Tag: Substitute Trustee

N.C. Court of Appeals: In re Foreclosure of Cain- Appeal of Oral Orders and Substitute Trustee Fiduciary Duty to Borrower

Ms. Cain granted a Deed of Trust against her home securing a mortgage note to Household Realty Corporation (“HRC”), which was first specially endorsed to Household Bank, but HRC later specially endorsed the not to Beal Bank, which, following Cain’s default, appointed Rogers, Townsend & Thomas (“RTT”) as substitute trustee to commence foreclosure. After the Cumberland County Clerk of Court allowed the foreclosure sale to proceed, Cain appealed to Superior Court and sent a Request for Admissions to RTT. RTT then was relieved as substitute trustee and commenced representing Beal Bank in the foreclosure suit. At that hearing, Cain presented an unfiled motion to dismiss the foreclosure due to a purported failure by RTT to respond to the Request for Admissions.… Read More

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4th Cir.: Jones v. Fulton Bank- Breach of Contract Requires Actual Damages; Standing to Object to Appointment of Substitute Trustee


The Joneses brought a breach of contract claim against Fulton Bank, alleging that Fulton Bank failed to send them a proper thirty-day pre-acceleration notice. See Bayview Loan Servicing, LLC v. Simmons, 654 S.E.2d 898, 901 (Va. 2008). The Joneses also challenged the appointment by Fulton Bank of a Substitute Trustee with instructions to commence foreclosure as not complying with the Deed of Trust. In their third cause of action, the Joneses contended that Fulton Bank breached the implied covenant of good faith and fair dealing under the Uniform Commercial Code. Lastly, the Joneses sought to quiet title to the property.… Read More

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North Carolina Proposed 2013 Formal Ethics Opinion 4- Representation in Purchase of Foreclosed Property

Proposed opinion examines the ethical duties of a lawyer representing both the buyer and the seller on the purchase of a foreclosure property and the lawyer’s duties when the representation is limited to the seller.

Editor’s note: This opinion supplements and clarifies 2006 FEO 3.

Inquiry #1:

Bank A foreclosed its deed of trust on real property and was the highest bidder at the sale. Bank A listed the property. Seller entered into a contract to purchase the property.

An addendum to the Offer to Purchase and Contract (“Contract”) signed by the parties states that the closing shall be held in Seller’s lawyer’s office by a date certain and that Seller, Bank A, “shall only pay those closing costs and fees associated with the transfer of the Property that local custom or practice clearly allocates to Seller … and the Buyer shall pay all remaining fees and costs.” Bank B is providing financing for the transaction.… Read More

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North Carolina Proposed 2013 Formal Ethics Opinion 5- Disclosure of Confidential Information to Lawyer Serving as Foreclosure Trustee

Proposed opinion rules that a lawyer/trustee must explain his role in a foreclosure proceeding to any unrepresented party that is an unsophisticated consumer of legal services; if he fails to do so and that party discloses material confidential information, the lawyer may not represent the other party in a subsequent, related adversarial proceeding unless there is informed consent.


Lender requests that Lawyer’s Firm serve as the substitute trustee under a note and deed of trust to commence foreclosure proceedings based on an alleged event of default. Borrower under the note and deed of trust is a limited liability company. While Firm is acting as substitute trustee, Borrower’s member-manager meets with Lawyer and explains to Lawyer why he believes Borrower is not in default.… Read More

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NC Court of Appeals: Evans v. Neill- Breach of Fiduciary Duty by Substitute Trustee in Foreclosure


The Debtors granted a Deed of Trust originally to Associates Financial, which was eventually sold or otherwise assigned to Citifinancial.   The Deed of Trust included a legal description of the collateral, but did not include an address.  Debtors later defaulted on a Deed of Trust.  The Substitute Trustee instituted foreclosure proceedings and attempted personal service by Sheriff at three different addresses.  When that failed, the Sheriff posted service at an address that was not for the collateral described in the Deed of Trust.  Unaware of the defects in service, the Clerk of Court allowed the foreclosure to proceed and the collateral was sold to a third party.… Read More

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