This article discusses recent case law in Illinois regarding the issue of whether "absolute" (as opposed to "conditional") assignments of rents in connection with mortgage loans are enforceable (especially where there is a bankruptcy proceeding filed by or against the mortgagor), and the issue of what steps must be taken to "activate" a properly perfected assignment-of-rents document so that, as between the mortgagor and mortgagee, the lender will be entitled to take ownership of and collect the rents from the tenants at the property.
This article addresses the issue of whether a mortgage insurance clause could be deemed to permit the mortgagee to require that the mortgagor obtain terrorism insurance where, at the time the mortgage was executed, the applicable provision did not expressly require terrorism insurance but required the mortgagor to maintain insurance coverage generally available at commercially reasonable premiums. The article discusses a New York appellate court opinion that ruled that the mortgagor should not be forced to purchase terrorism insurance under such circumstances, as well as a New York federal district court opinion that held that such language in the mortgage justified the lender's requirement of terrorism insurance even where the applicable "all risk" policies were amended to exclude such coverage. The article also notes that the Terrorism Risk Act of 2002 prohibits terrorism exclusions from insurance policies and written notice from the insurer of any increased premium for such coverage.
This article discusses the enactment of the Civil Asset Forfeiture Act of 2000, and its ramifications for real estate owners and lenders, as well as title insurers. The article also discusses a recent federal court of appeals case of first impression, which permitted the mortgage lender to collect a prepayment premium where the government had seized the mortgaged property and sold it, in connection with a criminal forfeiture proceeding based on the mortgagor's fraud involving the federal Medicare program.
This article discusses the "clogging of the equities" doctrine as applied to traditional real estate transactions, as well as to relatively new forms of transactions such as synthetic leases and mezzanine financing.
This article examines a recent Florida appellate decision that refused to extend the expiration date of an option agreement. The contractual deadline date was enforced, even though it fell on a Saturday. The court found that there were no equitable considerations that justified extending the deadline date. The article also discusses other cases where equitable considerations were deemed sufficient to extend the expiration date.
This article summarizes recent case law regarding the ability of a mortgage lender to charge late charges and default interest, and the permissible amount and scope of such charges. The article further discusses the recent concept of charging a borrower an exit fee (especially in connection with securitized financing), and the enforceability of such a provision. Sample exit fee provisions are attached as exhibits to the article.
This article discusses recent case law, both bankruptcy and non-bankruptcy, regarding the issue of whether, and to what extent, a secured creditor is entitled to collect contractual default interest and late charges.
This article discusses the use of defeasance provisions in securitized loan transactions. Topics covered include the following: the definition, nature, and scope of defeasance; benefits to both the lender and borrower; steps that must be taken to comply with the requirements of loan servicers and rating agencies; applicable case law regarding the enforceability of defeasance clauses in mortgage loan documents; "in substance" defeasance; special requirements imposed by REMIC and FASIT investment conduits; structuring considerations; bankruptcy issues; and the use of special consultants and title-company escrow services in such transactions. The article contains, as exhibits, a sample form of prepayment/defeasance provision in a mortgage-loan commitment and sample forms of specialized mortgage prepayment/defeasance provisions for use in securitized financing transactions.
This article discusses recent case law regarding the issue of whether a recorded, but defectively notarized, real estate document is valid and effective, and whether it nonetheless imparts constructive notice to other lienholders and judgment creditors with validly recorded documents. The decisions in this area are often conflicting, and may depend on the construction of applicable state statutes.
Editors’ Synopsis: This Article discusses recent case law regarding whether a recorded but defectively executed or acknowledged mortgage may be deemed valid, whether it imparts constructive notice to, and is entitled to priority over, subsequent judgment creditors and lienholders with validly executed and recorded documents, and particularly, wheth¬er a trustee in bankruptcy may avoid the defectively executed mortgage. This Article also addresses the impact of errors in the indexing of real estate documents, the title insurer’s liability if the mortgage is deemed invalid because of a defect in it or the underlying note, and whether improperly executed documents should be reformed or deemed invalid.
A discussion and analysis of what interest a secured creditor obtains when it takes a security interest in a "naked" option to purchase real estate; i.e., an option unrelated to any recorded interest, such as a mortgage, that it may otherwise have in the property. The article contains suggestions for legislative solutions.
