What if I have a Property Line Dispute with my Neighbor? What are my Rights?
As one can imagine, your rights are dependent upon the facts surrounding your case. There are a number of different remedies and/or defenses in a case where two neighbors are battling over who owns what property.
At first blush, one might believe that a survey of the land should resolve all problems, which may very well be the case.
However, there are a number of doctrines that can be used as a defense in these situations.
If your property is the property upon which the person or entity is trespassing, you may have a number of rights and even potential causes of action, such as any of the following:
Ejectment
Trespass to Land
Negligence
Injunction (temporary or permanent)
Other potential causes of action depending on the specific facts
If you are the person or entity accused of encroaching on another’s property, you might have certain defenses, which may include but are not limited to:
Adverse possession
Easement of any of the various sorts permitted in Missouri (which will be discussed below)
Section 516.010 of the Missouri Revised Statutes governs ejectment claims. Basically, the statute bars a claimant from recovering possession of lands unless that person or their predecessor or ancestor had claim to the property within 10 years prior to the time of the lawsuit. R.S.Mo. Section 516.010 (2016).
If you are dealing with an adverse possessor on your property, then you will need to bring an action within less than 10 years to be able to protect your rights. Obviously, the sooner you can get trespassers off your property the better.
What are the elements of Adverse Possession in Missouri?
“In order to acquire title by adverse possession under § 516.010,2 the claiming party has the burden of proving that he ‘possessed the land, and that the possession was (1) hostile, that is, under a claim of right, (2) actual, (3) open and notorious, (4) exclusive, and (5) continuous, for 10 years prior to commencement of [the] action to perfect title by adverse possession.’ Shoemaker v. Houchen, 994 S.W.2d 40, 44 (Mo.App. W.D.1999). The burden of proving each element by a preponderance of the evidence is on the party claiming adverse possession, and failure to prove even one element defeats the claim.” Lancaster v. Neff, 75 S.W.3d 767 (Mo. App., 2002)(citing Id.).
Hostile– “a possession antagonistic to claims of all others, with an intent to occupy as one’s own” Lancaster v. Neff, 75 S.W.3d 767, 772 (Mo. App., 2002). “[E]ven if the possessor mistakenly believed he had title and occupied the land as his own, the [hostile] element is satisfied” Id.
Open and Notorious – “‘visible acts of ownership exercised over the premises,’ such as maintaining and improving the property.” Id.
Actual– “determined by the nature and location of the property and a use by the possessor based upon and expected therefrom, including planting and mowing of grass.” Id.
Exclusive– “the claimant holds the land for the claimant only and not for another, for example using the land as his or her own backyard and not allowing others to so use the property.” Id.
Continuous– “must be [ten] consecutive years and need not be the ten years just prior to the filing of the law suit, but once the period has run, the possessor is vested with title and the record owner is divested” Id.
A license is generally described as “[a] permission, usu. revocable, to commit some act that would otherwise be unlawful; esp., an agreement…that it is lawful for the licensee to enter the licensor’s land to do some act that would otherwise be illegal, such as hunting game.” Black’s Law Dictionary 1002 (9th Ed. 2009).
“A mere license may exist by parol, and ordinarily is not assignable, and is revocable unless it has been executed and the party has incurred expense on the faith of it, so that he would be injured by its revocation.” Main Street Feeds v. Hall, 19 S.W.3d 688 (Mo. App. S.D., 2000).
“An easement is a non-possessory interest in the real estate of another.” Burg v. Dampier, 346 S.W.3d 343 (Mo. App., 2011).
An easement is generally defined as “[a]n interest in land owned by another person, consisting in the right to use or control the land, or an area above or below it, for a specific limited purpose (such as to cross it for access to a public road).”
“An easement in gross conveys a personal interest in or right to use the land of another independent of ownership or possession of land, Henley v. Continental Cablevision of St. Louis Cnty., Inc., 692 S.W.2d 825, 827 (Mo.App. E.D.1985), and thus lacks a dominant tenement.” Burg v. Dampier, 346 S.W.3d 343, 353 (Mo. App., 2011).
Click the following link for a more in-depth explanation regarding easements in gross.
“Missouri courts have developed the following four-factor test for the establishment of a visible easement:
There must have been a unity of common ownership followed by a separation of title of the subject property into dominant and servient estates;
The purported easement must have been constructed, altered or artificially arranged by the common owner so as to constitute an open, obvious and visible benefit or advantage to the claimant’s property and a burden to the servient portion of the premises;
The purported easement must have been used long enough before the separation of title and under such circumstances so as to show that the alteration or artificial arrangement was intended to be permanent; and
The purported easement must be reasonably necessary for the full beneficial use and enjoyment of the dominant estate.[citations omitted]” Hillside Development Co., Inc. v. Fields, 928 S.W.2d 886 (Mo. App.W.D., 1996).
What is an Implied Easement from Pre-existing Use?
