Saturday, December 20, 2014

Owner/Operators Of Downstate NY Senior Living Residences & Assisted Living Facility Agree To Cough Up $297K+ To Settle Alleged Fair Housing Act Violations

From the Fair Housing Justice Center:
  • On December 11, 2014, federal Magistrate Ronald L. Ellis signed an agreement to settle a lawsuit filed by the Fair Housing Justice Center (FHJC) against the owners and operators of four senior living residences located in Staten Island, Manhattan, Westchester County, and Rockland County as well as one assisted living/adult home facility in Rockland County. The federal complaint, filed in May 2013, alleged various discriminatory policies and practices based on disability, religion, and race.

    The allegations in the complaint included, among other things, maintaining a separate dining room for wheelchair users at one site, a prohibition on the use of power wheelchairs at another site, intrusive medical inquiries, questions about the religious practices of potential applicants, as well as the use of only white human models in marketing materials. The complaint was based on a four-month testing investigation conducted by the FHJC in 2012.


    While the defendants denied any wrongdoing, the settlement requires, among other things, that the defendants comply with fair housing laws; adopt policies to prevent future discrimination; obtain fair housing training; prominently market themselves as an equal housing opportunity provider; and pay $297,500 in damages, attorney fees, and costs. Most provisions of the agreement continue for a period of four years. During this time the defendants will maintain certain records and make them available for inspection by the FHJC. These provisions are designed to ensure future compliance with fair housing laws.
Source: Settlement Ensures Non-Discrimination in Senior Living Residences and Adult Home Facility (Defendants Pay $297,500 to Resolve Fair Housing Lawsuit).

Friday, December 19, 2014

More On The Slumbering New Jersey Lender Who Slept Through Statute Of Limitations On Foreclosing Mortgage, Leaving Lucky Homeowner w/ Free & Clear Home

The Philadelphia, Pennsylvania-based law firm Duane Morris LLP has recently published a post about the recent New Jersey court case where a homeowner who had defaulted on his house payments on a $520,000 mortgage had the outstanding balance of his mortgage wiped out where the lender apparently "fell asleep" for six years without bringing a foreclosure action, and whose statute of limitations "alarm clock" apparently didn't awaken it from its slumber until after the applicable limitations period had expired, leaving it time-barred from initiating a lawsuit.

For the post, see Bankruptcy Court Finds Debtor Entitled To A "Free House" Because Mortgage Foreclosure Complaint Barred By New Jersey Statute Of Limitations.

For the court ruling, see In re Washington, 2014 Bankr. LEXIS 4649 (Bankr. D.N.J. Nov. 5, 2014).

Editor's Note:

Not unlike some others, I found myself confronted with the temptation of employing "rhetorical flourish" and using the term "free house" to describe the homeowner's windfall in the headline for this piece, as well as in my original post on this story (see Expiring Statute Of Limitations Leaves New Jersey Homeowner With Free & Clear Home While Foreclosing Lender Left Holding The Bag).

While I don't feel that it's such a horrible thing to"keep the facts from getting in the way of a good headline" every once in a while, I resisted on this post because, according to the facts of the case - see The acquisition of the property:
  • The homeowner did, in fact, put a $130,000 down payment (20% down) on a $650,000 purchase price - not exactly "chump change" (presumably, there were thousands of dollars in additional out-of-pocket expenses paid for closing costs as well),
  • The homeowner did, in fact, make three mortgage payments on a $520,000 loan (not to mention any escrow cash for real estate taxes & insurance) before defaulting,
  • The homeowner purchased his home on February 27, 2007 (which, for students of 21st century history of the U.S. real estate market, was right around the time when the market was at its absolute peak, if it hadn't already begun to stall, crash, and burn); presumably the value of the subject home in this case began to tank shortly after purchase, and probably has yet to fully recover.
While the homeowner scored a great win in this case, the home certainly did not turn out to be as "free" as I first thought it might be.

Wednesday, December 17, 2014

Does Recorded, Properly Prepared But Improperly Indexed Deed Provide Constructive Notice To Bona Fide Purchasers? Yes, Says Bay State Bankruptcy Court

  • A chapter 7 trustee sought to avoid a transfer of the debtor’s real property using his “strong arm” powers based on an argument that the deed conveying the property did not provide constructive notice since it was not properly indexed in the real estate records.

    The debtor owned property in Boston that he transferred in July 2003 by a deed that correctly identified the grantor as “William O. Hultin.” However, when the deed was recorded, it was listed in the grantor index under “William Hiltin.” The original deed from the debtor was followed by a deed from his purchaser in 2005, a foreclosure deed in 2008, another deed in 2008, and a mortgage in 2011.

    A trustee’s strong arm powers include the ability to avoid transfers that could be avoided under state law by a bona fide purchaser of real estate as of the petition date. Typically under state law (1) a purchaser can take free of an interest unless it has notice of the interest, and (2) a properly recorded deed provides constructive notice of the grantee’s interest.

