Tag Archives: Deed of Trust

41 Contracts Our Attorneys Draft, Review, and Litigate

Types of Contracts in Missouri

Our attorneys are experienced in handling a variety of different matters relating to contracts.

To give our clients an idea of how we can assist them with their contract needs, we have prepared a list of the contractual agreements that we have litigated or prepared for clients in the past.

We’ve also attempted to give a general description of the various agreements, so our clients and any viewer of this website will be informed regarding the types of agreements that are at their disposal.

Our attorneys are on call to answer questions about any of the agreements set forth below, and we’d be happy to draft any of these agreements or another document that is suited for your particular situation.

Acquisition Agreements

Acquisition is the gaining of wealth or control over new assets or things.  Any time that a business or assets of a business are acquired, the purchaser and/or seller would be well-advised to consider an acquisition agreement.

An acquisition agreement sets forth the terms of the transactions to eliminate uncertainty amongst the buyer and seller and facilitates the fluidity of the sale/purchase.  Many questions arise when business or commercial entities make purchases including the price, the payment terms, financing, and minor details governing the acquisition.

Ordinarily, acquisition agreements deal with acquiring equity or wholly purchasing other companies.  A number of the important negotiating points deal with closing conditions, indemnity, disclosure of liabilities, and other points that greatly affect the value of the acquisition.

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Agent or Agency Agreements

An Agency Agreement typically sets forth the role and duties of an agent to a principal.  There are numerous situations when this type of agreement may be necessary, but it is frequently seen in the real estate context as described in the brokerage agreement section.  However, it is not limited to this context.  Agency agreements are common throughout all industries.  In fact, any time that a third party (agent) is acting on behalf of a principal, there is usually some type of agency relationship.  An agency agreement is a way to memorialize that and expressly grant or limit powers which the agent has.  It is also important because it defines the duties and obligations of the agent to the principal and vice versa.

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Amendments or Modifications to a Contract

Amendments or modifications to a contract are pretty self-explanatory.  A change order would be a more specific example of an amendment or modification to a contract.  Also, in real estate transactions, the parties will often amend the contract to add conditions precedent to the sale or contingencies which make the contract dependent on a certain occurrence.  One specific example would be the contingency that the buyer has to sell their own house before the contract is binding on both parties.  Our attorneys are experienced in drafting various types of modifications or additions/deletions to contracts, and we are prepared to assist you with your situation.  Please contact one of our attorneys if you need help amending or revising a contract that doesn’t exactly fit your situation.

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Asset Purchase Agreements

Asset Purchase Agreements are a type of acquisition agreement as described above.  As most people are aware, assets are those things of value owned by a company like cash, equipment, inventory, real estate, accounts receivable, and the goodwill of the company.

When dealing with asset purchase agreements in their simplest form, it usually governs the acquisition of equity and/or stock in a company.  Many of the considerations deal with an overview of the financials of the company (assets) that the prospective buyer is looking to acquire.

The solvency of the company is obviously a major factor.  However, solvency can be described in two different ways: (1) the company cannot pay debts as they come due or (2) the liabilities of the company outweigh the assets.

The type of insolvency sometimes is of no import to investors as the purchaser/investor believes that s/he can turn the business around with a new marketing or operations model or an injection of financing will give the company the necessary cash to continue operations in order for it to realize profits from an earlier investment.  In a similar but nuanced viewpoint, some investors merely want to use the acquisition for a limited purpose as a certain product line owned by the company warrants the purchasing of the entire company.

For more information regarding asset purchase agreements see the description under Acquisition Agreements.

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Bill of Sale

A bill of sale is usually a document that evidences a transaction of personal property between two parties.  Oftentimes a bill of sale is incredibly simple.  Sometimes it conveys title, but not in every scenario. One of the most common situations where individuals will encounter a bill of sale is in the purchase or sale of a motor vehicle.  It should be noted that in Missouri and Kansas a bill of sale does not convey title.  Instead, the title of the vehicle must be assigned to the purchaser. The bill of sale merely evidences the details of the transaction (and typically serves to satisfy the statute of frauds requirement for a sale of goods over $500).

The department of revenue for each state usually has a form that can be used as the bill of sale, which contains the basic details of the transaction including make, model, and year of the vehicle as well as the mileage and other details relevant to the transaction.

In the event that you need a bill of sale for a specific situation our lawyers can prepare numerous types of bills of sale specifically customized for your situation.

