F.3d 799, 802 (5th Cir. 2010) (citing RESPA Statement of Policy 2001-1, 66 Fed. Reg. 53,052 (Oct. 18, 2001)).

    All U.S. Courts of Appeals that have addressed the issue agree that § 8(b) plainly prohibits the first and fourth types of schemes, fee splitting and overcharges.  See id. (citing cases).  However:

    The circuits disagree on the remaining two types of fees: mark‑ups and undivided unearned fees.  The Fourth, Seventh, and Eighth Circuits have each held that RESPA § 8 is exclusively an anti‑kickback provision.  [See Boulware v. Crossland Mortg., 291 F.3d 261 (4th Cir. 2002); Krzalic v. Republic Title, 314 F.3d 875 (7th Cir. 2002); Haug v. Bank of Am., 317 F.3d 832 (8th Cir. 2003).]  Accordingly, RESPA ' 8(b) requires two culpable parties, a giver and a receiver of the unlawful fee, rendering mark‑ups by a sole services provider not actionable.  The Second, Third, and Eleventh Circuits have rejected the two‑party requirement and held that RESPA § 8(b) prohibits mark‑ups.  [See Kruse v. Wells Fargo Home Mortg., 383 F.3d 49 (2d Cir. 204); Santiago v. GMAC Mortg. Group, 417 F.3d 384 (3d Cir. 2005); Sosa v. Chase Manhattan Mortgage Corp., 348 F.3d 979 (11th Cir. 2003).]  Only the Second Circuit has explicitly addressed whether RESPA § 8(b) prohibits a sole provider's undivided unearned charges and found that it did.  Cohen v. JP Morgan Chase & Co., 498 F.3d 111 (2d Cir. 2007).  Presumably, the three circuits that require two culpable actors would not find undivided unearned charges actionable.

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    Topics: legal research, property law, Steve Friedman, RESPA, §§ 2601-2617, kickbacks, referral fees, federally related mortgage loans, mark-ups and undivided unearned fees in question, two-party requirement

    PROPERTY LAW: Mortgages, Merger, and Mayhem: Foreclosing Mortgagee's Omission of Junior Lienholder

    Posted by Gale Burns on Wed, Jul 20, 2011 @ 09:07 AM

    July 19, 2011

    Steve Friedman, Senior Attorney, National Legal Research Group

    In recent years, dubious mortgage practices and lax lending standards contributed to a housing bubble that eventually burst and thrust the economy into the worst economic downturn since the Great Depression; as a result, there have been a record number of foreclosures.  Despite the time-sensitive nature of foreclosure proceedings and related litigation, foreclosing parties need to be careful about checking the land records and verifying that all interested parties have notice of the foreclosure proceedings.

    The doctrine of merger provides that "[w]henever a greater and a less estate coincide and meet in one and the same person, without any intermediate estate, the less is immediately merged in the greater, and thus annihilated."  31 C.J.S. Estates § 153 (Westlaw database updated June 2011).  Applying the merger doctrine to the mortgage context, when the mortgagee acquires legal title to the subject property by way of foreclosure, the mortgage lien merges with the legal title, and the lien is extinguished as a matter of law.  See Citizens State Bank of New Castle v. Countrywide Home Loans, No. 76S03-1009-CV-515, 2011 WL 2566451, at *2 (Ind. June 29, 2011); Am. Family Mut. Ins. v. Welton, 926 F. Supp. 811, 816-17 (S.D. Ind. 1996).

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    Topics: legal research, foreclosure, property law, Steve Friedman, mortgages, doctrine of merger, junior lienholder, mortgage lien merging with legal title

    PROPERTY: No Private Right of Action Under the Home Affordable Modification Program ("HAMP")

    Posted by Gale Burns on Fri, Apr 22, 2011 @ 17:04 PM

    April 22, 2011

    Alistair Edwards, Senior Attorney, National Legal Research Group

    In 2008, Congress passed the Home Affordable Modification Program ("HAMP"), created under the Emergency Economic Stabilization Act of 2008 ("EESA"), 12 U.S.C. §§ 5201-5261.  To participate in HAMP, companies that service mortgages not owned by a government-sponsored enterprise enter into a contract with Fannie Mae ("HAMP Contract").  HAMP's purpose is to provide eligible homeowners with permanent loan modifications to avoid foreclosures.  In a typical HAMP Contract, the company agrees to review all eligible borrowers who apply for a loan modification under HAMP and to provide permanent loan modifications to eligible borrowers who meet the HAMP criteria.

