July 7, 2016
What is a Summons for Unlawful Detainer?
This blog post discusses the role of the Summons for Unlawful Detainer in Virginia foreclosures. “Unlawful Detainer” is a legal term for the grounds for eviction from real estate. The foreclosure trustee and new buyer go to a real estate closing a few days after the foreclosure sale. Upon settlement, the title company records the Trustee’s Deed of Foreclosure in the local land records. In most land transfers, the giver and recipient of the ownership of the real estate participate voluntarily. In a foreclosure, the borrower may contest the validity of the foreclosure transaction and the Trustee’s Deed. The Trustee’s Deed is necessary to the new buyer to pursue eviction proceedings against the occupants of the property. The Trustee’s Deed is the buyer’s legal basis for filing the Summons for Unlawful Detainer form. A copy of what this form looks like is available on the website for the Virginia court system.
Post-foreclosure evictions are not the only reason anyone files a Summons for Unlawful Detainer. Unlawful Detainer suits get into court in different situations. The most common is where a tenant fails to pay rent or defaults on the lease. However, it can be used for a variety of situations where an occupant entered onto the property with lawful authorization (such as a deed or lease) but has continued to occupy the premises after his right to do so ended. Every landlord knows that each month that the tenant holds over without paying is rental income that will likely never be collected. The General Assembly enacted legislation to streamline property owner’s rights to evict tenants and other persons unlawfully detaining possession of the real estate. This prevents an unfair result that might occur if a tenant could use lengthy court proceedings to live in the premises rent free when he may not have money to pay a judgment at the end. The buyer of the foreclosure property has made a financial commitment to own the property. Foreclosure investors want to evict the borrower, make any necessary repairs as soon as possible so that the property can be rented out or re-sold. So the summons for unlawful detainer form is a powerful, attractive tool for the new buyer in a foreclosure.
The investor or their attorney typically files the Summons for Unlawful Detainer in the local Virginia General District Court (“GDC”) after receiving the Trustee’s Deed. The GDC is the local court in Virginia most people are familiar with. This is where Virginians go for traffic ticket cases and suits for money under $25,000.00. The GDC has a “Small Claims Division” where parties litigate without lawyers. The Sheriff’s Office serves the Summons for Unlawful Detainer on the borrower and any other occupants. Upon receipt of the Summons for Unlawful Detainer, the borrower faces a “fight or flight” decision. Experienced lenders, trustees and purchasers know that the Trustee’s Deed of Foreclosure can be used as a weapon to try to crush the borrower’s opposition to the foreclosure. The Bank, trustee, and new buyer are can pursue these legal matters without the threat of having being evicted out of their base of operations. The borrower would not be in a foreclosure matter if there wasn’t a difficulty making payments. Once the Deed is in land records and the Summons is filed with the GDC, the borrower also has to mount a legal defense to keep possession of the home. A borrower is well advised to seek qualified legal counsel in his jurisdiction to help deal with these matters.
The Summons for Unlawful Detainer Summons must contain the name, address and point of contact for the new owner seeking to evict him. This will tell the borrower whether the property is now owned by the bank that requested the foreclosure or an unrelated investor. The Summons sets out when and where the borrower or his attorney must appear to contest the eviction proceeding. Every form states, “If you fail to appear and a default judgment is entered against you, a writ of possession may be issued immediately for possession of the premises.” A writ of possession is a document signed by the judge that authorizes the Sheriff’s Office to go out to the house and remove the people and belongings found there and turn it over to the new buyer and their locksmith.
What can a borrower do who has been wrongfully foreclosed upon and received a Summons for Unlawful Detainer? The earlier the borrower engages with legal counsel, the more there is that the attorney can do to help. On June 16, 2016, the Supreme Court of Virginia initiated legal reforms which dramatically shift the balance of power in these post-foreclosure evictions. If properly defended, the borrower may have an opportunity to get the dispute over the validity of the foreclosure decided before ordering eviction. This is good news. Prior legal precedent required many borrowers to defend against a Summons for Unlawful Detainer at the same time he pursued his own wrongful foreclosure claims against the bank and trustee. I discussed this new case in greater detail in my blog post, “The Day the Universe Changed” and in a radio show interview available in the “On the Commons” podcast library. While borrowers will continue to receive these “Summons for Unlawful Detainer” forms, they now have better options.
