Declaratory Relief vs Quiet Title: Which Path to Take?

The issue with Quiet Title complaints and matters of equity comes down to one question: did you sign a note?

The Problem with Quiet Title Complaints

I have reviewed many strategies brought forward in wrongful foreclosure actions. None are more disappointing than the Quiet Title complaints that state a lot of information but lack substance, form, and timeliness. There is a misnomer in thinking that the quiet title cause of action is a fix-all for problems pertaining to title of real property clouded by the actions of other parties claiming an interest.

In many instances, this is putting the cart in front of the horse. I have viewed many Quiet Title complaints. A lot of claims are made. A lot of facts are stated. But it is just sizzle with no viable substance to carry the cause of action.

A complaint that “pleads facts that are ‘merely consistent with’ a defendant’s liability stops short of the line between possibility and plausibility of entitlement to relief.” (Quoting Twombly, 550 U.S. at 557)

Parties are named and claims of harm are stated, but these claims are not sufficient to support a claim upon which relief can be granted. The complaints get remanded to federal court, a motion to dismiss is filed, and a Rule 12(b)(6) dismissal follows.

Legal Sufficiency of Claims

Lacking legal sufficiency of claims is one of the primary reasons these Quiet Title complaints fail. It is this writer’s opinion that filing a Quiet Title complaint before a determination of superior right to title has been made is untimely. Yet that is exactly what is being done. Parties are named to participate in the Quiet Title action and then told they do not have standing to respond.

A New Perspective: Slander of Title Complaints

Rather than using a Quiet Title complaint that enjoins named parties and then attempts to sever a party from the action, first determine the culpability of the parties who will be allowed to participate.

Slander of Title is a cause of action that addresses securitization issues. It provides a client with the ability to name interested parties and clarify whether a party has a valid claim to real property supported by statutory requirements of law. A quiet title investigation can provide the factual basis for such an action. A securitization audit may also reveal whether the trust rules were properly followed.

A Declaratory Judgment specific to the parties of a Slander of Title action would allow the court to declare by statute: “The defendant is not a party to title of real property being disputed.” A complaint like this sets the status quo for who will or will not be named in a future complaint pertaining to the clouded title issues created by the securitization of real property mortgage loan instruments.

Determination First

It is this writer’s opinion that the courts should make a determination as to the legal rights of a party to any actions on the title of real property first and foremost.

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Joseph Esquivel, Mortgage Compliance Investigators. Copyrighted 2014.