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Automobile Fraud: 10.11.1.1 Negotiation Strategy

Automobile fraud cases are usually an educational process for culpable defendants, and it takes some time for defendants and their counsel to become accustomed to the defendants’ real exposure. This process is often complicated by the fact that defendants who are guilty of fraudulent practices are frequently rather belligerent people, with no shortage of nerve. Once an attorney has won a substantial judgment or two at trial for consumers, dealers may be more willing to settle cases on reasonable terms.

Automobile Fraud: 10.11.1.2 Settlement with Financially Shaky Defendants

The requirements for collection under the dealer’s bond should be kept in mind during settlement if the dealer is at all shaky financially. Is a finding of fraud or a violation of the motor vehicle laws necessary in order to recover against the bond?674 Will such a finding be more likely to be recognized by the bonding company if it is entered by the court after evidence has been presented?

Automobile Fraud: 10.11.1.3 Last-Minute Settlements

When defense counsel wants to discuss settlement right before trial, some consumer attorneys follow a practice of having another attorney in the firm handle negotiations, giving that attorney the parameters for settlement and the goal number. This approach allows the lead lawyer to continue concentrating on trial preparation.

Automobile Fraud: 10.11.1.4 Seeking Partial Summary Judgment to Speed Settlement

One tactic which is often successful is to seek partial summary judgment for a clear breach of warranty or when it can clearly be shown that the car is not as represented.677 Then the case can proceed to trial with some degree of victory assured. Similar partial summary judgment motions can seek a ruling on liability on a deceptive acts and practices (UDAP), Truth in Lending, or odometer act claim.

Home Foreclosures: 13.1 Introduction

Land installment sales contracts, sometimes called installment land contracts, land sale contracts, contracts for deed, bonds for deed, or long-term land contracts, are often abusive alternatives to mortgages or deeds of trust.1 This chapter focuses on the seller’s forfeiture after a buyer’s default under such a contract.

Home Foreclosures: 13.2.1 Legal Obligations of the Parties

It may at times be difficult to distinguish land installment contracts from their close cousins, the short-term executory contract for sale and lease with an option to buy. The characteristics of land installment contracts, as distinguished from these other transactions, are discussed in more detail elsewhere.17

Home Foreclosures: 13.2.2 Abuses Involving Installment Land Sales Contracts

Buyers often enter into installment land sales contracts because they could not obtain institutional financing or were unable to afford the closing costs and down payment associated with conventional mortgage financing.32 Land contracts are especially prevalent in communities of color historically excluded from the traditional mortgage market.33 For sellers, the possibility of a quick forfeiture remedy can be attractive.34 Many sellers expect

Home Foreclosures: 13.3.1 Introduction

Increasingly, states recognize that forfeiture, especially when the buyer has substantial equity in the property, is a harsh remedy. To provide more protection for contract buyers, some states regulate forfeiture by providing guidelines as to when forfeiture is permitted. Other states have enacted laws with protections that are akin to those given to mortgagors. This section focuses on state statutory protections, and the next section will address court decisions protecting contract buyers.

Home Foreclosures: 13.3.2 Notice and Right-to-Cure Requirements

States have enacted legislation which provides a contract buyer with advance notice and an opportunity to cure a default before the contract can be forfeited.48 The time allotted for buyers to cure the default varies from state to state, but can last as long as a year.

Home Foreclosures: 13.3.3 Statutes Treating Land Installment Sales Contracts Like Mortgage Loans

Buyers receive the strongest protections under statutes that require foreclosure of installment land sales contracts in the same way mortgages are foreclosed under the state’s laws. If the state statute requires only notice of intent to declare a forfeiture and a grace period to pay the arrearage, a seller may proceed with a forfeiture once it has complied with the notice requirement.

Home Foreclosures: 13.3.4 Other Statutory Protections for Buyers

Several states have adopted statutes that provide additional protections for land installment sales contract buyers. A few states regulate credit terms.71 Several states require certain disclosures before the transaction is consummated.72 Some states, like Texas, require sellers to provide buyers with annual statements disclosing current information such as the amount paid to date, the amount owed, the amounts paid for taxes and insurance, and the number of remaining payments.