To establish an implied easement from pre-existing use, the petitioner must prove the following elements:
“(1) unity and subsequent separation of title;
(2) obvious benefit to the dominant estate and burden to the servient portion of the premises existing at the time of conveyance;
(3) use of the premises by the common owner in their altered condition long enough before the conveyance and under such circumstances as to show that the change was intended to be permanent; and
(4) reasonable necessity for the easement.”Causey v. Williams, 398 S.W.2d 190, 197 (Mo.App. 1966).Baetje v. Eisenbeis, 296 S.W.3d 463 (Mo. App., 2009).
When does a Necessary Easement or Easement By Necessity Arise?
“An easement by necessity arises ‘whenever land has been sold which is inaccessible except by passing over the land of the grantor.’” Baetje v. Eisenbeis, 296 S.W.3d 463 (Mo. App., 2009)(quoting Vossen v. Dautel, 116 Mo. 379, 22 S.W. 734, 735 (1893).”
What must a claimant prove to obtain an Easement by Necessity?
“To obtain an easement by necessity, the petitioner must show prior unity of title, and subsequent deprivation of access to a public roadway. Orvis v. Garms, 638 S.W.2d 773, 778 (Mo.App. S.D.1982); McDougall v. Castelli, 501 S.W.2d 855, 858-59 (Mo.App.1973).” Baetje v. Eisenbeis, 296 S.W.3d 463 (Mo. App., 2009).
The Court goes on to state that the easement by necessity cannot be obtained merely because it is convenient. The necessity for the easement must exist. SeeBaetje v. Eisenbeis, 296 S.W.3d 463 (Mo. App., 2009).
“If one has a substitute way off the land, he or she is not entitled to an easement by necessity. Id. ‘[T]his is true even if the substituted way is less suitable, quite inconvenient and involves substantial cash outlay.’” Id.
“A user may acquire a prescriptive easement over the land of another by continuous, uninterrupted, visible, and adverse use which endures for at least 10 years. Moss v. Ward, 881 S.W.2d 238, 241 (Mo.App.1994). In the absence of a showing that the use was permissive in its origin, and where the use has been open, continuous, visible and uninterrupted for 10 years, the courts presume that the use was adverse and under a claim of right. This shifts the burden to the landowner to show that the use was in fact permissive rather than adverse. Id.; Speer v. Carr, 429 S.W.2d 266, 268 (Mo.1968).”Phillips v. Sommerer, 917 S.W.2d 636 (Mo. App.W.D., 1996).
“The general rule is that an easement may be created by grant, express or implied, or by prescription but it cannot be created by parol, except that in certain circumstances an easement may exist by reason of an estoppel.” Main Street Feeds v. Hall, 19 S.W.3d 688 (Mo. App. S.D., 2000).
“There is a further doctrine comporting with reason and justice and recognized as clear equity…that a license to use a way or an easement, though without consideration at its inception, may not be revoked at will where, from the very nature of the license, the licensee was expected to go to great expense in order to enjoy it, and where that expense has been incurred. In such case equitable estoppel arises and the relations of the parties may not be severed and the easement destroyed at the whim and by the act of the licensor alone. They must be severed, if at all, on equitable principles.” Id.
In Majors v. Bush, the Court discussed whether an oral license could ever ripen into an easement. The Court generally held that it could, citing to 28 C.J.S. Easements, section 24, p. 678: “an oral grant will be upheld where it is accompanied by consideration, action in reliance on the grant, and by the grantee’s being permitted the granted use.” Majors v. Bush, 356 Mo. 17, 200 S.W.2d 892, 895 (1947).
“Generally speaking, an easement or a license may terminate by reason of abandonment or the completion of the purpose thereof or when that purpose may no longer be accomplished by means of that easement or license.” Dick v. Shannon, 596 S.W.2d 79 (Mo. App. S.D., 1980)(citingBall v. Gross, 565 S.W.2d 685 (Mo.App.1978)).
Does Non-Use of an Easement Constitute Abandonment of the Easement?
The mere non-use of an easement for the statute of limitations period is not sufficient to extinguish an easement. Harrison v. State Highways and Transp. Com’n, 732 S.W.2d 214 (Mo. App. S.D., 1987). This non-use must also be accompanied by “an intention on the part of the owner of the dominant estate to abandon it.” Id.
“As a general rule, an easement acquired by grant or reservation cannot be lost by mere nonuser for any length of time, no matter how great. The nonuser must be accompanied by an express or implied intention to abandon.” Id. citing 25 Am.Jur. Easements and Licenses, § 105, p. 509.
If a Possessor of Property makes Repairs, can the Possessor recover for the Fair Value of the Repairs to the Property?
Yes. Section 524.160 of the Missouri Revised Statutes gives a possessor, who made improvements to property, a right to compensation for any improvements that were made in good faith by the possessor. R.S.Mo. 524.160 (2016).
“The tort of nuisance arises when a defendant’s use of his or her property is so ‘unreasonable, unusual, or unnatural’ that it substantially impairs the rights of another to enjoy his or her property. Moore v. Weeks, 85 S.W.3d 709, 716 (Mo.App. W.D.2002).” Rychnovsky v. Cole, 119 S.W.3d 204 (Mo. App., 2003).
