I am writing a play, part of which is set around 1884 in Vermont. One of the characters is an attorney, and two legal questions have come up that I would like to present correctly.
1. If an attorney becomes aware of a crime being committed by somebody who is not his client, is he obligated to report it? (Obligated more than any private citizen, that is.) If so, to whom would he report this?
Another character is an unscrupulous banker, whose bank holds a lien against a house. He claims to have extended the lien out of generosity, but instead has pulled some kind of shady deal. From what little I know of property law, which consists of nosing around the Internet, upon foreclosure the property should be put up for auction by an officer of the court, or by the county sheriff or somebody.
2. If the banker himself secretly paid off the lien and claimed the title of the house for himself, would this be a crime, and if so, what? (I’m guessing some kind of breach of contract, for starters.)
IANAL and IANAB, but I’ll take a stab at your second question. Paying off a lien is not the same thing as having title to a house. A lien represents indebtedness that must be satisfied before the owner can transfer the title to someone else.
A mortgage is the classic example of a lien. If I have a mortgage on my house, I can’t legally transfer title until the mortgage is paid off. Usually when a house is sold, the buyer gets a new mortgage and part of the funds are used to pay off the seller’s existing mortgage, thus satisfying the lien.
If John Doe walked in off the street to my mortgage lender and paid off the balance of my mortgage, that does not make him the owner of my house. As long as my name is on the title/trust deed/whatever, I can thank Mr. Doe for his generosity in paying off my lien and tell him to take a hike.
Thank you for that answer. I’m not sure if I made my question clear, though.
In the play situation, the banker would have the authority to foreclose (i.e., the balance of the lien is past due). The process of foreclosure (as I vaguely understand it) can consist of either a) the bank taking legal steps to repossess the title and property, or b) the county sheriff holding a public auction for the title and property.
If the banker pays the money and claims the title without going through the formal foreclosure process (viz, the auction), is that a crime, and if so, what?
I work in real estate, and the banker would have to have to homeowners sign legal papers to get ownership of the house. If he did pay the loan without them, he could not claim title. He could put a lien on the property and file suit against the owners, but they still own the house. The lien would prevent the owners from selling it, but they would own it till death.
Formal foreclosure includes posting a notice and giving the owners a chance to pay off the debt. Even if the home is in foreclosure, you can’t just pay off the mortgage and claim title without the homeowner’s approval.
I would still like to find something sufficiently underhanded that the banker could try regarding the house, something he could leverage as an officer of the bank, and preferably illegal. Do you have any suggestions for plot point related to the above, at least the theoretical, which I could look into?
The banker could pay off the lien and try to collect the money from the homeowner.
The banker could also purchase the debt and then foreclose. The homeowner would be able to redeem the property, though. If the homeowner did not have the funds to redeem, the homeowner could try to refinance.
He could have the homeowner’s in “to sign some routine papers regarding extension of your mortgage,” slip a blank page in, have them sign it, then type a “transfer of ownership” deed over to himself. Then he attaches the blank signed page and has it unlawfully witnessed and notarized.
Then he’d simply have to file the deed and claim ownership.
A lawyer has no more obligation than any other citizen to report a crime.
However, a lawyer might be subject to heavier sanctions than another citizen for failing to report a crime. In addition to whatever criminal charges there could be for not reporting a crime, the lawyer has to have a license to practice law. Usually the requirements for that have some catch-all clauses relating to integrity & morality that could possibly be used to disbar a lawyer who fails to report a crime. But you very seldom hear about such a disbarment actually happening.
Leins are used to guarantee eventual payment by binding it to the sale of real estate. Forclosure would only occur as I understand it if the owner of the property was failing to meet his mortgage obligation.
IF the homeowner owed more than the property was reasonably worth you might be able to get a judgement to take possession of that property as partial compensation. IIRC it takes a pretty wicked debt or zero attempt to make good on your debt to incur this type of seizure of real estate.
Here’s a compelling story about a real property lien that may inspire you.
One time, Luke Duke broke Boss Hogg’s big mirror in the Boar’s Nest when Luke got in a fight with some boxer that came in from out of town. Luke, formerly a military boxer, was arrested by Roscoe.
Boss Hogg let Luke out of jail on the condition that Luke would repay the debt by fighting that boxer guy, and Boss Hogg would get a cut of the money gambled on the fight plus concession proceeds. If Luke refused, Boss Hogg threatened to put a lien on Uncle Jesse’s farm and sell it.
Luke had sworn off boxing forever after he thought he had killed a man in a bout, but he really didn’t kill him. Bo gave Luke a rousing pep talk about the need to help Uncle Jesse and not to puss out on the fight. Uncle Jesse asked Luke to stand by his principles, even if it meant losing the farm. Luke reluctantly agreed to go back on his personal anti-boxing vow in order to save Jesse’s farm.
First, the evil boxing guys tried to prevent Luke from attending the fight by kidnapping him. The contract said if Luke didn’t show, the evil guys get all the gambling money.
Luke wiggled out of it and made it to the fight while Daisy stalled the anxious crowd by singing the Star Spangled Banner … twice. Then, the boxing guys took all the gambling and concession money out of the box in Boss Hogg’s trunk that was supposedly being guarded by Roscoe’s dog, Flash, who is not the best watchdog.
All the Dukes and the police chased the evildoers down and got the money back. All was right again in Hazzard. The Duke farm was saved from Boss Hogg’s lien.
Actually, no thanks to Bearflag, I was able to google from home to answer my own question about real estate fraud. Yes, it still happens today and it isn’t an illusion that you only see on bad TV melodrama. (I couldn’t google for it earlier while at work.)
I knew I remembered reading about historical real estate deals, which would apply to the 1884 time period of the play. Now at least I think I have what I need. Thanks for everybody’s help.
