Bankruptcy-RealEstate-Insights –
A debtor objected to attorney fees included in the proof of claim filed by a mortgagee, and the mortgagee moved for relief from the automatic stay to exercise its rights under a security deed securing the debtor’s guaranty based in part on the debtor’s lack of equity in the property.
The lender’s proof of claim initially included attorney fees of $275,000 (15% of the outstanding principal and interest as of the petition date). It was later amended to claim ~$184,000 in attorney fees (based on a statutory formula of 15% of the first $500 of outstanding principal and interest and 10% of the excess). The lender acknowledged that actual fees were ~$149,000.
The debtor objected, arguing that the lender was limited to reasonable actual fees. In particular, the debtor had guaranteed a note, and an addendum to the note stated: “Notwithstanding anything to the contrary contained within the Note or other Loan Documents … any reference to attorney fees accrued to the account of the Borrower or any Guarantor shall be limited to reasonable attorneys’ fees actually incurred.”
[Bankruptcy-RealEstate-Insights]