If you believe you have a nuisance claim, we are proud to offer real estate lawyer services through counseling, negotiating, and litigating on behalf of our clients.
“Where real estate is involved, ‘trespass is the unauthorized entry upon the land of another, regardless of the amount of force used, even if no damage is done or the injury is slight.’ [Rosenfeld v. Thoele, 28 S.W.3d 446, 449 (Mo.App. E.D.2000).] The unauthorized entry may be made by a person or an object as a result of a person’s actions. Id. The tort of trespass arises from the direct physical interference with the person or property of another. Rychnovsky v. Cole, 119 S.W.3d 204, 211 (Mo. App., 2003)(citingLooney v. Hindman, 649 S.W.2d 207, 212 (Mo. banc 1983)).
An ejectment action is defined as “[a] legal action by which a person wrongfully ejected from property seeks to recover possession, damages, and costs.” Black’s Law Dictionary 594 (9th Ed. 2009).
“To make a claim for ejectment, the plaintiff must show the defendant was in possession of premises to which plaintiff had a right of possession. Smith v. Seamster, 36 S.W.3d 18, 20-21 (Mo.App. W.D.2000). Plaintiff must further plead that he was damaged as a result of the defendants’ unlawful possession of the premises. Section 524.060.” Rychnovsky v. Cole, 119 S.W.3d 204 (Mo. App., 2003).
The statute further elaborates on the elements, laying them out, in relevant part, as follows:
Plaintiff was entitled to the possession of the premises;
Plaintiff must describe the premises;
Plaintiff must be entitled to the possession of the premises (the Plaintiff must prove at the time of the commencement of the action in ejectment, the Plaintiff had possession of the premises claimed and Plaintiff had the right to possess the same R.S.Mo. 524.080 (2016);
Defendant “on some day to be stated, entered into such premises, and unlawfully withholds from the plaintiff the possession thereof”
Plaintiff is damaged because he has been kept out of possession. R.S.Mo. 524.060 (2016).
Is there a statute that gives a Lawful Owner of Property a Right to Eject Trespassers?
Yes. In fact, all of Chapter 524 of the Missouri Revised Statutes is dedicated to the cause of action known as Ejectment.
However, specifically, R.S.Mo. 524.010 gives persons or entities the right to bring an action in ejectment, stating the following: “[a]n action for the recovery of the possession of premises may be maintained in all cases where the plaintiff is legally entitled to the possession thereof.” R.S.Mo. 524.010 (2016).
If you are a landlord of commercial property, and you need the services of a commercial real estate attorney to eject a non-paying tenant, please contact us for a free consultation.
What is the difference between a Mortgage and a Deed of Trust?
Despite the frequent use of the term “mortgage,” mortgages are rare and are not commonly used in Missouri.
Why? I thought that’s what you have on your house in Missouri.
This brief discussion is designed to teach the differences between a deed of trust and a mortgage.
Missouri uses a deed of trust. Kansas uses a mortgage.
So, if you’ve been calling it a mortgage your whole life and you live in Missouri, you’ve been using the wrong terminology (at least from a technical, legal standpoint).
A mortgage is defined as “a conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and that will become void upon payment or performance according to the stipulated terms.” Black’s Law Dictionary 1101 (9th ed. 2009).
There is a common misconception that anyone who borrows money from a bank to purchase a home is typically required to sign a mortgage.
Rather than referring to the instrument as a mortgage, people who are not sure, should more generally and more properly refer to such document as an instrument that creates a security interest in the home.
Basically what that means is that you give the bank a mortgage, and the bank has an encumbrance, or lien, on your property.
A security interest is just a general way of describing the mortgage.
A security interest is defined as “a property interest created by agreement or by operation of law to secure performance of an obligation (especially repayment of a debt).”[1]
When you borrow from the bank to purchase your home, you typically receive a promissory note from the bank, which is usually for the amount of the purchase price (unless you have money down).
Along with the promissory note, the bank requires you to give them a mortgage, essentially putting the house up for collateral in case you don’t make timely payments on the promissory note.
Thus, the borrower becomes the mortgagor (because they’re giving the mortgage), and the bank becomes the mortgagee (because they are receiving the mortgage).
This was an extremely confusing concept in law school, but after dealing with real estate matters on a daily basis for a long time, you find ways to remember these little nuances.
Now, let’s look at a deed of trust.
Deed of Trust
A deed of trust is defined as “a deed conveying title to real property to a trustee as security until the grantor repays a loan. This type of deed resembles a mortgage.” Black’s Law Dictionary 476 (9th ed. 2009).
Approximately 20 states in the United States use mortgages while the remaining are deed of trust states.
If you compare the definitions of a deed of trust and a mortgage, you really wonder what is the actual difference. In the most basic sense, they are used for the same purpose.
