The opinion
ACCEPTED
03-14-00632-CV
4153377
THIRD COURT OF APPEALS
AUSTIN, TEXAS
2/13/2015 4:57:07 PM
JEFFREY D. KYLE
CLERK
NO. 03-14-00632-CV
FILED IN
3rd COURT OF APPEALS
IN THE COURT OF APPEALS FOR AUSTIN, TEXAS
THE THIRD DISTRICT OF TEXAS 2/13/2015 4:57:07 PM
AT AUSTIN JEFFREY D. KYLE
Clerk
KARL B. BAILEY,
Appellant,
v.
MIDFIRST BANK,
Appellee.
ON APPEAL FROM THE 250TH JUDICIAL DISTRICT COURT, TRAVIS COUNTY, TEXAS
TRIAL COURT CAUSE NO. D-1-GN-14-002430
HON. GUS J. STRAUSS, PRESIDING
BRIEF FOR THE APPELLEE
Mark D. Hopkins
Texas State Bar No. 00793975
Hopkins & Williams, PLLC
12117 Bee Caves Rd., Suite 260
Austin, Texas 78738
(512) 600-4320 – Telephone
(512) 600-4326 – Facsimile
mark@hopkinswilliams.com
ATTORNEY FOR APPELLEE
February13, 2015
IDENTITY OF PARTIES AND COUNSEL
Pursuant to Texas Rule of Appellate Procedure 38.2(a)(1), Appellee certifies
that the following is a complete list of all parties and counsel:
1. Appellee: MidFirst Bank, N.A.
Represented at trial Chris H. Pochyla
Texas State Bar No. 24032842
Barrett Daffin Frappier Turner & Engel, LLP
15000 Surveyor, Blvd., Suite 100
Addison, Texas 75001
(972) 340-7955 – Telephone
(972) 341-0734 - Facsimile
Represented on appeal by: Mark D. Hopkins
Texas State Bar No. 00793975
Hopkins & Williams, PLLC
12117 Bee Caves Rd., Suite 260
Austin, Texas 78738
(512) 600-4320 – Telephone
(512) 600-4326 – Facsimile
2. Appellant: Karl B. Bailey
Represented at trial
and on appeal by: William B. Gammon
Texas State Bar No. 07611280
Anthony G. Read
Texas State Bar No. 24056184
Gammon Law Office, PLLC
1201 Spyglass Drive, Suite 100
Austin Texas 78746
(512) 444-4529 – Telephone
(512) 545-4279 - Facsimile
3. Trial Judge: Hon. Gus J. Strauss
250th Judicial District Court of Travis
County, Texas
ii
TABLE OF CONTENTS
BRIEF FOR THE APPELLEE .................................................................................. i
IDENTITY OF PARTIES AND COUNSEL ........................................................... ii
TABLE OF CONTENTS ........................................................................................ iii
INDEX OF AUTHORITIES ................................................................................... iv
STATEMENT OF THE CASE ................................................................................ 1
ISSUES PRESENTED ............................................................................................. 2
STATEMENT OF FACTS ....................................................................................... 3
SUMMARY OF THE ARGUMENT ....................................................................... 5
ARGUMENTS & AUTHORITIES .......................................................................... 7
1. Did the trial court commit error in granting Appellee’s request for
declaratory relief regarding the validity of the foreclosure sale of
the Property? ................................................................................................... 8
2. Did the trial court error in determining that Appellant’s breach of
contract claim fails as a matter of law? ......................................................... 15
3. Did the undisputed summary judgment evidence negate
Appellant’s wrongful foreclosure claim as a matter of law?......................... 16
4. Does the undipsuted summary judgment evidence negate
Appellant’s quiet title claim as a matter of law? ........................................... 18
5. Did the trial court error in determining that Appellant’s affirmative
claim for equitable estoppel fails as a matter of law given that it is
only a defensive claim and not an affirmative cause of action? .................... 20
PRAYER................................................................................................................. 22
CERTIFICATE OF SERVICE ............................................................................... 23
CERTIFICATE OF COMPLIANCE ...................................................................... 24
APPENDIX............................................................................................................. 25
iii
INDEX OF AUTHORITIES
CASES PAGE(S)
Athey v. MERS,
314 S.W.3d 161 (Tex. App.—Eastland 2010, pet. denied). ................................. 9
BHP Petroleum Co. v. Millard,
800 S.W.2d (Tex. 1990) ...................................................................................... 14
Bierwirth v. BAC Home Loan Servicing, L.P.,
2012 WL 3793190 (Tex. App. – Austin 2012) ........................................ 3, 10, 11
Biswell v. Gladney,
213 S.W. 256 (Tex.Comm'n App.1919)............................................................. 21
Boucher v. Wallis,
236 S.W.2d 519 Tex.Civ.App.—Eastland 1951, writ ref'd n.r.e.) ..................... 21
Campbell v. Mort. Elect. Reg. Systems, Inc.,
2012 WL 1839357 (Tex. App. – Austin, pet. denied) .......................................... 9
Charter Nat’l Bank – Houston v. Stevens,
781 S.W.2d 368 (Tex. App. – Houston [14th Dist.] 1989, writ denied) .............. 17
Cox v. Clay,
237 S.W.2d 798 (Tex. App. -Amarillo 1951) .................................................... 21
Cuauhtli v. Chase Home Fin. LLC,
252 F. App'x 690 (5th Cir.2007) ........................................................................ 12
EMC Mortgage Corp. v. Window Box Ass'n, Inc.,
264 S.W.3d 331 (Tex.App. 2008). ..................................................................... 16
Fillion v. David Silvers Co.,
709 S.W.2d 240 (Tex. App. – Houston [14th Dist.] 1986, writ ref’d n.r.e) ........ 18
Ford Motor Co. V. Ridgway,
135 S.W. 3d 598, 600 (Tex. 2004) ........................................................................ 8
iv
Fricks v. Hancock,
45 S.W. 3d 322 (Tex. App. – Corpus Christ 2001, no pet.). ............................... 19
Harris v. Ebby Halliday Real Estate, Inc.
345 S.W. 3d 756 (Tex.App.---El Paso 2011, no pet.) ........................................... 8
Howell v. Mauzy,
899 S.W.2d 690 (Tex. App. – Austin 1994, writ denied) .................................. 13
Johnson v. Hewitt,
539 S.W.2d 239 (Tex. Civ. App. – Houston [1st Dist.] 1976, no writ) ............... 13
Kelly v. Rio Grande Computerland Group,
128 S.W.3d 759 (Tex. App. – El Paso 2004, no pet.) ........................................ 21
Kramer v. Fannie Mae,
2012 WL 3027990 (W.D.Tex. May 15, 2012) .................................................... 10
Lambert v. First Nat. Bank of Bowie,
993 S.W.2d 833 (Tex. App. – Ft. Worth 1999, no pet.) ...................................... 18
Pena Wells Fargo Bank, N.A.,
2014 WL 2090859 (W.D. Tex. 2014) ............................................................... 16
Reinagel v. Deutsche Bank Nat. Trust Co.,
735 F.3d 220 (5th Cir. 2013) .............................................................................. 11
Rodriguez v. Ocwen Loans Servicing, LLC,
306 F. App'x 854 (5th Cir.2009) ........................................................................ 12
Sefzik v. City of McKinney,
198 S.W.3d 884 (Tex. App. – Dallas 2006, no pet) ............................................ 21
Stanley v. CitiFinancial Mortg. Co.,
121 S.W.3d 811 (Tex.App.- Beaumont 2003, pet. denied) ................................ 12
Star-Telegram, Inc. v. Doe,
915 S.W.2d 471, 473 (Tex. 1995). ........................................................................ 8
v
Stephens v. LPP Mortg.,
316 S.W.3d 742 (Tex.App.-Austin 2010, pet. denied)........................................ 10
Valence Operating Co. v. Dorsett,
164 S. W. 3d 656 (Tex. 2005) ............................................................................... 7
Vernon v. Perrien,
390 S.W.3d 47 (Tex. App. – El Paso 2012, pet. denied) .................................... 19
Wright v. Matthews,
26 S.W. 3d 575 (Tex. App. – Beamount 2000, pet. denied).................................. 19
Ysasaga v. Nationwide Mut. Ins.,
279 S.W.3d 858 (Tex. App. – Dallas 2009, pet. denied) .................................... 13
STATUTES PAGE(S)
C.P.R.C. §37.004 .................................................................................................... 14
Tex. Prop. Code Chapter 51 ............................................................................... 5, 14
Tex. Prop. Code §51.002 .................................................................................. 10, 12
Tex. Prop. Code Ann. §§ 51.0001(4) ...................................................................... 10
Tex. R. Civ. P. 310 ................................................................................... 1, 6, 14, 15
vi
I.
STATEMENT OF THE CASE
Appellant Karl B. Bailey (“Appellant” or “Bailey”) appeals summary
judgment in favor of MidFirst Bank (“Appellee” or “MidFirst”), entered by the
250th Judicial District Court in Travis County, Texas, on July 2, 2014. (CR at 26-
27). The trial court dismissed all of Appellant’s claims against MidFirst, and
granted MidFirst’s counterclaim for a declaration that MidFirst’s non-judicial
foreclosure sale 1 of 1234 Acanthus Street, Pflugerville, Texas 78660 (the
“Property”) was proper. The trial court also granted MidFirst relief pursuant to
Texas Rule of Civil Procedure 310, whereby providing MidFirst possession of the
Property. Appellant severed his claims against MidFirst from the remaining
defendants in the lawsuit on July 22, 2014 so that the summary judgment in favor
of MidFirst could become final (CR 28). Appellant then filed a Motion for New
Trial on July 28, 2014 (CR 29-31). Appellant’s Motion for New Trial was
overruled by operation of law and he subsequently filed a Notice of Appeal on
September 30, 2014 (CR 57-58).
1
The Property was sold at a non-judicial foreclosure sale on January 4, 2011 due to the
mortgagor’s failure to pay his mortgage. (Supp. CR 75)
1
II.
ISSUES PRESENTED
1. Did the trial court commit error in granting Appellee’s request for
declaratory relief regarding the validity of the foreclosure sale of the
Property?
2. Did the undisputed summary judgment evidence negate Appellant’s
breach of contract claim as a matter of law?
3. Did the undisputed summary judgment evidence negate Appellant’s
wrongful foreclosure claim as a matter of law?
4. Did the undisputed summary judgment evidence negate Appellant’s
quiet title claim as a matter of law as the deed records establish
MidFirst’s superior legal title to the property?
5. Did the trial court error in determining that Appellant’s affirmative
claim for equitable estoppel fails as a matter of law given that equitable
estoppel is only a defensive claim and not an affirmative cause of
action?
2
III.
STATEMENT OF FACTS
This is a home foreclosure matter and involves real estate located in Travis
County, Texas. On July 15, 2004, Travis Chestnut and Amy Chestnut borrowed
$116,578.00 to purchase the real property and improvements at 1234 Acanthus
Street, Pflugerville, Texas 78660 (hereafter, “Property”). The Chestnuts agreed to
repay their loan by executing a promissory note (“Note”) (Supp. CR 51-53), and
they secured the Note by executing a deed of trust (“Deed of Trust”) (Supp. CR
39-50).
The Deed of Trust identified Mortgage Electronic Registration Systems
(MERS) as “Beneficiary” and stated that MERS was the nominee for Lender
(Alethes, LLC) and its successors and assigns. (Supp. CR 49). The Deed of Trust
further specified that MERS had the right to exercise any or all of the interests that
the Chestnuts granted in the Deed of Trust, including the right to foreclose and sell
the Property and to take any of the Lender’s required actions (Supp. CR 50).
