Real estate transactions may be very simple or incredibly complex. Further complicating the already intricate process of purchases and sales, creations of subdivisions and problems of zoning is the reality that almost every real estate transaction involves some degree of credit financing. Whether on the commercial side or the consumer side, the financing for even the simplest modern real estate transaction is burdened by detailed documentation that almost always involves hundreds of pages of dense verbiage and tiny fonts. In the rush to close these deals, humans make mistakes.

In refinance transactions, common mistakes may include listing the wrong legal description for the collateral; a defective release of the prior mortgage or deed of trust; or recording late, out of sequence or in the wrong jurisdiction. When a refinancing lender pays an existing lien but makes a mistake that could cost that lender important priority in the real estate, that lender may frequently rely upon the remedy of equitable subrogation to save itself from a total loss.

What is subrogation?

Subrogation is a doctrine well known in the insurance world where payment of the claims of another is common. In many instances, after paying on a claim an insurance company will step into the shoes of its insured in order to assert rights against the person or entity that caused the damage to the insured. The insurance company becomes the subrogor and is entitled to all of the rights of its customer who has been paid and may have no longer any interest in pursuing the person who has damaged them.

Similarly, in a real estate refinance transaction a new lender is paying an existing lender. The refinance may occur for many reasons, including to lower the interest rate, cure a default or pull more cash out of the real estate. What’s supposed to happen: the new lender pays the prior lien, the new lender records a mortgage and the paid lender records a release.

But sometimes mistakes happen.

If the sequence doesn’t go the proper way but the new lender pays off the old lien the new lender may invoke the remedy of equitable subrogation to try and set things right. This subrogation is equitable because even if the new lender made a mistake, it would be fair for all the affected parties for the new lender to step into the shoes of lender that had been paid off. This way, the new lender will enjoy all of the rights that were held in the released lien, at least to the extent that the old lender had been paid.

The new lender will have to file a complaint in a court that has jurisdiction over the property in order to obtain the right of equitable subrogation. The parties should expect to have a contested lawsuit, usually between the new lender (or their title insurance company) and some other person with an interest in the property, whether a subsequent lienor or judgment creditor.

The new lender may not prevail in the lawsuit if an intervening equity would be harmed by allowing equitable subrogation. This may happen if another lienholder or property owner would be unfairly affected by the subrogation. Courts will view these disputes on a case by case basis. However, since the facts are usually well known to all parties and not in significant dispute, the courts can generally resolve the issues on motions for summary judgment.

Lenders who are faced with sudden or unexpected priority or recording issues should always consider the remedy of equitable subrogation as a possible solution to their problem.

The post Fix Real Estate Problems With Equitable Subrogation appeared first on Baltimore Bankruptcy Lawyer.

On TV, process servers appear as clowns, ice cream vendors or construction workers and after engaging the hero in offhand chatter force papers into his hand announcing “You’ve been served!” The hero looks down with an expression as if his fingers have been forced into a muddy goo and we cut to a commercial.

In real life, clients need never pay for these extravagant masquerades because service is actually fairly easy. Maryland, Delaware, Pennsylvania and Virginia all authorize service upon almost anyone of adult age at the defendant’s usual address.

In Maryland:

Service of process may be made within this State … if the person to be served is an individual, by leaving a copy of the summons, complaint, and all other papers filed with it at the individual’s dwelling house or usual place of abode with a resident of suitable age and discretion.

In Pennsylvania:

Original process may be served upon a defendant who is an adult by handing a copy to the defendant; or by handing a copy at the residence of the defendant to an adult member of the family with whom the defendant resides; but if no adult member of the family is found, then to an adult person in charge of such residence.

In Virginia:

In any action at law or in equity or any other civil proceeding in any court, process, for which no particular mode of service is prescribed, may be served upon natural persons as follows:

By delivering a copy thereof in writing to the party in person; or if the party to be served is not found at his usual place of abode, by delivering a copy of such process and giving information of its purport to any person found there, who is a member of his family, other than a temporary sojourner or guest, and who is of the age of sixteen years or older.

In Delaware:

Upon an individual other than an infant or an incompetent person by delivering a copy of the summons, complaint and affidavit, if any, to that individual personally or by leaving copies thereof at that individual’s dwelling house or usual place of abode with some person of suitable age and discretion then residing therein.

These rules seem fair to the courts and the attorneys who draft the rules because they believe that service of legal papers shouldn’t be a game to see if a plaintiff can successfully force the complaint directly into the hands of the defendant.  Instead, the focus is on whether the service is reasonably likely to alert the defendant that there’s been an action or a proceeding filed against them. If so, the defendant knows that they need to take some steps to protect their legal rights.

Service issues can become difficult when people attempt to evade.  They may see the sheriff coming and refuse to answer the door.  In that event, the plaintiff’s attorney will file an affidavit from the process server that the person seems to be evading service and ask the court to enter an order saying all the plaintiff has to do is certify a mailing to the defendant and post the papers at the defendant’s last known address.  If the court grants that request the defendant will be determined to be served even if they never have the papers placed directly into their hands.

The post Serve A Complaint At The Individual’s Dwelling House Or Usual Place Of Abode With A Resident Of Suitable Age And Discretion appeared first on Baltimore Bankruptcy Lawyer.

The news seems fraught with stories of bankruptcy, from individuals to large corporations. Loans are commonplace in everyday life, and people frequently turn to loans for everything from purchasing a vehicle to larger commitments like mortgages and business loans.

The current economy, while certainly challenging for the individual consumer, has hit business twice as hard. While operating costs climb, consumers are reluctant to employ services or purchase products. Because of this, businesses have been finding themselves operating on slimmer and slimmer margins.

Like so many businesses and individuals, you may have found that your own business is in danger of defaulting on a loan from your bank. Depending on how far into payment delinquency you have gotten, you may have been offered a forbearance agreement—but what does this mean for you and your business?

Proceed with Caution, But Not Fear

Forbearance is a temporary “fix” that many banks offer to avoid defaulting on a loan, by allowing the borrower to postpone or reduce payments for a designated amount of time. This typically involves an agreement between the lender and borrower that the lender cannot foreclose or accelerate payments during the agreed forbearance period.

In forbearance, however, the borrower also waives the right to fight any action that the lender takes to collect the remaining debt should the borrower not uphold the terms of the forbearance agreement. Other agreements such as restructuring a loan in the short or long term, or changing the date that the loan is to be paid in full, can also require the borrower to waive certain rights.

Talk to a Maryland Commercial Litigation Lawyer Today

Maryland and Delaware commercial litigation attorney Ron Drescher has over twenty-five years of experience in bankruptcy and commercial litigation, representing individuals and businesses throughout Maryland, Delaware, Pennsylvania, and Virginia. In his years assisting businesses with their legal battles, he has seen that borrowers in trouble tend to benefit the most from a property restructure or forbearance—but results can vary depending on the initial agreements set forth in your loan.

If you’d like to talk more about it, call the Baltimore office of Drescher & Associates today at 410.484.9000. Ron Drescher and his knowledgeable team are available to help you and your business regain control of your finances and move forward.

The post Have You Already Waived Your Rights for Maryland Commercial Litigation? appeared first on Baltimore Bankruptcy Lawyer.