The major distinction is that the deed of trust is conveyed to a trustee. The trustee is a third party, who legally holds the title to the property and enforces the terms of the agreement (deed of trust), usually at the direction of the lender, until the debt is satisfied.
A trustee under a deed of trust has neither the power nor the obligations of an ordinary trustee. See generally Baxter Dunaway, Law of Distressed Real Estate § 24:64 (2012); I. E. Associates v. Safeco Title Ins. Co., 702 P.2d 596, 600 (1985).
The trustee “[t]echnically. . . is not a trustee at all, but is merely a functionality of limited power, under a type of mortgage conferring on him or her the power to convey under the prescribed conditions, and is bound to follow the provisions of the deed of trust and applicable law.” Baxter Dunaway, Law of Distressed Real Estate § 24:64 (2012); I. E. Associates v. Safeco Title Ins. Co., 702 P.2d at 600.
“Although technically, under a deed of trust, legal title passes to the trustee, holders of deeds of trust do not have an ownership interest in the land, rather, such conveyance of title is solely for the purpose of security, leaving in the trustor a legal estate in the property, as against all persons except the trustees and those lawfully claiming under them.” 54A Am. Jur. 2d Mortgages § 121 (2012); see also Aviel v. Ng, 161 Cal. App. 4th 809, 74 Cal. Rptr. 3d 200 (1st Dist. 2008).
In fact, “[t]he trustee is typically not even a necessary party to suits relating to the mortgaged property.” 18 Mo. Prac., Real Estate Law-Transact. & Disputes § 16:1 (3d ed.) (2012 fn 2). SeeLibby v. Uptegrove, 988 S.W.2d 131 (Mo.App.1999).
The addition of the trustee is the primary factor that causes the deed of trust to differ from the mortgage. 18 Mo. Prac., Real Estate Law-Transact. & Disputes § 16:1 (3d ed.)(2012). However, not only the addition of the third party causes a difference, but also the change in procedure due to the presence of this third party (the trustee).
In the case of a mortgage, the lender will convey the title to the borrower but have the borrower execute and record a mortgage to ensure the borrower is in compliance with the terms of the note and mortgage.
Are Deeds of Trust and Mortgages Filed in the same Location?
Yes.
In order to put the whole world on notice, both instruments, deeds of trust and mortgages, should be recorded in the recorder or register of deeds office in the county in which the real property is located. R.S.Mo. § 442.380 (2012); K.S.A. 58-2221 (2012).
Any lender that fails to timely record the instrument runs the risk of losing priority to deeds of trust or mortgages that are executed subsequently. See Golden Delta Enterprises, L.L.C. v. US Bank, 213 S.W.3d 171, 176 (Mo.App.2007).
In Kansas, “[one that] purchases without actual notice of a prior unrecorded mortgage, obtains priority over such unrecorded mortgage.” Jackson v. Reid, 30 Kan. 10, 1 P. 308 (1883).
If you need help filing a deed of trust or other real estate document, our attorneys would be more than happy to assist you with that service.
Does it Matter who Physically Holds the Deed of Trust or Mortgage?
No.
It does not make a significant difference as to who physically holds the document because the document becomes part of the public record upon recording and the significant effect is that of the priority which the mortgage or deed of trust receives, which is based on the order of recording (unless one can rebut the presumption and prove actual notice was received by the purported junior lienholder). Jackson v. Reid, 30 Kan. 10, 1 P. 308 (1883); See Golden Delta Enterprises, L.L.C. v. US Bank, 213 S.W.3d at 176.
When does the Lender have the Right to Foreclose under a Deed of Trust? Is it Constitutional?
With deeds of trust, “title remains in the mortgagor ‘until entry for breach of the condition of the deed of trust’ . . . or “until entry for breach of condition, and then foreclosure under power of sale.” Graham v. Oliver, 659 S.W.2d 601, 603 (Mo. Ct. App. 1983); see also Tipton v. Holt, 610 S.W.2d 659, 661 (Mo.App.1981).
An extremely important concept in both the context of a deed of trust and a mortgage is that both instruments are contracts between the lender and the borrower. Baxter Dunaway, Law of Distressed Real Estate § 24:64 (2012).
This notion is important in the context of non-judicial foreclosure as issues regarding the constitutionality and borderline violation of due process have been called into question because the state is allowing another party to dispose of the homeowner’s property (through non-judicial foreclosure sale, on the courthouse steps) without due process of the law.
With respect to the contracts and the actions of lenders in carrying out non-judicial foreclosures based on those contracts, the Courts have stood strong against the unconstitutionality argument: “[t]he Fifth Circuit put it this way: to hold that the state, by recognizing the legal effect of those arrangements, converts them into state acts for constitutional purposes would effectively erase … the constitutional line between private and state action and subject to judicial scrutiny under the Fourteenth Amendment virtually all private arrangements that purport to have binding legal effect.” Apao v. Bank of New York, 324 F.3d 1091, 1094 (9th Cir. 2003).
Building on that concept, the foreclosure process is substantially different in certain respects, and many of those differences will be covered in the next section.
