Tag Archives: Negligence

7 Most Common Claims in Missouri Real Estate Litigation

Are you looking to buy or sell a home? Are you a real estate agent assisting someone with purchasing or selling a home?

Are you prepared to go to court after the closing?

Given the complexity of Missouri real estate laws and the inordinate amount of issues that can arise, buyers, sellers, and real estate agents face a real threat of becoming a party to litigation after participating in Missouri real estate transactions.  Even those parties who comply with all laws and regulations face exposure to litigation merely by virtue of their involvement in the transaction.

This guilt-by-association-esque approach may not seem right, but it is an unfortunate reality when something goes awry in a real estate transaction.  While there is no guarantee that you will not be named as a defendant in a lawsuit, there are certain things that can be done to greatly reduce the probability of winding up in litigation.

Based on my experience litigating these cases, the 7 most commonly alleged claims involving Missouri real estate transactions are set forth in this article.  The prudent real estate agent, homebuyer and/or home seller will educate themselves regarding these claims to know the potential pitfalls, so they are in a better position to avoid exposure to liability and the unpleasantries that accompany a lawsuit.

The table of contents on this page enumerates the 7 claims that are most common when litigating real estate transactions.  Each claim is discussed more fully under its respective heading.

1. Fraud

The elements of a fraud claim in Missouri are: “(1) a representation;  (2) its falsity;  (3) its materiality;  (4) the speaker’s knowledge of its falsity;  (5) the speaker’s intent that it should be acted on by the person and in the manner reasonably contemplated;  (6) the hearer’s ignorance of the falsity of the representation;  (7) the hearer’s reliance on the representation being true;  (8) his right to rely thereon;  and, (9) the hearer’s consequent and proximately caused injury.”  Droz v. Trump, 965 S.W.2d 436 (Mo. App.W.D., 1998); see also Green Acres Enterprises, Inc. v. Nitsche, 636 S.W.2d 149, 153 (Mo.App.1982); Hanrahan v. Nashua Corp., 752 S.W.2d 878, 883 (Mo. Ct. App. 1988).

Fraud is a term used in everyday speak.  We know the meaning, but most people don’t know the 9 elements in Missouri that make up a fraud claim.  While these are merely technical elements in Missouri law, in laymen’s terms, fraud is synonymous with lying.  Thus, even if you don’t choose to memorize the above elements, just remember that if you don’t lie, you probably won’t find yourself on the other end of a fraud claim (no guarantees, but it should greatly reduce the probability).

Statute of Limitations

  • 5 year or 15 year Statute of Limitations (depending on tolling)—S.Mo. § 516.120(5)

R.S.Mo. § 516.120(5) states: “[a]n action for relief on the ground of fraud, the cause of action in such case to be deemed not to have accrued until the discovery by the aggrieved party, at any time within ten years, of the facts constituting the fraud.”

“[T]he cause of action does not accrue from discovery of the fraud. If ten years elapse without discovery of the fraudulent acts, the statute of limitations begins to run and after five years the cause of action is barred, even if the fraud has not yet been discovered. Id. at 798. This means that the latest a fraud claim may be brought is 15 years after the fraud occurred.” State ex rel. Stifel, Nicolaus & Co., Inc. v. Clymer, 522 S.W.2d 793, 798 (Mo. banc 1975).

Thus, an action for fraud accrues not when the damage occurs or can be ascertained, but when “facts constituting the fraud are discovered.” Schwartz v. Lawson, 797 S.W.2d 828, 832 (Mo.App.1990). The statute of limitations begins to run at the time a cause of action in fraud accrues, which is when plaintiff “discovered or in the exercise of due diligence, should have discovered the fraud.” Gilmore v. Chicago Title Insurance Co., 926 S.W.2d 695, 698 (Mo.App.1996)(citing Burr v. National Life & Accident Insurance Co., 667 S.W.2d 5, 7 (Mo.App.1984)). “The plaintiff maintains the duty to make inquiry to discover the facts surrounding fraud. Where the means of discovery exist, the plaintiff will be deemed to have known of the fraud so as to begin the running of the statute.” Burr v. National Life & Acc. Ins. Co., 667 S.W.2d 5 (Mo. App.W.D., 1984).

Back to top

2. Violations of the Missouri Merchandising Practices Act

The Missouri Merchandising Practices Act is an act designed to protect consumers by leveling the playing field and incentivizing attorneys to take such cases where consumers are harmed.  In order to incentivize attorneys to take these cases, the Missouri legislature included the potential for recovery of attorney’s fees and punitive damages if violations of the Act are found.