Unless the borrower does not intend to contest the eviction and foreclosure, borrowers receiving a Summons for Unlawful Retainer from the buyer of the foreclosure property should immediately seek qualified legal counsel in order to explore available options. The Virginia General Assembly is anticipated to enact new legislation in its next session to clarify the jurisdiction of the GDC and the appropriate court procedures when a borrower contests the validity of a foreclosure related to the eviction proceeding. With assistance, borrowers may be able to take advantage of these legal reforms.
photo credit: GEDC1290 s via photopin (license)
June 21, 2016
The Day the Universe Changed
My parents are retired schoolteachers. Growing up, we watched our share of public television. I remember watching a British documentary by James Burke called, “The Day the Universe Changed.” This program focused on the history of science in western civilization. Scientific developments affect public perceptions of man’s place in the world. Each episode dramatically built up to a momentous change in scientific perception. For example, when scientists determined that the earth circles the sun (and not the opposite), it felt as though the “universe changed.” The title of the final episode was, “Worlds Without End: Changing Knowledge, Changing Reality.” Provocative stuff for 1985. I went on to study the history of science for four years in liberal arts college.
Property: Ownership & Possession:
In the law there is a difference between the reality of how people think and act in real life, on the one hand, and the reality of courthouse activities on the other. For example, people frequently lie when under the stress of questioning. Courts developed a comprehensive set of evidence rules to determine what documents and testimony are acceptable. The rules of evidence are not a formalization of the way people ordinarily evaluate truth-claims. As another example, outside of Court, non-lawyers understand the difference between the right of ownership and the right to possess or occupy any property. The right of ownership is superior to, and often includes the right to possess. These rights are distinct but unseverably connected. Attorneys and nonlawyers understand the difference between being an owner, a tenant, or an invited guest. By contrast, since before the Civil War, Courts in Virginia enforced the conceptual separation between the right to claim ownership and the right to evict an occupant and gain exclusive possession. The courts did this by not allowing an occupant to raise a competing claim of ownership as a defense in an eviction suit. In many cases, attorneys would have to “lawsplain” why a borrower could not effectively assert the invalidity of the foreclosure in the eviction case brought by the new buyer. Practically speaking, the borrower had to defend the eviction case while also filing another, separate lawsuit of her own to raise her claims to rightful title to protect her property rights. The rules required a financially struggling borrower to litigate overlapping issues in two separate cases at the same time against overlapping parties. If you are reading about this and think that it makes no sense, you are right, it doesn’t. But this was the way that the Virginia eviction world worked for a very long time.
Instant Legal Reform:
And then June 16, 2016 was the day the entrenched worldview of foreclosure contests and evictions in Virginia changed forever, or at least until the General Assembly holds its next session. The Supreme Court of Virginia published a new opinion overturning 150-200 years of precedent in this area. This opinion is important to anyone who lives or works in any real estate with a mortgage on it. Virginia appellate law blogger Steve Emmert observed that this decision represents a “nuclear explosion” and that “. . . dirt lawyers are going to erupt when they read . . .” This case is a game-changer that unsettles much of real estate litigation in Virginia.
My Professional Interest:
Since the foreclosure crisis exploded in 2008, I have litigated foreclosure cases in Virginia on behalf of borrowers, lenders and purchasers. Before June 16, 2016, few expected the rules of the road to change dramatically. The Supreme Court of Virginia has hundreds of years of precedent underlying the existing state of affairs. The banking industry maintains an effective lobbying presence with the General Assembly. Victims of foreclosure abuses play the game of survival; few become activists. Yet, common-sense would dictate that having two separate lawsuits (the eviction case and ownership dispute) proceeding through the court system at the same time wastes resources for everyone. This impacts borrowers the most because they are in the least favorable position to pursue multiple lawsuits at the same time.
