Friday, February 26, 2016

Trial Reporter, 2016, Journal of the Maryland Association for Justice, Inc.

This Special Issue, 2016, includes Mr. Valkenet's article on use of limited scope engagements in Maryland civil court cases and administrative actions.

Call us with questions. 410-323-0900.

Wednesday, February 24, 2016

Freddie Gray documents available for you to read!

The 400+ page record extract is available to the public. It is part of the States appeal of orders refusing to compel an officer to testify against others.

Follow this link to the appellate court website.

Tuesday, February 23, 2016

Your loan modification can erase bank mistakes in the documents.

Distressed homeowners who enter loan modifications with their lenders may be wiping away past mistakes made by the bank. These mistakes my be simple clerical errors, but sometimes they can assist a defaulted homeowner in defending a foreclosure.

In a recent case handled by this office the homeowner relied upon inconsistent dates in her documents to defend against a foreclosure. She made motions to the court attacking the legitimacy of the documents, and the claimed lien on her property, based on the inconsistencies--the transactions and loan dates did not match the dates of the instruments. Her argument was that the loan she took was not secured to her real property, and thus the bank should not be allowed to foreclose.

However, the borrower had already modified her loan once. The foreclosure was triggered by her inability to meet the terms of the modified loan. This, too, is common.

Her motion to prevent the foreclosure failed. The judge found language in the loan modification demonstrated the borrower's acknowledgement that any mistaken dates in the original documents were merely the result of clerical error, and that she ratified the existing lien. As a result, the bank was allowed to foreclose.

I can't think of a clearer example of a later contract being used to clean up the ambiguities and mistakes in drafting the prior contract.

Saturday, February 13, 2016

Dissolve your partnership? It takes more than a little bit of water.

We answer questions posted on AVVO. But space limitations don't always permit a full answer to interesting questions. Here's a very common issue- One business partner is "so over it" and wants to split away from the other partner (or multiple partners). How does he get out of the business relationship?

First, the original AVVO question, as it was posted by a non-lawyer, much as if the prospective client were sitting at our conference room table, over coffee:

What is the exiting/minority owner entitled to when he/she leaves the business?: A partnership where the minority owner decides to leave the business. There is no prior 'record' as to what would happen or a buy/sell agreement in the event the partnership dissolves. If the remaining majority owner of the business wants the exiting partner officially removed from the business what can the remaining partner do with the exiting (minority) partner's percentage of ownership?

Thomas’s answer: It must be valued and paid. Absent a written agreement, the code and case law will control. This could drift to a lawsuit for dissolution if folks cannot agree.

Maryland's business code fills in the gaps when business partners don't have their paperwork  in order.  For example, with so much "self help" available to entrepreneurs the documents you think control how your business operates might not adequately address your business relationships and goals. They usually are very deficient in addressing how to dissolve or wind up your business.

Consider the code your default operating agreement.  It may not provide you with a perfect solution, but when coupled with the rules of court, it does provide the mechanisms to separate you from a bad business arrangement.

We most often see broken relationships where partners have stopped effectively communicating with each other, usually after an argument over goals or finances.  It is less often, but just as ordinary that we see one partner complain that the other has committed outright fraud or theft of shared business assets-- like money or opportunities. We have all heard about former business partners competing against each other. That competition might have started even while they were in business together!

Filing a lawsuit to separate partners by dissolving the business entity is costly. It also takes time.  Where partners can no longer communicate the court may appoint a receiver to take control of business assets. There will be depositions, forced mediation in the court, written discovery, document exchanges and expert analysis performed to determine the final accounting between partners.

And there is always the risk that you may owe money, even where you started the case thinking that others would pay money to you. You might even owe a hefty tax bill to Uncle Sam.
But where there is legitimate dispute, the court provides powerful tools to claw back misappropriated assets, and to bar others from profiting from use of partnership opportunities.
After working through contentious partner disputes for almost three decades, I assure it is always less expensive to to tighten up your basic business documents before the first argument, when everyone is still in like with each other. When disputes arise, as they most certainly will, talk, negotiate and settle without court intervention. And if that doesn't work, be ready to take time from your busy schedule to sit for deposition, where only the coffee is free.
Visit our website for more info about Young & Valkenet.

Wednesday, February 10, 2016

Easements by plat in Maryland, a real thing if you look hard enough.

On January 27, 2016 the Maryland Court of Appeals further clarified our law of easements. In particular, when an easement is deemed to be expressly stated in a record plat, and whether the lower appellate court correctly decided the issue. A short discussion of the lower appellate court decision, with a link to the earlier decision can be found here.

The case involved an homeowner's association seeking to deny access to a homeowner's lot for lack of a recorded easement. The homeowner sought access as it was drawn in a plat, which is not recorded like a deed in the same indices examined during traditional title searching.

Emerald Hills v. Peters allowed the highest Maryland court to examine the statute of frauds, and declare that a record plat sufficient in detail to satisfy the statute of frauds may describe express easements. A simple statement of law, but not one that will limit the amount of future litigation over this very issue.

After acknowledging that the preferred manner of creating express easements is through a deed or other instrument recorded in the land records, the court turned to the record plat at issue in the case.The plat did not contain traditional words used to create or pass interests in land, such as
  • grant
  • convey
  • transfer
  • assign
But the court confirmed that a record plat that otherwise complies with the Statute of Frauds will be enough to create an easement.

I'll leave it for another day to describe the Statute of Frauds, but know that this case expands your risk, as a purchaser of real estate.  Your investigation into whether easements burden your property must now extend beyond what is recorded in the land records, but to record plats that may be filed with County government, but which are not otherwise to be found in the land records.

It also multiplies your risk of litigation as each element of the Statute of Frauds is subject to bona fide dispute-- smart lawyers often differ over whether the elements are satisfied by a particular document. The debate now extends to whether the language of a plat satisfies the Statute, and then to what extent your property is burdened.

Of course, if you buy property in Baltimore City you will already be searching outside the land records to determine proposed condemnation zones- they aren't easements, but they will certainly impact your ownership of the property.

And so, this recent ruling merely confirms that your investigation into a piece of real property must extend well beyond the land records. If it doesn't, you risk buying something with encumbrances that can severely restrict your use and enjoyment of the property.

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