2012 Commercial Law Developments

II. Real Property Secured Transactions

  • In re Kentwood Pharmacy, L.L.C., 475 B.R. 602 (Bankr. W.D. Mich. 2012) -- Michigan does not recognize a common-law landlord's lien on the tenant's personal property in the leased premises.

  • BAC Home Loans Servicing, LP v. Semper Investments L.L.C., 277 P.3d 784 (Ariz. Ct. App. 2012) -- A lender that refinanced existing senior mortgages was subrogated to them because the junior mortgagee was not prejudiced thereby.  The refinanced loan required interest at a variable rate and the new loan carried a fixed rate of interest that was lower than the maximum variable rate.  Also the junior mortgagee's predecessor was not notified of the refinancing transaction before the predecessor made subsequent advances.

  • Niday v. GMAC Mortgage, LLC, 284 P.3d 1157 (Or. Ct. App. 2012) -- An assignee of a mortgage note also acquires the mortgage securing the note.  However the assignee cannot foreclose nonjudicially in Oregon without previously having recorded the assignment.  Using MERS as an agent does not avoid this requirement.

  • Bain v. Metropolitan Mortg. Group, Inc., 285 P.3d 34 (Wash. 2012) -- If MERS never held the promissory note secured by the deed of trust, MERS is ineligible to be a "beneficiary" of a deed of trust under the Washington Deed of Trust Act.

  • Edelstein v. Bank of New York Mellon, 2012 WL 4461716 (Nev. 2012) -- When MERS is the named beneficiary of a deed of trust and a different entity holds the promissory note, the note and the deed of trust are split, making nonjudicial foreclosure by either improper. However, any split is cured when the promissory note and deed of trust are reunited.  Because the foreclosing bank in this case became both the holder of the promissory note and the beneficiary of the deed of trust, it had standing to foreclose nonjudicially.

  • Cadlerock Joint Venture, L.P. v. Lobel, 143 Cal. Rptr. 3d 96 (Cal. Ct. App. 2012) -- An assignee of loan secured by junior deed of trust that was created simultaneously and by the same originator as the loan secured by the senior deed of trust was not subject to the state's anti-deficiency statute and thus was permitted to pursue the debtor on the debt after the senior lender foreclosed nonjudicially, "wiping out" the junior lien.  The decision distinguishes Bank of America v. Mitchell, 204 Cal. App. 4th 1199 (2012) (single lender with both senior and junior deeds of trust cannot avoid the application of section California CCP § 580d by assigning the junior loan after the trustee's sale on the senior lien).

  • Baer v. Douglas, 2012 WL 917190 (Cal. Ct. App. 2012) -- The relative priority of two simultaneously executed deeds of trust that were stamped as recorded at the same time was not determined by which received the lower indexing number.  Although neither of the trust deeds indicated on its face the relative priority of the lien created thereby, the trial court acted within its legal discretion when it based priority on the grantor's intent.

  • Onyeoziri v. Spivok, 44 A.3d 279 (D.C. 2012) -- A mortgagee that conducted a foreclosure sale at which it purchased the property for $59,000 after learning that the debtor had a contract to sell the property for $280,000 to a buyer who was pre-approved for financing could potentially be liable for intentional interference with business relations.

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