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IA APPEALS COURT |”MORTGAGE NULL & VOID” DEUTSCHE BANK NATIONAL TRUST COMPANY v. GAUPPS

IA APPEALS COURT |”MORTGAGE NULL & VOID” DEUTSCHE BANK NATIONAL TRUST COMPANY v. GAUPPS


Back by popular demand…first posted this back on July 1, 2010.

DEUTSCHE BANK NATIONAL TRUST COMPANY, As Trustee of Ameriquest Mortgage Securities, Inc., Asset-Backed Pass Through Certificates, Series 2004-X3, Under the Pooling and Servicing Agreement Dated as of September 1, 2004, Without Recourse, Plaintiff-Appellant,
v.
DAVID J. GAUPP, ALEXANDRA C. GAUPP, NATHAN PARTON and SPOUSE OF NATHAN PARTON, REBEKAH J. BARTON and SPOUSE OF REBEKAH J. BARTON, WELLS FARGO BANK, N.A., and PARTIES IN POSSESSION,, Defendants-Appellees.

No. 0-272/09-0700.

Court of Appeals of Iowa.

Filed June 30, 2010.

Excerpt:

On October 21, 2008, the Partons and Wells Fargo filed a motion for summary judgment asserting that (1) the mortgage held by Deutsche Bank was invalid; and (2) the mortgage held by Deutsche Bank could not be foreclosed because the Partons were bona fide purchasers for value. On February 12, 2009, the district court issued its ruling finding that the Gaupps and Granger conveyed their interest in the property to G & G Properties on July 3, 2002, and when G & G Properties recorded the deed on September 24, 2002, it became the record titleholder. Gaupp did not have any interest in the property when he executed the mortgage in favor of Ameriquest/Deutsche Bank and after the mortgage was executed, Gaupp never obtained title to the property. G & G Properties did not convey the property to anyone prior to May 19, 2006, when the Partons purchased the property. As a result, the mortgage held by Deutsche Bank was “null and void.” The district court granted the Partons and Wells Fargo’s motion for summary judgment and dismissed the petition for foreclosure. Deutsche Bank appeals.

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Deutsche Bank asserts that the district court erred in granting the defendants’ motion for summary judgment. The parties do not dispute that at the time Gaupp executed the promissory note and mortgage, he did not hold title to the property and that G & G Properties was the record titleholder. Deutsche Bank cannot avoid the fundamental principal that a party that has no interest in a particular piece of real property cannot validly mortgage that property. See, e.g., Lee v. Lee, 207 Iowa 882, 885, 223 N.W. 888, 890 (Iowa 1929) (holding a mortgage invalid because the mortgagor had no interest in the property at the time the mortgage was given); 59 C.J.S. Mortgages § 111, at 102-03 (2009) (discussing that “[o]ne who has no ownership interest in property has no right to mortgage it” and if one does so, the mortgage creates no interest in the property). At the time Gaupp obtained the loan from Ameriquest, he did not have any interest in the property and therefore, the mortgage instrument attempting to secure the promissory note was invalid.

Deutsche Bank argues that Gaupp acquired title to the property on December 31, 2003, when the Gaupps and Granger executed the “Corrected Warranty Deed,” which Deutsche Bank further argues resulted in the mortgage becoming valid.[ 3 ] However, this argument fails because Gaupp did not acquire an interest in the property when the “Corrected Warranty Deed” was executed on December 31, 2003. On July 3, 2002, the Gaupps and Granger conveyed the property to G & G Properties. After this conveyance, Gaupp had no interest in the property and could not convey the property to anyone. See Iowa Code § 557.3 (2007) (“Every conveyance of real estate passes all the interest of the grantor therein, unless a contrary intent can be reasonably inferred from the terms used.”). After the July 3, 2002 conveyance, only G & G Properties was able to convey title to the property. Any such attempt by Gaupp to do so would be and was invalid as he was no longer the titleholder. Therefore, the attempts by the Gaupps and Granger to convey the property on December 31, 2003, and February 2, 2005, were not valid conveyances.[ 4 ] Additionally, because the invalid conveyances were outside the chain of title, they were stray deeds when recorded. See William Stoebuck and Dale Whitman, The Law of Property § 11.11 (3rd ed. 2000) (“The term `chain of title’ is a shorthand way of describing the collection of documents which one can find by the use of the ordinary techniques of title search.”); 1 C.J.S. Abstracts of Title § 15, at 320 n.8 (2009) (“Instrument executed by owner [that] is recorded before acquisition or after relinquishment of title by owner is outside chain of title . . . .”).[ 5 ] Title remained with G & G Properties from July 3, 2002 until May 5, 2006, when G & G Properties conveyed its solely held interest in the property to the Partons. Therefore the chain of title went from G & G Properties to the Partons. Gaupp did not have title to the property when he executed the mortgage instrument now held by Deutsche Bank nor did he subsequently obtain title. We affirm the district court’s findings and ruling.

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deutsche bank v. gaupp

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