    As of the date that the debtor filed bankruptcy in 2013, the deed was indexed under William Hiltin. (This is significant because someone examining the grantor index to determine the status of the property would conclude that it was still owned by William Hultin.) Thus, the trustee’s argument was that the 2003 deed was not properly recorded, with the result that it did not provide constructive notice that the debtor transferred the property and a bona fide purchaser in 2013 could acquire the property free of the interests of the subsequent owners and lender.

    The analysis turned on a state statute that provided (emphasis added):

    No instrument shall be deemed recorded in due course unless so recorded in the registry of deeds for the county or district in which the real estate affected lies as to be indexed in the grantor index under the name of the owner of record of the real estate affected at the time of the recording.

    The defendant lender contended that this meant only that a document must be presented for recording that could be properly indexed, and did not require the recording party to confirm that proper indexing occurred. The lender argued that the deed complied with the statute so that the question of whether it provided constructive notice was a question of common law. Under common law, there were a number of cases holding that an indexing error did not prevent an otherwise properly recorded document from providing constructive notice.

    In contrast, the trustee argued that the requirement that the deed be “so recorded… as to be indexed in the grantor index” meant that it must be properly indexed in order to be deemed recorded. The trustee countered the lender’s position by arguing that (1) the purpose was to insure parties had constructive notice by requiring the interest to be in the grantor index, (2) enactment of this section abrogated many of the earlier cases relied on by the lender, and (3) in many of the cases the document was accessible notwithstanding the error, which was not the case here since a party searching the grantor index to determine whether the debtor owned property would not have found the deed transferring his interest.

    The court concluded that the statute was not precise so that it should turn to common law. The court reviewed several cases holding that a mistake made by a clerk in indexing does not invalidate constructive notice. The court predicted that the state supreme court “would uphold the common law rule concerning mistakes by a registry and ‘[hold] in favor of a person who has done all he could to have a transaction recorded, as against a subsequent creditor or purchaser who has relied on an erroneous record.’”

    The court specifically rejected the view that the decision should turn on whether the document would be found in a search of the real estate records. According to case law:

    Instances are not rare in which the constructive notice provided for by statutes requiring the registration of instruments proves insufficient to protect the interests of those for whose benefit they are intended, but who do not, for that reason, have a right to priority.

    As for legislative intent, the court concluded that the requirement for indexing was intended to eliminate “indefinite references” in recorded instruments. In particular, it did not place the burden on a recording party to assure that a document was in fact indexed properly.

    Since the deed correctly identified the grantor and the registry was the source of the indexing error, the court determined that the deed provided constructive notice of the transfer of the debtor’s interests in the property, and accordingly dismissed the trustee’s claims.

    Note that the issue in this case arose ten years after the deed was recorded. It can be difficult to predict whether a court will find that an improperly indexed real estate document provides constructive notice so that the interests of subsequent purchasers and lenders are protected.

    Although there are periodic discussions among real estate lawyers about whether it is necessary to verify proper indexing of recorded real estate documents, as a practical matter, the usual approach is to rely on title insurance.
For the ruling, see Agin v. Dookhan (In re Hultin), 516 B.R. 190 (Bankr. D. Mass. 2014).

Tuesday, December 16, 2014

Federal Court To Multiple Sclerosis-Afflicted Tenant Requesting Entitlement To Reasonable Accommodation Under Fair Housing Act For Doctor-Prescribed, Medical Marijuana Use: No Chance!

From the Fair Housing Defense blog:
  • In an age when more states continue to decriminalize use of small amounts of marijuana, apartment management employees are getting a more common request: can medical marijuana be a reasonable accommodation because of a disability?

    Earlier this month, a federal district court answered that question with a resounding no. In a case from Michigan involving an affordable housing community (Michigan permits medical marijuana pursuant to the state’s Medical Marijuana Act), a U.S. District Court judge ruled that because marijuana is still classified as a controlled substance under federal law (in other words, use of marijuana is still against federal law), the resident is not entitled to a reasonable accommodation for medical marijuana use under the Fair Housing Act (“FHA”).(1)

    In so ruling, the judge reviewed applicable state and federal law as well as guidance from the U.S. Department of Housing and Urban Development (“HUD”) written in 2011 in which HUD concluded that persons using illegal drugs (including medical marijuana) are categorically disqualified from relief pursuant to the FHA, Section 504 of the Rehabilitation Act of 1973 and/or the Americans with Disabilities Act as the requested accommodation was not reasonable and would constitute a fundamental alteration in the nature of the housing operations.
Source: Medical Marijuana as a Reasonable Accommodation Because of a Disability? One Court Says No.

For the court ruling, see Forest City Residential Management, Inc. v. Beasley, Case No. 13-14547 (E.D. Mich. December 3, 2014).

