Straw or Bricks: Building a Strong Chain of Title

Laying the proper foundation is essential before one can begin building upon it. This applies to almost everything in life. It is no different in matters pertaining to foreclosure, whether going on the offense or defense. When one starts building, they need to determine what ingredients to use. Should I use straw or bricks?

The story of the three little pigs is not just a children’s tale. It is a lesson in the importance of building with the right materials. A house built of straw will be blown down at the first sign of pressure. A house built of bricks will withstand the storm. In foreclosure defense, the materials you choose to build your case with will determine whether it survives the first motion to dismiss or whether it collapses before it ever gets to trial.

Declaratory Relief: A Good Brick

In a foreclosure action, declaratory relief could be considered a brick and is a good start. A declaratory judgment is a judgment of a court which determines rights of parties as well as establishing the status quo. Unfortunately, it is not used as much as it should be, in this writer’s opinion. Many times this action will resolve some or all of the issues in the matter at hand.

Once this is done then one can proceed with injunctive relief. A Chain of Title Analysis provides the factual basis for establishing the rights of the parties. This type of relief can take place in many different forms such as temporary restraining orders, preliminary injunctions and permanent injunctions. Injunctive relief is a very powerful remedy that can be used in regards to a specific behavior. An injunction could be considered an equitable remedy in the form of a court order. Injunctions are orders that are made by the courts either restraining or requiring performance of a specific act in order to give effect to the legal rights of the applicant.

The strategy here is to build from a position of strength. Declaratory relief establishes what the rights of the parties are. It asks the court to determine the status quo. Who has a valid claim to the title? Was the assignment properly executed? Was the note properly transferred? These are questions that a declaratory judgment can answer. A quiet title investigation may follow once the rights are established. Once the rights are established, the homeowner can then seek injunctive relief to prevent the bank from taking actions that would violate those rights.

Elements of an Injunction

Among the elements which must be proven by the party seeking the injunction are:

1. It has no adequate remedy other than an injunction (such as money damages).
2. Truly irreparable harm will occur in the absence of an injunction.
3. It is more likely than not that the moving party will prevail on the underlying merits when the matter ultimately goes to trial.
4. The benefit to the party seeking the injunction outweighs the burden of the party opposed to the injunction.
5. The moving party’s right to the relief sought is clear.

Each of these elements must be addressed in the complaint. The homeowner must demonstrate that money damages alone would not be an adequate remedy, because the loss of their home is irreparable. The homeowner must show that irreparable harm will occur without the injunction. The homeowner must demonstrate a likelihood of prevailing on the merits, which requires a proper analysis of the chain of title and the defects therein. The homeowner must show that the benefit of stopping the foreclosure outweighs the burden on the bank. And the homeowner must demonstrate that their right to the relief sought is clear.

The Power of Injunctive Relief

Many times the courts have enjoined the trustee’s sale for a property with a presumed deficiency with an injunction prohibiting a sale.

An injunction that stops a foreclosure sale is one of the most powerful tools available to a homeowner. It buys time. It forces the bank to the table. It prevents the irrevocable transfer of the property while the legal issues are being resolved. Once the property is sold at a foreclosure auction, getting it back is extraordinarily difficult. The injunction prevents that sale from happening, and that prevention is often the difference between keeping and losing the home.

To Enjoin

As defined in the Merriam Webster Dictionary online:

enjoin (transitive verb)

• to direct or order (someone) to do something
• to prevent (someone) from doing something; especially: to give a legal order preventing (someone) from doing something

The word “enjoin” has a dual meaning. It can mean to order someone to do something, or it can mean to prevent someone from doing something. In the context of foreclosure defense, the preventive meaning is what matters. The court enjoining the trustee’s sale prevents the sale from taking place. The court enjoining the bank from proceeding with foreclosure prevents the foreclosure from going forward. This is the power of injunctive relief.

Build with Bricks, Not Straw

We must strive to build a strong brick house, not a house built of straw that can be easily knocked down.

A case built on straw is one that relies on vague allegations, emotional arguments, and legal theories that have not been properly researched or supported. It will be knocked down by the first motion to dismiss. A case built on bricks is one that relies on specific facts, proper statutes, competent evidence, and a proper legal foundation. It will withstand the storm.

The choice is yours. Build with straw, and your case will collapse. Build with bricks, starting with declaratory relief and following with injunctive relief, and your case will have the foundation it needs to survive and ultimately prevail.

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Joseph Esquivel, Mortgage Compliance Investigators. Copyrighted, all rights reserved.