Emily Abel, Senior Attorney, National Legal Research Group

      In a recent decision, the Virginia Supreme Court reiterated the importance of using due diligence and carefully examining the title when purchasing property. Washington v. Prasad, 791 S.E.2d 566 (Va. 2016), involved a suit by a purchaser against his neighbors to recover the funds the purchaser expended as a result of erroneously improving his neighbors' property instead of his own.

     After receiving notice of a public action, the purchaser, a retired chemical engineer turned house "flipper" accessed the County assessor's records and reviewed the property card for the Parcel 8-C, the parcel being auctioned. The property card correctly listed the street address as 17211 Shands Road, but incorrectly showed a picture of the neighbors' home, Parcel 9-A. The reason for the mix-up was that the neighbors' house on Parcel 9-A had previously been numbered as 17211, but the street number changed to 17201 years ago. However, the neighbors never changed the number at the front of the house or on the mailbox, thus, the neighbors' property appeared to be 17211 Shands Road to passers-by.

Alistair Edwards, Senior Attorney, National Legal Research Group

     It is not unusual for a borrower (mortgagor) who is facing foreclosure to attempt to obtain a loan modification from the lender (or the servicer acting for the lender). However, even if the borrower requests a loan modification, this does not automatically put the foreclosure process on hold. Nor does the lender (mortgagee) automatically violate some sort of duty owed to the borrower by proceeding with the foreclosure even though a loan modification has been requested.

      For example, in Afridi v. Residential Credit Solutions, Inc., No. CV 15-13632-NMG, 2016 WL 3017382 (D. Mass. May 24, 2016), the U.S. District Court for Massachusetts recently held that the lender (or the servicer acting for the lender) did not breach its implied duty of good faith by proceeding with a foreclosure sale while the borrower was attempting to obtain a loan modification. In that case, the servicer sought to foreclose, and in order to avoid that outcome, the borrower applied for a mortgage modification under the Home Affordable Modification Program ("HAMP"). The servicer initially denied the application as incomplete. The servicer ultimately provided a list of the missing documents and the borrower updated his application. However, the servicer scheduled a foreclosure sale without first rendering a decision on the borrower’s modification application. The servicer ultimately denied the application.

Andrea Stokes, Senior Attorney, National Legal Research Group

     Most practitioners are aware of the potential problems and limitations associated with the use of voluntary dismissal without prejudice. Less well known, perhaps, is the limitation on refiling an action after more than one involuntary dismissal without prejudice, particularly in the mortgage foreclosure context. Florida Rule of Civil Procedure 1.420(b), addressing involuntary dismissals, provides that

[u]nless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction or for improper venue or for lack of an indispensable party, operates as an adjudication on the merits.

Fla. R. Civ. P. 1.420(b).

     So it is the odd occasion, indeed, where a trial court involuntarily dismisses without prejudice a second or third time after a motion or sua sponte order under Rule 1.420(b). The question may then arise whether a plaintiff can continue to take "bites at the apple" or if there exists a limitation on those bites. And when viewed in the context of a mortgage foreclosure, this question becomes even more vexing.

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.

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).

The Lawletter Vol 40 No 11

The Lawletter Vol 40 No 11

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).

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?

The Lawletter Vol 40 No 5