Federal Appeals Court Recharacterizes Sale-Buyback Arrangement As An Equitable Mortgage

In an opinion issued about two weeks ago, the U.S. Court of Appeals for the Eleventh Circuit affirmed lower court rulings in a Georgia case saying that, under the specific facts of the case, the contemporaneous execution of a warranty deed to a tract of land to a purported buyer and a contract giving the seller of the tract an option to purchase the land within a time certain was not a true sale, but rather, it created a mortgage in which the seller remained as the true owner of the property and the buyer in the arrangement was treated as a mortgage lender (the funds paid by the buyer were treated as a loan).

This case involved the application of Georgia state law and provides attorneys representing homeowners facing foreclosure, at least in Georgia (and possibly in Alabama, Florida, and elsewhere), some additional ammunition in battling foreclosure rescue operators in so-called "home rescue" or "home saver" arrangements. For the long version of this post, see Federal Appeals Court Upholds Equitable Mortgage Doctrine In Georgia Case.

For the case itself, see Christopher v. Cox (In re Cox), Case #04-1589, 11th Cir., July 27, 2007. equitable mortgage yak