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Broker-Carrier Agreements

A broker-carrier agreement usually deals with the transportation of employees or other individuals or personal property by a broker.  In this case the broker acts as the carrier for the principal in which the broker agrees to transport and the principal or the owner agrees to make payment for the broker providing logistics and/or actual physical transportation services.

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Broker (Real Estate) Agreements

Most individuals have dealt with broker real estate agreements.  A lot of times these will be called an Exclusive Limited Agent Buyer’s Agreement or Exclusive Limited Agent Seller’s Agreement.  These are just fancy names that set forth the real estate agent’s commissions, duties to, and rights against the client (purchaser or seller, depending on the principal). Real Estate broker agreements are probably the most common, but broker agreements are not strictly limited to such context.

Really, any situation where a broker or agent is acting as an intermediary creates a broker arrangement.  In such a case, the parties should consider defining their rights and duties toward each other to avoid falling at the whim of Missouri’s statutory scheme, which may not reflect what the parties intended to be the agreement.

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Business Contracts

Business Contracts come in all shapes and sizes.  Business contract is such a general description of a contract that it could really refer to anything.  Throughout this webpage, there are numerous contracts that relate to the business context.  Thus, business contract can only be defined generally as a contract that governs some type of operation, action, or transaction that arises out of, relates to, or refers to a business or commercial context.

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Change Order

A Change Order is basically a change or a modification to an original contract.  Change orders can be for the extension or reduction of time, the increase or decrease in the cost of certain items, increasing or decreasing the scope of the work, value engineering, may account for delay days or extra work requested by the owner.

A change order does not have well-defined requirements.  It must be supported by consideration as other contracts, but apart from the basic contractual requirements, change orders may come in any shape or form.  In fact, there is case law in Missouri that allows a contractor to recover on the basis of equity if extra work is performed by agreement but the change order was never reduced to writing (even if the original contract requires all change orders to be in a signed writing).

Change orders are most frequently seen in the construction industry.  Owners often avail the the reduction in price due to limited mobilization and overhead (contractors are already out on the project, so they can perform additional work for a more economical price).  One of the most common contexts where we see change orders that cause problems is when there is a remediation project for fire, water or mold damage, and the homeowner wants an addition or extra work performed on their homes.

Many times the homeowner does not realize the incredible expense that additional construction work will cost and refuses to pay.  On the other hand, some contractors take advantage of the homeowner and charge exorbitant rates.  In any case, litigation is quite common in such scenarios.

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Confidential Disclosure Agreements (CDA)

A Confidential Disclosure Agreement  or CDA or Confidential Agreement (CA) is one party’s promise to refrain from disclosing information that is confidential to the other party, such as trade secrets, classified information, or proprietary information.

In many situations where the company deals with sensitive or confidential information that is critical to the success of the company, the employment agreement will include a clause or even a separate contract that pertains to confidential disclosure or non-disclosure agreements. Confidential disclosure agreement is a close relative to the non-disclosure agreement, or even a twin, depending on the language used.

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Construction Contracts

Construction Contracts come in all shapes and sizes.  Depending on the type of project, owner requirements, or general contractor capabilities, a contract specifically catered to the situation may be necessary.

The following are a number of different types of contracts which may be used on a construction project and can be prepared by our attorneys for your use.

1.      Unit Price Contracts

2.      Lump Sum or Fixed Price Contract

3.      Cost-Plus Contracts

4.      Time and Material Contracts

5.      Incentive Contracts

6.      Guaranteed Maximum Price Contracts

7.      Percentage of Construction Contracts

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Contract for Building & Sale of Residential Property

A contract to build and sell real estate to be used as a residence is common when a consumer hires a general contractor to construct a home for them.  The home purchaser would be well-advised to have an attorney draft the contract, paying close attention to the terms contained therein as the purchase of a new home is a major decision.  One that can greatly affect the life of the home purchaser, and the purchaser should have recourse in the event that the builder does not perform the work as agreed upon by the parties.

Equally, a home builder should have a contract for the construction and sale of a residence prepared in a manner favorable to the builder.  This is critical for the builder because there are numerous responsibilities and duties that should be accounted for in the contract in order to clarify the parties’ responsibilities.

