Countrywide Home Loans v. Holland, 993 N.E.2d 184 (Ind. Ct. App. 2013), explores an enterprising individual’s attempt to appropriate a vacant residential property by entering it without invitation and making improvements. Plaintiff gets an “A” for creativity, but an “F” for legal theory. The lender/mortgagee defeated Plaintiff’s efforts to terminate the subject mortgage.
Venture. Plaintiff, a self-titled “Concerned Citizen of Gary,” entered the residential property he claimed created a nuisance and undertook efforts to abate it. The owner/mortgagor had abandoned the real estate after the mortgagee foreclosed, but the mortgagee had not conducted a sheriff’s sale. Plaintiff sought title to the property and compensation by filing an action to quiet title and to foreclose on a purported common-law lien “for costs of abating a nuisance property.”
Quiet title claim. Plaintiff asserted that he was entitled to summary judgment on his quiet title claim, which, if successful, would have extinguished the subject mortgage. In Indiana:
[a] suit to quiet title brings in issue all claims to the property in question. Hence, a plaintiff may recover only upon the strength of his own title. He must show legal title with a present right of possession paramount to the title of the defendant. It is therefore appropriate under the issues for a defendant to prove the plaintiff and those claiming under him do not have title or interest in the property.
Not abandoned. The premise upon which Plaintiff based his quiet title action was that the property had been abandoned. The mortgagee, in turn, contended that Plaintiff had not established a valid legal interest in the property, “and certainly not an interest paramount to [the mortgagee’s].” Plaintiff relied upon cases holding that “[a]bandonment of property divests the owner of his ownership, so as to bar him from further claim to it.” Plaintiff asserted that he may “appropriate property once it is abandoned if it had not already been appropriated by another.” But Plaintiff’s cases addressed personal property, as opposed to real property. With respect to real property “[t]itle in fee simple is not lost by mere abandonment in Indiana,” said the Court, noting that:
Washington, the record owner, and Countrywide, the holder of a mortgage lien, clearly claim superior title to the land than a mere possessor. In sum, these cases simply do not support [Plaintiff’s] assertion that his entry onto and possession of the property immediately wrested legal title from the fee simple owner and transferred it to him.
The Court concluded that Plaintiff “presented no colorable claim to legal title of the property and, consequently, cannot prevail in his action to quiet title.”
No lien. Plaintiff’s second theory was that he had a legal interest in the property by virtue of a common-law lien that arose when he took action to abate the perceived nuisance. Generally, “in Indiana, a ‘lien’ is a claim which a person holds on another’s property as a security for an indebtedness or charge. Without a debt, a lien cannot exist.” Plaintiff’s alleged debt was for the work he put into abating the nuisance the house presented. Insufficient, the Court held: “the allegations set forth in the complaint do not state a factual scenario supporting any claim of a legally actionable debt based on Holland’s actions to abate the alleged nuisance.” No debt, no lien.
Holland did not address the reason why the mortgagee delayed seeking a sheriff’s sale. That delay appears to have opened the door for Plaintiff to try to capitalize on the mortgagor/owner’s abandonment of the real estate. Even though Plaintiff ultimately lost in Holland, the bases of his claims were not entirely unreasonable, in my view. My suggestion for lenders is to move forward with the sheriff’s sale right away. (In 2010, Indiana’s General Assembly passed legislation to deal with delays in sheriff’s sales.)