Parrish Foreclosure Case:
Teresa and Brian Parrish took out a $206,100 deed of trust (mortgage) on a parcel of real estate in Hanover County, Virginia. This deed of trust’s provisions incorporated certain federal regulations into its terms. These regulations prohibited foreclosure if the borrower submitted a complete loss mitigation application (a.k.a., loan modification application packet) more than 37 days before the trustee’s sale. Federal National Mortgage Association (“Fannie Mae”) had an interest in the home loan. The Parrishes timely submitted their application packet. Regardless, in May 2014, ALG Trustee, LLC sold the Parris property to Fannie Mae at the foreclosure sale. Fannie Mae then filed an unlawful detainer (eviction) lawsuit against the Parrishes in the General District Court (“GDC”). The GDC is the level of the court system that most Virginians are familiar with. People go to the GDC for traffic tickets, collection cases $25,000.00 or less, evictions and “small claims” cases. In the GDC, the Parrishes did not formally seek to invalidate the foreclosure sale. Instead, they argued that they were entitled to continue to possess the property because ALG conducted the foreclosure sale while the loan modification application was pending. The GDC judge took a look at the Trustee’s Deed that ALG made to Fannie Mae and ordered the sheriff to evict the Parrish family. The Parrishes appealed the case to the Circuit Court. The Circuit Court granted a motion affirming the lower decision in Fannie Mae’s favor. The Parrishes sought review of the case by the Supreme Court. The Supreme Court of Virginia’s June 16th opinion is a mini-treatise for the new landscape of foreclosure legal challenges.
Questions of Ownership and Occupancy Are Inextricably Intertwined:
The Justices directly addressed the question of the GDC’s jurisdiction. Unlike the Circuit Court, the GDC does not have the statutory legal authority to decide competing claims to title to real estate. That said, in each post-foreclosure unlawful detainer case the GDC must base its decision on whether the presentation of the Trustee’s Deed of Foreclosure is sufficient evidence of title to grant the eviction. Under longstanding legal precedent, the Parrishes’ contention about their loan modification application would not be heard in the unlawful detainer case because the borrowers can’t invalidate the foreclosure deed in the GDC. But on June 16, 2016 that all changed. The majority found that the validity of the foreclosure purchaser’s claimed right to possess the premises cannot be severed from the validity of that buyer’s claimed title because that title is the only thing from which any right to occupy flows. “The question of which of the two parties is entitled to possession is inextricably intertwined with the validity of the foreclosure purchaser’s title.”
From this insight, one must call to question the practical requirement for the borrower to bring his own separate lawsuit against the buyer, trustee and lender to reverse the foreclosure, confirm the right to possess and other relief. Why not have a procedure where all of the related claims can be combined?
What Are Lawyers to Do Now?
Okay, now the “universe has changed.” How do borrowers raise this issue in defense of post-foreclosure evictions? Is there anything that the foreclosure buyer can do about this? The Supreme Court recognizes many reasons why a borrower might have a legitimate claim that the foreclosure sale was legally defective, including but not limited to:
- Fraud (by the lender and/or foreclosure trustee)
- Collusion (between the trustee and the purchaser)
- Gross Inadequacy of Sale Price (so low as to shock the conscience of the judge)
- Breach of the Deed of Trust (for example the regulations about the loan modification application)
The Supreme Court’s new opinion states that the homeowner could allege facts to put the validity of the foreclosure deed in doubt. By the court’s new standard, if the borrower sufficiently alleged such a claim, the GDC becomes “divested” of jurisdiction. When the judge determines that he has no jurisdiction because there is a bona-fide title dispute, he must dismiss the entire case. From there, the new buyer would have to re-file the case in the Circuit Court where the parties would then litigate everything.
I expect that the General Assembly will enact new legislation in its next session that will clarify the jurisdiction of the GDC and the procedures for post-foreclosure unlawful detainers. At least until then, purchasers and lenders will not have the same ability to use the unlawful detainer suit as a weapon in their struggles with borrowers in foreclosure contests. Homeowners’ abilities to fight foreclosures will be streamlined. Justice McClanahan wrote a dissent where she explained the meaning of this in remarking that the majority of justices,
practically eliminated the availability of the summary [i.e. expedited] proceeding of unlawful detainer to purchasers of property at foreclosure sales. The majority’s new procedure for obtaining possession operates to deprive record owners of possession until disputes over “title” are adjudicated after the record owner has sought the “appropriate” remedy in circuit court.
The Supreme Court of Virginia reversed the decision of the Circuit Court and dismissed the unlawful detainer proceeding brought against the Parrishes.
Conclusion:
I welcome the Court’s recognition that the rights of title and possession are “inextricably intertwined”. In post-foreclosure disputes between the borrower, purchaser, lender and trustee, bona fide ownership claims should certainly be decided in court before the sheriff kicks anyone out of their house. Eviction procedures should not be used as a weapon to railroad homeowners out of their houses. It makes no sense for there to be more than one legal case about the same thing. Hopefully the General Assembly will adopt new legislation accepting these revelatory developments while clarifying and streamlining court jurisdiction and procedures so that the parties need not litigate any more than is necessary to properly decide who has the right to own and possess the foreclosure property. The universe has changed, and we are closer to a future where the court procedures do not unfairly burden one side over the other and it is easier for each case to be decided on its merits and not who runs out of money first.