(1) From the court's opinion:
  • Beasley's [the tenant's] physician prescribed medicinal marijuana to help with her symptoms of Multiple Sclerosis. [...] Beasley obtained a Medical Marijuana card issued by the State of Michigan pursuant to the Michigan Medical Marihuana [sic] Act.

Monday, December 15, 2014

Pennsylvania Appeals Court Kiboshes Tax Sale Where Widow Had $250K Home Sold Out From Under Her Over $6.30 Late Fee; Ruling Reverses Lower Court Decision That Initially Gave Her The Boot

In Harrisburg, Pennsylvania, Reuters reports (via Public Citizen's Consumer Law & Policy Blog):
  • A widow whose western Pennsylvania home was sold by the county after she failed to pay interest accrued on $6.30 in late tax fees was overjoyed when a court ruled she can keep her home, her lawyer said on Friday.

    Eileen Battisti, who is in her early 50s and lost her husband in 2004, was unfamiliar with managing her finances and did not understand in 2009 that she owed the $6.30 late fee, which subsequently accrued $234.72 in interest, prompting the tax sale of her home in 2011, said her lawyer, Ed Santillan.

    A judge in Pittsburgh on Thursday ruled Battisti could keep ownership of the home in Aliquippa, about 20 miles northwest of Pittsburgh.

    She has remained in the home with two of her three adult children since it was sold by the Beaver County Tax Claim Bureau to S.P. Lewis, a man who buys tax delinquent properties and sells them back to their former owners for a profit, according to court papers.

    "We are thrilled with the decision of the commonwealth court and my client cried tears of joy when she heard the news," Santillan said.

    "I think when you read the opinion it is clear that the property should never have been sold," he added.

    Pennsylvania Commonwealth Court Judge Mary Leavitt ruled that county tax officials failed to provide Battisti with proper notification or warning regarding the sale of her house.

    "A reasonable tax claim bureau would have responded to Taxpayer's payment on the 2008 taxes with an invoice for $6.30, and it would have invoiced Taxpayer in 2010 for the 2009 shortage of $234.72," the judge wrote in her ruling.

    The home, which is worth between $250,000 and $280,000, was sold to Lewis for $113,000. He offered to sell the property back to Battisti for $160,000, Santillan said.

    Lewis did not immediately respond to a request for comment.

    The bureau still has the money from the sale and is expected to return it to Lewis, Santillan said, but Lewis has 30 days to appeal the court ruling.
Source: Court lets Pennsylvania widow keep home sold over interest on $6.30 tax bill.

For the court ruling, see Battisti v. Beaver County Tax Claim Bureau, No. 733 C.D. 2014 (Pa. App. December 11, 2014).

Go here for a 'friend of the court' brief filed in this case by The American Association of Retired Persons (AARP), the National Association of Consumer Advocates (NACA), and the National Consumer Law Center (NCLC). AARP is a nonprofit organization which promotes the interests of individuals over the age of 50 and seeks to protect older individuals from unfair and abusive business practices. NACA is a nonprofit corporation comprised of attorneys, law professors, and law students who primarily focus on the protection of consumers. NCLC is an advocacy organization which focuses on the needs of low income and elderly consumers.

Sunday, December 14, 2014

San Bernardino DA Puts Pinch On Pair Accused Of Hijacking Title To Vacant Home, Then Flipping It To Unwitting Buyer For $440K+; Duo Faces 22 Felony Counts Of I.D. Theft, Forgery, Procuring & Offering False/Forged Instruments, Conspiracy

From the Office of the San Bernardino County, California District Attorney:
  • A Rancho Cucamonga man and woman were recently arrested for stealing Title on a home and selling it for profit.

    Investigators from the District Attorney’s Office Real Estate Fraud Unit arrested Emma Adel, 45, and Mazen Fazah, 39, on Nov. 25, 2014. Both Adel and Fazah were booked at West Valley Detention Center on felony arrest warrants for various criminal acts involving felony real estate fraud.

    Following the arrest, DA Investigators executed a search warrant on their homes and Upland-based business, Smart Edge Auto.

    “During the search we were able to seize additional evidence related to the investigation,” said Senior Investigator John Vega, who is assigned to the case.

    In June 2014, Adel and Fazah allegedly unlawfully acquired a vacant house in Rancho Cucamonga and forged the names of the owner and notary public on the grant deed. Next, they transferred the property into their own business called “Perking’s Trust.”

    According to Vega, shortly after recording the false grant deed with the County Recorder, the pair deceived the escrow and title companies and sold the house to an unsuspecting buyer for over $440,000.

    Adel and Fazah were booked on 22 felony charges (see attached copy of the complaint) with more charges pending in San Bernardino and Riverside Counties. Deputy District Attorney Vance Welch will prosecute this case. Adel and Fazah were arraigned via video Nov. 26, and both pleaded not guilty to all counts. A Disposition/Reset Hearing is scheduled Dec. 22 at the San Bernardino Justice Center.