Any additional work for which the builder is not compensated is lost money for the builder. The purpose of a builder or general contractor that constructs homes is to make a profit and a valuable final product for the home purchaser.  However, to ensure that the builder stays in business, there must be some element of profitability.  If the duties are not well-defined, and the builder has to continue to perform extra work without compensation therefor, the builder is losing money. For that reason, the contractor should have a contract drafted to protect its/his/her interests.

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Deed of Trust

A deed of trust is the name for a mortgage in Missouri.  Despite the common misconception, on a technical level, a mortgage is not used in Missouri.  Instead, we use a deed of trust.

The way a deed of trust works is as follows: when a bank or financial institution gives a loan to a borrower, so the borrower can buy the house, the bank wants to be able to reduce its risk and ensure that it gets paid back on its loan.  Accordingly, the bank wants some type of collateral to secure the loan.  The house serves as the collateral for the loan.  The deed of trust evidences the bank’s security in the house.

In order for the bank to put third parties on notice (put all the world on notice as the treatises and legal textbooks like to say) that it has first dibs on the house (the house is collateral and the bank has priority), the bank files a deed of trust with the local recorder of deeds office. Thus, as a matter of course, a deed of trust usually is executed at the same time that the bank issues a promissory note (loan) in order to make sure that it takes priority as a creditor in the event that the borrower defaults on the note.

There are a number of other differences between a deed of trust and a mortgage.  However, for the sake of brevity and to stay focused, the differences between mortgages and deeds of trust are explained in more intimate detail on the real estate section of this website.

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Employment Agreement

Whether a worker has an employment agreement or not really depends on the type of work.  Given the fact that Missouri is an employment at will state, employers are not really incentivized to enter into contracts with their employees.

In certain limited circumstances to give the employees peace of mind or to create a sense of security, the employer will enter into an employment agreement for a certain term.  Many of these contracts are based on contingencies, which often relate to performance.

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Equipment Use Agreements

Equipment Use Agreements are essentially rental agreements.  Equipment is usually personal property, articles, or goods used for some commercial or business operation.  This does not mean that equipment use agreements are not present in consumer transactions.  However, typically these types of agreements are witnessed more frequently when a business enterprise is renting equipment to carry out some particular commercial purpose.  These agreements are important as they can be based on time of usage, fixed time periods, fixed prices, and/or a number of other hybrids or unique methods of pricing.

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Exclusive Limited Buyer’s Agreements

This type of agreement is typically seen in the context of a homebuyer-real estate agent relationship.  The real estate agent wants to ensure that his/her commission is set forth in writing, and the agreement also typically includes the statutory and fiduciary responsibilities and duties owed to the homebuyer.

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Forbearance Agreement

A forbearance agreement is typically the prolongation of payment on a loan or the foreclosure of a property.  Forbearance in general refers to a situation where one party foregoes its legal right.

According to studentaid.ed.gov, with a forbearance “you may be able to stop making [student loan] payments or reduce your monthly payment up to 12 months.” However, it should be noted that interest will continue to accrue during the time period that the loan is in forbearance.  These types of provisions may be negotiated out of forbearance agreements, by an industrious lawyer, but the flexibility of the agreement varies from situation to situation.

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Guaranty (Personal Guaranty)

A guaranty or sometimes referred to as a personal guaranty is when a person agrees to pay for the debt of another.  These are usually required to create security for the lending of money or other property.  Accordingly, these are most common when dealing with banks or financial institutions where the lending of money is involved.  Additionally, when companies have a line of credit, the banks offering the line of credit want to secure it with a personal guaranty from a member or shareholder of the corporate entity.  Similarly, when someone has poor credit the lender will often require a co-signer or a personal guarantor before agreeing to lend the money.

The word co-signer is used loosely in most contexts.  However, from a technical standpoint it can mean either personal guarantor or surety.  For most people, this does not make a difference, but looking at it technically, a surety usually has primary liability and upon default, a creditor can go after the surety without first pursuing the borrower.

However, when a creditor wishes to pursue a personal guarantor, typically the law requires that the creditor have made a good faith attempt, or exhaust its legal remedies, to collect against the original borrower.  These two variations are sometimes semantics as the language of the guaranty may account for the situation and make any co-signer primarily liable.

Guaranty agreements come in various shapes and sizes.  Below are a few examples of different types of personal guaranty agreements:

  1. Absolute
  2. Conditional
  3. Continuing
  4. General
  5. Specific
  6. Special

If you need a guaranty drafted, we have attorneys with experience litigating and preparing various types.