UPDATE: I was interviewed by Shu Bartholomew on her radio show/podcast, “On the Commons” about this Parrish v. Fannie Mae case. The podcast is now available.
Case Citation: Parrish v. Federal National Mortgage Association (Supr. Ct. Va. Jun. 16, 2016)
Photo Credit: 2012/11/12 OOFDG Defending Jodie’s Home via photopin (license)(does not depict the property discussed in this article)
July 11, 2014
The California Nanny and Mediating Legal Disputes Through the Media
Marcella and Ralph Bracamonte brought Diane Stretton into their Upland, California home to provide childcare services in exchange for room and board. Ms. Stretton and the Bracamontes got into a dispute over their arrangement. Ms. Stretton stopped working and refuses to move out. Why is this story national news? The answer illustrates some pitfalls of mediating legal disputes through the media. Parties are better off resolving seemingly intractable disputes through judges, qualified mediators and experienced attorneys.
Every day, disputes arise over the treatment, performance and compensation of employees. Most states have employment commissions to alleviate stress on the court system. Disputes over how soon a landlord is entitled to have a non-paying tenant depart are also commonplace. Many courts even have special hearing days for evictions. Diane Stretton has been dubbed the “Nanny from Hell,” “Nightmare Nanny” or “Won’t Go Nanny.” Why has her story captured our attention?
In March 2014, the Bracamontes family hired Ms. Stretton off CraigsList to be a live-in nanny for their three children. Over the next three months, the relationship deteriorated. According to the Bracamontes, Stretton stopped working and continued to occupy the premises after they fired her on June 6th. See Jul. 8, 2014, J. Hayward, “Nanny from Hell and the Squatter Ethos.”
Ms. Stretton maintains that as the weeks progressed, Marcella Bracamonte demanded additional tasks of her far beyond their original arrangement. When someone isn’t getting paid their wages and doesn’t like the work, usually they simply quit and go home. For Stretton, the workplace was home. Ms. Stretton stayed despite the couple’s demands. On June 25th, they served her with legal notice in the living room of the residence.
No Self-Help Eviction. In California, like Virginia, once someone makes a property their residence and declines to leave voluntarily, the owner cannot evict them without going to court. Each state has a different housing code. Some are more friendly to landlords, others favor tenants. The common principle is that in the event of a dispute, the resident cannot be booted out without legal action. All of us sleep better at night knowing that we have a right to due process before a mortgage lender or landlord attempts to remove us from our home.
Boundaries are Good. Both the Bracamontes and Stretton voluntarily entered into this living & working arrangement as strangers without establishing significant boundaries. The Bracamontes not only consented to have Stretton care for their children, they also agreed to allow her to live with the family. On the level of human intimacy, this high on the trust scale.
Stretton is also vulnerable. She isn’t being paid a salary and relied on her “host” family for food, water, shelter, etc., in exchange for her labors. Tom Scocca of Gawker sees an element of exploitation on the part of the Bracamontes, characterizing them as seeking a live-in nanny while ignoring California’s wage & hour laws. After the situation deteriorated, they went to the media, complaining that their unpaid servant will neither work nor leave. Jul. 3, 2014, T. Scocca, “The ‘Nanny from Hell’ is an American Hero.”
A written lease agreement sets out the remedies available to the parties in the event of a default of specific obligations such as paying rent. However, the document performs another role. Even if the parties had entered into a thorough legal contract, Stretton still would be entitled to have her case heard by a judge, a process that could take several weeks or months, depending on the jurisdiction. Experienced landlords and employers know that a written agreement does not guarantee that the tenant or employee will perform according to that document. A written lease agreement is a legal instrument, but it is also an opportunity to define boundaries of human relationships at the time they form. For the Bracamontes and Stretton, those dynamics stretch both professional and personal boundaries. If the lease and employment agreement negotiation process had been conducted properly, this whole situation may have been avoided in the first place.