Generally, consumers are not equipped to foot an expensive litigation bill, but with the potential for attorney’s fees, some attorneys are more inclined to take the case on a contingency basis (that mean’s that the client only pays attorney’s fees if the client succeeds).  This attorney’s fees possibility heightens the recovery potential and gives the consumer more leverage.

“Section 407.020 of the Missouri Revised Statutes, commonly known as the “Missouri Merchandising Practices Act,” provides that, ‘[t]he act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice, or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce … is declared to be an unlawful practice.’ The scope of the MPA is broad. Section 407.025 provides a civil cause of action to consumers who purchase goods or services and suffer damages due to any of the aforesaid unlawful practices.In re McClelland, 06-41720, 2008 WL 5157685 (Bankr. W.D. Mo. June 20, 2008).

One case simplifies the foregoing paragraph in a succinct manner, “[i]n a private lawsuit for violation of the Missouri Merchandising Practices Act (MMPA), plaintiffs must demonstrate that they:

  • (1) purchased merchandise…from defendants;
  • (2) for personal, family, or household purposes; and
  • (3) suffered an ascertainable loss of money or property;
  • (4) as a result of an act declared unlawful under the Merchandising Practices Act.”

Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 773 (Mo. banc 2007); Edmonds v. Hough, 344 S.W.3d 219 (Mo. App.2011)(spacing and emphasis added).

The following is a more descriptive breakdown of each element necessary to satisfy the Missouri Merchandising Practices Act (“MMPA”).

(1) purchased merchandise…from defendants

R.S.Mo. § 407.010 (4) defines merchandise as the following: “any objects, wares, goods, commodities, intangibles, real estate or services.”

Based on the definition alone, the first element of the MMPA is satisfied because real estate is considered merchandise. Accordingly, the first element is satisfied by virtue of the type of transaction. Due to the long reach of the MMPA, there is potential that the legislature may amend the MMPA to narrow it.  Particularly with the Republican administration in 2017, there is a chance that the MMPA could be greatly limited.

However, at this point, it is difficult to say whether that limitation would involve the definitions section or would limit the reach of the MMPA as to whom it applies (i.e., only merchants).

It should be noted, though, that because the aim of the MMPA is to protect consumers, and because the MMPA allows buyers of residential real estate (typically consumers) to bring an MMPA claim against sellers of residential real estate (oftentimes consumers), the leverage contained in R.S.Mo. § 407.025, which potentially allows for the recovery of attorney’s fees and punitives, not only works for consumers, but also works against them.

The contrary argument to this policy stance is that most real estate contracts that are drafted by sophisticated parties (which are most contracts used by real estate agents and brokerage firms these days) contain a clause which awards attorney’s fees to the prevailing party.  However, the distinction lies in the vast reach of the violative acts (which are discussed below under element 4 of the MMPA) versus the requirements that the party prevail on the breach of contract claim.  To capitalize on the attorney’s fees provision in the real estate contract, the prevailing party would, presumably, have to prevail on the breach of contract claim.  Because the prevailing party would have to prove breach, this would require a greater burden than merely proving that the party violated an act under the MMPA.

The opposing side would then argue that the safeguard under the MMPA is that the judge ultimately decides whether attorney’s fees are awarded at the conclusion of the case.  Thus, if the court believes in equity that attorney’s fees are warranted, then reasonable fees will be awarded.

A contractual provision providing for the award of attorney’s fees, does not allow for such flexibility.  In any event, the foregoing discussion merely elucidates the advantages and disadvantages of modifying the extent that the MMPA applies to real estate transactions, the application to transactions in which a consumer is the seller, and how attorney’s fees may affect/undermine the legislature’s intent.

(2) for personal, family, or household purposes

This element is very factually based.  If the purpose of the transaction is personal and will be used as the buyer’s principal residence, then it satisfies this element.  If the purchase of the property is to be used as rental property, there is a legitimate question as to whether this element is satisfied.

There is a high probability that the court will find that this element is not satisfied for rental property because it is for commercial purposes and is not used for personal, family or household purposes.

(3) suffered an ascertainable loss of money or property

As it pertains to the MMPA, the Missouri Court of Appeals stated that “[t]he defrauded party should be awarded the difference between the actual value of the property and the value if it had been as represented, measuring the damages at the time of the transaction.” Schoenlein v. Routt Homes, Inc., 260 S.W.3d 852 (Mo. App., 2008).

