Saturday, November 22, 2014

Daughter Thwarted In Attempt To Boot Elderly Father Out Of His Home; Judge: Fight "Over What Amounts To Expectation Inheritence Rights"; Dad: "“I Am 71 & In Poor Health. I Am Not Going To Make It Much Longer. Couldn’t She Just Wait Until I Die?”

In Miami, Florida, The Miami Herald reports:
  • Former Miami Beach mayor-turned-convicted felon Alex Daoud does not have to move out of his home, a Miami-Dade judge ruled Monday.

    In 2012, Daoud’s daughter Kelly Hyman filed a complaint against him that said she owned the corporation that bought the $1 million, two-bedroom, three-bathroom house in the 1700 block of Michigan Avenue. At the time, she said she owned the home because her name is on the incorporation documents of the company that bought the house in 2006.

    She wanted her father out of the house and said her dad was trying to take away her corporation.

    But Daoud said he had made all the payments on the home and put the corporation in his daughter’s name only to avoid publicity. He said the home was his and that he should be able to live there for the rest of his life.

    On Monday, Circuit Judge John W. Thornton said in his 14-page ruling that it was a “business dispute that should have been in family court.”

    He ruled that Hyman is entitled to 50 percent of the company Bouganvilla Investments, which means half of the home. Daoud’s trust owns the other half. “The court finds that Ms. Hyman has tendered insufficient evidence to support her contention that she is the 100 percent owner of Bouganvilla,” he wrote. So in order for the home to be sold, the two would have to agree, the judge said.

    “A sophisticated father and daughter, both of whom have law degrees, both of whom have sophisticated counsel, are fighting over what amounts to expectation inheritence rights,” the judge wrote.

    He went on to say that Daoud is “entitled to quiet enjoyment thereof for the duration of his life.”

    Hyman's attorney Bernardo Burstein said Monday night that Hyman strongly disagrees with the order. "She will be pursuing her appellate options," he said.

    Daoud’s attorney, Alex Brito, said “it was unfortunate a daughter would be compelled to sue her father.” “We are very happy with the outcome,” he said.

    Daoud said he felt “vindicated.” "I still love her very much,” he said.
Source: Daoud wins legal battle against daughter over home.

See also, Father vs. daughter: Former Miami Beach mayor Alex Daoud sued for his house (Alex Daoud, the ex-Miami Beach mayor who served 18 months in federal prison for charges including bribery, is now facing off against his daughter in a suit over his Michigan Avenue home):
  • I am 71 and in poor health,” he said. “I am not going to make it much longer. Couldn’t she just wait until I die?”

Friday, November 21, 2014

Another Sloppy Lender Takes Hit With Voided Lien In Homeowner's Bankruptcy Case As Mortgage Containing Incorrect Legal Description Falls Outside Property's Chain Of Title, Thus Failing To Provide Constructive Notice To BFPs; Bank Left Holding The Bag Without Loan Collateral, But At Least Wins Fight To File Belated Unsecured Proof Of Claim

From Bankruptcy-RealEstate-Insights:
  • A Chapter 13 trustee and the debtor sought to use the strong arm powers of a hypothetical bona fide purchaser of real estate to avoid a mortgage based on the fact that an incorrect legal description was attached to the mortgage and it was indexed in the land records using the incorrect description.

    A debtor and his wife acquired property through a deed that correctly described the property by street address, parcel number, and legal description. A year later the debtor executed a note for ~$100,000 payable to a lender, and the debtor and his wife executed a mortgage on the property to secure the note.

    The first page of the mortgage granted a security interest in the “following described property” which referenced an attached legal description, and set forth the property tax parcel number and street address. Unfortunately for the mortgagee, although the street address and parcel number on the first page were correct, the attached legal description was for an entirely different property.

    Under Section 544 of the Bankruptcy Code, a trustee may avoid a mortgage that is voidable by a hypothetical bona fide purchaser under state law. Typically state law provides that a purchaser can take free of interests unless it has actual or constructive notice of the interest, and typically properly recorded documents provide constructive notice. Under Section 544, the trustee is able to exercise its strongarm powers without regard to any actual knowledge. So the key question was whether a purchaser would have had constructive knowledge of the mortgage despite the incorrect legal description.

    The debtor presented testimony about how a title search would be conducted and whether the search would have disclosed the mortgage: The witness said that if he has a deed, he would use the legal description of the property from the deed to begin the search. Alternatively, if he only had the name of the owner or the property address, he would use auditor and treasurer records to obtain a legal description.