This article discusses potential challenges to mortgage due-on-sale clauses, even though though there is a statutory federal preemption of any limitation on the exercise of such provisions. The article discusses attempts by "clever" borrowers to challenge the applicability, validity and enforceability of due-on-sale clauses in connection with land contract transfers, the exercise of prepayment provisions, agreements not to "unreasonably withhold" consent to property transfers, changes in entity ownership or control, and borrower bankruptcies. The article includes suggested forms of due-on-sale clauses as exhibits.
This article discusses a recent decision by the federal district court in Illinois, regarding a specific "carveout" from a nonrecourse provision in a commercial loan document. The court ruled that the carveout was valid and enforceable, and summarily rejected the borrower's argument that the carveout constituted a liquidated damages provision or an unenforceable penalty. The article also discusses the types of carveouts commonly inserted in commercial mortgage loan documents and the reasons for their use. The article further discusses the measure of damages for the breach of carveouts, as well as recent case law finding borrower liability under certain tort theories even when there are no carveouts to the nonrecourse provision.
An analysis and discussion of recent bankruptcy and non-bankruptcy decisions regarding the validity and enforceability of various types of prepayment provisions in commercial mortgage-loan documents. The article also discusses the "perfect tender in time" rule, the use of "exit fees" in lieu of prepayment premiums, the use of a prepayment-premium provision in the proposed Capital Markets Mortgage, and prepayment/defeasance provisions. The article also includes several forms of yield-maintenance and other prepayment-premium provisions.
An outline, in a question-and-answer format, of the legal issues and case law (including forms) that apply when a lender is making a commercial mortgage loan secured by property in more than one state.
This article describes and analyzes a recent Washington Supreme Court case, Countrywide Home Loans, Inc. v. First Nat. Bank of Steamboat Springs, N.A, 144 P.3d 1224 (Wyo. 2006), which dealt with the issue of whether a refinancing mortgagor must be precluded from equitable subrogation to a first-priority lien if it has actual or constructive notice of a junior lienholder. The court held that that answer was "no," relying on the Restatement (Third) of Property - Mortgages approach, i.e., that actual or constructive knowledge of the intervening lien is irrelevant. The article also discusses other current case law in this area and the distinction that some courts make between "conventional" and "equitable" subrogation.
This article describes the three different jurisdictional approaches that courts have applied to the doctrine of equitable subrogation; 1) the approach taken by the restatement (third) of property: mortgages, i.e., that actual or constructive knowledge of the intervening lien is irrelevant; 2) the “majority” approach, i.e., that a party with actual knowledge of the intervening lien cannot seek equitable subrogation, while one with constructive notice can; and 3) the “minority” approach, i.e., that a party with either actual or constructive knowledge of the intervening lien cannot seek equitable subrogation. The article also discusses recent case law and commentary in this area, which indicates that t
This article summarizes the changes to the Illinois Transfer Tax Law that became effective in June, 2004. Additional transactions that are now subject to a transfer tax include ground leases in excess of 30 years, easements, timber rights, timeshare rights, and “any other type of interest with the right to use or occupy real property.” The amendments also provide that transfers other than by deed or trust document are subject to a transfer tax, including the transfer of a “controlling interest” in a “real estate entity.” The article also discusses the attempt by some Illinois counties and municipalities to impose a transfer tax on similar types of interests.
An analysis of "exploding" and "springing" guarantees, and variations thereof, which provide for liability that only becomes effective, or that terminates, upon the occurence of a specified future event (or events). This article also discusses the enforceability of such documents in the event of the borrower's bankruptcy, and their applicability to conduit and CMBS financing transactions.
This article discusses the issue of federal preemption of state statutes restricting or prohibiting the charging of prepayment penalties in connection with mortgage loans. The article discusses the applicability of the federal preemption to residential and commercial loans, and the various types of loans that are covered (or exempted). The article also discusses the effect of the Alternative Mortgage Transactions Parity Act on the enforceability of prepayment charges by lenders, and the effect of recent OTS regulations and rulings. The article further discusses the enforceability of prepayment penalties in connection with the lender's acceleration of the loan due to violation of the due-on-sale clause.
This article discusses and analyzes the Illinois appellate court's decision in LaSalle National Bank v. Metropolitan Life Insurance Company, which upheld the trial court's ruling that a disputed mortgage prepayment fee of more than $50 million, as calculated by the lender pursuant to the applicable prepayment provision, was unenforceable and not payable by the borrower. The article also discusses the unique language of the provision, and the dangers inherent in the use of "non-standard" language and the reliance on subjective, as opposed to objective, criteria to determine the amount of the premium.