What is the Foreclosure Process in Missouri (Deed of Trust State) vs. Kansas (Mortgage State)?
Foreclosure is “a legal proceeding to terminate a mortgagor’s interest in property, instituted by the lender (the mortgagee)[2] either to gain title or to force a sale in order to satisfy the unpaid debt secured by the property.”[3] Foreclosure proceedings can be instituted judicially, which is the typical procedure in a state with mortgages, or a lender can initiate procedures by providing proper notice and instructing to trustee to carry out a the process pursuant to state law and power granted to the trustee in the deed of trust, if applicable.
In Missouri, a creditor with a security interest in real property and the right to foreclose has the option of instituting a judicial or non-judicial foreclosure sale.
Judicial foreclosures are substantially more time consuming and costly, so from a practical standpoint, most foreclosures are non-judicial. See Karen M. Pence, Foreclosing on Opportunity: State Laws and Mortgage Credit 5 (Fed. Reserve Bd., Finance and Economics Discussion Series No. 2003-16, 2003), available at http://www.federalreserve.gov/pubs/feds/2003/200316/200316pap.pdf. See also Black’s Law Dictionary 719 (9th ed. 2009) (defining judicial foreclosure).
Some scholars believe that “it is possible to foreclose [non-judicially on] a major property in [a] little more than a month.” 18A Mo. Prac., Real Estate Law–Transact. & Disputes § 58:1 (3d ed. 2012).
A non-judicial foreclosure or sometimes referred to as a power-of-sale foreclosure is defined as “a foreclosure process by which, according to the mortgage instrument and a state statute, the mortgaged property is sold at a non-judicial public sale by a public official, the mortgagee, or a trustee, without the stringent notice requirements, procedural burdens, or delays of a judicial foreclosure.” Black’s Law Dictionary 719 (9th ed. 2009).
Missouri’s foreclosure statute states the following, in relevant part:
“[a]ll mortgages of real property or security agreements providing for a security interest in personal property, or both, with powers of sale in the mortgagee or secured party, and all sales made by such mortgagee, secured party or his personal representatives, in pursuance of the provisions of the mortgages or security agreements, shall be valid and binding by the laws of this state upon the mortgagors and debtors, and all persons claiming under them, and shall forever foreclose all right and equity of redemption of the property so sold….” R.S.Mo. § 443.290 (2012).
This type of sale is sometimes referred to as a power of sale foreclosure because the trustee that holds the deed of trust is typically given the power of sale by way of contract. The contract in which the power of sale is contained is the deed of trust. A power of sale is specifically defined as “a power granted to sell the property that the power relates to.” Black’s Law Dictionary 1289 (9th ed. 2009). “The power’s exercise is often conditioned on the occurrence of a specific event, such as nonpayment of a debt.” Black’s Law Dictionary 1289 (9th ed. 2009).
Without the power of sale provision listed in the deed of trust, the trustee cannot legally invoke its right to sell the property in question. In such a case, the property would have to be judicially foreclosed upon to properly carry out a foreclosure sale.
It is important to note that a contract (deed of trust) governs the relationship between the lender, borrower, and trustee.
This is important from a constitutional standpoint as briefly discussed above. Because some borrowers, who had their home foreclosed upon, raised the issue that a non-judicial foreclosure does not provide for adequate due process before their property is taken, Missouri courts were faced with ruling upon the same. See Graham v. Oliver, 659 S.W.2d 601, 603 (Mo. Ct. App. 1983).
The Missouri Supreme Court ruled that the relationship was governed by the contract (the deed of trust), and “that the power of sale exercised by the trustee during foreclosure is not principally derived from statute nor otherwise granted by the state.” AgriBank FCB v. Cross Timbers Ranch, Inc., 919 S.W.2d at 268.
Therefore, the mere enforcement or interpretation of the contract by the court does not constitute sufficient state action to raise an issue regarding deprivation of due process. See AgriBank FCB v. Cross Timbers Ranch, Inc., 919 S.W.2d at 268.
In short, the mere fact that the state is enforcing a private contract between the lender and borrower does not designate such enforcement as state action.
As noted above, Kansas is a judicial foreclosure state. Judicial foreclosure is defined as “a costly and time-consuming foreclosure method by which the mortgaged property is sold through a court proceeding requiring many standard legal steps such as the filing of a complaint, service of process, notice, and a hearing.” Black’s Law Dictionary 719 (9th ed. 2009).
Kansas statutes also require “the officer [executing the sale to] give[] public notice of the time and place of sale once each week for three consecutive weeks prior to the day of sale, by publication in the county in which the judgment was rendered and in the county in which the land and tenements are located.” K.S.A. 60-2410 (West 2012).
The court then reviews the proceedings and if it finds them “regular and in conformity with law and equity, it shall confirm the same.” K.S.A. § 60-2415 (West 2012).