    He further testified that a search is conducted based on the legal description and not a street address since it is more definitive than a street address and the recorder’s office indexes property based on its legal description. Similarly, the parcel ID number can be helpful in finding a legal description, but once the legal description is located, the description is what is used to review the records.

    Once a legal description is identified, the next step is to review the recorder’s index of names. The index identifies instruments and indicates the property subject to the instrument based on its legal description. In this case, the index showed that the debtor had interests relating to three different legal descriptions – identified as Bayberry Trail, Springview Acres, and Rose Estates.

    Springview Acres was owned by the debtor and was the property that should have been described in the mortgage. Rose Estates related to property that was not owned by the debtor, and Bayberry Trail described a different piece of property owned by the debtor that was in foreclosure. Thus, the witness testified that he would review only instruments related to the Springview Acres property to identify potential encumbrances in the chain of title. Although three mortgages showed up under the debtor’s name for Springview Acres, all three had been released by recorded documents.

    Since the mortgage in question was improperly indexed using the Rose Estates legal description, the witness testified that the mortgage would not fall in the chain of title for the Springview Acres property and would not have been reviewed as part of the title search. There were also no red flags that would have caused him to review instruments outside the chain of title. (For example, a circumstance where an instrument references only a street address and does not contain a legal description.)

    Under applicable state law, a purchaser has constructive notice of everything recorded in the chain of title. If a document is within the chain of title, a purchaser is deemed to have constructive notice even if the document is not properly recorded. However, a purchaser is required to examine only those items that “could reasonably be expected to exist in the record chain of title” and it is “not required to exercise a higher degree of diligence and undertake an exhaustive search of the records to discover the most remote adverse claims or encumbrances.”

    Although a document that is improperly recorded outside the chain of title might provide constructive notice, the court was clear that if a document improperly identifies the property so that it is recorded outside the chain of title through no fault of the recorder, a bona fide purchaser does not have constructive notice. The court distinguished a 6th Circuit case holding that a mortgage provided constructive notice when it included a correct street address. In that case the legal description was missing and there was no incorrect property information.

    Given that the lender’s mortgage did not provide constructive notice, it was subject to avoidance under Section 544. Although the plaintiffs sought to bar the lender from filing an unsecured proof of claim after the decision (arguing that it was too late to file a claim), the court relied on FRBP 3002(c)(3) – which generally provides that an “unsecured claim which arises in favor of an entity or becomes allowable as a result of a judgment may be filed within 30 days after the judgment becomes final” – to find that the lender was allowed to file an unsecured proof of claim.

    There are a surprisingly large number of cases in which there are errors in execution or property identification in mortgages. The consequence of errors frequently turns on state specific practices. For example, it may make a difference in the analysis if the official record is a grantor-grantee or a tract index. In any event it is a good idea both to pay attention to detail and to stay in touch with your friendly local real estate lawyer.
Source: Strong Arm Powers: Mortgage Boo-Boo Strikes Again.

For the court ruling, see Kellner v First Ohio Banc & Lending, Inc. (In re Geraci), 507 B.R. 224 (Bankr. S.D. Ohio 2014).

Thursday, November 20, 2014

Salvation Army To Fork Over $72K To Settle Alleged Fair Housing Violations That It Illegally Booted Four Homeless Women From Its Transitional Housing Center After They Became Pregnant

In Washington, D.C., the Department of Housing & Urban Development recently announced:
  • The U.S. Department of Housing and Urban Development (HUD) announced [] that the Salvation Army will pay $48,000 to four women as part of a Conciliation Agreement resolving allegations that the international charitable organization wrongfully evicted them from its Turning Point transitional housing center in Washington, DC, because they became pregnant. Salvation Army also agreed to set aside $24,000 for a housing case manager.

    The Fair Housing Act makes it unlawful to discriminate in housing based on a person’s race, color, national origin, religion, sex, disability, and familial status. This includes discriminating against families with children under 18 years old, women who are pregnant, and persons who are attempting to secure legal custody of a child under 18.

    “Transitional housing centers are essential to helping individuals move from homelessness into stable housing situations,” said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity, “but it is both wrong and illegal to evict women because they become pregnant.”