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Independent Contractor Agreement (ICA)

Independent Contractor Agreement is a contract that sets forth the duties of an independent contractor and clarifies the relationship between the hiring company and the contractor.  An independent contractor is typically hired by a person or entity to perform a designated task, but legally, the hiring person/entity does not have control over the independent contractor.

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Employee v. Independent Contractor

Missouri courts state the following to determine “the existence of the independent contractor relationship, the common law of agency right to control shall be applied. The common law of agency right to control test shall include but not be limited to: If the alleged employer retains the right to control the manner and means by which the results are to be accomplished, the individual who performs the service is an employee. If only the results are controlled, the individual performing the service is an independent contractor.” Fritts v. Williams, 992 S.W.2d 375 (Mo. App. S.D., 1999).

The independent contractor agreement merely lays out the responsibilities and duties of the contracted party.  Additionally, it may be the employer or hiring party’s opportunity to include certain risk allocating provisions such as an indemnity clause.  An indemnity clause is further defined below under the common contractual provisions section.

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Lease Agreement

A lease is probably one of the most common agreements that a real estate lawyer has to draft.  There are certain critical provisions that a landlord will want in a lease.  A number of those provisions, though seemingly minor, can make a huge difference when dealing with a troublesome tenant.

Generally described, a lease is when an owner of real property agrees to convey the right of use of the property in exchange for rent payments, usually in the form of cash, but may also be in-kind (something of value other than cash).

For information about Landlord-Tenant Law in Missouri follow the foregoing link. 

Regardless of whether a lease is for commercial or residential rental property, there are a number of provisions that should be included in the lease to ensure that your rights are protected—no matter whether you are the landlord or the tenant.

If you need a lease drafted or revised, we are more than happy to assist you.  Also, in the event that you need to enforce the provisions of a Missouri lease, or if you need to evict a non-paying tenant, please contact one of our landlord-tenant attorneys today.

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Master Services Agreements

A master services agreement or master service agreement is a contract between two parties who usually have an ongoing relationship.  The master agreement sets forth the common terms that the parties have agreed upon, and it can be used as the basic foundation for any future agreements.  Thus, the provisions of the master services agreement are usually incorporated by reference into any of the future agreements between the parties.

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Memorandum of Understanding (MOU)

A memorandum of understanding is sometimes referred to as a letter of intent.  A letter of intent is a statement reduced to writing which details the preliminary understanding of two or more parties who plan to enter into a contract.

Many sources state that a memorandum of understanding is not binding.  However, Missouri courts often treat these agreements as contracts, and in most of the cases in which a memorandum of understanding is discussed, such document involves a school, city, or other governmental entity.  In other limited circumstances, the parties used the memorandum of understanding to divide their interests in a business or form a partnership.

A letter of intent that is signed by high school football athletes, committing to a university, are bound by signing the letter of intent.  According to www.nationalletter.org, an athlete agrees to attend the academic institution for a period of one year in exchange for the institution granting a specified amount of financial aid.

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A mortgage was generally defined above under deed of trust.  In Missouri a deed of trust is used, but the counterpart of the deed of trust is the mortgage, which is used in states like Kansas, Iowa, and Oklahoma.

From a practical standpoint the difference is slight and is predominantly felt in the foreclosure process.  A mortgage requires a judicial foreclosure (use of the court process to effectuate a foreclosure), whereas a deed of trust allows for a non-judicial foreclosure (where the property can be sold on the courthouse steps.

The mortgage basically represents the lender’s security in its collateral (the house).  Once the promissory note is paid in full, the lender must file a release of mortgage with the recorder of deeds which extinguishes the mortgage.  In most states, there are statutes which penalize any lenders who do not timely file releases of mortgage.

If you need a mortgage drafted or a subordination agreement prepared, we can help you do so.

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Non-Compete Contracts

Non-Compete Contracts are not as typical as including a mere non-compete covenant into a contract.  Typically, when there is danger of usurping the business from an employer, the employer, in order to protect itself, includes a non-compete clause into the contract.  The non-compete clause prevents the party subjected to such clause from engaging in the same type of business in the same geographic region for a certain time period.  Missouri courts typically require.