This article summarizes and analyzes an Illinois bankruptcy decision upholding the enforceability of a prepayment premium provision in commercial mortgage-loan documents. The court held that even though the loan had been accelerated the lender could still collect the premium after the property had been sold at a bankruptcy sale, because the prepayment provision provided that the premium would be deemed a "voluntary prepayment" as long as it occurred before a foreclosure sale (as opposed to a bankruptcy sale). The court also awarded the lender its late fee, but refused to allow it to collect default interest. The article also discusses the tendency of some bankruptcy courts (including the court in this case) to subject prepayment premiums to a "liquidated damages" analysis, and the case law regarding the collection of late fees and default interest in bankruptcy.
This article summarizes the holding of the Illinois trial court in the LaSalle National Bank v. Metropolitan Life Insurance Company, which held that the mortgage lender was not entitled to an escrowed prepayment fee in the amount of $47 million. The prepayment language in the mortgage called for the lender to exercise its "good faith" judgment in selecting a "comparable instrument" to the mortgage as of the day it was entered into in 1987. The court held that the facts in this case indicated that the lender had not, in fact, acted in good faith in selecting the benchmark instrument.
This article discusses the new ALTA Endorsement 14.2 (Future Advances - Letter of Credit), which is used when the mortgage secures a reimbursement obligation for a letter of credit and contains no exception for advances made after the borrower's bankruptcy. The article urges caution in issuing this endorsement, without the bankruptcy exception, in the situation where the endorsement is requested to insure against loss based on the issuer's failure to realize on its security for its reimbursement rights where the letter of credit secures the tenant's security deposit under a lease. The article analyzes the Ninth Circuit's decision in In re Mayan Networks Corp, which could be construed to limit the issuer's recovery against the tenant's bankruptcy estate.
This article discusses and analyzes, in detail, advanced issues and case law in connection with loan guaranties, including "burn down" and limited/conditional guaranties, "exploding" and "springing" guaranties, and guaranties and fraudulent transfers. The article also contains, as exhibits, various forms of guaranties.
This article discusses the potential recharacterization issues that occur in connection with loans where more than one borrower participates in the financing. It also analyzes the various types of relationships between co-lenders as well as the characterization of participation agreements, and the rights of participating lenders, in connection with borrower bankruptcies.
This article describes the coverage available (in certain jurisdictions) to mezzanine lenders (who lend to equity holders in the entity that has title to the property and secure the loan with pledges of the equity interests) under a special mezzanine financing endorsement which, subject to certain conditions and qualifications, provides "Fairway," non-imputation, and additional-insured coverage to the mezzanine lender. Sample forms of such endorsements are attached to the article.
This article discusses and analyzes the concept of mezzanine financing of commercial real estate, and highlights the legal and title-insurance issues that must be addressed in connection with this type of financing.
This article summarizes, in outline form, mezzanine financing and securitization issues, including definitions, structural aspects, bankruptcy risks, credit agency requirements, and substantive consolidation.
This is a series of brief summaries (including schematics) of current issues and developments in the areas of mezzanine financing and commercial mortgage backed securitizations.
This article discusses a recent decision by the Michigan appellate court, which denied a challenge to a mortgage prepayment-penalty clause based on an allegation of an alleged oral promise by the mortgagee not to enforce the penalty provision. The court rejected the mortgagor's claims of negligence and promissory estoppel, and held that Michigan's statute of frauds expressly prohibited any action based on an oral promise. The article also discusses the enactment of "credit agreement" statutes by most states in recent years to deal with the surge of lender liability claims in the late 80s and early 90s.
This article summarizes Michigan statutes and case law with respect to usury issues in mortgage loans. The article includes a discussion of applicable Michigan Attorney General opinions, the Michigan "business entity" statute, the Michigan criminal usury statute, and limited statutory exemptions for corporations, partnerships, and limited liability companies.
This article discusses a New York appellate court decision, BFP Park Co. v. GMAC Commercial Mortgage Corp., which held that a mortgagor was obligated to obtain additional terrorism insurance coverage and that the mortgagee had properly obtained such coverage at the mortgagor's expense. The court held that the "all risk" and "other insurance" provisions in the mortgage were clear and unambiguous, and that such additional insurance was required because it was a risk "commonly insured against" even though not universally insured against in the local commercial market. The article also discusses the importance of careful drafting of insurance provisions in loan documents.
