Title Nerds

Riker Danzig partners Jim Lott and Diane Hickey were our special guests for the second episode of Season 3, moderated by our co-hosts Mike O’Donnell and Bethany Abele. Jim and Diane practice in Riker’s Governmental Affairs practice with extensive experience in Land Use law, regularly dealing with disputes over title, and continually interacting with planning boards and the Department of Transportation at the intersection of title law and real estate development. They explained to Bethany and Mike that most of their title examination for commercial development comes during thorough due diligence, whether for developers, lenders or investors, which serves to help avoid most title disputes. They advise as to the best courses of action to address a potential title issue in appearances before planning boards, from controversial warehouse projects, and commercial shopping centers to lighting applications for drive-up ATMs. Diane also addressed specific issues faced by cannabis licensees with applications before the local planning and zoning boards, when title insurance companies are not issuing policies because of federal law hurdles for real property transactions with cannabis uses. Jim also provided insight on being attentive to DOT access rights for properties located along state highways when considering subdividing or changing lot lines, and dealing with easements in the planning board context. Next, Mike interviewed then-associate Thomas Persico, who is now serving as Assistant General Counsel with JPMorgan Chase. Tom explained the Community Wealth Preservation Program established by Governor Murphy early this year, which aims to intercept foreclosed-upon residential properties before public auction by giving first and second rights of refusal to purchase after foreclosure. The goal of the program is to keep generational wealth within families. Tom addressed how the Act works and the various restrictions, as well as how sales under the Program differ from other foreclosure sales. Mike and Tom discussed the process of exercising the rights of refusal, exploring how sheriff’s offices are enforcing deed restrictions and addressing complaints. They also identified areas of the Program that will likely be clarified in the future.

Special guest Anton Tonev, co-founder of Inspect HOA, joined us for our final episode of Season 2 of Title Nerds. Drawing from his own experience as a member of an HOA, he built this business for real estate professionals and buyers who need to deal with homeowners associations. With 400,000 HOAs in the U.S. and no central database of HOAs, his business has established a niche service, including hoa.com, to assist buyers, attorneys, lenders and escrow officers. He and his team work with clients on several thousand closings a month. Anton shared examples of scenarios in which Inspect HOA has been able to assist buyers and others in avoiding problems with the rules and regulations that HOAs try to enforce, particularly with regard to leasing out properties. Mike explored ways that Inspect HOA assists escrow officers and attorneys with avoiding issues during closing transactions when there may be violations or special assessments. Anton suggested that by automating work, such as how his company has been able to do, it allows clients to be more efficient and productive and minimize errors and mistakes, thereby speeding up the closing process for all parties. Mike then interviewed Thomas Persico, our newest associate in our Title Insurance practice, about WW3 Ventures v. Bank of N.Y. Mellon, Nos. A23A0719, A23A0720, 2023 Ga. App. LEXIS 536 (Ct. App. Nov. 3, 2023), wherein the Georgia Court of Appeals addresses how constructive and inquiry notice related to a recorded security deed not properly witnessed.