    Recently, the U.S. District Court for the Southern District of Florida held that no private right of action exists under HAMP.  In Ozoria v. Deutsche Bank Trust Co. Ams., No. 10-24070-Civ, 2011 WL 1303270 (S.D. Fla. Mar. 31, 2011) (available on Westlaw only), the plaintiffs sued GMAC Mortgage, LLC ("GMACM"), their mortgage loan servicer, after they had twice applied for a permanent mortgage modification but GMACM had denied their applications both times.  The plaintiffs, claiming to be third-party beneficiaries of the HAMP Contract, alleged that GMACM had breached the Contract when it wrongfully denied their applications for permanent HAMP mortgage loan modification and that it had breached the covenant of good faith and fair dealing when it denied their applications.  In dismissing the plaintiffs' breach-of-contract claims (or third-party beneficiary claims) against GMACM, the court emphasized that there is no private right of action under HAMP.  The court, pointing out that other courts have held likewise, commented:

    Defendants argue that Plaintiffs' Complaint should be dismissed because it only concerns breaches of the HAMP Contract, and HAMP does not provide a private cause of action. Indeed, the courts that have been presented with similar cases have held that HAMP does not confer a private right of action. See, e.g., Nelson v. Bank ofAmerica, N.A., No. 10-00929, 2011 WL 545817, at *1 (M.D.Fla. Feb. 8, 2011); Zoher v. Chase Home Financing, No. 10-14135, 2010 WL 4064798, at *3 (S.D.Fla. Oct.15, 2010) (collecting cases). Neither the HAMP Guidelines nor the EESA expressly provide for a private right of action. Instead, Congress provided that Freddie Mac serve as the compliance officer for HAMP. See U.S. Dep't of Treasury, Supp'l Directive 2009-08, at 4 (Nov. 3, 2009). As the compliance officer, Freddie Mac must conduct "independent compliance assessments," including an "evaluation of borrower eligibility." Supp'l Directive 2009-01, at 25-26. By delegating sole compliance authority to Freddie Mac, and staying silent as to a right of action in district courts, Congress intended that a private right of action was not permitted. Cf. Thompson v. Thompson, 484 U.S. 174, 180, 108 S.Ct. 513, 98 L.Ed.2d 512 (1988) ("The intent of Congress remains the ultimate issue, however, and unless this congressional intent can be inferred from the language of the statute, the statutory structure, or some other source, the essential predicate for implication of a private remedy simply does not exist.").

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    Topics: legal research, Alistair Edwards, property law, Home Affordable Modification Program, HAMP, Fannnie Mae, permanent home loans, loan modifications, private right of action

    PROPERTY: Acquisition of a Prescriptive Easement by a Class of Persons

    Posted by Gale Burns on Fri, Apr 8, 2011 @ 09:04 AM

    April 12, 2011

    Steve Friedman, Senior Attorney, National Legal Research Group

    A prescriptive easement is analogous to adverse possession, the difference being that in a prescriptive easement claim, the claimant acquires only an easement rather than title to the land.  See 28A C.J.S. Easements § 23 (Westlaw database updated Mar. 2011); Cumulus Broad. v. Shim, 226 S.W.3d 366, 378-79 (Tenn. 2007).

    As with adverse possession, a party asserting a prescriptive easement must generally prove, by clear and convincing evidence, adverse use that is visible, open, and notorious, as well as continuous and uninterrupted for the statutory prescriptive period.  See 28A C.J.S., supra, § 23; 25 Am. Jur. 2d Easements and Licenses § 39 (Westlaw database updated Nov. 2010); Hilley v. Lawrence, 972 A.2d 643, 651-52 (R.I. 2009); Shapiro Bros. v. Jones‑Festus Props., 205 S.W.3d 270, 274 (Mo. Ct. App. 2006).

