Homebuyer Files Suit To Halt Foreclosure; Says Seller "Owner-Financed" Sale, Then Mortgaged Premises To 3rd Party & Failed To Make Loan Payments

In Jefferson County, Texas, The Southeast Texas Record reports:

• A Beaumont couple claims a mortgage company is attempting to foreclose on their property even though they say they have made the required monthly payments. Antonio R. and Hilda L. Trista Candelaria filed a lawsuit March 1 in Jefferson County District Court against Edward Williams, Citimortgage, Carolyn Ciccio, Tommy Jackson, Misti Montalvo, Selim Taherzadeh, Cara Featherstone and David Moon.

• The Candelarias claim they own property in Beaumont, which they purchased from Williams on Feb. 19, 2002. After Williams sold the Candelarias the property, he turned around and mortgaged the same property to Corinne Palmer Anold, who transferred the note to Citimortgage, according to the complaint.

• The Candelarias faithfully paid their monthly mortgage payments to Williams, but remained unaware of the subsequent mortgage Williams issued, the suit states. "Apparently Defendant, Edward Williams, did not pay the mortgage even though he was paid by your plaintiffs," the suit states.(1)

For the story, see Couple seeks order to stop trustee's sale of property.

(1) If the Candelarias took possession of the home prior to Williams' mortgaging of the premises, the Candelarias' ownership interest in the home may have priority over the mortgage now in foreclosure. Under Texas law (and the laws of most states), a purchaser of, or mortgage lender secured by, real estate is charged with constructive notice of all claims of a party in possession of the property that the purchaser or lender might have discovered had he made proper inquiry. Madison v. Gordon, 39 S.W.3d 604; 2001 Tex. LEXIS 5; 44 Tex. Sup. J. 410, (Tex. 2001). See also, footnote 2 of this post for more on the duty of a bona fide purchaser in Texas to inquire into the rights of persons in possession of real estate.

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire. See also, The Bona Fide Purchaser for Value of a Legal Estate Without Notice.