MERS (“as nominee for Lender and Lender’s successors and assigns”)
subsequently assigned the Chestnuts’ Note and Deed of Trust to MidFirst and
recorded the assignment in the Travis County real property records. (Supp. CR
51).2 See Bierwirth v. BAC Home Loans Servicing, L.P., 2012 Tex. App. LEXIS
2
The Note was also subsequently endorsed to MidFirst. (Supp. CR 51).
3
7506, at *2-3 (Tex. App. – Austin 2012, no pet.)(mem. op.)(addressing analogous
facts).
Unbeknownst to MidFirst and without MidFirst’s approval, the Chestnuts
sold the Property to Appellant Bailey in 2009, without the Chestnuts paying off
their Note nor obtaining a release of MidFirst’s Deed of Trust. The Chestnuts and
Appellant supposedly entered into a “Wally Wrap”3 through which Appellant was
to pay his monthly installment (under the Wally Wrap) to the Chestnut’s designee,
and the Chestnuts’ designee would, in turn, continue to pay the MidFirst Note. The
special warranty deed from the Chestnuts 4 into Appellant specifies that the
conveyance of title to the Property into Appellant is subordinate to MidFirst’s
interest(s) in the Property.5
As any bad television movie would go, the Chestnuts (through their
designee) ceased making payments on the MidFirst Note while still collecting
Appellant’s monthly installment payments. After the Chestnuts defaulted on their
Note, MidFirst initiated the foreclosure process that culminated in the foreclosure
3
See, Appellant’s Brief at. n.1 describing Wally Wraps in general.
4
The Chestnuts actually transferred title to the property to their designee who then, in turn,
conveyed the property to Appellant.
5
The Special Warranty Deed reads in part,
This conveyance, however, is made and accepted subject to the Vender’s Lien retained in
Deed recorded as Document No. 2004136581 in the Official Public Records of Travis
County, Texas the Deed of Trust recorded as Document No. 2004136582 in the Official
Public Records of Travis County, Texas, and assigned by instrument recorded as
Document No. 2009079539…(Supp. CR 39).
4
sale of the Property on January 4, 2011. (Supp. CR 135). During the foreclosure
process, MidFirst sent the Chestnuts a notice of default (Supp. CR 61), a notice of
acceleration (Supp. CR 70), and a notice of foreclosure sale (Supp. CR 72).
The foreclosure sale occurred as scheduled on January 4, 2011. Appellant
asserts that the foreclosure sale is invalid because MidFirst did not send Appellant
notice of the foreclosure sale. See, Appellant’s Brief at 21. Appellant also seeks to
challenge the assignment into MidFirst from MERS, whereby indirectly attacking
the validity of the foreclosure sale. See, Appellant’s Brief at 20.
IV.
SUMMARY OF THE ARGUMENT
1. Foreclosure was in compliance with contractual terms. MidFirst’s
foreclosure of the Property, after the default by the Chestnuts, occurred in strict
compliance with the terms of the Deed of Trust and Chapter 51 of the Texas
Property Code. Notices of foreclosure are to be sent to “debtors” obligated on the
Note. Appellant was not an obligor on the Note and therefore was not entitled to
notice.
2. Appellant lacks standing to challenge the Deed of Trust. Appellant
seeks to attack the assignment of the Deed of Trust from MERS into MidFirst. As
provided by black letter law, a nonparty to an assignment does not have standing to
challenge an assignment on grounds that would only render the assignment
voidable and not void. Additionally, even if the assignment were to have failed
5
(which it did not) the summary judgment evidence also provided that MidFirst
holds the Note. Either as the note holder or beneficiary under the Deed of Trust,
MidFirst qualified as a mortgagee as that term is defined by the Texas Property
Code. As a mortgagee of the Property, MidFirst was authorized to conduct the
foreclosure sale of the Property.
3. Effect of MidFirst’s superior title in the Property. MidFirst purchased
the Property at the foreclosure sale. The special warranty deed through which
Appellant claims his interest in the Property specifically recognizes that the title
interest conveyed to Appellant (by the Chestnuts) was subordinate to MidFirst’s
vendor’s lien and Deed of Trust lien. When the Deed of Trust lien was foreclosed,
Appellant lost his title interest in the Property. As such, Appellant’s quiet title
claim against MidFirst fails as a matter of law.
4. Declaratory Relief and Right to Possession. The trial court properly
granted the affirmative relief of MidFirst in validating the foreclosure sale. As no
contract existed between Appellant and MidFirst, MidFirst properly obtained the
trial court’s judgment with respect to the contested right to the Property as between
the parties. Further, the trial court was empowered to provide Tex. R. Civ. P. 310
relief to MidFirst in awarding MidFirst possession of the Property given its
superior interest in the Property vis-à-vis Appellant.
6
V.
ARGUMENTS & AUTHORITIES
As a common problem running through Appellant’s Brief, Appellant
attempts to articulate that his various causes of action were denied for very specific
reasons. Appellant then attempts to set up straw man arguments attacking the
imagined reasons for the trial court’s ruling (eg. “Summary Judgment is in Error
because Bailey has standing to bring his claims…” see, Appellant’s Brief at 18).
However, the trial court did not specify the reasons why it granted MidFirst’s
summary judgment motion. Appellant’s limited arguments in attacking the
summary judgment order misses the mark in the sense that Appellant needs to
attack all grounds upon which the judgment could have been rendered, and not just
selected issues.
MidFirst filed both a traditional and no-evidence motion for summary
judgment. In granting MidFirst’s Motion for Summary Judgment, the court did not
address in its order the grounds upon which the motion was granted, nor whether it
was granting MidFirst’s traditional motion or no-evidence motion with respect to
each cause of action. (CR 27).
Both traditional and no-evidence summary judgment motions are subject to
a de novo review upon appeal. See Valence Operating Co. v. Dorsett, 164 S. W. 3d
656, 661 (Tex. 2005). When a party moves for summary judgment under both
standards, the reviewing court will generally address the no-evidence grounds first.
7
Ford Motor Co. V. Ridgway, 135 S.W. 3d 598, 600 (Tex. 2004). When, as in this
case, the trial court does not specify the basis for the judgment, the appealing party
must demonstrate none of the grounds proposed in either motion support the
judgment. Harris v. Ebby Halliday Real Estate, Inc. 345 S.W. 3d 756, 759
(Tex.App.---El Paso 2011, no pet.) Star-Telegram, Inc. v. Doe, 915 S.W.2d 471,
473 (Tex. 1995). The appellate court may review and affirm on any ground the
movant presented in a motion for summary judgment, regardless of whether the
trial court identified the ground relied on to grant the summary judgment.
Cincinnati Life Ins. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996).
1. Did the trial court commit error in granting Appellee’s request for
declaratory relief regarding the validity of the foreclosure sale of the
Property?
The trial court did not commit error in granting MidFirst declaratory relief
that its foreclosure sale was valid, and that the foreclosure of MidFirst’s purchase
money lien interest in the Property extinguished all subordinate liens. Appellant
attacks the grant of declaratory relief on three grounds, those being:
a. The Assignment into MidFirst is invalid and therefore MidFirst
had no authority to conduct the sale;
b. MidFirst did not comply with the necessary pre-sale requirements
set out within the Deed of Trust and Texas Property Code; and
c. The trial court should not have even considered MidFirst’s request
for declaratory relief as the relief was duplicative of the claims
already asserted by Appellant before the trial court.
8
a. MidFirst’s legal standing to foreclose is beyond dispute. MidFirst’s legal
right to have conducted the foreclosure sale of the Property is crystal clear. The
recorded assignment of the Deed of Trust into MidFirst, from MERS, leaves no
room for doubt that MidFirst was empowered to act pursuant to the terms of the
Deed of Trust (including the power to foreclose). This Court has repeatedly held in
recent years that,
Under Texas law, where, as here, a deed of trust expressly grants
MERS the power of sale, then MERS has that power. Athey v. MERS,
314 S.W.3d 161, 166 (Tex. App.—Eastland 2010, pet. denied). MERS
was the nominee for [lender] and its successors and assigns… MERS
had the authority to transfer the rights and interests in the deed of
trust… When MERS transferred the deed of trust to [assignee],
[assignee] obtained all MERS’s rights and interests in the deed of
trust, including the power to foreclose on the property. As in Athey,
the mortgage documents provide for the use of MERS, and those
provisions are enforceable to the extent provided by the terms of the
documents.
Campbell v. Mort. Elect. Reg. Systems, Inc., 2012 WL 1839357 (Tex. App. –
Austin, pet. denied). Appellant attempts to misdirect the Court away from the
express powers granted MidFirst under the Deed of Trust by pointing to a
supposed discrepancy with the endorsements on the Note.6 Appellant argues that if
the endorsements on the Note are unclear ‘there must be doubt about who can
6
The Note was originally endorsed from Atheles LLC into GMAC, and then from GMAC into
MidFirst.
9
foreclose as the beneficiary under the Deed of Trust.’ See generally, Appellant’s
Brief at 24.
Appellant’s argument misses the mark in the sense that the right to foreclose
under a security instrument is fundamentally different than a note holder’s right to
seek collection on a note. It does not matter if MidFirst held the Note or not at the
time of foreclosure. As the Austin Court of Appeals set out in Bierwirth v. BAC
Home Loan Servicing, L.P., “Bierwirth’s assertion that an entity must own or hold
a promissory note to conduct a foreclosure under the associated deed of trust runs
afoul of the property code provisions governing foreclosure under a deed of trust.”
Bierwirth v. BAC Home Loan Servicing, L.P., 2012 WL 3793190 (Tex. App. –
Austin 2012); See also, Tex. Prop. Code Ann. §§ 51.0001(4)(defining
“mortgagee”), and 51.002 (providing procedure for foreclosure “under power of
sale conferred by deed of trust”) (West Supp.2012); Kramer, 2012 U.S. Dist.
LEXIS 105878, at *17–18, 2012 WL 3027990. Continuing, the Austin Court of
Appeals went on to state,
Similarly, this Court rejected the argument that a note and its security
are inseparable by recognizing that the note and the deed-of-trust lien
afford distinct remedies on separate obligations—the note against the
borrower and the lien against the real property. See Stephens v. LPP
Mortg., 316 S.W.3d 742, 747 (Tex.App.-Austin 2010, pet. denied).
For this reason, a lien creditor may pursue foreclosure of a lien against
real property under the deed of trust independent of any personal
action against the borrower for collection on the note. See id.; see also
Kramer v. Fannie Mae, No. A–12–CA–276–SS, 2012 U.S. Dist.
LEXIS 105878, at *16–19, 2012 WL 3027990 (W.D.Tex. May 15,
10
2012).
Bierwirth v. BAC Home Loan Servicing, L.P., 2012 WL 3793190 at *4 (Tex. App.
– Austin 2012). Simply put, Texas courts refuse to conflate foreclosure under a
security instrument with enforcement of a note.
Appellant also attempts to argue that the trial court improperly determined
that Appellant lacked standing to challenge the Assignment to the Deed of Trust;
the trial court never made such a ruling (instead the summary judgment order
simply reads that Appellant’s claims are denied). The summary judgment record
factually supports that MidFirst is the holder of the Note (by way of
endorsement)(Supp. CR 51), and is also the beneficiary of the Deed of Trust (by
way of assignment)(Supp. CR 39). Whether the Assignment from MERS
attempted to transfer the Note to MidFirst (by assignment) despite MidFirst already
being the holder of the Note (by endorsement) is immaterial. At a minimum the
summary judgment evidence depicts that MidFirst was assigned the Note twice,
and was assigned the Deed of Trust once.7 The assignment of the Deed of Trust
alone was sufficient to empower MidFirst to act as it did.
b. MidFirst Complied with all Pre-sale requirements. MidFirst’s
7
Even if the trial court based its decision on issues of standing as opposed to the factual issue of
MidFirst holding the Note and being the beneficiary under the Deed of Trust, Appellant can’t
escape that he does not possess standing to challenge the assignment in the manner addressed in
his brief. See, Reinagel v. Deutsche Bank Nat. Trust Co., 735 F.3d 220 (borrower did not have
standing to challenge assignment on grounds that would only make the assignment “voidable” as
opposed to being “void.” Nothing Appellant has articulated suggests that the Assignment of the
Deed of Trust was void from inception.