(4) as a result of an act declared unlawful under the Merchandising Practices Act

The following are the unlawful acts seen most frequently in the real estate context:

a) Misrepresentation

A misrepresentation is defined as “an assertion that is not in accord with the facts”

When proving a misrepresentation pursuant to the MMPA, a plaintiff does not need to prove

  • Reliance,
  • Knowledge that the assertion is misleading/false, or
  • Any culpable mental state. 15 CSR 60-9.070

b) Half-Truth

A half-truth in its simplest form is defined as a situation where a party “[o]mit[s] to state a material fact necessary in order to make statements made…not misleading.” 15 CSR 60-9.090

c) Omission of a Material Fact

An omission of a material fact is defined as “any failure by a person to disclose material facts known to him/her, or upon reasonable inquiry would be known to him/her.” 15 CSR 60-9.110 (3)

When proving an omission of a material fact pursuant to the MMPA, a Plaintiff does not need to prove:

  • Reliance, or
  • Intent. 15 CSR 60-9.110 (4)

d) Unfair Practice

An unfair practice is any practice that:

1A. Offends any public policy as it has been established by

  • Constitution
  • Statutes
  • MO Common law
  • Federal Trade Commission & interpretive decisions

or

1B. Is unethical, oppressive, or unscrupulous           

and

2. Presents risk or causes substantial injury to consumers

15 CSR 60-8.020

Statute of Limitations

  • 5 Year Statute of Limitations—S.Mo. § 516.120(2)

“The statute of limitations [for violations of the MMPA] begins to accrue when the Plaintiff has

[1] knowledge of the wrong and at least nominal damage, or

[2] knowledge that puts plaintiff on notice to inquire further.”

 Ball v. Friese Constr. Co., 348 S.W.3d 172 (Mo. App., 2011)(emphasis and spacing added).

Back to top

3. Breach of Contract

“The essential elements of a breach of contract action include: (1) the existence and terms of a contract; (2) that plaintiff performed or tendered performance pursuant to the contract; (3) breach of the contract by the defendant; and (4) damages suffered by the plaintiff.” Martha’s Hands, LLC v. Rothman, 328 S.W.3d 474, 479 (Mo. Ct. App. 2010)(citing Keveney v. Mo. Military Acad., 304 S.W.3d 98, 104 (Mo. banc 2010)).

A breach of contract in a real estate scenario can be the seller or buyer suing the opposing party (buyer or seller) on the basis that their actions constituted a breach of contract.  In a similar vein, the buyer or seller may sue their real estate agent or the brokerage firm, usually, whichever entity/person was named on the buyer or seller’s agency agreement.

While the agent has statutory duties s/he must carry out, the agency contract often incorporates a number of said duties as well as its own independent duties (typically).  Violation of the statutory duties incorporated into the contract could be the basis for the breach of contract claim.  In the event the MMPA claim is not sufficient or groundless against the real estate agent, the breach of contract claim might be the only avenue of recovery.

Statute of Limitations

  • 5 Year Statute of Limitations—S.Mo. § 516.120(1)

“The statute of limitations begins to run “after the causes of action shall have accrued.” § 516.100. But a “cause of action shall not be deemed to accrue when the wrong is done or the technical breach of contract or duty occurs, but when the damage resulting therefrom is sustained and is capable of ascertainment.” Id. A cause of action is capable of ascertainment “‘when a reasonable person would have been put on notice that an injury and substantial damages may have occurred and would have undertaken to ascertain the extent of the damages.'” State ex relOld Dominion Freight LineIncvDally, 369 S.W.3d 773, 778 (Mo. App. S.D. 2012) (quoting Powel vChaminade CollPreparatoryInc., 197 S.W.3d 576, 584 (Mo. banc 2006)). “‘At that point, the damages would be sustained and capable of ascertainment as an objective matter.'” Id. (quoting Powel, 197 S.W.3d at 584-85).” N. Farms, Inc. v. Jenkins (Mo. App., 2015).

Back to top

4. Breach of Fiduciary Duty

The agent’s statutory duties include the duty of care and loyalty, which are the essence of a fiduciary duty.

To establish a claim for breach of a fiduciary duty, a plaintiff must prove: (1) the existence of a fiduciary duty between the plaintiff and the defending party; (2) “‘that the defending party breached the duty'”; and (3) “‘that the breach caused the [plaintiff] to suffer harm.'” Henry v. Farmers Ins. Co., 444 S.W.3d 471 (Mo. App., 2014)(citing W. Blue Print Co. v. Roberts, 367 S.W.3d 7, 15 (Mo. banc 2012)).

“Whether a fiduciary duty exists is a question of law, while the breach of that duty is for the trier of fact to decide.” W. Blue Print Co. v. Roberts, 367 S.W.3d 7, 33 IER Cases 1397 (Mo., 2012).

