In April 1997, Keven Shanahan bought two units at the Woodview ...

[urbanoutfitters]

In April 1997, Keven Shanahan bought two units at the Woodview Condominium complex in Millville, New Jersey. The Woodview Condominium Association, Inc, collected fees on a monthly basis to cover each unit owner's pro rata share of expenses for the common areas, including utility charges. During his ownership, Mr. Shanahan defaulted on his obligation to pay the monthly condominium assessments, which he cured when sued by the Association. On January 11, 2000, Shanahan conveyed title to the two units to Tomas Pratts, Jr., who, in exchange, executed a one-year purchase money mortgage in the amount of 33,000 payable to Shanahan. Pratt also failed to pay the monthly fees, and on January 29, 2001, the Association filed an assessment lien on the units, totaling 3,192.50. In September 2001, Pratts defaulted on his mortgage with Shanahan, and Shanahan assumed control of both units as a mortgagee in possession. Shanahan rented out each unit. Although Shanahan satisfied the Association's assessment liens, he never paid the monthly condominium fees while in possession and control of the units. As a result, the Association filed suit against Pratt and Shanahan to collect the monthly assessments that were due. Shanahan moved to dismiss on the grounds that he was not personally liable for the accrued fees because he did not hold legal title to the units. Discuss whether Shanahan is liable for the fees.

Question 2

The Rule of Capture permits a party to draw all minerals from the subsurface - even those drifting in from adjoining properties.
  Indicate whether the statement is true or false

[javimendoza7]

Answer to Question 1

It has long been the view that if a mortgagor defaults in the payment of mortgage debt, the mortgagee has the right to take possession of the mortgaged property, subject to the mortgagor's right of redemption. To be sure, legal title remains in the mortgagor and the mortgagee in possession does not obtain an unfettered interest akin to fee simple ownership. Nevertheless, upon taking possession of the property, the mortgagee in possession has the right to occupy the property as well as the right to lease the property to a third party, and to collect the rent and profits. In addition, the mortgagee in possession has standing to sue a third party for damage to the property.
Concomitant with the entitlement to profits and rent, mortgagees in possession assume the duties in a provident owner, which requires management and preservation of the property. This is because although the mortgagee is in possession, legal title remains in the mortgagor, who has the right to redeem the property, and title only passes to the mortgagee at the conclusion of the foreclosure process.

Thus, mortgagees in possession have long been held to the duty of treating the property as a provident owner would treat it, ... of using the same diligence to make it productive that a provident owner would use and to keep it in good ordinary repair. Indeed, a mortgagee in possession is liable both for damages to the property while in possession, and in tort for injuries arising from his actionable fault in utilizing the property or ... his failure to perform duties imposed by law upon the owner of the land. Furthermore, a mortgagee in possession may also be subject to prosecution by local governmental authorities for the failure of the mortgaged property to conform to housing codes, health and safety ordinances and other similar regulations. And, mortgagees in possession have been required to pay taxes as they accrue on the property.

Significant for present purposes, a mortgagee in possession may be liable for services rendered to him in connection with the property during his occupancy thereof on the basis of an express or implied contract. When a mortgagee goes into possession questions as to his personal liability arising out of his relations with third parties arise. Since he is the person in possession of the premises he is personally liable in tort for injuries resulting either through his actionable fault in utilizing the property or by reason of his failure to perform duties imposed by law upon the owner of the land. Even more clearly he is liable for goods and services furnished to him during his occupancy.

Answer to Question 2

TRUE