Missouri does not look favorably at non-compete agreements:

Contracts in restraint of trade are unlawful in Missouri. Section 416.031 RSMo (1994).3 “A promise is in restraint of trade if its performance would limit competition in any business or restrict the promisor in the exercise of a gainful occupation.” RESTATEMENT (SECOND) OF CONTRACTS Section 186(2) (1981). “Every promise that relates to a business dealing or to a professional or other gainful occupation operates as a restraint in the sense that it restricts the promisor’s future activity.” Id., cmt. a. Restrictive covenants limiting individuals in the exercise or pursuit of their occupations are in restraint of trade. Sturgis Equip. Co., Inc. v. Falcon Indus. Sales Co., 930 S.W.2d 14, 16 (Mo.App. 1996). Post-employment restrictions are generally considered restraints of trade. House of Tools & Engineering, Inc. v. Price, 504 S.W.2d 157, 159 (Mo.App. 1973). Healthcare Services of Ozarks, Inc. v. Copeland, No. 26410 (MO 7/27/2005) (Mo, 2005).

However, there are certain limited circumstances where Missouri courts have allowed them:

“there are two areas in which non-compete agreements may be enforceable. ‘A restrictive covenant in an employment agreement is only valid and enforceable if it is necessary to protect one of two well-defined interests, trade secrets and customer contacts, and if it is reasonable as to time and place.’” Healthcare Services of Ozarks, Inc. v. Copeland, No. 26410 (MO 7/27/2005) (Mo, 2005)(quoting in part Schmersahl, Treloar & Co., P.C. v. McHugh, 28 S.W.3d 345, 348 (Mo.App. 2000).

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Non-Disclosure Agreements  (NDA)

A non-disclosure agreement is one party’s agreement not to disclose trade secrets, innovative or sensitive information of a company.  These are typically signed by employees who work in industries where certain trade secrets carry significant value.

Non-disclosure agreements are also used in contexts where one person or entity is proposing a business plan, and said person or entity wishes to keep the information disclosed in the meeting confidential.  Hence non-disclosure agreements are sometimes referred to as confidential disclosure agreements.

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Operating Agreements

The Missouri Secretary of State defines operating agreement as: “an internal document (it is not filed with the Secretary of State or any other government agency) that establishes the rules and regulations for the conduct of the company’s business and affairs, and the rights, powers and duties of the company’s members, managers and employees. https://www.sos.mo.gov/business/outreach/startup_guide

Typically the operating agreement is responsible for defining:

  • The classes or groups of members and their rights and benefits;
  • Voting structure for company decisions;
  • Restrictions on transfer of membership interests;
  • Allocation of income and losses among the members; and
  • Tax elections for the company.

The above information is taken from the Missouri Secretary of State website discussing :  https://www.sos.mo.gov/business/outreach/startup_guide

An operating agreement is necessary and required by Missouri statute when forming a limited liability company (LLC).

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Partnership Agreements

Pursuant to R.S.Mo § 359.011, a partnership agreement is “any valid agreement, written or oral, of the partners as to the affairs of a limited partnership and the conduct of its business.”

In essence, a partnership agreement defines the rights and obligations of partners.  It does not necessarily limited to only two partners.  Often times more than two people or entities can become partners.  The type of relationship typically depends on the structure of the business.

In Missouri a partnership is defined, under R.S.Mo § 358.060, as “an association of two or more persons to carry on as co-owners a business for profit and includes, for all purposes of the laws of this state, a registered limited liability partnership”

Missouri statutory scheme allows individuals to form general partnerships, limited partnerships, limited liability partnerships, and limited liability limited partnerships.  These forms all have different statutory default rules that are generally set forth under Missouri Chapters 358 and 359.

Usually when individuals or entities are interested in forming a partnership, they would like to have their own terms in place in order to supersede the default rules laid out in Missouri statutes.

This objective can be accomplished by hiring one of our attorneys to draft a partnership agreement for you.  For further counsel regarding your rights in forming a partnership or to have one of our attorneys draft an agreement for you, please contact us.

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Prenuptial (or Antenuptial) Agreement

A prenuptial agreement or sometimes referred to as an antenuptial agreement is entered into prior to marriage and is designed to pre-plan the division of property and marital support upon the termination of the marriage.

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Professional Services Agreement (PSA)

A professional services agreement (PSA) is used to enter into a contract with a person or entity providing professional services, such as a consultant, an attorney, an accountant, or some other professional, which provides services.