Home Foreclosures: 13.3.5 Failure to Return a Surplus As an Unfair or Deceptive Practice

The Federal Trade Commission (FTC) has ruled that land installment sales contracts are unfair where the buyer’s default results in forfeiture of all payments made to date, even where the sale results in a surplus.79 While there is no private right of action under the FTC Act, unfair forfeiture practices should be actionable under a state unfair and deceptive practices statute—as long as the statute applies to real estate sales,80 and as long as the statute prohibits unfair or unconscionable

Home Foreclosures: 13.4.1 Judicial Treatment of Land Installment Contracts As Mortgages

Absent clear statutory provisions requiring that installment land sale contracts be foreclosed as mortgages, buyers enjoy the strongest protections when court rulings mandate such a requirement.82 In supporting this type of common law rule, the Restatement of Property recognizes that a contract for deed or land installment sales contract creates a mortgage.83 The Restatement position focuses upon the function of a land installment sales contract as a means of securing the s

Home Foreclosures: 13.4.2 Judicial Creation of Protections Against Forfeiture

Short of refusing altogether to enforce a forfeiture clause, courts have employed a variety of theories to limit the forfeiture remedy and protect the buyer, some based on mortgage law concepts and related equitable principles.97 For example, courts have strictly construed any pre-forfeiture notice provisions contained in the contracts against the seller.98 When the contracts have not provided for pre-forfeiture notice, courts in their equitable discretion have implied a notice obligation.

Home Foreclosures: 13.5.1 Can Installment Land Contract Be Treated As Creating a Security Interest?

Many bankruptcy courts have ruled that an installment land sale contract creates a security interest, allowing the debtor to provide for the seller’s claim under a chapter 13 plan in any manner that would be appropriate for treatment of a mortgage lender’s claim.136 For example, the debtor may cure an installment land sale contract arrearage through the life of a chapter 13 plan, in accordance with sections 1322(b)(2), 1322(b)(5), and 1325(a)(5) of the Bankruptcy Code.

Home Foreclosures: 13.5.2 Debtor’s Options If Installment Land Contract Must Be Treated As an Executory Contract in Bankruptcy

Treatment of the installment land contract as a mortgage offers the chapter 13 debtor the most flexible options for curing and reinstating a land sales contract after default. Nevertheless, debtors who face courts that refuse to view the contracts as security instruments still have some recourse for saving their homes. The option for assuming an executory contract under section 365 may offer a viable remedy.

Home Foreclosures: 13.5.3 When Is It Too Late to File a Chapter 13 Case to Prevent Forfeiture of an Installment Land Sale Contract?

Regardless of whether the land sales contract is considered a mortgage or an executory contract, the purchaser filing for chapter 13 relief may face the question of when the termination process has gone so far as to preclude a cure or other action to retain rights in the contract through bankruptcy. The key factor will be whether the debtor, at the time the bankruptcy petition was filed, still retained some right under state law to reverse the termination and reinstate the contract.

Home Foreclosures: 13.5.4 Automatic Stay Issues

Regardless of whether the land sales contract is considered a mortgage or an executory contract, the automatic stay should prevent the initiation or continuation of a forfeiture and allow the debtor an opportunity to cure the arrearage through a chapter 13 plan, subject to the limitations discussed above.159 Failure to make postpetition payments as they come due or to comply with a proposed chapter 13 plan may constitute “cause” for an order granting relief from the automatic stay.160

Home Foreclosures: 13.5.5 Setting Aside the Forfeiture

A debtor in bankruptcy may be able to set aside the forfeiture of a land installment sales contract when the remaining debt under the contract is significantly less than the value of the forfeited property. This relief may be available under the Bankruptcy Code’s provision for setting aside fraudulent transfers.163 The Supreme Court in BFP v.

Home Foreclosures: 11.1 Overview

There are currently almost 8.5 million manufactured homes in the United States, almost seven million of which are occupied.1 Many people choose these units because they purport to offer the security and privacy of homeownership at a fraction of a conventional home’s upfront cost.2 Many others do so because they have few other affordable housing options.

Home Foreclosures: 11.2.1 Introduction

An initial question whenever the owner of a manufactured home is facing the loss of the home is whether foreclosure law or repossession law applies. Often the determination will hinge upon the home’s status as either real or personal property.

Home Foreclosures: 11.2.3.1 Nature and Effect of Manufactured Home Real Property Conversion Statutes

More than three-quarters of the states have statutes that set forth a procedure to convert a manufactured home to real property and document that conversion. In states where the method provided by the statute is the only means of converting a manufactured home to real property, the statutes create a bright-line rule: for at least the purposes listed in the statute, and possibly for other purposes as well, public records will show whether the home is real property.

Home Foreclosures: 11.2.3.2 Listing of State Conversion Statutes

The following states have statutes that specify a procedure for the conversion of a manufactured home to realty for at least some purposes. In the following summaries, the terminology of the statutes as to manufactured or mobile homes has been retained.