    The Conciliation Agreement is the result of a Secretary-initiated complaint that HUD filed against the Salvation Army after an investigation determined that the Turning Point Center’s residency rules unlawfully discriminated against residents on the basis of sex and familial status. The center accepted pregnant women and women with children, but evicted women who became pregnant during the term of their residency. The Salvation Army’s Turning Point Center maintained a policy that said “there are to be no additions to a resident’s family while she is enrolled in the Turning Point Program. Pregnancy, regardless of outcome, will be grounds for dismissal from the program.”

    Under the terms of the Conciliation Agreement,the Turning Point Center will revise its residency policies to allow women who become pregnant after entering the program to complete their stay. The Salvation Army will also pay $12,000 to each of four women who were pregnant at the time they were evicted from the Turning Point Center. In addition, the Salvation Army will allocate $24,000 to the operating budget of the Turning Point Center to hire a part-time case manager to assist women with moving to housing after completing the center’s two-year program.
Source: HUD, Salvation Army Settle Pregnancy Discrimination Claims (Settlement follows eviction of four pregnant women from D.C. homeless housing program).

Wednesday, November 19, 2014

N. Illinois Landlord Agrees To Cough Up $255K In Settlement w/ Fair Housing Feds For Allegedly Refusing Reasonable Accommodation For Mobility-Impaired Tenant Living On 3rd Floor Of Non-Elevator Bldg., Then Threatening Eviction When Adult Daughter/Caregiver Moved In

The Department of Housing and Urban Development ("HUD") recently announced (via the Fair Housing Defense blog):
  • The U.S. Department of Housing and Urban Development (HUD) announced [] that it has entered into a Voluntary Compliance Agreement (VCA) with University Village, the owner and operator of a 500-unit HUD-subsidized apartment complex in DeKalb, Illinois. As part of the agreement, University Village has agreed to pay $255,000 to settle allegations that it violated fair housing laws when it failed to meet the needs of persons with disabilities and retaliated against a resident with disabilities for requesting a reasonable accommodation.

    The VCA is the result of complaints that were filed by HOPE Fair Housing Center,(1) the RAMP Center for Independent Living(2) and two residents with disabilities, which alleged that University Village made housing unavailable when it assigned a mobility impaired resident to a third-floor unit in a building with no elevator, and threatened her with eviction for having her adult daughter, who was serving as her caregiver, in the unit, even though she had documentation verifying her disability and need for the accommodation. University Village receives federal financial assistance from HUD in the form of project-based vouchers.

    The Fair Housing Act prohibits discrimination in the sale or rental of a dwelling because of disability, including refusing to make reasonable accommodations in policies or practices when a person with a disability requires such an accommodation. In addition, Section 504 of the Rehabilitation Act of 1973 requires that programs or activities receiving federal financial assistance be readily accessible to persons with disabilities and that they be granted the reasonable accommodations they need, including being allowed to have a live-in caregiver in a unit when it is necessary.

    "No one with a disability should be denied the accommodations they need to fully enjoy their home," said Gustavo Velasquez, HUD's Assistant Secretary for Fair Housing and Equal Opportunity. "This agreement reflects HUD's commitment to working with housing providers, including owners of HUD funded housing, to meet their obligation to comply with the nation's fair housing laws."

    Under the terms of the agreement, University Village will pay $255,000, which includes attorney fees,(3) to the two individuals who filed complaints and work with HOPE Fair Housing Center to develop a new reasonable accommodation policy. The complex will also conduct a needs assessment of current tenants and applicants who require assessable units to determine if their needs are being met and ensure that five percent of its units are fully accessible, either by constructing new units or converting existing units.
Source: HUD Settles Claims Alleging Owner of Dekalb Apartment Complex Discriminated Against Persons with Disabilities.


(1) HOPE Fair Housing Center is a non-profit, fair housing advocate dedicated to eliminating housing discrimination and segregation because of race, color, religion, national origin, sex, disability, familial status, or any other characteristics protected under state or local laws..

(2) A Center for Independent Living is a non-profit, non-residential organization assisting people with all types of disabilities, regardless of age, to control and direct their own lives.

(3) According to the Voluntary Compliance Agreement, one resident will receive $72,000 (from which payments will be made to reimburse Medicare for expenses related to the failure to provide reasonable accommodation, with her to keep any balance remaining from the $72K). The second resident will receive $20,000. With regard to the balance of the loot, the two non-profit groups involved will each pocket $20K, with the lawyers pocketing $123,000 to cover their legal fees and costs.