11
declaratory relief, affirming the foreclosure sale, is supported by the undisputed
summary judgment evidence. Specifically, the Chestnut’s Note was in default.
MidFirst sent the Chestnuts a notice of default as required by the Deed of Trust
(Supp. CR 61). After the default was not cured, MidFirst sent the Chestnut’s a
notice of acceleration of the debt. (Supp. CR 72). Notice of foreclosure was also
provided to the Chestnuts as required by law (Supp. CR 74). Contrary to
Appellants un-cited legal proposition that Appellant was also entitled to notice of
sale, Texas law is clear that the entity conducting foreclosure must provide notice
only to the obligors under the loan agreement. See, Tex. Prop. Code §51.002
(“serving written notice of the sale by certified mail on each debtor who,
according to the records of the mortgage servicer of the debt, is obligated to pay
the debt.”)(emp. added). “There is no legal requirement that personal notice of
foreclosure be sent to persons not parties to the deed of trust.” Rodriguez v. Ocwen
Loans Servicing, LLC, 306 F. App'x 854, 856 (5th Cir.2009) (quoting Stanley v.
CitiFinancial Mortg. Co., 121 S.W.3d 811, 817 (Tex.App.- Beaumont 2003, pet.
denied)); Cuauhtli v. Chase Home Fin. LLC, 252 F. App'x 690, 692 (5th Cir.2007)
(“The personal notice that must be given to debtors is not owed to residents of the
property who are not personally liable for the debt.”).
The undisputed summary judgment evidence established that the Chestnuts
were in default on their Note. The evidence also established that the required
12
notices of default, acceleration and sale were sent to the Chestnuts. The substitute
trustee’s deed additionally reflects that the sale occurred within the time required
and at the location specified.
c. MidFirst’s Counterclaim for Declaratory Relief was Proper.
Appellant seeks to challenge the propriety of the trial court even entertaining
MidFirst’s request for declaratory relief. Appellant asserts that his filing of a quiet
title cause of action works to bar MidFirst from bringing a claim for declaratory
relief. See, Appellant’s Brief at 30 (relying on the proposition that, “The
Declaratory Judgments Act is not available to settle disputes already pending
before the court. Johnson v. Hewitt, 539 S.W.2d 239, 240-241 (Tex. Civ. App. –
Houston [1st Dist.] 1976, no writ)).” Appellant is incorrect in his analysis of the
law.
A court may allow a declaratory judgment counterclaim if it is something
more than a mere denial of the plaintiff’s claim and has greater ramifications than
the original suit. See, Howell v. Mauzy, 899 S.W.2d 690 (Tex. App. – Austin
1994, writ denied); Ysasaga v. Nationwide Mut. Ins., 279 S.W.3d 858, 863 (Tex.
App. – Dallas 2009, pet. denied). A counterclaim states a claim for affirmative
relief if it alleges that the defendant has a cause of action independent of the
plaintiff’s claim, on which the defendant could recover benefits, compensation, or
relief, even if the plaintiff were to abandon or fail to establish his cause of action.
13
BHP Petroleum Co. v. Millard, 800 S.W.2d 838 (Tex. 1990).
MidFirst’s request for declaratory relief has larger implications than simply
determining the rights of Appellant vis-à-vis MidFirst. MidFirst’s relief was not
only whether the sale was valid, but also whether the sale extinguished all inferior
lien interests (not just Appellant’s interest). As such, MidFirst’s claim was
independent of Appellant’s action and sought relief beyond Appellant’s limited
interest in the Property.
MidFirst properly brought a claim for declaratory relief pursuant to Civil
Practice and Remedies Code §37.004 seeking to ascertain the status of its rights in
the Property. The summary judgment evidence undisputedly establishes that
MidFirst possessed the right to foreclose as the beneficiary under the Deed of
Trust, and that the foreclosure sale was performed in accordance with the terms of
the Deed of Trust and Chapter 51 of the Texas Property Code. The trial court’s
grant of declaratory relief to MidFirst should be in all things affirmed.8
8
By way of ancillary relief the trial court granted MiFirst a writ of possession. The trial court’s
declaratory relief specifically provided that, “any interests of any secondary or junior lienholder
were extinguished as a result of the foreclosure sale.” MidFirst asked for Rule 310 relief within
the body of its motion for summary judgment and in its prayer for relief generally asked for a
writ of possession ancillary to its request for declaratory relief. In response, the trial court ruled,
“MidFirst, is entitled to possession of the premises in accordance with Tex. R. Civ. P. 310 and
that Defendant Midfirst have restitution, for which let writ issue…” (CR 24-25)(emp. added).
Even if the trial court assigned an incorrect reason for the issuance of the writ (which it did not),
“we will affirm if we find that one of the grounds asserted by the movant is valid.” Torres v.
Chrysler Credit Corp., 655 S.W.2d 249 (Tex. App. – Corpus Christi 1983); Hotchkiss v. Texas
Employers’ Insurance Ass’n, 479 S.W.2d 336, 339 (Tex. Civ. App. – Amarillo 1972, no writ).
MidFirst’s right to possession of the Property flows from its superior legal interest in the
14
2. Did the trial court error in determining that Appellant’s breach of
contract claim fails as a matter of law?
Appellant brought a claim against MidFirst for breach of contract (breach of
the terms of the Deed of Trust). Appellant asserts MidFirst should have provided
Appellant with notice of the foreclosure sale of the Property. In defense, MidFirst
moved for summary judgment seeking to negate Appellant’s breach of contract
claim on the grounds that: (1) Appellant does not have standing to assert his claim
as he was not a party to the Deed of Trust, and (2) that Appellant was not entitled
to notice.9
In a strikingly similar case to this matter, the United States District Court for
the Western District of Texas was confronted in Pena v. Wells Fargo Bank, N.A.
with whether a person holding an equitable interest in property (under a wrap
around deed of trust), but who was not a party to the Deed of Trust, possessed
standing to sue for breach of contract for lack of notice of sale. The court
concluded,
“[A] s a general rule, only the mortgagor or a party who is in privity
with the mortgagor has standing to contest the validity of a
foreclosure sale pursuant to the mortgagor's deed of trust.” …
However, Texas courts recognize a third-party exception to this rule:
“when [a] third party has a property interest, whether legal or
equitable, that will be affected by [a foreclosure] sale, the third party
Property. Whether via Rule 310 relief or as ancillary relief to MidFirst’s declaratory relief, it
was proper for the trial court to see to the enforcement of its order.
9
In Section 1b above, MidFirst addressed the issue that notice of sale is to be sent to debtors
obligated for repayment of the Note, which did not include Appellant.
15
has standing to challenge such a sale to the extent that its rights will
be affected by the sale.” EMC Mortgage Corp. v. Window Box Ass'n,
Inc., 264 S.W.3d 331, 335 (Tex.App.2008).
Pena v. Wells Fargo, N.A., 2014 WL 2090859 (W.D. Tex. 2014).
However, despite having standing to sue, the Pena court held that the
plaintiff’s claim failed as a matter of law because,
“Plaintiff's Complaint does not allege that she is a party to the deed of
trust or otherwise a debtor on the loan taken out by the Apostols to
secure the Property. See Pl.'s Compl. Moreover, Plaintiff does not cite
to any statute or regulation that would require Defendants to provide
foreclosure notices to Plaintiff. Therefore, dismissal is appropriate as
to Plaintiff’s claims that Defendants failed to provide her with
foreclosure notices pursuant to the Deed of Trust and the Texas
Property Code.
Pena Wells Fargo Bank, N.A., 2014 WL 2090859 *3. Appellant sets out in his
brief that the trial court determined that he did not have standing to assert his
breach of contract claim; the trial court made no such determination. Rather, the
trial court granted MidFirst’s summary judgment without specifying the reasons.
The record clearly reflects that while Appellant had standing to pursue his claim,
his claim failed as a matter of law because Texas law does not require notice of
sale be provided to individuals who are not parties to the deed of trust nor debtors
obligated on the note. This Court should in all things affirm the trial court’s
dismissal of Appellant’s breach of contract claim.
3. Did the undisputed summary judgment evidence negate Appellant’s
wrongful foreclosure claim as a matter of law?
16
In trying to appreciate what cause of action Appellant is attempting to assert
via his “void foreclosure” allegation (See Appellant’s Brief at 24), MidFirst
assumes Appellant is attempting to articulate a cause of action for wrongful
foreclosure. In defense against Appellant’s claim, MidFirst filed a no-evidence
motion for summary judgment. Appellant failed to produce any evidence in
support of the various elements of his wrongful foreclosure claim.
The elements of a wrongful foreclosure claim are: (1) a defect in the
foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a
casual connection between the defect and the grossly inadequate selling price.
Charter Nat’l Bank – Houston v. Stevens, 781 S.W.2d 368, 371 (Tex. App. –
Houston [14th Dist.] 1989, writ denied). The only aspects of the foreclosure that
Appellant challenges are that MidFirst did not have standing to conduct the sale,
and that Appellant was entitled to notice of sale. MidFirst has already addressed
each of these issues at length above.
Appellant failed to produce any evidence in response to MidFirst’s no
evidence motion depicting a defect with the foreclosure process. Additionally,
nowhere within Appellant’s summary judgment response, nor his Appellant’s
Brief, is there any discussion or commentary regarding a grossly inadequate selling
price for the Property at the foreclosure sale. As Appellant failed to produce more
17
than a scintilla of evidence regarding essential elements of his cause of action for
wrongful foreclosure, his claim fails as a matter of law.
Additionally, Appellant’s wrongful foreclosure claim also fails because, in
order to be entitled to have a foreclosure sale set aside in Texas, a plaintiff must
actually tender – not just offer to tender – the full amount owed on the note.
Lambert v. First Nat. Bank of Bowie, 993 S.W.2d 833, 835 (Tex. App. – Ft. Worth
1999, no pet.); Fillion v. David Silvers Co., 709 S.W.2d 240, 246 (Tex. App. –
Houston [14th Dist.] 1986, writ ref’d n.r.e)(“Tender of whatever sum is owed on
the mortgage debt is a condition precedent to the mortgagor’s recovery of title
from a mortgagee who is in possession and claims title under a void foreclosure
sale”).
In short, Appellant failed to introduce summary judgment evidence to carry
his burden of proof regarding the essential elements of his wrongful foreclosure
claim. The record before the Court also fails to establish that Appellant has
tendered the amount due and owing to pay off the MidFirst Note. Given the
foregoing, the trial court’s summary judgment order denying Appellant relief under
his wrongful foreclosure claim should be in all things affirmed.
4. Does the undipsuted summary judgment evidence negate Appellant’s
quiet title claim as a matter of law?
From the very outset of Appellant acquiring an interest in the Property in
2009, his interest was subordinate to the interest(s) held by MidFirst. MidFirst
18
possessed two lien interests in the Property dating back to 2004. First, MidFirst
was the beneficiary of the Chestnut’s purchase money deed of trust lien (Supp. CR
39). Second, MidFirst possessed the vendor’s lien that was reserved within the
Chestnut’s Warranty Deed in favor of their lender. (Supp. CR 59). Additionally,
the Special Warranty Deed into Appellant specifically provides that Appellant’s
interest in the Property is subject to MidFirst’s Deed of Trust lien (Supp. CR 39).
Despite the title documents unmistakably confirming the superior nature of
MidFirst’s title, Appellant nonetheless filed suit against MidFirst asserting a quiet
title claim. The elements of the cause of action to quiet title are that the plaintiff
must show: (1) an interest in specific property, (2) title to the property is affected
by a claim by the defendant, and (3) the claim, although facially valid, is invalid or
unenforceable. Vernon v. Perrien, 390 S.W.3d 47 (Tex. App. – El Paso 2012, pet.
denied). The plaintiff in a suit to quiet title must allege right, title, or ownership
in himself or herself with sufficient certainty to enable the court to see he or she
has a right of ownership that will warrant judicial interference. Wright v.
