Commercial Real Estate Blog by Madison
Author Archives: Debra Smith, Esq.

Real Estate Fraud – “Stealing” a Home

By: Debra Smith, Associate General Counsel, Madison Title Agency

An increasingly common type of real estate fraud occurs when someone impersonates the true owner of real property and does one of two things- sells the home or obtains a mortgage on it.

Typically, the wrongdoer first identifies a low risk transaction. The wrongdoer may look for a home nearing foreclosure for unpaid taxes. This is very easy information to obtain because so much data is accessible on the Internet now. The wrongdoer will then visit the property and confirm it is vacant. The ideal target has no mortgages (or only a very small mortgage) encumbering it.

The wrongdoer will obtain fake identification in the true owner’s name. He may then sell the property to a bona fide purchaser. He collects the net sale proceeds and moves on to the next victim. In criminal proceedings against Maria Leyna Albertina in Brooklyn a decade ago, it was alleged that she had identified and purportedly “sold” 32 such properties.

There are many variations on this scheme. Continue reading

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The Pervasiveness of Mortgage Fraud – Forged Documents

By Debra Smith, Associate General Counsel, Madison Title Agency

Mortgage fraud is pervasive. This is the first of a series of blogs describing different types of mortgage fraud and the flags that can help anyone involved in the real estate and financial sector identify them.

One fraud seen with increasing frequency is forged mortgage satisfactions. A major example of this type of fraud occurred in 2005 in Greenwich, Connecticut. A respected real estate developer owned a number of commercial properties. It turns out that to generate more cash flow, he was routinely forging mortgage satisfactions of mortgages encumbering properties he owned. Continue reading

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What are the Obligations of an Insured who Files a Title Insurance Claim?

By: Debra Smith, Esq., Associate General Counsel, Madison Title Agency

A recent Connecticut case, Chicago Title Ins. Co. v. Bristol Heights Associates, LLC, 142 Conn. App. 390, 70 A.3d 74 (Conn. App. 2013), cert. den. 309 Conn. 309, 68 A.3d 662 (Conn. June 20, 2013), underscores the importance of understanding your title policy when you file a claim with your title company. In this case, Bristol Heights Associates, LLC (“Bristol”) filed a claim for unpaid taxes covering a period prior to the date it acquired title to the property. These taxes were missed by the title company. The individual that sold the property to Bristol became a member of Bristol at the time of the conveyance. There were questions as to whether seller’s knowledge of the taxes could be imputed to Bristol, since the seller became a member of Bristol. Continue reading

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Appeals Court Addresses Insurer’s Duty to Defend

By: Debra Smith, Esq., Associate General Counsel, MCRES

In a recent case, K2 Investment Group, LLC, et al. v., American Guarantee & Liability Insurance Company, 21 N.Y. 3d 384, 993 N.E. 2d 1249, 917 N.Y.S. 2d 229 (N.Y. Ct. App. 2013), the New York Court of Appeals addressed the duty of an insurer to defend its insured. Even though this case did not involve title insurance, it will likely be cited in title and other insurance litigation involving the duty an insurance company has to its insured.
In this case, the plaintiffs made loans to be secured by mortgages. Following default, the plaintiffs commenced an action against various parties, including Jeffrey Daniels, a lawyer, for legal malpractice. The insured tendered the claim to his malpractice carrier, American Guarantee & Liability Insurance Company. The complaint contained allegations that the insured was a principal of the borrower. The plaintiffs alleged that the insured failed to record the mortgages and obtain title insurance. American Guarantee denied the claim and did not tender a defense based on a policy exclusion for claims arising out of an insured’s actions undertaken in his capacity as a member or owner of a business enterprise.
Here is the Court’s decision. Continue reading

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In Borough of Harvey Cedars v. Harvey Karan and Phyllis Karan, New Jersey Supreme Court Addresses How Awards for Property taken by Eminent Domain should be Calculated

A recent New Jersey decision addressed how a condemnation award should be calculated in the event of a partial property taking.

In Borough of Harvey Cedars v. Harvey Karan and Phyllis Karan, 2013 WL 3368225 (N.J.), the Supreme Court of New Jersey analyzed this issue in the context of a partial taking for an easement for sand dunes part of which was over a portion of the defendants’ property. It is easy to see that there would be some diminution in the value of an oceanfront property resulting from an obstruction of the view because of the sand dunes. The harder question, and the one the Court addressed, is whether any increase in the value of the home resulting from a reduced risk of storm damage, should also be factored in the calculation. To read more, go to http://blog.madisoncres.com/.

Continue reading

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Recent NY Case Expands Application of Equitable Subrogation in Second Department

By Debra Smith, Esq.
Associate Commercial Counsel

A recent case in the Second Department in New York has expanded the long-standing position held on the issue of equitable subrogation. Before delving into the details of the specific case, it may help to explain the concept. Equitable subrogation is a doctrine recognized in most states and a common issue in the world of real estate and lending. This doctrine enables a lender that pays off an existing loan to stand in the shoes of the lien holder it paid off for priority purposes. This is an equitable remedy that allows, in certain circumstances, for the lien holder (lender) to change its priority position to the extent of the lien paid.

How does equitable subrogation work? And how does the recent NY case expand the application of equitable subrogation in the Second Department?
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