Tag: reformation

N.C. Court of Appeals: Wells Fargo v. Coleman- Statute of Limitations for Reformation of Deed of Trust is a Factual Determination; Reasonable Diligence not required for Mutual Mistake

Summary:

The Colemans own lots 42, 43, 44, and 45 of a subdivision, with their home located on lots 42 and 43 and lots 44 and 45 being undeveloped. In 2007, Mr. Coleman borrowed $137,567.00 from (now) Wells Fargo, secured by a Deed of Trust signed by the couple. The Deed of Trust described the property as:

All that real property situated in the County of Davidson, State of North Carolina:
Being the same property conveyed to the Grantor by Deed recorded in Book 1007, Page 1013, Davidson County Registry, to which deed reference is hereby made for a more particular description of this property.… Read More

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N.C. Ct. of Appeals: Bank of America v. Charlotte Property Investments- Incorrect Legal Description Insufficient to Defeat Deed of Trust

Summary:

Gathings granted a Deed of Trust to Countrywide, later succeeded by Bank of America. The Deed of Trust included the correct Property Identification Number and physical address, but had an incorrect legal description. The property was subsequently sold at a foreclosure sale for homeowners dues to CPI, which did not discover the Deed of Trust in favor of Bank of America. Bank of America subsequently brought action to quiet title.

Although “[a] deed of trust containing a defective description of the subject property is a defective deed of trust and provides no notice, actual or constructive, under our recordation statutes.” Fifth Third Mortg.… Read More

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N.C. Court of Appeals: Wells Fargo v. Huntley- Purchaser in Foreclosure can seek reformation of Deed of Trust

Summary:

Wells Fargo sought a reformation of a Deed of Trust, which it discover, after the borrowers defaulted and Wells Fargo foreclosed (putatively purchasing the property itself), did not describe the actual real property upon which the house was built. The trial court held that as Wells Fargo, having purchased the property at foreclosure, was no longer a lender and lacked standing as a purchaser to seek reformation.

The Court of Appeals disagreed, following Citifinancial Mortg. Co. v. Gray, 187 N.C. App. 82, 85, 652 S.E.2d 321, 322 (2007), and holding that the purchaser at foreclosure can pursue reformation.

Commentary:

Free advice to the borrowers- Quickly, file bankruptcy and Wells Fargo will be wiped away.… Read More

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4th Circuit: Rogers v. River Hills- Extrinsic Evidence cannot be Used to Supplement Property Description

Summary:

The District Court determined that the contract relating to the easement did not sufficiently describe the portion or parcel of the servient estate to be affected by the easement. On appeal, Rogers argued that the property description was sufficient because River Hills owned only one parcel of land at the time the writing was executed. The Court of Appeals rejected this as such information was available only by reference to evidence extrinsic to the writing.

Commentary:

While not a bankruptcy case, this would support the position that Deeds of Trust and other documents related to land which contain defects as to property description cannot be remedied through extrinsic evidence.… Read More

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N.C. Court of Appeals: Inland Harbors HOA v. St. Joseph’s Marina (Inland Harbor III)- Reformation of Deed of Trust

Summary:

Following Hice v. Hi-Mil, Inc., 301 N.C. 647, 273 S.E.2d 268 (1981), the Court of Appeals (in its third opinion in this case) held that in an action for reformation of a written instrument the moving party must show by clear, cogent and convincing evidence that there was ” not just a mistake on its
own part, but a mutual mistake on the part of all parties.”

For a copy of the opinion, please see:

Inland Harbors HOA v. St. Joseph’s Marina (Inland Harbor III)- Reformation of Deed of Trust.pdf Read More

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N.C. Court of Appeals: In re Falk- Life of Mortgage Lien and Equitable Subrogation in Reformation of Mortgage Priority

Summary:

Quicksilver purchased an apartment complex in 1992, with $4.6 million in financing from the seller and $550,000 from the Charlotte Falk Irrevocable Trust (Falk Trust). Quicksilver later executed a promissory note and Deed of Trust to the Falk Trust, which was recorded on October 28, 1994. Quicksilver defaulted on the note in December of 1994 and, despite several payments in the intervening years, failed to remedy the default. On July 2, 1999, Quicksilver entered into a promissory note and Deed of Trust with Wachovia Bank. The Wachovia Deed was recorded on July 7, 1999, and the Falk Trust granted a subordination agreement, recorded on March 15, 200, moving the Wachovia Deed of Trust into first priority.… Read More

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Bankr. E.D.N.C.: Sea Horse Realty v. Citimortgage- Statute of Limitations for Reformation of Incorrect Deed of Trust

Summary:

Sea Horse Realty, which is wholly owned by Richard Mercer, is the owner of a parcel of real property located in Nags Head. In 2005, Mercer executed a promissory note, currently held by Citimortgage (to whom reference will be made, regardless of whether the party was Citimortgage or its predecessors), for $1.5 million, pledging the property as collateral. The Deed of Trust was originally to list Sea Horse Realty as the grantor, but this was changed at the request of the mortgage broker to list Mercer as the grantor.

Mercer filed Chapter 11 in 2009. Citimortgage filed a Proof of Claim, but following an uncontested objection by Mercer, this claim was allowed as a general unsecured claim.… Read More

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N.C. Supreme Court: Willis v. Willis- Mistake of One Party Insufficient to Reform Deed

Summary:

Janice Willis had two sons, Eddie and Anthony. In December 2004 she drafted a will bequeathing “any interest that I may own in my home place” to Eddie, expressing her “wish” that, if she conveyed the property to Eddie before her death and he decided to sell it, Eddie would divide the proceeds with his brother Anthony. The will also bequeathed the residue of her estate to Eddie and Anthony in equal shares, to pass to their children per stirpes if either or both predeceased her. Mrs. Willis did transfer the property to Eddie, subject to a life estate, but Eddie died a few years later, while Mrs.… Read More

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N.C. Court of Appeals: BB&T v. Teague & Glover- Priority of Reformed Deed of Trust against Bona Fide Purchaser

Summary:

While working as a bookkeeper for Teague & Glover, P.A., (T&G) Ms.  Gibbs embezzled substantial amounts.  In addition to criminal prosecution and imprisonment, in 2010, T&G obtained a civil judgment against Mr.  and Mrs.  Gibbs for $800,000.  T&G subsequently agreed to accept all of the Gibbses real and personal property in exchange for a reduction in the amount of the judgment.

The property at issue in the present dispute consists of Tract A (0.6 acres) and Tract B (0.7 acres and the Gibbses primary residence).  In 1999 and 2005, the Gibbses had granted BB&T a Deed of Trust against both tracts, but in 2009 they refinanced with the new Deed of Trust being secured only by Tract A. … Read More

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