All Those Great Recession Judgments May be Expiring Soon

Depending on who you ask, the “Great Recession” resulting from the subprime mortgage crisis began in December 2007 and lasted about two years. So, about ten years ago, I was spending most of my work days working on loan documents for third, fourth, and sometimes fifth mortgages for a local bank who was really, really late to the mortgage boom.

Of course, the impact of this past recession was felt for years afterwards, meaning my spring 2007 HELOCS didn’t go bad until 2010 or 2012. As a result, just a few years later, I was suing and taking judgments against those same borrowers. From 2008 to 2014, I estimate that I obtained at least 500 judgments, ranging in amounts from $2,500 to $5,000,000.

As I like to say, if you were hearing from me, it was bad news.

So, with a drawer full of judgments, this is what keeps me up at night: Those judgments are only valid for ten years, and, if I haven’t collected on them, they expire.

I’m taking about Tenn. Code Ann. § 28-3-110(a)(2), which provides that actions on judgments are only valid for ten years.

So, a good rule of thumb is that, if you received a judgment against someone you haven’t been able to collect in the last ten years, go back and confirm when you were awarded that judgment. If you’re getting close to the ten year mark, you might be running out of time.

(But, not to be too dramatic, I’m going to talk about how to extend that time period soon.)

 

 

General Sessions Court Refresher

One of the great things about blogging about esoteric issues that come up in my law practice is that, sometimes, I get to consult myself when a legal issue arises.

Like, right now, when I’m preparing for a Davidson County General Sessions trial that starts in an hour, and I’m trying to remember what Tennessee statute allows you to exceed the $25,000 jurisdictional limit in small claims court.

It’s Tenn. Code Ann. § 16-15-501, which allows you to exceed $25,000 in calculating a judgment, where the excess amount is comprised of attorneys fees (and/or court costs and/or discretionary costs).

So, thanks a lot, Creditor Rights 101.

Interpleaders: The Only Time People Like to Hear from Me

When people ask me what kind of law that I do, I always end my answer with “Generally, it’s bad news if you’re hearing from me.” In fact, if you’re reading this right now on a computer, look at my bio over to the right.

If you’re on a phone, I’ll help. It says: “It’s probably bad news if you’re hearing from him.

Recently, though, I’ve been spreading good news, because I’m filing a bunch of interpleader lawsuits.

Interpleader actions are filed by plaintiffs who are asking for court direction as to who to send cash or other property to. The typical situation arises after a foreclosure, when the foreclosure attorney sells the property for more than the debt owed, and there are multiple parties who can make a claim for those excess proceeds.

Generally, the deed of trust is pretty clear as to who gets the money, but, sometimes, it’s not clear or the situation is contentious. To be safe, you file an Complaint for Interpleader under Rule 22, name all the parties who have, or may have, a claim to the proceeds, and ask the Court to decide. This way, the judge gets to make the hard decision, and the foreclosure attorney (often the substitute trustee) isn’t exposed to future lawsuits alleging he paid the money to the wrong party.

Under Tenn. R. Civ. P. 22.02, the attorney files the lawsuit, later deposits the money with the Court, and, then, the filing attorney can be dismissed while the remaining parties fight over the money.

So, back to my phone calls this week. I was calling my “Defendants” to tell them that I was getting ready to sue them, but, “don’t worry, it’s a good lawsuit.”

 

Ex-Tennessee Titan Sued by Former Landlords for Property Damage

Real Estate is hot in Nashville. That’s not a news flash. In fact, unless you were burned in the economic downtown, you’ve probably always thought that real estate is a safe investment, either has an appreciating asset or as an income producing asset.

With high-end real estate, the income possibilities in this current market are endless. Short term rentals to tourists on AirBNB. Long term leases to health care executives. Leases to country music stars or professional athletes.

Well, one Nashville couple has learned the hard way that leases to star football players may require a greater security deposit.

In a lawsuit filed against former Tennessee Titan running back Zach Brown, a landlord for rental property has sued in Nashville’s Davidson Chancery Court (Rental Lawsuit), alleging failure to pay rent. After they were awarded a judgment in a prior detainer action, they were surprised to find the property in terrible condition, the lawsuit alleges.