Our special guest for Episode 4 of our second season of Title Nerds was land title attorney Lance Pomerantz of Land Title Law. An attorney who provides expert consultant services to the title insurance and real estate industry, Lance shared some very interesting war stories from his “accidental career.” He has researched land grants back to the Royal Charter, as well as underwater land grants and title disputes involving numerous New York beachfront properties. Co-host Michael O’Donnell asked Lance about some of the thorniest chains of title Lance has been involved in, some of which had him sounding more like a gritty Harrison Ford character than a land title attorney! Co-host Bethany Abele then interviewed Kevin Hakansson, an associate in our Title Insurance practice, about Davis v. Reverse Mortgage Solutions, (No. 2:20-cv-632-CWB, 2023 U.S. Dist. LEXIS 42496 (M.D. Ala. Mar. 14, 2023)). In Davis, two parcels of land, one with a house and the other with the surrounding yard and pool, were merged into a single tax parcel, which passed to the Plaintiff upon her father’s death. The father had applied for a reverse mortgage three years before his death, and it was not discovered until later that the metes and bounds description for the reverse mortgage only contained the description of the second parcel of property, and not the parcel with the house. Consistent with the metes and bounds description, the Foreclosure Deed encompassed only the non-residence portion of the property. The Plaintiff subsequently asserted ownership to the first parcel with the house and filed suit seeking a declaration of ownership. Ultimately, the federal court granted summary judgment to the Plaintiff, who asserted claims for reformation of both the mortgage and a subsequent foreclosure deed on the grounds of a mutual mistake. The Court noted that it was “authorized to reform real estate documents in circumstances where—due to a mutual mistake—the executed documents fail to reflect the true intentions of the parties.” It relied upon precedent issued in Federal Land Bank of New Orleans v. Williams, a case in which the Alabama Supreme Court granted reformation of a mortgage when a survey discovered that the mortgage did not properly describe the parcel on which the borrower resided. Bethany and Kevin agreed that the Court got this right, taking a common-sense approach to determining whether the reverse mortgage should be reformed. The Court looked to the circumstances and documentation to find that the parties were all aware that the parcel of property with the house was intended to be encumbered.

For our second episode of the new season, Title Nerds co-hosts Mike O’Donnell and Bethany Abele interviewed Steve Gottheim, General Counsel of the American Land Title Association (“ALTA”). Steve discussed some of the primary issues of concern to ALTA and its members, including housing recession possibilities, public policy issues around increased access to affordable housing and, generating the most conversation, real estate and wire fraud. Steve noted that ALTA is deeply involved in providing education and assistance to title insurance and real estate professionals to help avoid scams and to identify money laundering scenarios. In addition, ALTA provides a host of educational materials about avoiding wire fraud for consumers and real estate agents. Steve also touched on the proliferation of title monitoring services, and the need for home buyers to consider enhanced homeowners policies with title insurance fraud protection. Bethany then interviewed Riker Danzig associate Jim Mazewski about the complex title insurance coverage matter Findlay v Chicago Title Ins. Co., 2022 IL App (1st) 210889 (2022). Therein, the Illinois Appellate Court, First Division, adopted the reasoning of other outside jurisdictions and held that title insurance claims were exempt from Illinois’ “complete defense rule,” which requires that an insurer provide a defense on all claims raised against an insured even if only one of the claims is covered. In this matter, landlocked homeowners were able for years to easily access the Lake Michigan beach via a beach easement across a portion of a neighboring lot, Lot 5. However, when Lot 5 was purchased by a new owner, the new owner objected to neighbors cutting across his property and filed a lawsuit to prevent them from doing so. The landlocked homeowners sought a declaratory judgment, implying that an ingress-egress easement existed on Lot 5. The new owner of Lot 5 won that suit, and then sued Chicago Title, which had received claims from both parties to the first lawsuit as they were both insured by Chicago Title. The plaintiff’s suit against Chicago Title alleged conflict of interest, failing to provide coverage for all counts of the earlier litigation, and failing to approve of the plaintiff’s retention of a new attorney. Failing at trial on all claims, the plaintiff appealed. In a decision in line with a growing body of caselaw, the appellate court found title insurance companies are not subject to the “complete defense rule.” The Court also found that Chicago Title had the right to select counsel of its choosing, not the insured’s. Tune in to the podcast for an in-depth discussion of the Appellate Court’s consideration of the plaintiff’s claims leading to the decision.