The services agreement typically requires the non-consulting party to allow access to its company information, documentation, and/or facilities to allow the service provider to access and perform the designated tasks.  The professional services agreement essentially delineates the duties and responsibilities of each party and attempts to clarify any potential gray areas relating to the relationship.

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Promissory Note

A promissory note is a loan in which one party lends money to another in exchange for a promise to pay the other back, usually with a certain fixed interest rate.

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Power of Attorney

A power of attorney is a document that can come in all shapes and sizes.  Often we see a power of attorney drafted in the context of an estate plan.  In such a case, typically durable powers of attorney are drafted in order for the power of attorney (powers granted to the agent/attorney-in-fact) to survive mental incapacitation in the event that the principal (person who appoints someone as their attorney-in-fact) cannot make decisions for himself/herself.

In other instances, commonly seen in the real estate context, a husband or wife, who may not be able to attend the closing and will grant their spouse the authority to sign on their behalf in their absence.  Usually the power of attorney will be limited in time and scope.  For example, the limited power of attorney may only last until a few days after the closing is scheduled to occur.  Other times the length of time is a fixed duration.

With respect to limiting the powers of the attorney-in-fact, the power of attorney may limit the powers to signing, authorizing certain transactions, or limit the powers to only dealing with certain limited entities or persons.

The most common in the real estate context is stated above, but the most common in the estate planning context are powers of attorney for health care and powers of attorney for financial decisions.  If you need a power of attorney, our lawyers are more than happy to discuss what may be best for your situation, and we can assist with the drafting of the same.

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Purchase Order

A purchase order is a statement in writing which documents the purchase of goods but allows the purchaser to make payment at a later time.

A purchase order usually includes:

  • Type or name of product
  • Quantity purchased
  • General terms and conditions
  • Special terms and conditions (specific to that purchase)

In order for a purchase order to become a contract, the buyer must accept the purchase order and the terms thereof.

Transactions that involve a purchase order are typically governed by the Uniform Commercial Code as they involve the sale of goods.  The Uniform Commercial Code is applicable in Missouri as it has been adopted by all 50 states, the District of Columbia, and the various U.S. territories. Accordingly, Missouri case law, in interpreting the Uniform Commercial Code, will presumably hold that a buyer impliedly accepts the terms and conditions of a purchase order by merely accepting the goods and failing to reject within a certain specified amount of time.

Accordingly, it is important to read any purchase orders, including the fine print.  If you don’t understand the language set forth therein, please contact one of our attorneys to assist you with understanding your rights and duties under said agreement.

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Real Estate Contracts

A majority of Missouri’s citizens will have reviewed and executed a real estate contract in their lifetime. Oftentimes the purchase of a home is the biggest decision in one’s life.  The real estate contract in chock full of legalese and boilerplate provisions, making it difficult to understand and know exactly what you’re getting yourself into with the home purchase.

However, usually when the real estate contract is supplied by a reputable real estate agent, the contract has been approved by the brokerage firm, and the use of which is required by said brokerage firm.  Accordingly, the terms of the contract are usually drafted to be fair for both the buyer and seller.

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Sale of Goods Contracts

Sale of goods contracts obviously deal with any transactions where the parties are buying or selling goods.  These transactions are governed by the Uniform Commercial Code, which applies in every state, the District of Columbia, and the U.S. territories, as briefly discussed above.

In certain situations, a sale of goods contract is required to be in writing signed by the party to be charged.  In the event, that the contract is not in writing and signed, the party attempting to defend the case may assert a defense called the statute of frauds.  This bars contracts for the sale of goods which equal or exceed $500.00.

The Missouri statute, which is applicable to this situation, section 400.2-201, states the following, in relevant part:

(1) Except as otherwise provided in this section a contract for the sale of goods for the price of five hundred dollars or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker.

Accordingly, it is important to make sure that your transaction, particularly when dealing with sales and purchases of goods, is in compliance with Missouri law.  One of our contract lawyers can assist you with drafting this type of agreement if you find yourself in that situation.

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Sales Commission Agreements

A sales commission agreement sets forth the commissions that an employer will pay the commissioned sales representative.  In a number of industries, especially in the financial industry, the sales commission agreement prevents a salesperson’s commission from becoming vested until a certain period of time passes or certain triggering event occurs.  For example, some companies will pay their sales representative on a monthly basis.

