All Forum Posts by: Peter Walther

I think you'll find most, if not all title insurers, will require the DIL to be dated and executed subsequent to default in order to insure.  In addition, the Grantor will probably be required to sign the same seller's affidavit that are needed for a non DIL closing.  Here's a short treatise by a title insurer:

A deed in lieu of foreclosure is a deed given by the owner of mortgaged property to the holder of the mortgage or its designee where the mortgage is in default and foreclosure is a possibility. A deed is given and accepted as an alternative to ("in lieu of") foreclosure. Unlike a foreclosure, a deed in lieu of foreclosure does not extinguish any of the liens and encumbrances affecting the property.

Most courts recognize the execution of a deed in lieu of foreclosure in a transaction subsequent to the original mortgage transaction as a legitimate alternative to foreclosure proceedings. However, deeds in lieu of foreclosure can be subject to judicial attack by their grantors and their grantors' creditors.

Grounds for attacks on deeds in lieu of foreclosure include the following:

• That the deed was an equitable mortgage - that the parties intended the deed to be given as security for a debt and that the deed was not an absolute conveyance.

• That the deed is either a preferential or fraudulent transaction within the purview of the provisions of the federal Bankruptcy Act or any other related state law.

• That the deed is a device to clog a mortgagor's right of redemption.

• Unfairness of the consideration.

• Coercion, fraud, oppression, duress, and undue influence.

• That the deed is not subsequent to the execution of the mortgage but contemporaneous with it.

• That the grantor/mortgagor was insolvent at the time of the execution of the deed.

An estoppel affidavit (executed and acknowledged by the grantor/mortgagor, attesting to the fairness of the transaction, the consideration exchanged, the value of the property, and other factors showing an intention to make a genuine transfer) or a recital (inserted directly in the deed) are supporting documents used to forestall challenges to these transactions.

State law and local title standards must be consulted in regard to the consideration and treatment of deeds in lieu of foreclosure.

This is a recent decision where a title insurer denied coverage to an insured owner who had been named in a suit to rescind the deed into the insured.  The insurer claimed the Complaint alleged matters which were excluded from coverage and therefore liability was denied.  The insured sued the insurer, and the trial court agreed with the insurer and dismissed the insured's complaint.  The insured appealed and the appeals court agree with the insured and reversed the lower court's decision.

I handled a similar title claim where the complaint alleged among other things, the insured knew or should have known about the Plaintiff's prior contract and therefore the deed into my insured should be rescinded.  I believed the company had liability because the allegation "should have known" was outside the policy exclusion.  There was lots of discussion in the department about whether the matter was in fact covered but my opinion ultimately prevailed.  The conversation, as well as this decision, left me wondering how many insureds are denied policy coverage and cannot afford to bring a suit against the insurer and are unable to recover their loss.

There's also a considerable risk that the person you're dealing with isn't actually the owner of the property.

I believe that if the non-signing spouse had an interest in the property burdened by the easement, then the easement interest is not insurable.  However, that doesn't mean the easement is not valid.  If the non-signing spouse agreed to the easement and received and accepted the consideration paid, it very well may be valid as to them.  If the failure to join was a ministerial oversight, then a new deed would probably cure the defect.  This assumes there are no third parties who took an interest between the original deed and the new deed (think mortgage lender).  If there is one, and they did not take their interest with actual knowledge of the easement, then the new deed would need to be agreed to by that third party or would be subordinate to that prior interest.

I believe the Note creates liability for the loan, the mortgage creates a lien on the real property that secures the debt.  If I sign the mortgage but not the Note, I don't have liability for the debt, but my interest in the property is subordinate to the lien and so can be foreclosed if the debt is not repaid as agreed.

Sorry, it's Georgia Code § 16-8-3.

You might look at Georgia Code § 16-5-40.

I worked on more than one title insurance claim where an escrow agent disbursed funds before closing so while it's unusual, it's not unique.  Sometimes by mistake, sometimes by direction of the parties, sometimes in an attempt to steal money.

I believe you and your attorney are already pursuing a lien based on equitable subrogation.  While that might succeed, I hope you're also seeking a lien based on unjust enrichment in case it doesn't. 

It happens in divorces all the time.  In happier times the husband and wife buy a house and give a mortgage to pay for the purchase.  They get a divorce, and one spouse is awarded the house and is ordered to make the mortgage payments and hold the other spouse harmless from the obligation.  That's fine as between them but the lender is still going to hold both liable for the debt if the payments aren't made.  The non-title holding ex-spouse can ask the lender to release them from the Note, but it's rarely given in my experience.

 But you wrote "If the man wanted to he could sell the house and keep the profit", nothing about your advice is based on having reviewed the divorce.  If you read my reply to Chris Seveney, I think you'll see that I suggested the possibility of the wife's interest being memorialized.  I think you'll also find that even if he isn't liable for the debt, his interest in the property is subject to the lien of the mortgage.  If he sells the house the mortgage should be paid off out of the purchase price.  He might get to keep the net proceeds but the debt gets paid, and the mortgage is satisfied.  While I'm not an accountant, CPA or attorney, I'm hard pressed to believe that if the mortgage is paid in full from the sales price the wife has to worry about getting a 1099.

 Are you willing to insure the OP if she buys the house?