While this process appears simple on its face, according to a recent paper by Karen M. Pence,
[J]udicial [foreclosure] procedures are substantially more time consuming than power-of-sale procedures. Wood (1997) finds that judicial foreclosures, on average, take 148 days longer than nonjudicial foreclosures, while Freddie Mac’s guidelines for mortgage servicers indicate that foreclosures in the most time-consuming state, Maine (a judicial foreclosure state), take almost 300 days longer than in the quickest state, Texas (a power-of-sale state).
Grant S. Nelson & Dale A. Whitman, Reforming Foreclosure: The Uniform Nonjudicial Foreclosure Act, 53 Duke L.J. 1399, 1514 (2004 fn 20) (quoting Karen M. Pence, Foreclosing on Opportunity: State Laws and Mortgage Credit 5 (Fed. Reserve Bd., Finance and Economics Discussion Series No. 2003-16, 2003), available at http://www.federalreserve.gov/pubs/feds/2003/200316/200316pap.pdf.).
A power-of-sale state refers to a state in which the trustee has the right to sell the home based on the deed of trust.
What are some Benefits of Judicial Foreclosure States?
This is notable data for the borrower because it suggests that lenders are more reluctant to judicially foreclose due to the extensive time commitment and costs involved. See generally Black’s Law Dictionary 719 (9th ed. 2009).
Thus, in judicial foreclosure states, borrowers have much greater leverage to negotiate a loan modification and/or induce the lender into executing a forbearance agreement. A loan modification is an adjustment to the original note to account for and hopefully, allow the borrower to make timely payments.
“Any agreement to extend, modify, or subordinate a deed of trust will normally be recorded.” 6 Mo. Prac., Legal Forms § 3:231 (3d ed.).
A forbearance agreement is typically an agreement to postpone, reduce, or suspend payment due on a loan for a limited and specific time period. Interest that accrues during the forbearance remains the debtor’s responsibility.
When the forbearance expires the unpaid interest is added (capitalized) to the principal balance of the loan. A forbearance request must be approved by the lender.
Typically, the lender agrees not to foreclose on the property or accelerate payments due on the loan during the forbearance period.
In exchange, the debtor agrees not to contest any actions taken by the creditor to collect the debt in the event that the debtor fails to make scheduled payments or live up to other terms of the forbearance agreement. Available at http://definitions.uslegal.com/f/forbearance-agreement.
For example, a lender, instead of investing money in attorney’s fees and attempting to foreclose and then have to deal with forcibly removing a homeowner from the premises, it may just take opt to modify its original note, take a small hit on the interest rate, but ultimately implement a viable payment plan for the homeowner.
While this course of action may seem unfair to the lender, the reality is that, all of the parties will benefit, if a reasonable loan modification can be carried out.
The lender is not typically in the business of managing recently foreclosed upon homes, and it incurs substantial expenses in maintaining and attempting to resell the acquired property.
For this very reason, the lender may be compelled to modify the note almost as much as the borrower. If a successful note modification can be carried out, the result is that the lender continues to receive payments on its note, and the borrower gets to keep his collateral (his home).
Analysis of Real Estate Laws in Deed of Trust vs. Mortgage States
Although the most prominent difference between a deed of trust and a mortgage is the participation of a trustee, the procedural posture of the transaction is substantially changed by the presence of this third party. The trustee allows lenders that have their note secured by a deed of trust to sidestep the judicial foreclosure process thereby providing proper notice and initiating the foreclosure on its own accord.
When dealing with a deed of trust, the title is held in a somewhat different manner than a mortgage. On its face, however, it does not appear to confer the same legal title in the property to the borrower.
The reality is that, in substance, the title held by the borrower is similar because in both settings the borrower does not actually acquire full rights and ownership to the property until the note secured by the property is paid in full. This satisfaction of debt would be evidenced by a release of deed of trust or in the case of a mortgage, a release of the mortgage, which is filed in the recorder of deeds office and in effect extinguishes the lien from the property.
Based on the above, one can see the great risks of foreclosure imposed on a debtor due to the expedited process and the more lenient safeguards in a deed of trust context. See generally Black’s Law Dictionary 719 (9th ed. 2009).
As a result, many attorneys look at Kansas as a more debtor-friendly state and typically feel that they are in a better position to assist a Kansas debtor in the event of a default on the note. That is not to say that a debtor in default in Missouri is without remedies; there are numerous safeguards for non-judicial foreclosure states with which a lender must strictly comply throughout the foreclosure process as discussed above. See R.S.Mo. § 443.290 (West 2012).
When a lender does not comply with such statutory procedural requirements, the attorney representing the debtor may have an avenue to attack the foreclosure sale. A successful defense to a foreclosure sale would come in the form of a petition to set aside the foreclosure, which could result in a wrongful foreclosure or the mere setting aside of the foreclosure. “The term ‘wrongful foreclosure’ has been used both in relation to suits in equity as a ground to set aside a sale and suits at law as a ground to recover tort damages.” Dobson v. Mortgage Elec. Registration Sys., Inc./GMAC Mortg. Corp., 259 S.W.3d 19, 22 (Mo. Ct. App. 2008).