When the sale is made, the salesperson would receive his/her commission the following month.  However, the contract would require the sales representative to pay back any amount that is not vested in the event that the customer cancels the policy.  Usually the time period for vesting, which is included in the agreement, would take into consideration the amount of time the customer has to cancel or in which the right to revoke expires.

Salespersons should be aware of this and those companies, firms, and organizations employing a sales staff should ensure that their sales commission contracts contain clauses which account for any cancellation of policies or return of products if commission is distributed concurrently (or in close proximity thereto).

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Security Agreements

A security agreement is a document that represents a party’s interests in personal or real property. The agreement is considered “secured” because the return of payment is “secured” by some type of collateral.

For example, in some circumstances, the security agreement uses personal property as the collateral, such as a car.  Car dealerships usually would enter into a retail installment sales contract at that time, which would contain the financing terms as well as the language that would reflect the fact that the vehicle would be treated as the security.  The retail installment sales contract is the security agreement. In order to perfect the security agreement, a notation is put on the title that shows the lender’s interest in the vehicle.

When real property is used as security, typically the security agreement is called a deed of trust or mortgage.  As noted above in this article, in Missouri the security agreement used for homes is called the deed of trust.  This is entered into concurrently with the promissory note.  The lender is known as the mortgagee because the borrower is giving them a mortgage (deed of trust).  Thus, the borrower in that transaction, even when it involves a deed of trust, is known as the mortgagor.

The foregoing examples represent typical uses of a security agreement.  However, there are numerous types of security agreements. If you want to lend someone money, but you want to make sure that you are paid back on that loan, then you should consider securing the loan with some type of collateral.

Security agreements require that the document state:

  • It must state that there is a security interest;
  • It must describe the collateral; and
  • It must be signed by the borrower/debtor.

If you find yourself in a situation, where you want to lend money, and you need direction or a security agreement drafted, please contact one of our attorneys.

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Service Contract

A service contract is a broad name for an agreement which relates to the provision of services.  The services provided under the contract can range from strictly services, such as painting, landscaping, installation of electrical in a building, etc, to provision of services and materials, which could be the same type of contract, but would the owner would provide the materials in the former type of contract.

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Settlement Agreements

Any time parties are involved in a dispute, litigation, claims, or if they have any other theory of recovery against each other, the most efficient resolution is entering into a settlement agreement.  Presuming the attorney who drafts the settlement agreement properly prepares the same, any subsequent attempt at bringing a lawsuit would be barred by the settlement agreement.

In a typical settlement agreement the parties state the background of the dispute that gives rise to the settlement agreement, both parties usually deny any liability against themselves, and then the parties mutually waive future (and sometimes all) claims against each other.

The parties will also list out the terms of the settlement agreement, usually including the amount each party will be paying to the other, the terms of payment, and any other terms that would relate to dismissing the lawsuit.  Usually the settlement agreement will also include provisions which account for the default of any of the parties’ duties.

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Subordination Agreements

Our lawyers are well-versed in real property transactions and have dealt extensively with title companies, closing companies, and lenders. In certain situations, lenders will agree to make their loan junior to a new lender.  In these cases, a subordination agreement subordinates the senior loan to make it junior (typically to a new loan).

However, as a sidenote, it is not necessary that the loan is a newly originated loan as any loan can be subordinated so long as the lender or financial institution agrees to subordinate their loan.

After the subordination agreements are signed and notarized by the parties, they are usually filed in the recorder of deeds in the county in which the real property at issue is located.  The filing of the subordination agreement puts all the world on notice that the subordinated loan now takes a subordinate position to the other.

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Takeover Agreement

A takeover agreement is often used in the construction industry by and between a surety and a contractor.  When a contractor who purchased a bond defaults on their performance under a performance bond, the surety is then required to step in and the takeover agreement defines the duties and obligations of the surety to complete the performance of the original contract.  For the most part, the surety will typically hire another contractor to come in and complete the work and merely provides the financing.

As a sidenote, usually the defaulting contractor is required to indemnify the surety, but the defaulting contractor probably defaulted for a reason and may not be in a position to indemnify the surety.

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Transportation Agreements

Transportation is described as the movement of goods or people from one location to another. When employees wish to transport goods or persons, they usually have to enter into some type of agreement to effectuate this purpose.  Typically, the employer wants to delineate the services offered and limit liability to the extent possible.