This article examines and analyzes the various factors that mortgage lenders, in difficult economic times, should consider when determining whether to modify existing delinquent loans, rather than exercise the legal rights and remedies provided in the loan documents. The article discusses case law in this area, as well as bankruptcy and other concerns, and includes strategies for lenders to employ when negotiating and drafting modification agreements.
This article summarizes and analyzes the New Jersey Supreme Court's decision in MetLife Capital Financial Corp. v. Washington Avenue Associates, which reversed the appellate court and held that imposition of a late charge of 5%, and a default interest rate in an amount that was 3% in excess of the contract rate, were reasonable charges and were not invalid penalties.
This article describes the current creditors' rights exclusion in the ALTA lender's title insurance policy. It then discusses and analyzes the circumstances and conditions for removal of the exclusion, and applicable case law regarding whether removal of the exclusion implies coverage for creditors' rights issues. It also discusses the relative concerns and expectations of the insurer and insured, and the availability and scope of affirmative title coverage for creditors' rights issues.
This article discusses the desirability and effectiveness of language in real-estate documents carving out and excluding certain types of transactions where a party has granted an option, right of first refusal, or similar rights. The article reviews and analyzes the existing case law in this area, and suggests strategies for eliminating (or at least minimizing) the problems that may occur.
This article discusses a recent decision by the U.S. Court of Appeals for the District of Columbia Circuit, which held that the Office of Thrift Supervision, which regulates lenders other than commercial banks and credit unions, did not exceed its authority in issuing a rule that federal regulations regarding late charges and prepayment penalties were inapplicable to state-chartered housing creditors and were not preempted by such federal regulations, thereby requiring such creditors to comply with state laws regarding these charges. The article also discusses other recent case law in this area.
This manual, which was prepared for the Annual Winter Conference of the Real Property Law Section of the Michigan Bar Association in 1990, contains an exhaustive analysis of the legal and drafting issues involved in participating and "equity kicker" commercial mortgage loans. Included are sample forms of title endorsements for these types of loan transactions, as well as sample loan commitment forms.
This article discusses whether, and under what circumstances, a security interest in an option to purchase real estate constitutes an interest in personal property (in which event the applicable Uniform Commercial Code perfection provisions, as modified by the recent revisions to Article 9, would apply) or real estate (in which event the interest would be need to be properly recorded in the applicable real estate records). The article also discusses the impact of the recent revisions to Article 9 of the UCC with respect to this issue, as well as applicable bankruptcy court decisions. The article further contains suggestions for lenders on how to protect and properly perfect security interests in such options to purchase.
This article discusses one of the few cases that have decided the validity and enforceability of an "exit fee," whicn is a fee exacted by a lender in lieu of or in addition to a prepayment premium when the loan is paid by the borrower before its maturity date. The article analyzes a U.S. 2005 District Court case from New York, Anthracite Capital, Inc. v. MP-555 West Mezzanine, LLC, which held that the exit fee provision, as set forth in the mezzanine-financing loan agreement executed by the borrower, was not enforceable because it only applied if actual consideration was paid to the borrower in connection with a sale of the property. In this case, the transfer was in connection with an internal reorganization and restructure of the borrower's businesss operations and did not involve a cash sale to a third party. The article also includes a discussion of cases involving the payment of exit fees in general, as well as case law construing the scope of the language in such provisions and whether payment of the prepayment/exit fee was triggered by a particular transaction.
This article summarizes the holding of the 7th Circuit Court of Appeals, which reversed the district court’s ruling and held that the mortgage lender’s yield-maintenance prepayment provision was valid and enforceable because it was voluntary and tied to a “Treasury-flat” index that was discounted to present value. The court found that under Illinois law the clause was valid whether or not the applied a liquidated-damages analysis, because the provision constituted an agreed-upon alternative form of performance under the contract and not a disguised (and therefore unenforceable) penalty.
This article analyzes and discusses a recent Illinois Circuit Court opinion, Cornerstone Leased Drug Stores, Inc. v. Wells Fargo Northwest, NA, which held that the lender’s (Wells Fargo) prepayment provision in its mortgage loan documents was fully valid and enforceable against the borrower (Cornerstone). The court upheld the lender’s determination of the amount due as the result of prepayment by the borrower, as well as lender’s determination of the number of the remaining payments due under the note, based on the clear and unambiguous language of the contractual clause.
