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Is that Mortgage or Deed of Trust Void or Just Unenforceable?

livinglies.wordpress.com | March 5, 2019

Proving that an instrument is unenforceable does not void the instrument unless it is unenforceable by anyone. Better to prove that it should never have been written.

The DOT could only be void if it was not facially or actually valid. That, in my opinion, means that the the DOT should never have been written, should never have been executed and should never have been recorded. It must the equivalent of uttering a false instrument and have the qualities of being a wild deed.

You need to look at your state statute that authorizes the use of a Deed of Trust. Look for the elements. If they are present, the DOT is not void on its face. If the elements are falsely presented then the instrument can still be proven void.

Proving that an instrument is not enforceable by the party trying to enforce it does NOT prove that nobody could enforce it. Hence it isn't void until you can show that there is nobody who can or will enforce it. You must show that the DOT should never have been presented, signed and certainly not recorded.

That isn't easy. And it is nearly impossible without investigation and discovery in which some party claiming to have an interest admits that there are fatal defects in the DOT. Defects in assignments or legal standing do not prove that the original instrument is void.

Put yourself in the shoes of a party whose money was used to give you the loan. Would you want your collateral wiped out because your servicer did something wrong in enforcement?

So in Washington DC the operative statute says as follows:

42–801. Execution, acknowledgment, and recordation in same manner as deeds.

Mortgages and deeds of trust to secure debts, conveying any estate in land, shall be executed and may be acknowledged and recorded in the same manner as absolute deeds; and they shall take effect both as between the parties thereto and as to others, bona fide purchasers and mortgagees and creditors, in the same manner and under the same conditions as absolute deeds.

So then we are referred to the execution of absolute deeds. That statute says as follows:

42–401. Effective date of deeds; exception.

Any deed conveying real property in the District, or interest therein, or declaring or limiting any use or trust thereof, executed and acknowledged and certified as provided in 42-10142-121 to 42-123 [repealed], 42-306, and 42-602  and delivered to the person in whose favor the same is executed, shall be held to take effect from the date of the delivery thereof, except that as to creditors and subsequent bona fide purchasers and mortgagees without notice of said deed, and others interested in said property, it shall only take effect from the time of its delivery to the Recorder of Deeds for record.

And you may have trouble with this one:

42–403. Defective grants recorded on or after April 27, 1994.

Any instrument recorded in the Office of the Recorder of Deeds on or after April 27, 1994, shall be effective notwithstanding the existence of 1 or more of the failures in the formal requisites listed in 42-404, unless the failure is challenged in a judicial proceeding commenced within 6 months after the instrument is recorded.

But look at this ----

42–404. Failures in formal requisites of an instrument.

(a) The failures in the formal requisites of an instrument that may be cured by this act are:

(1) An omission of an acknowledgment or a defective or improper acknowledgment;

(2) A failure to attach a clerk’s certificate;

(3) An omission of a notary seal or other seal; or

(4) An omission of an attestation.

(b) Nothing in this act shall be construed to eliminate the requirement that a deed be under seal. Any deed accepted for recordation without a seal but made effective by operation of this act shall be deemed a sealed instrument.

(c) Nothing in this act shall be construed to validate any instrument with respect to which there was any misrepresentation, fraudulent act, or illegal provision in connection with its execution or acknowledgment.

(d) Any person convicted of a fraudulent act, in connection with the validation of any instrument under 42-10142-40242-403, and 42-602 shall be subject to the penalties set forth in 22-3222..

So putting it all together you probably cannot prove that the instrument is facially invalid but you can prove that it is invalid for misrepresentation of the lender and the terms of the loan referenced by the DOT by its reference to the promissory note. The actual terms were that a remote undisclosed party would sell the borrower's signature multiple times reaping huge rewards without any application of sale proceeds to the borrower's account. * The part about the wrong name being inserted as the lender is a good one. But that could be theoretically corrected by an affidavit of scrivener's error, although supporting such an affidavit would be nearly impossible. * But since the statute speaks to the commission of a fraudulent act you might be able to invalidate the the DOT without appearing to invalidate the debt. Or you could attempt to reform the DOT to name the actual lender, which I think might be a more productive tack, since it completely avoids the appearance of seeking a free house. Remember thought that fraud must be specific: You need a representation that was false, which the party knew was false, for the purpose of getting you to reasonably rely on the representation to your detriment and to their advantage. I think you have that here. * And remember that once you prove by clear and convincing evidence that the DOT was void for being part of a fraudulent scheme, any assignments of the mortgage or assignments of the beneficial interest in the void deed of trust are equally void because assignments convey only the interest possessed --- they do not create interests.

 

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