Title Nerds co-hosts Mike O’Donnell and Bethany Abele welcomed two partners from our Environmental Practice In Episode 9, Alexa Richman-La Londe and Steve Senior. Alexa and Steve discussed the hot real estate market in New Jersey for commercial/industrial properties, which are frequently environmentally impaired and require remediation. This led to an interesting conversation about the use and mechanics of NJDEP’s Deed Notices that get recorded in land records, including a case where a property owner refused to consent to a Deed Notice (Cozzoli Machine Company v. Crown Real Estate Holdings, Inc., Docket No. A-1733-19, App. Div., Dec. 7, 2021). The discussion led into other environmental documents that show up in title searches (including, other deed restrictions, conservation easements and liens), and the potential obligations of sellers and/or lenders to disclose environmental reports. Next, Mike interviewed counsel Jorge Sanchez about a case recently heard in the Appellate Division and approved for publication, Woodmont Props. v. Twp. of Westampton, 2022 N.J. Super. LEXIS 13, *2 (N.J. App. Div. Feb. 7, 2022). In this published case, the appeals court affirmed the dismissal of a potential purchaser’s claim for a constructive trust as to foreclosed land, finding that the potential purchaser’s claim could not be sustained because a foreclosure and sheriff’s sale extinguished any unrecorded contractual right to purchase the property. The plaintiff, Woodmont had contracted to purchase a piece of land. The contract required that the seller not encumber the Property more than 80% of its value. Woodmont did not record the contract in the County Clerk’s Office. The following week, the seller gave a mortgage on the land to TD Bank to secure a loan, encumbering the property. The seller defaulted on the loan prior to closing with Woodmont, and TD Bank sought foreclosure of the property. Woodmont did not intervene. While the foreclosure was pending, Woodmont entered into a redevelopment agreement with the Township of Westampton, which was terminated by Westampton when Woodmont failed to secure title to the land. The property was eventually sold to TD Bank at a Sheriff’s Sale. Woodmont subsequently filed suit against Westampton and TD Bank, among others, alleging tortious interference and a breach of the redevelopment agreement. Central to the claim was that the TD mortgage lien was more than 80% of the property’s value. The case was dismissed, and Woodmont appealed. On appeal, the appeals court found that the claims against Westampton failed because the redevelopment agreement was conditioned on Woodmont having title to the property, which it did not. As to TD Bank, the Court first found that even if TD Bank knew of the Woodmount contract, it still had a right to foreclose and need not name Woodmont as the contract was not recorded. To rule otherwise would run contrary to N.J.S.A. 2A:50-30, prior case law. The Court warned that those who did not record their interests ran the risk of their property interest being terminated without being named as defendants in a foreclosure. However, the court did find that Woodmont could have a viable claim against TD Bank for tortiously interfering with its contractual rights with the seller if it indeed knew of the contract .

Episode 7 features one of Riker Danzig’s impressive retired judges, the Hon. Travis Francis, who was Assignment Judge for Middlesex County, Superior Court of New Jersey before joining Riker Danzig. Judge Francis is now an active mediator and discovery master in the Firm’s Alternative Dispute Resolution Practice. Co-Host Bethany Abele interviews Judge Francis about some of the intriguing title insurance and real estate cases that came before him when he was on the bench, including issues of quiet title, specific performance and adverse possession. Co-Host Michael O’Donnell joins Bethany and Judge Francis in the discussion, which headed “into the weeds,” literally, as cases involving farmers and fences kept “cropping” up. Keeping us on track, Judge Francis provides insights and best practices for counsel bringing title insurance cases, including guidance on pursuing orders to show cause and motions for relief to provide for a good experience with the deciding judge. Next, Mike invites Riker Danzig attorney Kevin Hakansson to unpack the Cherry v. Ziad Hadaya case, 2021 N.J. Super. Unpub. LEXIS 2571 (App. Div. Oct. 29, 2021), in which the NJ Appellate Division held that neighbors could enforce deed restrictions tracing back to a 1928 deed to prevent another neighbor from subdividing their property. In Cherry, Defendants owned a plot of land on Jefferson Road in Princeton that was originally part of a larger parcel conveyed in 1928. While the 1928 deed contained restrictions on the land regarding subdivision, the 2004 deed did not. After the defendants received approval from the Planning Board in 2008 to subdivide its property into two lots, and later applied to subdivide the larger resulting lot into two more lots, the plaintiffs, who owned neighboring properties, filed a complaint seeking to void the 2008 subdivision and to enjoin further subdivision based on the 1928 deed restrictions relating primarily to the frontage of the lots. The Chancery Court dismissed some neighbors’ claims for lack of standing as they were not in the chain of title of the 1928 deed. But it granted summary judgment for the other plaintiffs whose properties were within the 1928 deed chain of title and ordered the Defendants to re-convey the plots back to their 2004 dimensions. On appeal, the Appellate Division affirmed, agreeing that enforcement of the 1928 deed restrictions was reasonable, and that plaintiffs in the chain of title were among those intended to be incorporated into the neighborhood scheme.