This article discusses a decision by the Second Circuit Court of Appeals, which held that a borrower's distribution of cash to its partners while real estate taxes were unpaid constituted a fraudulent transfer under the Uniform Fraudulent Conveyance Act in effect in New York. The article also discusses and analyzes federal and state case law regarding the issue of whether the failure to pay taxes, or the diversion of rental proceeds from the property, constitutes actionable waste notwithstanding the nonrecourse nature of the loan.
This article discusses the case law that supports the strong public policy protecting seller/purchase-money mortgage lenders with respect to subsequent construction-loan mortgages, whether or not the seller/purchase-money mortgage lender has subordinated its loan to the third-party mortgage. In certain instances, such as states with “race-notice” recording statutes, the lien of the purchase-money mortgage may be prior to the lien of the third-party lender even where the third-party lender records its mortgage first. The article also discusses the risks of modifying third-party mortgage loans when a subordination agreement entered into by the respective lenders does not specifically contemplate such modifications or the seller/purchase-money lender does not consent. The article also contains drafting tips to help realize the parties’ expectations.
This article discusses the advantages and disadvantages to mortgagors and mortgagees of "participating" loans, i.e., loans that entitle the mortgagee to contingent interest and/or shared appreciation (or other "equity kicker"). The article also discusses and analyzes recharacterization risks in connection with contingent-interest and shared-appreciation mortgages, including disguised equity interests, control and lender liability, tax issues, environmental issues, usury, unconscionablilty, equitable subordination, clogging the equity, and Uniform Commercial Code issues. The article also discusses special title insurance coverages and endorsements available for this type of financing.
This article discusses the relationship between the lead lender and the participating lender or lenders in a participating loan, which a "lead" or "agent" bank will often agree with another bank or financial institution, or several banks or financial institutions, to "participate" the loan, i.e., to transfer an interest in a portion of the mortgage loan and the underlying debt obligation either prior to the closing of the loan or after the loan has closed. The article discusses the characterization of a participation interest and how it might affect the ability of the lead lender, or a participant, to deal with the collateral when the loan is in fact secured by an interest in real property. The article further discusses the characterization of participation agreements in bankruptcy as well as Uniform Commercial Code issues that arise in connection with participating loans.
A detailed discussion and analysis of the risk of recharacterization by a court of certain real estate transactions, including contingent-interest and shared-appreciation loans, convertible mortgages, sale-leaseback transactions, synthetic-lease transactions, deeds in lieu of foreclosure, loan participations, and mezzanine financing structures. Particular attention is given to recharacterization risks, including equitable subordination, that arise when the real property is the subject of bankruptcy proceedings. The article also discusses the role of title insurance in alleviating recharacterization risks, and contains sample forms of endorsements.
This article analyzes the types of real estate transactions that are subject to recharacterization by a court, including bankruptcy courts and tax courts. These transactions include sale-leasebacks, deeds in escrow, synthetic leases, participation loans, “equity-kicker” loans, lease-leasebacks, deeds-in-lieu and deeds-in-escrow, mezzanine loans, and commercial mortgages.
This article discusses and analyzes case law regarding the issue of whether, and under what circumstances, a sale-leaseback transaction may be recharacterized as either an equitable mortgage or a joint venture, and whether title insurance is available to cover these risks.
This article discusses a California appellate court decision, Wachovia Bank v. Lifetime Industries, Inc., which concluded that there was insufficient evidence to establish that the optionee obtained title pursuant to the option or that such title related back to the original date of the option so as to extinguish an intervening contractor’s lien. The court ruled that the relation-back rule did not apply in this case because it could not compel specific performance of the option. The court ruled that the mere exercise of an option, without the actual cosummation of the purchase and sale transaction, did not provide the optionee with title to the property.
This article defines and describes "wraparound mortgages," and discusses two Michigan cases that dealt with the issue of whether federal law preempted application of the State's usury and consumer-protections laws to such mortgages.
This article discusses applicable Illinois case law regarding the issue of whether, and under what circumstances, a remote grantee has rights back against the original grantor when the remote grantee receives a quitclaim deed from an intermediate grantor, and the original grantor conveyed by warranty deed.