Matthews, 26 S.W. 3d 575, 578 (Tex. App. – Beamount 2000, pet. denied). A
plaintiff cannot succeed in a suit to quiet title by simply basing his claim on the
weakness of his opponent’s title but rather he must succeed on the strength of his
own title. See generally, Fricks v. Hancock, 45 S.W. 3d 322, 327 (Tex. App. –
Corpus Christ 2001, no pet.).
19
While not altogether clear from Appellant’s Brief, MidFirst construes
Appellant’s argument to be that MidFirst’s foreclosure action, while facially valid,
is actually defective due to the issues raised by Appellant surrounding the
Assignment and the Note. MidFirst has already addressed these issues within
Issues No. 1, 2 and 3 above and incorporates those prior arguments within this
Section of its brief to the extent necessary. As MidFirst’s lien interest in the
Property was superior to that of Appellant’s, and as no defect exists with the
foreclosure sale, Appellant’s quiet title claim fails as a matter of law. The trial
court’s judgment dismissing Appellant’s quiet title claim should be affirmed.
5. Did the trial court error in determining that Appellant’s affirmative
claim for equitable estoppel fails as a matter of law given that it is only a
defensive claim and not an affirmative cause of action?
Appellant asserts equitable estoppel as an affirmative claim against Midfirst.
See, Appellant’s Brief at 27. Appellant’s argument is that MidFirst should have
seen the Wally Wrap within the deed records, and once aware of the Wally Wrap,
MidFirst should have known Appellant was making payments on the Property (and
that it would be inequitable to foreclose on someone making payments). There are
multiple problems with Appellant’s argument.
First, a party is not required to constantly monitor the real property records
to guard against a future filing by another party. The law does not impart any
requirement on MidFirst to examine title records periodically to confirm no one
20
has attempted to destroy its lien interest in a specific piece of real property. See
generally, Biswell v. Gladney, 213 S.W. 256, 258 (Tex.Comm'n App.1919) (A
mortgagee is not charged with constructive notice of a subsequently recorded deed
conveying part of the land involved.). The object of all registration acts is to affect
with notice only such persons as have reason to apprehend some transfer or
incumbrance prior to their own, because none arising afterwards can affect them or
their estate in the land. Cox v. Clay, 237 S.W.2d at 804; also see, Boucher v.
Wallis, 236 S.W.2d 519, 526 (Tex.Civ.App.—Eastland 1951, writ ref'd n.r.e.)
(observing that the “purpose of [the Texas] recording laws is to notify subsequent
purchasers ... and not to give protection to the alleged perpetrators of fraud.”)
(emphasis added). Appellant has cited to no authority, and no authority exists to
impart a duty on MidFirst to examine deed records for an “after the fact” wally
wrap.
Second, and equally damaging to Appellant’s claim is that that equitable
estoppel is only a defense and cannot be used as an affirmative claim. See, Kelly v.
Rio Grande Computerland Group, 128 S.W.3d 759, 769 (Tex. App. – El Paso
2004, no pet.)(setting out that promissory estoppel can be used as an affirmative
claim but equitable estoppel cannot). Equitable estoppel prevents a party from
changing its position when it has misrepresented facts to another, knowing the
other party would rely on the representation to their detriment. See, Sefzik v. City
21
of McKinney, 198 S.W.3d 884, 895 (Tex. App. – Dallas 2006, no pet). Nothing
within the record suggests that MidFirst every misrepresented anything to
Appellant, much less even knew of Appellant’s existence. Further, nothing in the
record suggests that MidFirst changed its position after making a representation.
There is no merit in either fact or law to Appellant’s affirmative claim of
equitable estoppel against MidFirst. The trial court was correct in determining that
based upon the summary judgment evidence; Appellant’s claim for equitable
estoppel fails as a matter of law.
V.
PRAYER
For these reasons, Appellee MidFirst Bank respectfully requests that this
Honorable Court affirm the judgment of the trial court. Appellee also requests any
other relief, at law or in equity, to which it may be entitled.
Respectfully submitted,
Hopkins & Williams, PLLC
12117 Bee Caves Rd. Suite 260
Austin, Texas 78738
(512) 600-4320 – Telephone
(512) 600-4326 – Facsimile
mark@hopkinswilliams.com
By: _/s/ Mark D. Hopkins________
Mark D. Hopkins
Texas State Bar No. 00793975
ATTORNEY FOR APPELLEE MIDFIRST BANK
22
CERTIFICATE OF SERVICE
I hereby certify that Appellee's Brief for No. 03-14-00632-CV has been
forwarded to the following via certified mail, return receipt requested and regular
U.S. mail on this 13th day of February 2015:
Via Regular U.S. Mail
And CMRRR #70121640000171145954
William B. Gammon
Anthony G. Read
Gammon Law Office, PLLC
1201 Spyglass Drive, Suite 100
Austin Texas 78746
/s/ Mark D. Hopkins
Mark D. Hopkins
23
CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), the undersigned
certifies this brief complies with the type-volume limitations of Texas Rule of
Appellate Procedure 9.4.
1. Exclusive of the exemption portions in Texas Rule of Appellate Procedure
9.4(i)(1), the brief contains: 5,035 words
2. THE BRIEF HAS BEEN PREPARED in proportionally spaced typeface
using Microsoft Word 2011 in Times New Roman font, with 14 pitch font
for text and 12 pitch font for footnotes.
3. IF THE COURT SO REQUESTS, THE UNDERSIGNED WILL PROVIDE
AN ELECTRONIC VERSION OF THE BRIEF AND/OR A COPY OF
THE WORD OR LINE PRINTOUT.
4. THE UNDERSIGNED UNDERSTANDS A MATERIAL MISREPRESEN-
TATION IN COMPLETING THIS CERTIFICATE, OR CIRCUMVEN-
TION OF THE TYPE-VOLUME LIMITS IN TEXAS RULE OF
APPELLATE PROCEDURE 9.4, MAY RESULT IN THE COURT’S
STRIKING THE BRIEF AND IMPOSING SANCTIONS AGAINST THE
PERSON SIGNING THE BRIEF.
/s/ Mark D. Hopkins
Mark D. Hopkins
24
APPENDIX
Exhibit “A”: Summary Judgment Order
Exhibit “B”: Deed of Trust
Exhibit “C” Assignment
Exhibit “D” Special Warranty Deed
25
Notice stJnt: Finc-ll fntcrlocutory
DC BK14203 PG589
Dlsp Parties:. _ _ _ ---r+t-=7.~
Dlsp code: CVD / CLS ---'+.:.....o.-=--
~::::~~=: __ __.~..e-tt---
clcrk _ CAUSE NO. D-1-GN-11-000558
KARL B. BAILEY, JR. § 1N THE DISTRICT COURT
§
§
Plaintiff, §
vs. §
§
MIDFIRST BANK; SMOKE SIGNAL § 250TH JUDICIAL DISTRICT
PASS, LLC; ERIC J. LEE; KW §
MANAGEMENT, LLC, dfb/a Keller §
Williams §
§
§
Defendants. § TRAVIS COUNTY, TEXAS
ORDER ON DEFENDANT MIDFIRST BANK'S FIRST
AMENDED MOTION FOR SUMMARY JUDGMENT
On this day, the Court determined it had jurisdiction over the subject matter and the
parties to this proceeding. After considering Defendant MidFirst Bank's ("MidFirst") First
Amended Motion for Summary Judgment, the pleadings, the affidavits, and other evidence on
file, the Court GRANTS Defendant MidFirst's first amended motion for summary judgment.
IT IS THEREFORE ORDERED ADJUDGED AND DECREED that Defendant's
First Amended Motion for Summary Judgment is hereby GRANTED.
IT IS FURTHER ORDERED that all of Plaintiffs cause of actions against Defendant
MidFirst are dismissed with prejudice to there-filing of same.
IT IS FURTHER ORDERED that Defendant MidFirst's foreclosure sale conducted on
January 4, 2011 was valid, that it has a priority first lien on the Property in question, and that any
interests of any secondary or junior lienholder were extinguished as a result of the foreclosure
sale.
IT IS FURTHER ORDERED that Defendant, MidFirst, is entitled to possession of the
premises in accordance with TEX. R. CN. P. 310 and that Defendant Mid.First have restitution, for
ORDER ON DEFENDANT'S AMENDED MOTION FOR SUMMARY J'UDGMEJ','T
BDFrENO. 20100010601513
DC BK14203 PG590
which let writ issue, of the premises commonly known as 1234 Acanthus Street, Pflugerville,
Texas 78660, and legally described, to-wit:
LOT 18 BLOCK B, OF HEA THERWILDE, SECTION THREE, AN ADDITION
IN TRAVIS COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT THEREOF;
RECORDED IN BOOK 87, PAGES 57C-58A, OF THE PLAT RECORDS OF TRAVIS
COUNTY, TEXAS; AS CORRECTED IN DOCUMENT NUMBER 2000188927 OF THE
OFFICIAL PUBLIC RECORDS OF THE REAL PROPERTY RECORDS OF TRAVIS
COUNTY, TEXAS.
SIGNED on Q\11. l ~ ~II '2014.
~-~
pRESJI)INJ GE
SUBMITTED BY:
BARRETT DAFFIN FRAPPIER
TURNER & ENGEL, LLP
Is/Chris Pochyla
Chris Pochyla
State Bar No. 24032842
15000 Surveyor Boulevard, Suite 100
Addison, TX 75001
ChrisPO@bdfgroup.com
972-386-5040
972-341-0734 (Fax)
ATTORNEY FOR DEFENDANT
MIDFIRST BANK
ORDER ON DEFENDANT'S AMENDED MOTION FOR SUMMARY .TUDGl\IENT PAGE2
BDFTE NO. 20100010601513
27
.--2.5.12002146
SLG/04
1111111111111 DT
t2 PGS
2004136582
When Recorded Return and Mail To:
ALI'riiES, LLC
12885 RESEARCH BLVD STE 202
AV8TtN, TX 78750
ATTN:
[elephone: ------- --··----
rrepared By:
GINNY MXLU~
lU.&'rllm8, t..X.C
t2885 RBRMtC:H BLVD ftE 202,
AU8'rtN, 'rX 18750
- - - - ------IS_p_a_e_e_A_bo-ve-T"'"h-ls_L_Ine For Recordtna Dat;y-------·--·-
DEED OF TRUST
CIICS'INIM'
t.cWf mDIBD: . . . . . .
~ ~: t~S-?012.71-703 -
NZ•:
1002.71000020~3683
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL
PERSON, YOU MAV REMOVE OR STIUKE ANY OF TltE FOLLOWlNG
INFORMATION FROM THIS .INSTRUMENT BEFORE lT IS FILED FOR
RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER
OR YOUR DRIVER•s LICENSE NUMBER.