Counterproductive Media Attention. According to a July 9, 2014 People.com article, Stretton’s belongings still remain at the Bracamonte’s house. Although she is no longer sleeping there, she has declined to move out until conditions are met. She is unhappy that the news media is camped out around the Bracamonte house. To move she would have to run gauntlet of cameras and microphones in the hot sun. Some reports indicate that she suffers from health complications. As I mentioned earlier, eviction and employment termination disputes are common. News outlets don’t normally monitor them. Did the family or the nanny instigate the media attention to their case? The Bracamontes are no longer making appearances with CBS2 because the family now has an Exclusivity Agreement with another media network. Jul. 9, 2014, CBS2, “Controversial Nanny Tells Her Version of Events.” In the other ring of the circus, Stretton provided a “mountain of paperwork” to People magazine supporting her position. If the Bracamontes had simply gone to court like other landlords reaching an impasse, perhaps Stretton would have left of her own accord by now. Perhaps they fear a counterclaim. The parties decisions to interact with each other through the media has escalated the conflict in a mutually detrimental way. The media presence must have an effect beyond deterring the nanny’s move. I imagine news trucks interfere with day-to-day family life.
I hope for the sake of those three kids, Ms. Stretton gets a reasonable opportunity to remove her belongings from her room. Once the TV trucks leave, the adults can resolve their monetary claims. Bracamonte v. Stretton illustrates the risks of presenting a legal dispute to the news or social media rather than in court or at the settlement table.
photo credit: fredcamino via photopin cc
January 2, 2014
Can My Landlord Evict My Business Without Going to Court First? – Part II – Complications to Landlord Self-Help
In Virginia, landlords have a right to evict commercial tenants without going to Court first. This does not make it likely or wise. Even in jurisdictions where self-help is legal, it is unusual to see landlords piling up their tenants’ business property on the curb. There are several reasons why:
1. Lease Terms: Any self-help must comply with the terms of the lease agreement. The laws of Virginia and its neighbors vary regarding a landlord’s remedies upon the tenant’s default. Many commercial leases are forms adapted from use in other jurisdictions. These forms may be a challenge to interpret under Virginia law. Even terms drafted with an eye to the law of the jurisdiction may not contemplate the exercise of the self-help remedies desired by the landlord’s agents. The terms of some lease agreements eliminate the right of self-help eviction entirely. Many other leases do not clearly define the landlord’s rights to exercise self-help. When parties negotiate the lease agreement, tenants typically request that any detailed landlord self-help eviction terms be edited out. The landlord often finds himself reserving, in a general way, its common law remedies, including self-help, without defining how they may be exercised. When the issue comes up upon default, both parties experience uncertainty regarding how a court would view the landlord’s threatened action.
2. Possibility of Property Damage: The landlord may be averse to taking possession of the property in a way that may damage the tenant’s property or involve physical confrontation with the tenant’s personnel. The landlord may desire an award or settlement for the balance of the lease. Property damage counterclaims complicate collection efforts.
3. Forcible Entry Claims: In certain situations landlords and tenants may be punished criminally under forcible entry, detainer or trespass for aggressive action taken with respect to the premises and business property in dispute.
4. Bankruptcy Stay: If the tenant is in bankruptcy, then an automatic stay likely prohibits self-help. The dispute between the landlord and the debtor-tenant over rights to possess the space is addressed in federal bankruptcy court.
5. Sublease: The landlord-tenant relationship may be complicated by a subletting arrangement. A sub-landlord and the master-landlord may disagree regarding their respective rights to possess the sub-leasehold. Disagreements between the property manager and the sub-landlord may delay action.
6. Institutional Landlords: The organizational structure of the landlord may play a role. When the same individual is the owner and property manager of the building, that person will likely exercise broader discretion than in a more institutional context.
These issues do not necessarily preclude the use of self-help. A risk-adverse landlord may view going to court to gain possession as a desirable alternative.
What should a tenant do if the landlord is threatening to take possession prior to going to court? The simplest options are to (a) avoid falling into default or (b) plan a move-out in advance if a default appears imminent. In certain situations, the circumstances of the business or relationship with the landlord may be too complex or attenuated for that. The tenant may have business operations or valuable property to protect. In any case, careful consideration of the lease terms and cogent communication with the landlord are essential. Where property and income are at stake, potential risks associated with changing locks and removing property are too great for either side to view landlord self-help as the logical first step towards resolving a dispute. In these situations, a tenant is best served by interacting with the landlord through experienced brokers and lawyers.
photo credit: vasilennka via photopin cc