A remedy in tort for wrongful foreclosure is much different in that it only “lies against a mortgagee [] when the mortgagee had no right to foreclose at the time foreclosure proceedings were commenced.”[4] Accordingly, a debtor may have some various defenses even when a deed of trust evidences and collateralizes the debt.
Although the distinction between a mortgage and deed of trust appears slight, an overview of the foreclosure process in each state should provide a wake-up call to homeowners to know the dangers that a foreclosure may pose.
Especially in a city that borders two states with very different foreclosure laws, it is crucial for a homeowner to know the protections in his own state.
When purchasing a home, if the homeowner is armed with this knowledge, s/he may be aware of the greater leverage in the event that s/he defaults on her note.
This leverage can then be used to buy yourself time until you can get back on your feet.
[1] Black’s Law Dictionary 1478 (9th ed. 2009) (“[W]hen a buyer uses the lender’s money to make the purchase and immediately gives the lender security by using the purchased property as collateral,” the security interest is more specifically titled a purchase money security interest.)
[2] The lender is not always responsible for instituting foreclosure proceedings, on some occasions a lienholder can foreclose on their lien.
I recently purchased a home, but the seller misrepresented something on the disclosures, what should I do?
Depending on the damages that you’ve suffered (how much money that you spent to resolve the problem), you may wish to consult with an attorney to explore your potential options for recourse.
When searching for representation, remember that in order for a lawyer to find your case attractive, there has to be some type of recovery at the end of the case.
Otherwise, the attorney will have no incentive to take the case.
That means you need to have damages that are significant enough to warrant the retention of counsel. This is particularly important because real estate misrepresentation
cases are already teed up for litigation, and litigation can get very expensive.
Thus, you have to ask yourself, “why would an attorney take my case?”
In answering this question, keep in mind that attorneys are in the business of helping people but also want to make money.
So here are three ways to appease counsel and to help you determine if your case may be worth the fight:
(1) you’re willing to pay hourly fees to pursue your real estate misrepresentation claim;
(2) you have substantial damages that would incentivize an attorney to take the case in that s/he will receive a percentage of the recovery (if representation is based on a contingent fee agreement); or
(3) locate an attorney provisions fee in the real estate contract–many Missouri real estate contracts include attorney’s fee provisions as the real estate agents, depending on the brokerage firm, are usually required to use the contract approved by the local or regional real estate association.
Please note that contracts with attorney’s fee provisions and Missouri law only allows for awards of reasonable attorney’s fees. Additionally, the provisions in the real estate purchase agreement usually only award attorney’s fees to the prevailing party.
If you need assistance interpreting your real estate contract or in litigating a misrepresentation case, contact a lawyer here.
Do I need to do anything with my Real Estate when my Spouse dies in MO?
The answer to this question depends on how you held the property as co-tenants.
There are several ways to hold title to Missouri real estate as a co-tenant, and those are set forth below.
If the property is held in a joint tenancy or tenancy by the entirety, the surviving joint tenant typically files an affidavit in the county in which the property is located.
The affidavit basically just tells the recorder of deeds office that the deceased tenant is no longer living, and the recorder of deeds should record the affidavit in the record to update the true legal titleholder of the real property.
How to take my ex-wife off the property after divorce (i.e., MO divorce decree requires removal of one spouse)?
During a marital dissolution or what we commonly refer to as a divorce, the property of the married couple is inventoried and the assets are typically divided equitably.
Because real property is unique, there are very few times that the property will actually be physically partitioned (where the Court physically divides the land.) This is akin to a situation where a line is drawn down the middle of the room, and one person gets the right side the other person gets the left side–however, this example is an exaggeration of what really happens. Although the Court could decide that the land needs to be partitioned as previously described, such an outcome is rare and usually only happens in particularized circumstances, usually involving agricultural land.
Normally, instead of a physical partition, the court will partition the land and allow one of the parties to buy the other out, or the property will be sold and each party will receive proceeds in accordance with that party’s ownership interest in the real estate.
In any case, a divorce typically necessitates the division of property, which means that the real estate held by the married couple must be allocated to one spouse or the other.
It is not commonplace for the Court to sell the property unless an equitable divide using the other assets simply cannot be reached.
When the decision of ownership of the real estate is made, the Court often gives a certain period of time from the date of the Court’s order in which the property must be transferred to the spouse who is to receive the real estate.
So, how is this typically accomplished?
Usually a quitclaim deed is prepared by a real estate attorney and is executed by both parties (because title between husband and wife is typically held in tenancy by the entirety in Missouri, both must sign).
Additionally, there are certain counties in Missouri that require the grantors and grantees to sign the deed. St. Louis, for example, imposes this requirement.
Below is a list of requirements for filing a real estate deed in St. Louis.
How to add my new spouse to the legal title of my property? (I.e. My wife and I just got married, and I want to add her name to the title of the real estate)
When two people get married it is not unnatural to want to co-own the home together. It is also common for one of the spouses to enter into the marriage with property that is titled solely in their own name. This occurs when the spouse acquires property prior to the marriage.