TillS DEED OF TRUST("Sec:urity ln•1rumcnt"J i~ made on JULY 15, 2004 . The
grantor is TAAVIS CliES'.rlVI' AND AMY CHIS MIT, WSBAND AND WIJi't
("Bt)tlOwcr"). The trustue is MBIR'r J. WlLSON
whose ilddre~~S is 9951 ANDIRSON MILL RD. 1200 .AOSUN, 'l'X 79750
('"trustee"). 'f'he bi:neficiary is Mortgage E~tronic Registration Systemli,lnc. ("MERS") (solely as nominee
tor tender, as hereinafter defined, and Lender'~ succ."Cuors and assisns). MHRS is organit.cd and existing
under the lawa of Delaware, and has an address and telephone number or Post Office Box 2026, Flint,
Michigan 48501-2026, telephone (888)679·Mf.RS. ALITHES, LLC
("Lender") Is organized and existing under the laws of 'l'EXAS
and has an address of 12685 USI:ARCR BLVD STI: 202 AUSTIN, TX 76750
I'll"! I or Ill lo1J.A T1111l Otd ofl'rllff • 2.91
Borrower owe..-. Lender the principal sum of
20S368
0
ONE HUNDRED SIXD&N !'HOUSAND FIVE HUNDRED SllVZN'rY-EIGKT AND 00/100 c
Dollars (U.S. S 116, S78. 00 ). This debt is evidenced by Borrower's note dated the same
date as this Security Instrument ("Note"). which provides for monthly paymenls. with the futl debt. if not
<
:I:
paid earlier, due and payable on AUGUST 1, 2034 . This Security Instrument secures to Lender: 0
(a) the repayment of the debt evidenced by the Note. with interest, and all renewals, extensions nnd
m<xlitications of the Note; (b) the payment of nll other ~ums, with interest, ad\/Mced under Paragraph 7 to
protecl the security of this Security Instrument; and (c) the performance of Borrower's covenants and
agrcemen~ under this Security Instrument 1111d 1he Nott. For this purpose, Borrower irrevocably grants and
conveys to Trustee. in trust, with power of sale, the following described property locatetl in
TRAVIS County, Texas;
LOt 19, BLOCK B, OF HIA'.rHIIlWIIDE, SBCTION THUE, AN ADDITION IN TRAVIS
COUNTY, T&XAS, ACCORD INC TO THE MAP 01\ PLAT THEREOF: RZCO:RDSD IN BOOK 87
PAGES 57C-S&A, OF 'l'HI PLA'f 1\I:CORDS or TRAVIS COUK'l'Y, T&XA$; AS
CORRICTED tN DOCUMENT. NUHB£1\ 2000188927 OJ' ·!HE OFFICIAL PUBLIC RBOORDS
OJi' TRZ RltAL PROPU.!rY .. RilCORDS OF 'l'RAVIil COUN'fY, TEXAS.
whiCh hast~ address of 1234 ACAN'tlWS Sn&ET
[St~-etj
PFLUOERVI.i.LE Tul1.9 78660
[City] [Zip Code] ("Property Address");
TOGETHER WITH all the improvements now or hereafter erected on lhe·property, and all casements.
appurtenances, and fixtures now or hereafter a part of the PfOporty. All replacements and additions $hall also
be covered by this Security lnsttumcnl All ofthC f'ortgolng Is referred to in this Securily lnstroment as the
•Property.'' Borrower understatld9 and agrees that MERS holds only legal tille to the interests granted by
Borrower in this Securirylnstrumtnt; but, if necessary to comply with law or custom, MERS (as nominee fO!'
l.ender and l.ender's. suecossors and assigns) has the_ right: to exercise any or all of tho~ interests, including.
but not limited to, dle riaht to fo~lose and sell th~ Property; and to take any action n."quited of Len<kr
including, but not limited to, releasing, canceling or a.~!ilgnlng this Security Instrument.
BORROWER C<WENANTS that Borrower is lawfully sei1.1.'<1 of 1l1e estalr: hen:by conveyed and
has the righ11o mort&age. grant and convey the Prop;rty and that lhe Property is unencumbered. except for
..:ncumbranccs or ree<»ll. Borrower warrants and will defend generally the title lo the l>roperty againllt all
claims tmd <Jemands, subject to any encumbtances of I'CcoRI.
THIS SECURITY INSTRUMENT combines uniform covemmts for national use and non-uniform
covenants with limited variations by juri:.-diction to con\"tilute a uniform security instrument covering real
property,
Borrower and Lender coYellant and agn."C as follows::
UNJI<'ORM COVENANTS.
I~ Psyment of Prhadpal, lnterat ancl Late naargc. Borrower shall pay when due the principal of,
a11d int(!mt on, the debt evidenced by the Nde and. late charges due under the Note.
1. Moathly Pay•ents of TMsea, tns11rance Blld Other Cbarces. Borrower shall include in each
monthly pnymem, togeth~wlth the principal and Interest as set forth in the Note and any lare charges, a sum
of (a) ta:~es and special as.~ment$ levied or 10 be levied against the Ptoperty, (b) leasehold payments or
ground rents on the Property; for (c) premiums lor in~urance required by Paragraph 4. In any year in which
the t.c:nder must pay a mortgage im;urance pn:mium to the Secretary of Hotnln~ and Urban Development
(..Sccret~~ty"), or in any. yell!' in which !iuch premium would ha~e been rtq\Jii'Cd if Lender still held the
Security Instrument, each monthly payment shall alw include either: (I) a. sum lor the annual mortjtagc
lnsUTa~W<: premium to be paid by Lender to the sec,-etary, or (ii) a monthly charge instead of 11 mortg&J!.I!
insurance premhtm If this Securily lnst.-ument is hdd by the Secretary, in 11 reasonable IUTIIlunl to be
I'JtiC 2 of Ill •.IIA 1'rJUU D«d ufTralt .1J9)
•
205368
detennined by the ~relary. i:Jlc:cpl for the monthly charge by the Secretary, thete items are called "Escrow
Items" and the sums paid to Under an: c:alleci"Escrow Funds. •'
Lender may, at any time. collect and hold amounts for Escrow Items in an aggregate amount not to
eJCtecd the maximum amount that may be requited tor Borrower's escrow account under the Real Estate
Settlement Ptocedures Acl of l974, 12 U.S. C. Sectinn 2601 et seq. and Implementing regulations, 24 CFR
Pan 3500, as they may be. amended from time to time ("'RESPA"), except that the cushion or reserve
·permitted by RESPA for unanticipated disbursement.~ or disbursomcnt.s before the Borrower's payments are
available in the ~ount may not be based on amounts due for the mortgage insurance premium.
If tho amounts held by Lender for Escrow Items exceed the amounts permitted to be held by
RESPA. Lender shall account to Botrower for the excess. fundS a$ required by RF.SPA. If the runount~ of
funds held by Lender at any time are not sufficient to pay the Escrow Items when due. Lender moy nnt!fy the
Bon'Ower and require Rorrowcr to make up the shortage_, pennitted by RESPA.
. The: Escrow Fund.~ are pledged as additiooal sec:urity for all sums secured by this Security
Instrument. If BoJT()Wer tenders to Lender !he f\111 payment or all such sums, Borrower's accoonts shall be
credited, With the balance remaining tO, all installmc!nt items (a). (b). and (c:) and any mortgage lnsurantt:
premium installmen.l that Lender haa not bocomeiJblitJated to pay to the Soc:retary, and L.ender shall promptly
refund any excess funds I() Bon-Ovver. Immediate!)' prior to a foreclosure sale of the Propeny or it!l
acquisition by Lender, Barrower's account shall be credited with ~my balance remaining lor all insrallments
for items (a), (b), and (e).
l. Apptlcatloa of Paymea1t. All payments under Paragraphs I and J shall be applied by Londer a.o;
follows:
f'ir.~t. to lbe mortgage in$urance premium to be paid by l.endor to tho Secretary or to the monthly
charge by the Secretary Instead of tho monthly mmgago iMurance premium;
&t:ontl. to jUly taxes, special assessmentS, lcuehokl payments or ground rents, and fire, flood and
t>ther hazard insurance premiums, as required:
Third. to intere.9tdue under the Note;
Fcnmh,.lo amoniz.tion of the principal of the Nate; and
Fifth, to late charges due under the Not~:.
4. Fire. Flood and Otber Haurd lllluraru:". Borrower shall insure all improvcmel1ts on the
Property, whether now in exisrence or subseqoontly erected, aaainst any hazards, casualties, and
c:ootinacnei~. including fire. for which Lender requires lnsu~. This Insurance shall be maintained ln the
amounts and far the periods that Lender ~ulres. Borrower shall also irisure $11 improvements on the
Property, wht:ther now in txistencct .or $Ubsequently erected, against loss by floods \O the extent roquircd by
the Se~!ll')'. All insurance shall be carried with C(lmpanies approve.d by Lender. The insurance policies
and any renewals shall be 1\eld by Lender 1\nd shall include loss payable clauses in favor ot: and in a form
acceptable to, Lender.
In the event of lois, Borrower shall give Lender immediate notice by mail. l.ender may make proof
of loss If not made promptly by Borrower. Each insul'3RCe eompany conc:erMd is hereby authorized and
directed to make payment for such ross directly ta Lender, instead of to Borrower and ro Ltnder.jointly. All
or any pan of the insurance proceods may be applied by Lender, at its option, either (a) to the reduction of the
indebtedness under the Note and this Security lnstrumenl. first to any delinquent amounts applied In the order
in Paragraph ), and then to prepayment of princi~Jltl, or (b) to. the restoration or repair of the damaged
Property. Any applicatiOn oftlle proceeds to the principal shall not extend or pu~pone the due date o( the
monthly J)ayments which are referred to in JJaragraph ~. or chortge the amount of such payments. Any e:ot~ess
ins11rancc proceeds OV!R' an amount required to pay all outstanding indebtedneMo: under the Note and this
Soc:urlty ln$trumcnt shall be paid to the entity legally entitled thereto.
In the event of foreclosure o( this Security Instrument or other transfer of title to the Propeny that
ulinguish1.'S the indebtedness, olf right, title and intiJI"CSt of Horrower in and to insurance policies in force
shall pass to the purchaser.
~lofiU
.,.,
•
20536$
5. Occupaacy, Prelel'\lation. Maintenance and ProttctloD or tbe Property; Borrower's Loan
Appllcatto_.; Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's princip~~l
residence within sixty days after the execution of this Security Instrument (or within sixty days .of ~!later sale
or transfer c>f the Property) and shall continuo to occupy the Property as Borrower's principal residence for at
least one year after the date of occupancy. unloss Lender determines that requirement will cause undue
hardship for Borrower, ur Wlloss exteflll!Uing circumstances exist which are beyond Borrower's control.
Borrower shall notify l.ender of any extenuating circ11mstances. Borrower shall not commit waste or destroy.
damage pr sub5tantially change the Property or allow the Property to deteriorate. reasonable wear and tear
excepted. Lender may inspect the Property if the Property is vacant or abandoned or the loan is in dcfaull.
Lender may take teaSOnable action to protect and preserve such -1acant or abandoned Property. Borrower
shall ab;o be in default if Borrower. dll'ing the loan application process, gave matt"rially false or inaccurate
information or statements to Lender (or failed to provide Lcndc:r with any material information) in
connection with the loan evidenced by the Note, including, but not limited to, representations concerning
Borrower's occupancy of the Property as a principal residence. If this Security Instrument is on alensehold,
Borrower shall comply with the provisions of the lease. If Borrower acquires fee title to the Property, the
leasebold and fee title shall not~ mergod unless Lender agrees to me merger in writing.
6. Condemnation. The pruceeda of any aw;~rd ot claim for damages, direct or consequential, in
connection with any condemnation or other taking of any part. of the Property. or tbr conveyance in pln~ of
condemnation, are hereby assigned and shall be piid to Lender to the extent or the full amount of the
indebtedness that ffinalns unpaid under the Note 111nd this Security lnatrument. Lender ahall apply t;Uch
proceeds to the reduction of the indebtedness under the Note and this .Security Instrument, tirst to any
delinq1.1ent amounts applied in the order provided in Paragrap]l 3, and then to prepayment of principal. Any
application of the proceeds to the principal l!hall not extend or postpone the due date of the monthly
payments, which arc referred to in Paragraph 2, or change the amount of such payrnents. Any excess
proceeds over 1111 amooot required to pay all oul511lndinJ indebtedness under the Note and this S~riry
Instrument shall be paid to the entity legally llnlitled thereto .
