Seelen v. Couillard (In re Couillard) | Mortgage Errors: How Not to Correct a “Boo-Boo”

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Seelen v. Couillard (In re Couillard) | Mortgage Errors: How Not to Correct a “Boo-Boo”

Seelen v. Couillard (In re Couillard) | Mortgage Errors: How Not to Correct a “Boo-Boo”

Bankruptcy-RealEstate-Insights –

“Whether one is baking a cake, building a house, or recording a mortgage, sometimes even the slightest deviation from the directions can lead to catastrophe. Cakes don’t rise, buildings fall down, and … mortgages aren’t perfected.” So starts the opinion in Couillard.

The Coulillards refinanced a purchase money mortgage. The legal description attached to the refinancing mortgage included an easement parcel, but omitted the two principal parcels. A couple of months after the mortgage was recorded, an “affidavit of correction” to correct an “error” in the mortgage legal description was recorded that attached the missing parcel descriptions. A few years later the Couillards filed bankruptcy.

The bankruptcy trustee brought an adversary proceeding to avoid the mortgage using the “strong arm” powers under Section 544(a) of the Bankruptcy Code. Specifically, this section allows a trustee to assert the rights of a hypothetical bona fide purchaser of real estate that has perfected the property transfer (i.e. recorded a conveyance document) as of the commencement of the bankruptcy case.

[Bankruptcy-RealEstate-Insights]

[ipaper docId=138924389 access_key=key-1ynwsk52f0176nyw2io7 height=600 width=600 /]

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