It should be noted that the seller does not have a fiduciary duty to the buyer, and the buyer does not have a fiduciary duty to the seller.  Thus, these would not be valid claims against the other party.  These claims should be reserved to be alleged solely against the real estate agents and/or brokerage firms, depending on whether the situation lends to such claim.

Statute of Limitations

  • 5 Year Statute of Limitations—R.S.Mo. § 516.120(4); N. Farms, Inc. v. Jenkins (Mo. App., 2015).

Back to top

5. Negligent Misrepresentation

The elements of negligent misrepresentation are: “(1) speaker supplied information in the course of his business or because of some other pecuniary interest; (2) due to speaker’s failure to exercise reasonable care or competence in obtaining or communicating this information, the information was false; (3) speaker intentionally provided the information for the guidance of a limited group of persons in a particular business transaction; (4) listener justifiably relied on the information; and (5) that as a result of listener’s reliance on the statement, he/she suffered a pecuniary loss.” White v. Bowman, 304 SW 3d 141 (Mo. App., 2009).

A negligent misrepresentation claim is the hedge for a fraudulent misrepresentation claim.  In real estate litigation, usually a negligent misrepresentation claim is brought against the seller (if it deals with misrepresentation) and the seller’s agent and/or the listing agent, again, depending on what the facts the case indicate.

Statute of Limitations

  • 5 Year Statute of Limitations—R.S.Mo. § 516.120(4); Branstad v. Kinstler, 166 S.W.3d 134 (Mo, 2005).

Back to top

6. Negligence/Negligence Per Se

In a negligence action, the plaintiff must allege and prove facts which show: “1) the existence of a duty on the part of the defendant to protect plaintiffs from injury; 2) failure of defendant to perform that duty; and 3) injury to plaintiffs resulting from such failure.” Hill v. Gen. Motors Corp., 637 S.W.2d 382, 384 (Mo.App. E.D.1982) (citing Scheibel v. Hillis, 531 S.W.2d 285, 288 (Mo. banc 1976)). “The particular standard of care that society recognizes as applicable under a given set of facts is a question of law for the courts. Whether a defendant’s conduct falls short of the standard of care is a question of fact for the jury.” Harris v. Niehaus, 857 S.W.2d 222, 225 (Mo. banc 1993). Thompson v. Brown & Williamson Tobacco Corp., 207 S.W.3d 76 (Mo. App., 2006).

Negligence Per Se is a variation of negligence in which the duty is set by statute rather than by common law.  “Negligence per se arises when the legislature pronounces in a statute what the conduct of a reasonable person must be and the court adopts the statutory standard of care to define the standard of conduct of a reasonable person.” Dibrill v. Normandy Assoc. Inc., 383 S.W.3d 77, 84 (Mo.App. E.D.2012).

To prevail on a negligence per se claim, “the following four elements [must be] met: (1) There was, in fact, a violation of the statute; (2) The injured plaintiff was a member of the class of persons intended to be protected by the statute; (3) The injury complained of was of the kind the statute was designed to prevent; and (4) The violation of the statute was the proximate cause of the injury.” King v. Morgan, 873 S.W.2d 272, 275 (Mo.App. W.D. 1994).

“If a submissible case is made under a negligence per se cause of action, a plaintiff could recover if a jury concluded that a statute was violated and the violation was the proximate cause of the injury.” Sill v. Burlington N. R.R., 87 S.W.3d 386, 392 (Mo. Ct. App. 2002)(citing Vintila v. Drassen, 52 S.W.3d 28, 37 (Mo.App. S.D.2001). Thus, “if the [jury] instruction were based upon the theory of negligence per se, the jury would begin their inquiry with the question of proximate cause.” Id.

Statute of Limitations

  • 5 Year Statute of Limitations—R.S.Mo. § 516.120(2) & (4); Kueneke v. Jeggle, 658 S.W.2d 516 (Mo. App. E.D., 1983); Nuspl v. Missouri Medical Ins. Co., 842 S.W.2d 920 (Mo. App. E.D., 1992).

Back to top

7. Unjust Enrichment

Unjust enrichment is brought in a majority of lawsuits and usually acts as the catch-all claim.  Unjust enrichment is an equitable claim created in the law, which seeks to arrive at an outcome the represents principles of fairness.

Most diligent attorneys bring this claim in addition to the other relevant claims to ensure that the claimant can maintain his/her cause of action even if the court decides that no contract existed between the parties (or that there is no claim at law).