In certain situations, where the entity or person providing the transportation is deemed to be a common carrier, any clauses that purport to limit liability may be against public policy.  An attorney that is astute in drafting transportation agreements, and who is aware of the case law articulating exculpatory provisions in carrier agreements, can potentially prepare a contract that will protect the carrier in a number of circumstances.

In any event, if you are an employer or looking to transport people or goods, you should have a contract in place that sets forth your duties, obligations, and limits your potential liability.  For assistance with drafting a transportation agreement, contact an attorney today.

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St. Louis Real Estate Attorney Answers FAQs

Gavel Crushing a House

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)
  • License to be on the land
  • Unjust Enrichment
  • Other potential defenses exist

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What Statute Governs Ejectment in Missouri?

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.

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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.

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House on Beach

What is a License?

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).

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What is an Easement?

“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).”

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What is an Easement Appurtenant?

An easement appurtenant has a dominant tenement and a servient tenement. Burg v. Dampier, 346 S.W.3d 343, 353 (Mo. App., 2011).

This means that one piece of land benefits from the easement: the dominant tenement.

The other piece of land is burdened by the easement: the servient tenement.

This is different than an in gross easement because an in gross easement does not need a dominant tenement.

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What is an Easement in Gross?

“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.

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What are Some Different Types of Easements in Missouri?

  1. Express (by grant)
  2. Implied or “Visible”
  3. Necessary
  4. Prescriptive
  5. Estoppel

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What is an Implied or Visible Easement?

“Missouri courts have developed the following four-factor test for the establishment of a visible easement:

  1. There must have been a unity of common ownership followed by a separation of title of the subject property into dominant and servient estates;
  2. 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;
  3. 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
  4. 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).

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Arch looking into STL (web) 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).

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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).”

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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. See Baetje 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.

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What is a Prescriptive Easement?

“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).

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What is an Easement by Estoppel?

“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).

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What are some ways an Easement can be Terminated?

“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)(citing Ball v. Gross, 565 S.W.2d 685 (Mo.App.1978)).

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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.

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Scales of Justice in Courtroom (web)

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).

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What are some typical Causes of Action that arise from Property Disputes?

  • Nuisance
  • Trespass to Land
  • Ejectment

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When does a Nuisance Claim Arise?

“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.

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When does a Trespass to Land Claim Arise?

“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)(citing Looney v. Hindman, 649 S.W.2d 207, 212 (Mo. banc 1983)).

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What is an Ejectment Action?

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).

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What are the Elements for an Action in Ejectment?

“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).

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House in Hand (web)

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.

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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).

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What is a Mortgage?

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.

Home For Sale

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). See Libby 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.

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Are Deeds of Trust and Mortgages Filed in the same Location?


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. 

Hanging Scales

Does it Matter who Physically Holds the Deed of Trust or Mortgage?


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.

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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.

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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.

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Missouri (Deed of Trust State)

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).

Gavel Next to Real Estate

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.

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Kansas (Mortgage State)

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.

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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).

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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.

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Mortages v. Deeds of Trust Conclusion

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.

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Footnotes for Mortgages and Deeds of Trust

[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.

[3] Black’s Law Dictionary 1101 (9th ed. 2009).

[4] Dobson v. Mortgage Elec. Registration Sys., Inc./GMAC Mortg. Corp., 259 S.W.3d 19, 22 (Mo. Ct. App. 2008); see Peterson v. Kansas City Life Ins. Co., 339 Mo. 700, 98 S.W.2d 770, 773–75 (1936); Moore v. Moore, 544 S.W.2d 279, 282 (Mo.App.1976); Spires v. Lawless, 493 S.W.2d 65, 72 (Mo.App.1973).

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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.

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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.

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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.

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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.

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What Different Ways 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.

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Joint Tenants

“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.

The surviving titleholder takes the whole cake.

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Tenants by Entirety

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.

There may be an exception for mechanic’s liens, however, depending on the involvement of the spouses. See FAQs regarding Missouri Mechanics Liens.

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Tenants in Common

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.

In any event, a well-versed real property attorney knows the important of designating the proper vesting type in the deed.

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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.

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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.

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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.  

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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 following are a few examples of the requirements with which you must comply in order to properly file (record) a deed in St. Louis County:

  • The paper must be 8 ½” x 11”
  • 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:

  1. Title of the document;
  2. Date of the document;
  3. All grantors’ names;
  4. All grantees’ names;
  5. Any statutory addresses;
  6. Legal Description;
  7. 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.

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