If they are truly in love (we hope love exists in all marriages), it is typical for the spouse who owns the property to add the non-titled spouse to the property.
How do you do this?
The joint titling of spouses can be accomplished through the recording of a deed to the real estate.
The deed must be recorded in the Office of the Recorder of Deeds in the county in which the real estate is located.
The party who solely owned the property prior to the marriage simply names both himself and his new wife as the grantees in the deed. The legal description of the property is contained in the deed as well as the language necessary to legally pass the title to both spouses.
Note: This is an extremely dumbed-down description of the deed preparation and filing process and does not include all of the requirements or steps. Consult an attorney to assist you with your specific case.
What DifferentWays Can a Co-tenant hold title to Property in MO?
The way that two people hold title can be the difference between their kids receiving everything and their kids receiving nothing.
For that reason, it is critically important to understand the different ways you can hold title in St. Louis, Missouri. You will also learn the nuances between each vesting type.
Below are laymen’s explanations from a real property attorney of how co-tenants can be vested in St. Louis.
“Joint tenants with rights of survivorship and not as tenants in common” is the typical language used to vest joint titleholders as a joint tenancy. In laymen’s terms, if two people hold real property as joint tenants, and one dies, the surviving party will become the sole titleholder upon the death of the other person. In this case, the property is not divided between the estate and the surviving titleholder.
Tenants by the Entirety is almost the same type of legal title as joint tenants, at least for practical purposes.
A tenancy by the entirety, however, is a special type of vesting that’s carved out solely for married couples in Missouri.
It basically gives the titleholders rights of survivorship but also gives additional protection from creditors, when only one of the tenants by the entirety has a creditor. The creditor cannot assert a lien on the property unless both the husband and wife are debtors of that creditor.
If they are not, typically the creditor cannot assert a lien on the real estate.
Tenants in common is another type of vesting for the titleholders of real estate in Missouri.
A tenancy in common is the default vesting in Missouri, which essentially means that if no tenancy is specified between joint titleholders, they will hold the property as tenants in common.
This is a different default vesting than bank accounts and vehicles in Missouri, which have a default vesting of joint tenancy.
Tenants in common have a distinct ownership share of the property that is separate from that of the other tenant. Although the co-tenants equally share the property, they each own a share individually.
This means that if one of the tenants in common dies, the surviving tenant in common’s ownership share will remain the same. The deceased tenant in common’s interest will then pass to the decedent’s estate or the surviving tenant in common may have a right of first refusal.
What Do I need to File regarding my Real Property?
As noted above, deeds and mortgages should be filed in the recorder of deeds office.
However, the same statute which requires deeds of trust to be filed, R.S.Mo. section 442.380, states that any written instrument that either: “conveys any real estate, or whereby any real estate may be affected, in law or equity” shall be recorded in the recorder of deeds office of the county where the property is located.
If I have a Written Lease, Do I have to file it with the Recorder of Deeds Office?
You only have to file the lease with the recorder of deeds if you want it to be effective against third parties. A contract for deed would be an example of a document that a lessee/purchaser would want to file with the recorder of deeds office.
This would put all third parties on notice that you have an interest in the property.
From a practical standpoint, it acts as a deterrent for potential purchasers because they will see a cloud on the title.
Most wary purchasers will not go through with the sale if there is any issue with the title.
If you have questions about whether you need to file your written document, please feel free to contact one of our attorneys.
What are some of the Formal Requirements for Filing a Deed in the Missouri Recorder of Deeds Office?
The recorder of deeds office is not governed by Missouri. Each county has their own recorder of deeds office that monitors and manages the filings related to real property in their respective county. Thus, Missouri does not have a one-size-fits-all requirement for filing deeds. You need to reference each specific county to learn the deed filing requirements.
Below is a general description of the filing requirements imposed by the Saint Louis County Recorder of Deeds Office.
What are some of the Formal Requirements for Filing a Deed in St. Louis County Recorder of Deeds Office?
Despite the state’s lack of uniformity, there are a number of commonalities amongst the various county recorder of deeds offices. The St. Louis County recorder of deeds has some pretty strict requirements in order to properly prepare a deed.
The deed must be typed on a white or light-colored paper
The paper cannot have watermarks/logos
It must be printed on one side, not both sides of the paper
The font must be at least 10-point
All type including signatures needs to be black or dark ink
Signatures must have the name typed, stamped or printed below
There must be a 3 inch margin at the top of the first page
Then any additional margin must be at least ¾ of an inch
The following must be on the first page of the deed to the property:
Title of the document;
Date of the document;
All grantors’ names;
All grantees’ names;
Any statutory addresses;
Legal Description;
Reference book and page number(s) if required.
The deed does not need a cover page but the person or entity filing the same can include one. Any cover page must include the “first page” requirements that are listed above.
If you need assistance handling a real property matter or preparing or filing a deed in St. Louis, contact one of our attorneys now.