7. Charaes to 8orrower and Protettion or lender's R.lgbts Jn tbe Proptrty. Borrower shall pay all
govemmenllll or municipal charges. Ones and impositions that are not included in Paragraph 2. Borrower
shall pay these obligations on time directly to ihe entity which is owed the payment. If failure to pay would
advonety affect Lender's intmost in the Property, upon t.ender's request Borrower shall promptly furnish to
Lender receipts evidenciltg these p~~ymr.mts.
If Btttrowcr tails to mak~ these payments or the payments required .by Paragraph 2. or fails to
perfonn 11ny other covenants and agreements contained in this Security Instrument, or there is a legal
proceeding that may Sijpllficantly atTect Lendc(il righ!S in the Property (such 4ll a proceeding in bankruptcy.
for. condonmatiun (,lt to enforce laws or regulations), then Lender may do and pay whatever is necessary to
protecr the value of the Property and lender·~ righu in the Property, Including payment of uuuls. hazard
insurance und other itoma mentioned in Paragraph 2.
, Any IUllOUn(j disj,u~d by Lender under this Paragraph shall become an additional debt of
Borrower und be seeured by this Security Instrument These amounts shall bear interest from the date or
disbnrstm&.'flt. nt the Now me and at the option of Lender shall be immediately due and payable.
Borrower shall promptly discharge any lien which has priority over this Security Instrument unless
Borrower: (a) agrees In writing to the payment of the: obligatioo aecurc4 by the lien in a maoner acceptable to
Lender; (b) contests in good faith dtc lien by, or defeflds against enforcement of !he lien in, le$al proceedings
·which in the l.ender's opinion operate to prevent tho cntOrcc.ment of the lien; or (c) secures from the holder
of the lien an 8gTeem~nt satisfactory to Lendct iubordinating tho lien to this Security Instrument. If Lel)der
det\.'t'lllines that any part or the Pr()perty is su~iect to a lien which rnny attain priority over this ~urity
Instrument. l.ondcr may giveBI>ITower Q notice identifYing the lien. Borrower shall Sltlisfy the lien or take
one or more ufdteactlorn; sec tbrth above within 10 days of the giving or notice.
8. Fen. Ll!ndcr may collect f~:Cli and charge!laulhorlzed by the Secretary.
JIUA Tnu Dftd urT111tt • 11!11
I. '
I i
- ..,....
, ,, . . -· ~ . ....
~ " ' .. . .
..
-------""""·""!1<!'. . " "'., .
..........-.,.!!l!!ZUP,!·J"tr
....
-··---- ;?'-··-··-···-·····- ·-·····-····
<. '· ,
.
,,,//
/ f
205368
9. Grounds for AtctlcratiCln of Debt.
(I) Defaull . Lender. may, except as limited by regulations issued by the Secretary in the ease
of payment defaults, require immediate payment in full of all sums Se<:IJred by this Security
Instrument if:
(i) Borrower defaults by tailing to pa) In full any monthly payment rc:quircd by this Se<:urity
Instrument prior to or on the due date of the next monthly payment, or
(ii) Borrower defaults by failing, for a period of thirty days, to perfonn any other obligations
contained in this Security Instrument.
(b) Sale Wltho•t Credit Approvll. Lender 'hall, if pet'mitted by applicable law (including
sect jon l41(d) of the Gam-St Germain [)cptiSitory Institutions Act of 1982, 12 U.S.C. 170 lj-3(d))
and with lhe prior approval qfthe Secretary. requin: immediate payment in full of ulf sums Se<:ured
by this Security Instrument if:
(i) All or port of the Prope~. or a beneficial interest in a trust owning all or part of the
Property, is sold or O:therwise trensferrcd (other than by devise or descent), and
(il) The Property is not occupied by th~ purchaser or grantee as his or her principal residence,
or the purchaser or .,ante~t doe-s so oc~py tile Property, but his or her credit has oot been
approved in accordance with the requirements ofthe Secretary.
(c) No Wai\ltr~ If cil'l;umstan'es occur that would pcm1it Lender to require immediate
patyment in. full, but Lender does oot n;quil'l: such payments, Lender does not waive its rights with
respect to subseqiJcnt events.
(d) Reaulations of HUD Setretary. In many circumstances regulations issued by the
Secretary will limit lender's rights, in the c:a~ of payment defaults to require immediate payment in
tull •nd foreclose ir not paid. This Sec.urlty Instrument does not authoriz.e acceleration or
forc:closun: if not penniued by regulations of the Secretary.
(e) Mortpge Not lasured. Borrower agrees that If this S«urity Instrument 1111d the Note are
not determined to be eligible for insul'lll)ce •mder the Nation11l Housing Act within 'ixty (60) days
li'om the d11tc hert:of, Lender may, at ils option. require immediate payment in full of all sums
secured by this Security lnstrun1cnt A written statement or any authorized agent of the Secretary
dated subsequent tu sixty (60) da)ls from the date hereof, dcclinins to insure this Security Instrument
and the Note, shall be deemed conclusiH! proof of 1111(:/t ineligibility. Notwith.,tanding \he
foregoing, thi!l option may nut be eKerci~d by Lender when tho ullavailability of insurance is solely
due to Under's failure to remit a mol'tiage in:cunmce premium to the Secretary.
10. Reinttatemena. Borrower has a right to be reinstated if Lender has required immediate payment in
full because of Borrower's failure tu pay an atnount due under the Note or this Sec:urity lnstnlment. This
right applies even after foreciOSttrt proceedings are instituted. To reinstate the Security lnsltumcnt,
Borrower shall tender in a lump sum all amounts n:quin:d to brins Borrower's uccount current including, to
the extent 1hey are obligations of Borrower under thi~ Stcurity Instrument. foreclosure co~s and reasonable
and . customary auomey's rees lUid expeo5C:I pro~ly associated with the foreclos\ll'e proceeding. Upon
relnstatemem by Borrower. this Seeurity lnstruf\'lllnt 11nd lhe ~ligations that it ~uri!$ mall remain in el'f~t
u if l.uoder had not required immediate payment in full. However. tender i~ nol required U.t pennit
reinstatement if: {I) Lender hu BC«-"Pied reinstatl:mcnt alter the commencement or foreclosure proceedlllgs
within· two yea!"$ immediately pre(eding tliu c:omtnencem~..ont of a current foreclosure proceeding, (ii)
reinstaten1ent will preclude f<Jn~Closun: on diiTert:nt gtuunds in the futur~ or (iii) reinstatement will adver~~ely
affect the priority of the lien created by this Security Instrument.
II. Borrower Not Released; Forbc:tn~a~ By Lender Not a Waiver. E:xtcnsion of the time of
paymont ot modifictttiun of amortj?".ation of tl1o sumJl ~ured by this Security lnsttvmcnt granted by Lender
to any successor In intcreJt of Borrower shall oo1 operate to release the liability of the original Horrowcr or
Borrower's ~ucc~sor in interest. tender shall nol ~ required to commence proceedings ll3&inst any
~>aco ~of to
j.
''·'')·~·-4fiJ{1J •
...,~--··~-~-·1-l•·• ,"''" .-•-v" •" . . . . '"" "'" .
i/
I!
,..
•';
205368
successor in .Interest or refuse to ()(tend rime for payment or otherwise modifY amorti:r.atlon of the sums
secured by this Security Instrument by msson of 1111}' demand made by the original Borrower or Borrower's
successors in interest. Any forbeal'lll<:e by Lender in exer<:ising any right or remedy shall not be a waiver of
or preclude the exercise of any right or remedy.
•2. Su~cuson and Aulpa Bound; Jolat aad Stveral Liability; Co-SI&nen. Th~ covenants lmd
aa""ments of this SeC\Irity Instrument shall bind ood benefit the suceeS$01'5 anll asslgnN of Lender and
Borrower, subject .lo the provisions of Paragraph 9(b~ Borrower's Govenants and agrccments shall be joint
and soveral. Any Borrower who co-sigt~s this Security lnstrumenl but does not execure the Note: (a) is co-
signing this S'lcurity Instrument only to mortgage, gr411t and convey that Borrower's interest in the Property
under the term~ of this Security Instrument; (b) Is not personally obligated to pay the sums s~cured by this
Seoority Instrument; and (e) agrees that Lender and any other Borrower may agree to eKtend, modify, forbear
or make any accommodations with regard to the tenns uf this Security Instrument ur the Note without that
Borrower's consent.
J 3. Notices. Any notice to Borrow'r provid-=d for in this Security Instrument shall bt given by
~llvcring it or by mailing it by first clau mail unless applicable law requires use or another m1.'1hod. The
notice ~all be direaed to the Property Addre$$ or any other address Borrower designates by notice to
Lender. Any notice. to Lender shall be given by first class mail w Lender's address 11tated h~rein or any
address leftder designates by notice to Borrow~. Any notice provided ror in this Security Instrument shnll
~deemed to have been &iven to Borrower or Lender when given as provided in this paragraph.
14. Governlila Law; Severablll1y. This Security Instrument shall be governed by Federal law and tht
law of the: jul'i!ldiction in wbich the PropertY is located. In the ~vent that any provision or clause of this
Security Instrument or the Nate connicts with applicable law, such ~onflict shall not affect other provisions
of this ~urity Instrument or the: Note which can be givtm effect without the contlicting pmvision. To this
end the provisions of this Security Instrument and the Nore are dedared to be !ii:Verable.
IS, Borrower's Copy. Borrower shall be given one conformed copy of the. Note and of this Security
Instrument.
16. Hazardous Subltltncts. Borrower shall not cause or permit the presence, use, disposal, storage. or
release of any lluardous. Substances on or in the Property. Borrower shall not da, nor allow anyorw els~ to
<lo. anytlling affecting. the Property \hal is in violation of any environmental Law. The preceding two
sentence.1 !hall not apply to the presence, use. or storage on the Property of small quillltitics of Hazardous
Subsbmces thiU are generally recognized to be appropriate to normal residential uses and to maintenance of
the Propcny.
Borrower shall promptly give Lender wrillen notice of any investigation, elaim, demand, lawsuit or
other actiun by any govemrricntal or regulatory agency or private party Involving the Property and any
Hazardous Substance or Environmental Law or which Borrower has actual knowledge. tf Borrower learns,
or is- notirltd by any g()vtmmental or regulatory authority, that any removal or other. romcdlalion of any
Huardoll!i Substances affecting !be. Property is nrcessary. Borrower shall promptly take all necessary
remedial actions in accordance with Environmental Law .
' 1\s used in this Paragraph 16, "Ha.zardoua Substances" are those substances defined as toxic or
hamrdou5 substances by Environmental Law ond the fOllowing substances: gasoline. kerosene, other
flammable or toxic pelrolcurn f'I'Oducts. to:<ic pt~ic:ldes and herbicides, volatile solvents. materials
oontaming u:~bestos or formaldehyde, and radioactive materials. As USed in the Paraaraph 1(),
"Environmental Law" means fe~al laws of the jurisdiction where the Property is lo<;at~•d that relllle to
health, safety or environmental protection.
NON-UN! FORM COVENANTS, Borrower and Lend~r furlher covenant and agree ll$ folklws:
11. Ass~Jc,.meut or Reali. Borrnwer tmconditlonally wigns and transfers to Lender all the rents and
revenue.~ ot' the Property. Borrower authorizes Lender or Lender's agents to toll~f the rents and revehues
and hen,~by di~ts ua<:h tenant of the Property to pay the rents to Lender or l.ender's &tgCfil$. However, prior
10 Lcnd~s noti~e to Borrower of Borrower's bre~h of any covenant or 1\gfl:emeltt tn the Security
.!
,,,,' .
.I. 0
C\lQ
~~
205368
ln&trument, Borrower shall collect and receive all rents and revenues of the Property a~ trustee for the benefit ~ :r::
of Lender and Borrower. This assignment of rents constitutes an absolute assignment and not an assignment
for additional security only.