In Episode Five of Title Nerds, hosts Mike O’Donnell and Bethany Abele are joined by partners from Riker Danzig’s Bankruptcy & Corporate Restructuring Practice, along with Riker Danzig attorney Mike Crowley from the Title Insurance team. First, Bankruptcy Chair Joe Schwartz explains how liens and mortgages pass through bankruptcy. Partner Tara Schellhorn next joins Joe to address avoidance action-type claims, where Mike and Bethany questioned them about preferences as a way for Trustees to recoup payments and property interests, and best defenses against preferences. In a wide-ranging discussion, Joe and Tara provided insights on trustees being a hypothetical lien holder or a bona fide purchaser for value, as well as fraudulent transfers and the federal and state fraudulent conveyance statutes. Of particular interest to title underwriters, Tara discussed the 363 sale process, and how to confirm that clear title is being delivered. In the second segment, Mike Crowley, an associate in Riker Danzig’s Title Insurance practice, discusses the federal case Tithonus Partners II, LP v. Chicago Title Ins. Co., 2021 WL 4711284 (W.D. Pa. Oct. 8, 2021) in which a dispute arose over coverage after the insured owner – a limited partnership – conveyed the insured property to Tithonus Partners II, LP, another limited partnership that was the original insured’s 99.9% owner. Tithonus Partners later subdivided the property and sold some of it to a third party. In 2020, that third party commenced an action against Tithonus Partners, claiming that some of the conveyed property was not owned by Tithonus Partners. Tithonus Partners then made a title claim with Chicago Title, who denied the claim because Tithonus Partners was not the Insured under the policy. Tithonus Partners then sued Chicago Title and the parties cross-moved for summary judgment. The Court rejected Tithonus Partners’ claim that it was a successor to an Insured and, further, found that the unambiguous policy language requires that a grantee must “wholly own” the named insured for coverage under the policy to continue, and Tithonus Partners’ 99.9% ownership was not enough. The Court granted Chicago Title’s motion and the action was dismissed.

Title Nerds hosts Mike O’Donnell and Bethany Abele welcome special guest Mike Ham, the “Coolest Guy in Title Insurance,” to the podcast, along with fellow Riker Danzig attorney Desiree McDonald. In the first segment, the Title Nerds hosts interview Mike Ham, who is a commercial real estate title insurance sales executive with Fidelity National Title Group and hosts a wildly popular podcast, “The Morning Spotlight Podcast,” in which he brings on interesting guests in real estate and other industries. Mike talks about how he started in the title insurance industry, what sparked his podcast, how he helps his clients, and what it takes to be a successful title insurance salesperson. Then, Riker title team associate Desiree McDonald discusses the case of U & Me Homes, LLC v. Cty. of Suffolk out of New York State (148 N.Y.S.3d 682 (N.Y. Sup. Ct. July 16, 2021)) in which the Court held that a purported restrictive covenant on the property was void and granted the property owner’s motion for summary judgment. In the case, the plaintiff had purchased an undeveloped parcel of land in Southampton that was split-zoned, with both portions permitting residential development. When the plaintiff decided he wanted to build a single-family home on the property, he learned of a developmental restriction that would make his property of zero value. The deed and title search report, however, had not contained any reference to any development restrictions, and indeed, the property had been transferred numerous times previously with no reference to a restriction. The action was brought alleging that the covenant failed to run with the land and that the restriction was against public policy. The Court, very displeased with the County and Town, found no intent for the restriction to run with the land, and said the County and Town had overstepped their bounds and had reversed the role of government. The Town and County then went after the title companies for coverage, and the Court decided that if money was ever to be paid, it should be by the government, not by the insurance companies, something not seen very often in Court’s opinions.