The elements of an unjust enrichment claim are: “the plaintiff must prove that (1) he conferred a benefit on the defendant; (2) the defendant appreciated the benefit; and (3) the defendant accepted and retained the benefit under inequitable and/or unjust circumstances.” Howard v. Turnbull, 316 S.W.3d 431, 436 (Mo. Ct. App. 2010); see also Hertz Corp. v. RAKS Hospitality, Inc., 196 S.W.3d 536, 543 (Mo.App. E.D.2006); Graves v. Berkowitz, 15 S.W.3d 59, 61 (Mo.App. W.D.2000). Even if a benefit is “conferred” and “appreciated,” if no injustice results from the defendant’s retention of the benefit, then no cause of action for unjust enrichment will lie. Howard v. Turnbull, 316 S.W.3d 431, 436 (Mo. Ct. App. 2010)(citing White v. Pruiett, 39 S.W.3d 857, 863 (Mo.App. W.D.2001)).

Statute of Limitations

  • 5 Year Statute of Limitations—R.S.Mo. § 516.120(1).

“Section 516.120(1) provides a five-year statute of limitations for ‘[a]ll actions upon contracts, obligations or liabilities, express or implied….’ An action for unjust enrichment is based on an implied or quasi-contractual obligation. Landmark Sys., Inc. v. Delmar Redev. Corp., 900 S.W.2d 258, 262 (Mo.App. E.D.1995). Such actions are subject to the five-year statute of limitations in Section 516.120(1). See Koppe v. Campbell, 318 S.W.3d 233, 240 (Mo.App. W.D.2010).” Royal Forest Condo. Owners’s Ass’n v. Kilgore, 416 S.W.3d 370 (Mo. App., 2013).

Back to top

Conclusion

Real estate transactions can give rise to various causes of action.  While there are no magic steps one can take to avoid a lawsuit, informing one’s self about the most common claims in Missouri real estate litigation may allow the reader to take preventative steps to reduce the possibility of litigation.

The following are the 7 most common claims that are brought in Missouri cases involving real estate matters:

  1. Fraud
  2. Violations of the Missouri Merchandising Practices Act
  3. Breach of Contract
  4. Breach of Fiduciary Duty
  5. Negligent Misrepresentation
  6. Negligence/Negligence Per Se
  7. Unjust Enrichment

While many of these claims are discussed above, one takeaway is that the truth almost always prevails. Thus, if there is some question as to the legality of certain actions, remember most people are best served by taking the higher road and erring on the side of disclosure or taking preventative measures and addressing all problems up front, rather than dealing with bigger issues after the fact.

If you have issues involving a real estate transaction or if you just have questions about a potential situation that could arise, please do not hesitate to contact our attorneys.  We’d be more than happy to assist you in any way that we can.

Please let us know real estate claims that you’ve dealt with and any feedback regarding the same in the comments section.

Back to top

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

Back to top

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.

Back to top

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.

Back to top

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).

Back to top

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).”

Back to top

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.

Back to top

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).

Back to top

What are Some Different Types of Easements in Missouri?

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

Back to top

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).

Back to top

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).

Back to top

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).”

Back to top

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.

Back to top

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).

Back to top

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).

Back to top

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)).

Back to top

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.

Back to top

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).

Back to top

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

  • Nuisance
  • Trespass to Land
  • Ejectment

Back to top

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.

Back to top

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)).

Back to top

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).

Back to top

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).

Back to top

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.

Back to top

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).

Back to top

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.

Back to top

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

Yes.

In order to put the whole world on notice, both instruments, deeds of trust and mortgages, should be recorded in the recorder or register of deeds office in the county in which the real property is located. R.S.Mo. § 442.380 (2012); K.S.A. 58-2221 (2012).

Any lender that fails to timely record the instrument runs the risk of losing priority to deeds of trust or mortgages that are executed subsequently. See Golden Delta Enterprises, L.L.C. v. US Bank, 213 S.W.3d 171, 176 (Mo.App.2007).

In Kansas, “[one that] purchases without actual notice of a prior unrecorded mortgage, obtains priority over such unrecorded mortgage.” Jackson v. Reid, 30 Kan. 10, 1 P. 308 (1883).

If you need help filing a deed of trust or other real estate document, our attorneys would be more than happy to assist you with that service. 

Hanging Scales

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

No.

It does not make a significant difference as to who physically holds the document because the document becomes part of the public record upon recording and the significant effect is that of the priority which the mortgage or deed of trust receives, which is based on the order of recording (unless one can rebut the presumption and prove actual notice was received by the purported junior lienholder). Jackson v. Reid, 30 Kan. 10, 1 P. 308 (1883); See Golden Delta Enterprises, L.L.C. v. US Bank, 213 S.W.3d at 176.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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).

Back to top

Contract

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.

Back to top

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.

Back to top

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).

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.

Back to top

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.  

Back to top

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.

Back to top