If Lender gives notice of breach to Borrower: (a) all tents received by Borrower shall be held by
Borrower as trUstee for benefit oflender only, to be applied to the sums secured by the Security Instrument; '":.!!!
(b) Lender shall be entitled to collect and receive all of the rents of the Property; and (c) each tenant of tht: ~jl! -
?roperty shall pay all rents due and unpaid to Lender or Lendcrls aaent on lender's written demand to the
tenant. f~ii
Borrower has not executed any rtior assignment of the rents and has not and will not perform any
act that wuuld pn:vent Lender from exercising Its rights unaer this Paragraph 11.
Lender shall not be required to enter upon. take control of or maintain the Property before or al\er
t!l~ ! ~l
£*=z
giving nolicu of breach to Borrower. However. Lender or a judicially appointed receiver may do so at any A3fir .~~, ..
time thcte is a breach. Any application ofrenl~ shall not cure or waive any default or invalidate any other
right or remedy of Lender. This assignment of rents nf the Property shall ~nninatc when the debt secured by
the Security Instrument is paid in full.
~s'i
_..,.. 5;J; .·.~
.•
18. Foreclosure Procedure. lf after complyln& with all applicable statqtory noti« provisklns
Lender r.qulm iatmedlau payment In fuO under plFIII'IIPb 9.1Aadtr may Invoke tbe power Of Slile
aad any other remedln perMitted by applieable law•. Lender shall be flltitled to collect all ex~11ses
Incurred in pursuia& the r emedles provided l.fl this Panarapla IS. illltludlna, but not limited to,
reasonabk atton.ey.' fees ""4 ~tl oHitle nldenrc.
If Lender lavoketltbe power or ale, Lellder or Trustee tballalve notlce or tbe time. place and
terms of sale by pottlnc and ~rdln& the notice at leaat 21 days prior to .ale as provided by
applicable law. Lender shaU maU I copy of the AOtlce of ale to Borrower ill tbe manner preKribed by
appUcallfe law. Saluhall be made at publle vn11e belweea the houn of' 10 a.m. and .. p.m. on tbe nrst
Tuesday of the month. Borrower authorizes Truatee to tell the Property to the btahest bidder for cash
in one or more parc:els and Ia 111y order Trustee determlna. Lender or Its deslgnee may purchase the
Property at ~tny Sllle.
Ttustee sball deliver to the purchaser Trustee's deed c:onveylne inddeulble Cltlr to the
Property wU!l eoveunu or aenenl warnnty. Bonower covenants and avees to defend &entntly the
pur~baltr's tltlt to tbe Property aphut all dalms and demands. Tbe redtah 'n tbe Trutee's deed
sball be prima fttde evldeacc of U1e truth of t1t11 statements made therein. Trustee shall apply tbe
p~s or the sale. ill the rollowla& ordn: (a) to nil npenitl of the sale, ineladina. but aot limited to,
reasonable Tru..ee1s ud attonaey's fees1 (b) to aU suma setUred by this Security Instrument: and (e)
any exm., to the person or persons •ea•lly entitled to it.
If the Property is sold pursuant to tbl11 Paraeraph 18, Borrower or any person holding
pOQeSsloo of the Property throuth Borrower shatl immediately surrender po111easJoo of the Property
to ••• purchaser at that Jllle. If .poHeSsiOII is not surretldered. Borrower or such person sball be a
tenant at surteraote and may be removed by writ of poueulon.
· If tbe Lender's interest In tbls Security Jnstr.ument is held by the Secretary and lbe Secrehlry
req\'tlres immediate J)*ymcnt mfuU aader Paragrapb 9, the- 8Kte1ary may l11voke the nonjudicial
power or sale: proYlded In the Sbtgle Family Mortpge Foreclosure- Act of 1994 ("Ad..) ( ll u.s..c. 37.51
et seq.) by requcstlo1 a ft)ree~llrt commlttioaer desi&Aated IInder the Act to commence roredosure
aad to nil the Property as pro1'Jded In tbe AcL Nothin& In the precedla& senteoee shall deprive the
Secretary of any rl&bts otherwise a\'allable Co a Lelttler under this Paraaraph Ut or applh:abte t.w.
19. Release. Upon paymentuf all sums se(ured by this ~curity J~trument, lender shall release this
~curily Instrument without charge to Borrower. Borrower snall pay any recordatlcm costs.
20. Sub111it1Jte Trustee. Lender, at its opti"n and with or without cause. may from time to Ume remove
Trustee and appoint, by pow.:r of attorney ur olherwis e. n successor trustee to any Trustee appointed
FtiA Tnu OM! nll'ndt. 2191
~f?V'IX 12/01/200#
r.
.,'•' . '
i
'
. 205368
hereunder. Wtthout conveyance of the Propeny, the successor trustee shall succeed to all the title, power and
duties conferred upon Trustee herein and by applicable law.
1\. SubropUon. Any of the proceeds of the Note used to take up outstanding liens against all or any
part of tlte Property have been advanced by Lender at Borrower's request and upon Borrower's represenrat ion
that such amovncs are due and are £ecured by valid lims against !he Propeny. Lender shall be subrogated to
any and all riahts, superior titles, liens and equlti~s owned or claimed by any owner or holder of any
outstanding liens and debt;, reprdless of whether !mid liens or debts acquired by Lender by assignment or
are released by lhe holder Chereofupon payment.
ll. Partial Invalidity. In the event any portion of the sums intended to be secured by this Security
Instrument cannot be lawfully secured hereby, paym~.o'tlts in reduction of such sums shall b~ applied first to
those portions not secured hereby.
13. Riden to thb Security lnstnanumt. l f one or moro riders are executed by Borrower and recorded
together with this Security Instrument. the tovcnants of each such rider shall be incorporated into and shall
amend and supplement the covenants and agreements of this Security Instrument as if' the ridcr(s) were a part
or this Security lnstrumtt~t.
1Check applicable box{ef)}
0 Adjustable Rate Rider 0 Condominium Rider 0 Second Home Rider
0 Balloon Rider Ill Planned Unit Development Rider 0 Biweekly Payment Rider
0 1-4 Family Rider 0 Other(s) [specify}
Z4. Purchase Monryi OWelty ot Partition: Renewal and EatcnliOA of Liens Aplnst Homestead
Propeny; Acknowled&ment orCasb Ad\'aaced Aatlnst Noa-Homutead Property.
Check ho,x as apPiic:able:
til Purcha~e Moacy.
The funds advarKed to Borrow.er under the Note were used to pay all or part of the purchase price of the
l'roperty. The Note also is primarily secured by the v'-'tlclor's lien retained in the deed of even date with this
Security Instrument ttln\'cying the Propttty to llorrower, which vendor's lien has been assigned to Lender,
this Security Instrument being additional security for suth vendQr's lien.
0 O,wcHy of Partition.
The Note represents funds advanced by Lender at the special instance and request of BQrrower for the
purpose of .acquiring the entire fee simple title to the Property aad the eXistence of an owelty of partition
impose.~ against the entirety. of the Property by a C:Olart order or by a written agreement of tho parties to the
plil'tition to secure the payment ofthe Note is exprtSSiy acknowledged, confessed and granted.
0 Renew11 and Elt~nsioli or Llfllt A1aiast Homcttead Property.
The Note is in renewal and extension. but not In extinguishment, of the indebtedness described on the
atw:hod R~ncwal and Extension Exhibit which is Incorporated by reference. Lender is expressly subrogated
ro all rightS, liens 11nd remedies securing the original holder of a not~ evidencing Sorrower's indebtedness
aad the orlgirtal liens seturing the indebtedness are rt:ncwed and extended to the ~te of maturity of the Note
in renewal and exwnsion ofthe indebtedness.
0 ' Ackaowledament of Cish Ad:vaa«!d A&•lnst Non-flomeatead Property.
. Tho NOte represents filnds advanced to Borrower on this day at B()rrower's request and Borrower
acknowledgus receipt of such funds. Borrower states that Borro~ docs not now and doe$ notlntend ever to
rcsidt! an, U.'le in any manner, or claim . the Property secured by lhis Security Instrument as a business or
residential homestead. Aorrowcr distlaims all homestead rights. intere9ls and tKemptions related to the
Property.
0 Other
:15. Loan Not a Hoote Equity Loan. The Loan nldeneed by the Note is not~tn esteldlon ohn:dlt as
de(med by Section 50(a)(6) or Seclloo 50(a)(1), Artlele XVI, or tile T.-as Constitution. If the Property
Is used as. lkprrower'a reskience, then Borrower agree~ that Borrower will receive nu ntsh from lhe
I
..... ~}
-·-~~~--·n··
~· ~·
.: · ·: - · - -. · · · -· · ·-·.- ._. . . . . . .
/ ;
205368
Loaft evldeneed by the Note and that any advance.• not neces~ary to pun:bue &be Pro~rty, extin&ulab
an owelty Ilea, complete coutruttioJt, or renew and exteGd a prior lien aaatnst the Property, will bt
uftd to reduct the balance evldeneed by the Note or suell Loaa wlU be modJI'Itd to evidence the corrett
Loan balance. at Lender'• opliM• Borrower aarees to execute aay doc:umentatlon aewssary to rom ply
with fbh Section 2!.
BY SIGNING BELOW. Borrower accepts .uul agrees to the tenns and covenants contained in this
Sel:utity lns\l'utnent and in any rider(s) executed by Born.1we and recOt'ded with It
OOCU01!1v ntA Tn.. Dted ol Trull- 1191
~D.V1'11 IR/01/aOOJ
k J!MJjjl$, .,PI .:4 ,: ,A~ ' ,
1
205368
!Spate lklow Thi1 Une ft'or Acknowled&lllent
State of Texas ,/·
County of Travis
This instrument was acknowledged before me on .luly /.""), 2004 • by
TRAVIS CHESTNUT AND AMY CHESTNUT
SOSAN l. {;~I.OJ.r.\:J
loA> !.'f.'foii~•>"•Oo"· ."Wtf'I"S
~2l.~
(Signature of Office
cr~tle of Officer)
My cvmmisslon e~pires:
~IOofl<l
/ 0
C\1 0
z.:;,..~ ~
:J:
PLANNED UNIT DEVELOPMENT RIDER jJl? 'I (J
20!368
1l!.i
....... lJ <
··!-7012473-703-
...
~·'*
u_
THIS PLANNED UNIT DHVELOPMENT RIDER is made this l.STH day otffm..,.....,..IIO:Uo,.,
JULY, 2004 , and is incorporated into and shall be deemed to amend and supplement lhe •! ~~
Mortgage, Deed of Trust or Securi1y Deed ("Security Instrument") of the same date given by the undersigned~-~~~ .~
("Borrower") lo sei:Ure Borrower's Note {"Note") to ALETHES, LLC ~j!,..c: fS /i;
e.g it!S' ··
("Lender") of the same date and covering the Property drscribed in the Security l.nstrumen& and lex: ated at: ·~Jii .~~
1234 ~THUS S~RI&~ PFLUG&aVILLZ, TX 78660
(PI'Ofll'rt)· A.:ldr=f
The Property Address is a part ofa planned unit development ("PUD") known as
H&ATHBRWILO&
INamt of Plallncd Unit l>evclopmcnfl
. PUD COVENANTS. In addition to the eovtnanta and agreements made in the ~rity InstrUment,
Borrower and Lender further covenant and ag~ as follows:
A. So long as the OWners Assoc:llitlon (or equivalent enlity holding title to common areas and facllitles),
acting as trustee for .the homeowners, n1aintalns. with a generally accepted insurance carrier, a
"master" of "blanket• policy insuring lhe property tocated In the PUD, including all improvements
now cKisting or heteafier erected on the mmtgagetl premise~. and such policy is satisfactory to Lender
and provides insurance coverage in the amounts. for the periods, and against the hazards Lender
requires, including fire and other hat.ards induded within Uu: term "extended coverago,• and loss by
llood, to the extent requh·ed by the Secretary, then: (i) Lender waives the provision in Paragraph 2 of
thi~. Security Instrument for the tnonthly payment to Lender of one-twelfth of !he yearly premium
in!itallments for hazard insurance on the Property, und (ii) Borrower's obligation under Paragraph 4 of
this Security Instrument to maintain hazard inwrance coverage on the Property ls deemed satidied to
the extent that the required coverage is pr•>vidcd by the Owners A$Sociation policy. Borrower shall
gi\re Lender prompt notice of any lap&e in rtquired hazard insurance c:ove1"1lge and of any loss
o,;currlng from a huard. In the event '11' a distribution of hazard insurance proceeds In lieu of
restoration or repair following a loss to the Property or to common IU'Cas and fa<:ililies oft he PUD. any
proceeds payable to Rorrower are hereby ;tSSigncd and shall be paid to Lender for applicatk)n to the
sums secured by this Security lns1rument, with any excess paid to Ule entity legally entitled thereto.
a. Uorrower promises to pay all dues and assessments lm~ punuant to the legal instntments creating
and governing the PUD.
