April 2023
We advocated for adherence to the fundamental principles of Joint Tenancy in a Title Theory State: A mortgagee’s interest in property is not impacted by the death of one of two joint tenants and no formal administration of the estate of a deceased joint tenant is required to foreclose a right of redemption and enforce a mortgage lien.
Maine Foreclosures: Mortgagee’s Interest in Property is notaffected by the death of a Joint Tenant
On January 17, 2023, the Law Court invited amicus briefs on whether a “debtor” is an indispensable party in a foreclosure when the debtor is deceased, time for probate has passed, and the property is owned by a surviving joint tenant who is not liable on the note. That briefing will be argued Thursday April 6, 2023, in Augusta, Maine.
The Federal vs State conflict in the analysis of necessary parties to a Mortgage Foreclosure and Sale action as set forth in MTGLQ Investors, L.P. v. Alley, 2017 ME 145, 166 A.3d 1002, (“Alley”) in contrast with the U.S. District Court’s decision in Johnson-Toothaker v. Bayview Loan Servicing LLC, Civil Action No. 20-CV-00371-JDL, 2022 WL 3278883 (2022)(“Toothaker”) is the heart of the controversy.
The Alley Court reversed the Trial Court Foreclosure Judgment in favor of MTGLQ, sua sponte, and ordered that the complaint be dismissed without prejudice where it named neither the (deceased) debtor nor the debtor’s estate. In Toothaker, the District Court reasoned that because Maine is a title theory state, a mortgage is enforceable even if the note is not, and, it follows that the deceased debtor or his/her estate are not necessary parties to a foreclosure.
DGL submitted the attached Amicus brief taking the position that the Alley decision was incorrect, the correct parties were named and no more was required given the fact that one of the two joint tenants survived and was named in the foreclosure action. The Plaintiff did not advance a claim on the Keniston Note and made it clear only an in rem judgment extinguishing the remaining joint tenant’s interest in the property was sought. There was no “missing party;” in fact, given the status of the joint tenancy, the naming of the heirs was superfluous and, as a result, the matter should not have been dismissed. In a title theory state such as Maine, naming the remaining joint tenant is all that is necessary to foreclose the mortgage lien. The mortgagee’s interest in the property was not impacted by the death of one of two joint tenants and no formal administration of the deceased tenant was required to foreclose the right of redemption and enforce its mortgage lien.
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