This article discusses the special risks involved in a sale-leaseback transaction; i.e., if it is not carefully structured and documented, it may be subject to subsequent recharacterization by a court as an equitable mortgage, or as a joint venture. This is especially true if a bankruptcy proceeding is filed by or against the seller-lessee, and the seller-lessee, as debtor in possession (or the bankruptcy trustee) claims that the transaction does not constitute a “true” lease. This article examines the relevant bankruptcy law and the factors that bankruptcy courts consider when determining whether to recharacterize a transaction initially designated by the parties as a sale-leaseback. This article also will suggest certain preventive and protective measures that may be utilized by the parties to a sale-leaseback transaction to minimize the risk of subsequent recharacterization.
This article discusses a contentious issue in the negotiation of subordination, nondisturbance and attornment agreements ("SNDAs") in connection with mortgage-financing transactions: the obligation of a foreclosing mortgage lender to cure landlord defaults existing and continuing at the time of transfer of possession and title. The article contains a sample negotiated provision that will hopefully address the concerns of both the lender and the tenant.
This article discusses the nature and scope of special and limited warranty deeds, and the use of such deeds in place of quitclaim and warranty deeds. It also discusses recent case law and legal commentary regarding these types of deeds, and contains a form of special/limited warranty deed as an exhibit.
This article discusses and analyzes the title insurance coverages and endorsements available to mezzanine lenders, including the new ALTA Endorsement 16 (Mezzanine Financing), for issuance in connection with the ALTA Owner's Policy. It also discusses the availability and coverage of UCC insurance that insures the attachment, perfection, and priority of the mezzanine lender's security interest in the pledge of the ownership interests in the borrowing entity. The article also contains several sample documents, including those necessary to "opt in" to Article 8 of the UCC and thereby obtain "protected purchaser" status.
This article summarizes the decision of the Fifth Circuit Court of Appeals in In re Stonebridge Technologies, Inc. In this case, the court reversed the holdings of the bankruptcy court and district court, and held that the landlord's retention of letter-of-credit proceeds (as part of the security deposit for the tenant-debtor’s lease obligations) in excess of the bankruptcy cap on a landlord's damages under sec. 502(b)(6) of the Bankruptcy Code was permissible, because the sec. 506(b)(6) cap was not triggered where the landlord did not file a claim in tenant-debtor's bankruptcy case. The article also discusses other case law in this area.
This article discusses the necessity, availability, cost, and scope of terrorism insurance for mortgage-financing transactions in the wake of the terrorist attacks on September 11, 2001. It also discusses the reaction of rating agencies, attempted federal governmental efforts to address the issue, and the effect of new or more stringent insurance requirements on the CMBS market and general mortgage transactions.
This article discusses the definition and uses of land trusts, business trusts, and Delaware statutory trusts, and describes the differences and similarities of these different types of entities. It also discusses the bankruptcy ramifications of each of these entities.
This article discusses lender and rating-agency requirements in connection with the use of special purpose entities ("SPEs") as borrowers in real-estate financing transactions. It also discusses the use of trusts and limited liability companies as SPEs, including applicable case law and bankruptcy issues. It further discusses and analyzes the proposed new accounting rules that affect the use of SPEs in connection with synthetic-lease transactions.
This article discusses and analyzes an Illinois court decision that refused to recharacterize a sale-leaseback transaction as an equitable mortgage. The case stressed the importance of the intention of the parties as evidenced by the written documents and their testimony, the fact that no loan terms were contained in the sale-leaseback documents, and the fact that the price paid by the purchaser-lessor for the property was established by appraisal testimony to reflect the true value of the property. The article also contains drafting and negotiating strategies to avoid recharacterization of a sale-leaseback transaction.
Prepayment Premium Provisions in Commercial Loan Transactions:
An analysis and discussion of recent bankruptcy and non-bankruptcy decisions regarding the validity and enforceability of "yield maintenance" or "make whole" prepayment provisions in commercial mortgage loan documents, including sample yield-maintenance provisions for insertion in commercial notes and mortgages.
This article discusses the issue of defective acknowledgments in recorded documents, and whether or not such documents impart notice to third parties with properly recorded documents that have no defects. In particular, the article discusses a recent Tennessee case, In re Hickman, in which the bankruptcy court held that, based on an applicable Tennessee statute, omission of the debtors' names in the acknowledgment of the deed of trust did not make the lien avoidable by the bankruptcy trustee.