    The existence of prescriptive easements and the requisite elements to establish them have long been plainly set forth in the law; however, there is scant legal precedent regarding  the acquisition of prescriptive easements by an identified class of persons as opposed to an individual or the public generally.  See Flaherty v. Muther, 2011 ME 32, ¶¶ 80-83, 2011 WL 990308, at *16 (not yet released for publication).

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    Topics: legal research, property law, Steve Friedman, prescriptive easement, adverse possession, acquisition by a class

    PROPERTY: Defending Against Foreclosure on the Basis of Faulty Assignment by the Original Lender

    Posted by Gale Burns on Thu, Mar 17, 2011 @ 11:03 AM

    February 15, 2011

    Charlene Hicks, Senior Attorney, National Legal Research Group

    In recent months, embattled homeowners striving to fend off mortgage foreclosures have increasingly turned to the courts for relief.  This has resulted in an emerging body of law involving the validity of the underlying loans.  Because virtually all mortgages are assigned by the original lender soon after execution, questions concerning the validity of the assignment often arise.  Thus, one particular avenue in which homeowners have enjoyed particular success in defending against foreclosure proceedings involves contesting the current noteholder's standing to maintain a foreclosure action.

    This point is well illustrated in Wells Fargo Bank, N.A. v. Ford, No. A‑3627‑06T1, 2011 WL 250561 (N.J. Super. Ct. App. Div. Jan. 28, 2011), a case recently decided by the Superior Court of New Jersey, Appellate Division.  In that case, Sandra Ford executed a negotiable note on March 6, 2005 to secure repayment of $403,750 she had borrowed from Argent Mortgage Company and a mortgage on her New Jersey home, a transaction in connection with which Ford was alleging that Argent had engaged in fraudulent and predatory acts.

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    Topics: legal research, Charlene Hicks, negotiable instrument, foreclosure, property, assignment of note, U.C.C. § 3-301, holder in due course

    PROPERTY: Taking Land for a Private Casino Operation Was a Taking for a Public Purpose

    Posted by Gale Burns on Thu, Feb 10, 2011 @ 15:02 PM

    The Lawletter Vol 34 No 6, August 6, 2010

    Alistair Edwards, Senior Attorney, National Legal Research Group

    In Murray v. City of Lawrenceburg, 925 N.E.2d 728 (Ind. 2010), the Supreme Court of Indiana recently held, among other things, that land being used as part of a docking site for a private riverboat casino had been taken by the City of Lawrenceburg and the Lawrenceburg Conservancy District for a public purpose or use.  In Murray, the plaintiffs alleged that they were the owners of the land at issue, and they brought an action against the City and the Conservancy District to quiet title.  The plaintiffs further alleged that in 1996 a quitclaim deed was recorded whereby a railroad company had attempted to deed the land at issue to the City.  The court, opining for the first time that inverse condemnation was an exclusive remedy, held that the plaintiffs should have sued for inverse condemnation, not to quiet title—even though the City had a deed to the property and had never attempted to "take" the property.  Accordingly, the plaintiffs were subject to the six-year statute of limitations applicable to an inverse condemnation action, which statute had expired prior to the plaintiffs' filing suit.

    Among other arguments presented to the court, the plaintiffs asserted that inverse condemnation was inapplicable because any alleged taking was not for a public use.  As alleged in the plaintiffs' complaint, the land at issue was part of a docking site for a riverboat casino operated by a private gaming company, which was leasing the land from the City.  However, the court nevertheless held that the land had been taken for a public use.  To support its conclusion, the court stated:

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    Topics: legal research, Alistair Edwards, eminent domain, The Lawletter Vol 34 No 6, quitclaim deed, inverse condemnation, taking

    PROPERTY: Eminent Domain—What's an Easement Worth?

    Posted by Gale Burns on Mon, Jan 10, 2011 @ 11:01 AM

    November 19, 2010

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    Topics: legal research, property, eminent domain, Lawletter Vol 34 No 11, value of easement, Scott Meacham

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