\.
!
DOCtJIU'Ill 1'1111< I of2 FUA Mutllstatt PUP Rklrr- 6196 '~··
oac:uitl'llt.Ynl Ol/01/2000 .. ,'
.,
I
,.
;;
205368
C. If 'Borrower ctoes not pay PUD dues and assessments when due, then Lender may pay thj:m. Any
amounts disbursed by Lender under this paragraph C shall become additioMI debt of Borrower
secured by the Sec:urtty Instrument. Unltss Borrower and l.ender agree to other tenns or payment.
these amounts shall bear interest from the date of disbursemt:nt at the Note rare and shall be payable,
with Interest. upcn notice trom Lender to Borrower requesting payment.
to the terms and provisions contained fn this PUD
FILED AND RECORDED
OFFIClAI. lltaJC ltiCOAD$
'
IJ(JCIJKPI12 f'nao: 2 url ffiA Mullitttk P()O ltldtr- 6196
-.Vft ~/l7120M
tf
Pf11)8red by Sarah Fomeca
~ I!ICQ'd~
MidFII'a\ Bank
reiUm to:
t1 \1
"cj/)1 tb ,\.N'
"' ,. ()(J fig (
2.730 N POI'IItnd
OKC. OK 73107
MFBflti346G074
. . . . . . . :-_ 219879539
AMIGltMafJ Of' DECJ) OF mlm
f'OR VAlUE RECEIVED. MOitgtGe Eltctronlc Registration Syltllmt, ~. aa nominee for AlllhM,
U.C. Po Box 2028, Flint, MI. <48501·3)26 (h«.maftw c:an.cllha •Asslgno!"), does hereby QrWit. ri«<Vf/t,
ass91. lrantler, 111\d stt over eo MtCIFtrat BMk. a '"-den~~!)' ~ hvlnQ• Aleodellon, 999 t-NJ
Orand Btvif.; 6Ute 100, Ot:llohome City, OK 73118, (llenlinaftet called lhe 'AIIIQnBe"), lla auete~IK'll'l
and aeaiQne, all of the .AeliOne(s rt~Ma. tile end i'tteletttn and to:
1. 1M Pl'anii&Oiy Note (twain caJed 11w1 "Note"). evidencing the lndlbtednan secured by tile.
~ofTMl
2. The t.tortge~ deled 7111104, ~by 'Ti'avltl Cheetnut .,d ~ CManut. hualland and
wtfa, to Morli:allot Ellottonlc ReOI*Irdlon Syttema, Inc.. 11. nomlnH for Alethn, U.C,
recotded on.711eiM •. Documltnt .No. 2004138812, In lhe Otri:8 ol the R8c:ord«,. County of
Tmta, $tat& Of TU.. GOVellng 1t1e rotlowlng cleealled pcopetty end all ~tl ee more
tully dOacrlbed i't the DMcl of Truat rtfln'IMt to herein.
t.ot u, -.octe 1, or •• e•, IICftCII _ . , , . A~Dl'm:lir llf 'llllllllml
CIOI*IIt, . . . . ~·- . . . . . Cia ............. . . . . . , Ill . . .,
- . . l'liMM. or • ,_-or ...u. CDIM', ._..., aa
• tllil· u ~ . . _ :rOOtinm •,.. tii'ICIUL 1a11or4-
0'11 . . . . . . . . . . . . . - • tM..U CIIIM'I'I, taM.
Property Addrest; 1234 AAnthus 8trHt. Pflugii'YIIII, TX 7H410
P~ID:02TiSI08040000
In~ Whertof, the undetllgned corporauon nes caused this tnstrumentto be ~ lhhl a"' day
of April, 2001. .
SlM at Oklahoma
County Of~
Ori 1t11s 22"' day of April, 2001, before .... a Notary Pllbltc, In am fa said county, penonahy appeared
Jeri aa..-, eo me ~Y lcncMn, who .being by me duly .worn did say lhfot·IIM .. the vrc.
"-!dent d.~ .Bicttonlc ~ Srmmt. Inc.. • JIIOIIIkiN for Altthli, u.c. and 11wt rna
>MittIn Ina~ wu 11Qni1:1 ~ blltlalf d Hid COI'pOI alioh by aut11or1ty of Its Bolwd Of or.dora, and that
they ~gad the oxecuton of lllid loatumeol to be tne volUntary act and 4elt<l or said capo!&tiOn,
ewcutlld f01: the uaea.l!fld Pl.il'pQIH Mt forth.
In teatlmony , I haYe hereunto HI my hend end olllclal aeallhlt :a" day of April. 2008.
(Seal)
_ _ _, . . _ _ _ _ _ _ . . . . . . . . . . . . . . . _ . . _ . _ . _ _ p , . . . . . . . . . . l···... ·•.. --.-.--~ ................. ,.•••• , ..
FIL£0 AND RECORDED
(l_;la;;~
ZMII flay 11 11:Q M 2ei19e79539
lllt'fliOOOk . . . . .
IIMIII DIIMUVOIII COUNT'f CU1IK
T*Wtfl ~ 11ilCM
---·--·--...--... ,---~ --
........ ..............................,~..........~........... " , ....... ' .....,........... ~ .. -..-- -··"-· -
--- 1111111111111 : PGS
NOTICE OF CONFIDENTIALllY RIGHTS: IF YOU ARE ANATURAL PERSON, YOU MAY REMOVE
OR STRIKE ANY OF 1liE FOLLOWING INFORMATION FROM ANY INSTRUMENT nlAT
TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS t1LED FOR RECORD IN THE
PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRJVER 'S LICENSE NUMBER.
I :J··JJ,T( Ii(fl '" 09)oedal
'11-(lef\
\Varrantv Deed Wi.th vendor's Lien
KNOW ALL MEN BY THESE PRESENTS, that SMOKE SIGNAL PASS LLC ("Grantor''), for and
in consideration of the sum ofTen llf!d No/100 Dollars ($1 0.00) and other good and valuable consideration to
Grantor in hand paid by KARL BAILEY JR. AND REBECCA BAILEY (collectively, "Grantee"), the receipt
and sufficiency of which are hereby acknowledged and oonfessed, has GRANTED, SOLD and CONVEYED,
and by these presents does GRANT, SELLand CONVEY unto said Grantee, the property commonly known as
1234 Acanthus Street, Pflugerville, TX 78660, and further described as
.LGt 18. Block B, REATHEltWJLDE, SECIION THRE£, A SMALL LOT SUBDIVISION, ACcordtJig to tilt IIUIP or
plat tllereof. ret.orded ID Volllllle 87, Fagt S7C, Plat Rtc:ords, T1..vts County, Teus.
(together with all improvements, rights and appurtenances, the "Property")
This conveyance, however, is made and accepted subject to the Vendor's Lien retained in Deed
retorded as Document No. 2004136581 in the Official Public Records ofTravls County, Texas, the Deed of
Trust re®rded as Document No. 2004136582 in the Official Public Records of Travis County, Texas, and
assigned by instrument recorded as Document No. 2009079539 in the Official Public Records of Travis
County, Texas, and any and all validly existlng eneumbrances, conditions and restrictions, relating to the
Property as now reflected by tbe Official Public Records ofTI"avis County, Texas.
A portion of the C011$ideration to be paid to Grantor was advanced by Grantor at the special instance
and request of Grantee, which amount constitutes a portion of the proceeds of ~tlQan from Grantor to Grantee
evidenced by those certain Notes Secured by Wraparound Mortpgc of even date herewith executed by Grantee
in the aggregate original principal amount of One Hundred twenty-One Thousand Fifty and No/1 00 Dollars
($121,050.00) (the "Notes"). The Notes are secured by the vendor's lien and superior title herein retained by
Grantor and by the lien created by that certain Deed of Trust (Wraparound Mortgage), dated as of even date
herewith extcu1ed, by Grantee in favor of Drew Shirley, P.C., Trustee, for the benefit ofGrantor, covering the
Property.
TO HA VB AND TO HOLD the Property, together with all and singular the rights and appurtenances
thereunto in anywise belonging untosa.id Grantee, its successors and assigns, forever. And Grantor does hereby
bind itself and its sucocssors toW ARRANt and FOREVER DEFEND all and singular the Property unto said
O~antee, its successors and assigns, against every penon whomsoever lawfully claiming or to claim the same or
any part thereof by, through or under Grantor, but not otherwise.
AS A MATlRIAL PART OF THE CONSIDERATION FOR THJS DEED, GRANTOR AND
GRANTEE AGREE THAT GRANTEE IS T AKlNG mE PROPERTY .. AS Js•• WITH ANY AND
ALL LATENT AND PATENT DEFECTS AND THAT TIIERE IS NO WARRANTY BY GRANTOR
THAt THE PROPERTY IS FIT FOR A PARTICULAR PURPOSt. GRANTEE ACKNOWLEDGES
mAT GRANTEE IS NOT RELYING UPON ANY REPRESENTATIONS. STATEMENTS,
ASSERTIONS, OR NON-ASSERTIONS BY THE GRANTOR WITH R£SPECT TO THE
PROPERTY CONDITION, BUT IS RELYING SOLELY UPON ITS EXAMINATION OF THE
PROPERTY. GRANTEE TAKES THE PROPERTY UNDER THE EXPRESS UNDERSTANDING
Special Warranty Deed With Vendor's Lien- Pagel
THAT THERE ARE NO EXPRESS OR IMPLIED WARRANTIES (EXCEPT FOR THE LIMITED
WARRANTIES OF TlTLE SET FORTH HEREIN).
But it is expressly ag~eed and stipulated that the Vendor's Lien is retained against the Property until
th~ above--descdbed Notes, and all interest thereon, are fully paid according to its face and tenor, effect and
~Uding, when this Deed shall become absolute.
This Special Warranty Deed with Vendor's Lien Is EXECUTED to be effective as of the 31st day of
July, 2009.
GRANTOR:
SMOKE SIGNAL PASS LLC
STATE OF TEXAS §
§
COUNTY OF TRAVIS §
This ins.trument was acknowledged before me on July 3.1. 2009, by Eric J. Lee, Manager ofSrnoke
SI,;;LLC~: I AUJi~q~t·
9 •:?3- a NOtmy Publ;c, SlaloofT&iS 1
AFTER REC RDING RETURN TO:
Karl and Bailey Independence Title Company
1234. A thus Street 11215 S. IH35, Ste. 114
Pflu ille, TX 78660 Austin, TX 7$747
FILED AND RECORDED
OFFICIAL PUILIC RicotmS
ztel ,.. 12 12:13 Pl'l 2889136933
PIRUTA $2t.M
DNM Dlt!IAUVOIR COUNTY CL.ERk
TRAVIS COUNTY TEXAS
Speciat Warranty Deed With Vendor's Lien- Page 2