Court Decides Case Regarding Claims Arising Out of Transfers of Mortgages

A.R.S. § 33-420 permits a cause of action to quiet title to property and, among other things, also permits a claim for damages arising out of recording of documents that are forged, groundless, contains a material misstatement or false claim, or is otherwise invalid.

The Court of Appeals for the State of Arizona recently considered a case dealing with these issues as they arise within the context of multiple assignments of the lender’s interests in the home through MERS (Mortgage Electronic Registration System).

The case is Sitton v. Deutsche Bank National Trust Co. which was decided on September 5, 2013. In this case, the homeowner undeniably fell behind on her mortgage payments. During the time she owned the home, the mortgage loan was transferred to a variety of assignees. Crucial, however, was the fact that the original mortgage lender assigned its interest to MERS who then became the mortgage of record (and privately kept track of assignments from MERS to subsequent assignees even though MERS always remained the mortgage of record).

Arizona Property Tax Liens And Mers

A recent case illustrates at least one of the pitfalls for those who invest in property tax liens. In Delo v. GMAC Mortgage, an investor (Delo) purchased a property tax lien on a property that had been acquired by Pinal County. Mr. Delo paid the outstanding property taxes and received an assignment from the County.

Following the three year waiting period for the owners to redeem the property tax lien by paying the past due taxes (plus interest), Mr. Delo proceeded to foreclose. Neither the owners nor the lenders defended and Mr. Delo obtained a default judgment.

However, while Mr. Delo’s lawsuit was proceeding, the lender on the property initiated a separate non-judicial foreclosure proceeding on the property. The original lender was EquiFirst with MERS (Mortgage Electronic Registration System) “as a nominee for Lender and Lender’s successors and assigns” and as “the beneficiary under the Security Instrument” and as legal title holder.

BOUNDARY DISPUTES

Boundary disputes, which are disagreements regarding who owns a piece of property, can be quite common. Boundary questions often arise when a property owner makes an improvement, such as building a fence.

For example, when you are raising a fence outside of your house, you may unknowingly be placing your fence on your neighbor’s property. On the other hand, you may be erecting the fence entirely on your property, but your neighbor may argue that the fence is encroaching on his property. It is important that any issues concerning boundary disputes get resolved in a timely manner.

There are a number of factors that can be reviewed to determine who has rightful ownership of the land. If a survey was prepared at the time of purchase, it will show the actual boundary lines. Otherwise, the property description in the deed, which is usually recorded with the county, includes a description of the boundary lines of the property. However, if the property description was originally recorded many years ago, it may not be entirely accurate. Therefore, you may want to have a survey done if no survey was done at the time of purchase.