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Opinion Date: 08/13/2013
e-Journal Date: 08/21/2013
Full Text Opinion

Practice Area(s):   Real Property

Issues: Quiet title action involving a purchase money mortgage (PMM); Graves v. American Acceptance Mtg. Corp.; Fecteau v. Fries; Bednarowski & Michaels Dev. LLC v. Wallace (ED MI); Townsend v. Chase Manhattan Mtg. Corp.; Wengel v. Wengel; Dennis v. Sharer; MCL 554.44 & .45; Request for sanctions under MCR 7.216(C) for a "vexatious" appeal
Court: Michigan Court of Appeals (Unpublished)
Case Name: BAC Home Loans Serv., LP v. Thomas
e-Journal Number: 55252
Judge(s): Per Curiam - Gleicher and Beckering; Concurrence - Shapiro

The court held that when the PMM and the warranty deed were executed at closing on 7/18/03, the PMM took effect immediately as part of the same transaction by which seisin was acquired. Contrary to defendant-Yolanda's contention, she did not have an interest in the property as a tenant in common before execution of the PMM. On 8/16/02, Geneva Thomas and MGD Building Company entered into a building contract for a home. On 5/12/03, the Seaver Title Company issued a title commitment as to the property. The title commitment provided that Geneva was the proposed insured for the owner's policy, and that Republic Bank was the proposed insured for the mortgage policy. Escrow closing instructions dated 7/7/03, listed Geneva as the buyer of the property. A HUD settlement statement that had Geneva's signature provided that she was the borrower, MGD was the seller, Republic Bank was the lender, and Seaver Title was the settlement agent. An estoppel certificate dated 7/18/03 for the issuance of a title insurance policy by Seaver Title provided Geneva was the mortgagor and had her signature. On 7/18/03, Geneva entered into a PMM to secure her payment of a $240,000 loan for the property. The mortgage provided that Geneva, a single woman, was the borrower and mortgagor. Republic was the lender, and MERS was the mortgagee and the bank's nominee. On the same day, MGD executed a warranty deed to convey the property. The deed stated that MGD conveyed to Geneva, Yolanda, and Louise (Geneva's daughters). It was notarized on 7/18/03 and recorded on 9/12/03. Later, Geneva conveyed the property to herself and her two daughters by quit claim deed, which was recorded on 10/27/03. Geneva died on 10/18/09. Yolanda moved into the property and started to pay on the mortgage but stopped because she could not afford the payments. On 1/30/10, MERS assigned its rights and interest in the mortgage to plaintiff. Plaintiff sued Yolanda, Geneva's estate, and Louise to quiet title and reform the mortgage. After a trial, the trial court ordered a default judgment against Louise, ordering that Louise's and Yolanda's interests in the property were subordinate and subject to plaintiff's purchase mortgage, and dismissed Yolanda's counterclaim with prejudice. Yolanda appealed arguing that the warranty deed was executed before the mortgage and thus, her interests in the property could not be subordinate to the mortgage because she had an interest in the property as a tenant in common before the execution of the mortgage. The court concluded that when Geneva, Louise, and Yolanda acquired their interests in the property, it was already encumbered by the PMM. "Plaintiff can foreclose despite Yolanda's interest in the property." Thus, Yolanda failed to show that the trial court erred by ruling in plaintiff's favor on the basis of the PMM doctrine. Affirmed.

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