The $59,286.85 in damages alleged includes claims of: animal teeth marks on staircases and doors; stains on carpet; “damage to the walls by what appears to be repeated throws of footballs and darts;” holes in the wall; and door frame damage “from where it appears a locked door was forced open.”

These are just allegations, but, long story short, a property owner opens the door to deterioration and damage when he or she rents to a stranger. There’s no such thing as easy money, and the landlord / tenant model has its fair share of risks.

 

 

 

15 Day Continuance Limit on Detainer Actions

A few weeks ago, I talked about detainer warrants and how fast a landlord can get an eviction hearing set (a minimum of six days from service of process).

A caveat, however, is that many courts will allow continuances, especially when a plaintiff has set a hearing on such short notice. Some courts, like Davidson County, have Local Rules that expressly allow some continuances.

But, the ability to get a continuance in detainer actions isn’t absolute. Tenn. Code Ann. § 29-18-118 provides that the “general sessions judge may, at the request of either party, and on good reason being assigned, postpone the trial to any time not exceeding fifteen (15) days.”

In eviction actions, a landlord isn’t getting paid, so the delay costs the landlord both time and money.

Detainer Warrants: When can I get them Out?

Tennessee’s General Sessions Courts provide the fastest justice in the state. There, a plaintiff can file a lawsuit and, potentially, have a judgment in as early as 2-3 weeks.

No plaintiffs, however, are as eager to get to court than landlords. A common question I get is: What is the quickest court date a landlord can get?

The answer is in Tenn. Code Ann. § 29-18-117, which provides: “The officer serving the warrant shall notify the defendant of the time and place of trial, the time not to be less than six (6) days from the date of service.”

So, in order to have a valid eviction lawsuit, you have to provide–at a minimum–six days notice from the date of service of process.

Note:  This timeline is for commercial property evictions. Residential evictions are governed by the Uniform Residential Landlord and Tenant Act , and that is it’s own blog post.

 

 

Tennessee Detainer Actions: Not Just for Tenants and Landlords

What if you own real property, but someone else has possession of the property, and you want them gone? You evict them. But, as you’ll see under Tennessee statutes, they don’t call it an “eviction” lawsuit; they call it a “detainer” lawsuit.

The statute in Tennessee is Tenn. Code Ann. § 29-18-104, titled “Unlawful Detainer.” That statute provides:

Unlawful detainer is where the defendant enters by contract, either as tenant or as assignee of a tenant, or as personal representative of a tenant, or as subtenant, or by collusion with a tenant, and, in either case, willfully and without force, holds over the possession from the landlord, or the assignee of the remainder or reversion.”

These detainer actions are generally brought in general sessions court, where, as I’ve noted before, you can exceed the $25,000 jurisdictional limit. Also, even though general sessions appeals are very easy on most matters, they are complicated and expensive in general sessions court.

So, if you’re a landlord, you’re probably reading that statute and thinking it’s exactly what you need, right? But, what about if you’ve purchased the property, either by a typical sale or a foreclosure? In that case, you’re not a landlord, and the defendant isn’t entering by contract (i.e. lease). Does a different statute apply?

No, said the Tennessee Court of Appeals in Federal National Mortgage Association v. Danny O. Daniels, W2015-00999-COA-R3-CV (Dec. 21, 2015).  There, the Court noted that the Deed of Trust will create “a landlord/tenant relationship … between the foreclosure sale purchaser and the mortgagor in possession of the property,” and, as a result, “constructive possession is conferred on the foreclosure sale purchaser upon the passing of title; that constructive possession provides the basis for maintaining the unlawful detainer.”

In such a case, a plaintiff must prove: (1) its constructive possession of the property (i.e. ownership of the property); and (2) its loss of possession by the other party’s act of unlawful detainer.

In short, the detainer statutes in Tennessee aren’t well crafted. Sometimes they reference landlords and tenants; sometimes they don’t. Courts have a tendency to construe statutes as written and to assume that the legislature means what it says when it uses specific words. That’s bad news for the foreclosure sale purchaser, who isn’t a landlord and who isn’t dealing with a tenant.

Here, however, it’s clear that the legislature should have proofread the statutes a few more times. Fortunately, Tennessee courts have applied the statutes in a broader sense.