Real Property – Mortgages – Entireties Property – Only Husband’s Signature – Equitable Remedies Inapplicable

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Chase Home Finance, LLC v. Risher (Lawyers Weekly No. 011-077-13, 9 pp.) (Paula H. Thomas, J.) Appealed from Lexington County (James O. Spence, Master-in-Equity) S.C. App.

Holding: Although defendant Cassandra Risher’s name was on several closing documents, including the deed, only her (now deceased) husband was asked to sign the purchase money note and mortgage; now that the loan is in default, equity does not allow the holder of the note and mortgage to recover from Mrs. Risher or her one-half undivided interest in the property.

We affirm the master-in-equity’s ruling in Mrs. Risher’s favor.

Equitable Lien

For an equitable lien to arise, there must be a debt, specific property to which the debt attaches, and an expressed or implied intent that the property serve as security for payment of the debt.

Plaintiff did not show the parties had an express or implied intent that Mrs. Risher’s interest would serve as security for payment of the debt that Mr. Risher incurred.

We recognize that Mrs. Risher admitted in a deposition (1) she and Mr. Risher could not have purchased the residence without the loan from Midland Mortgage, (2) she was aware of the loan, and (3) she benefited from the transaction. Nevertheless, these admissions do not warrant a finding that the Rishers and Midland Mortgage intended that Midland Mortgage or any successor-in-interest could recover against Mrs. Risher’s interest in the property for any part of the debt that Mr. Risher’s share could not satisfy in the event of a default. Although Mrs. Risher signed several documents at the closing, there is no evidence that she was asked to sign either the note or the mortgage. No one from Midland Mortgage offered evidence that would have supported plaintiff’s argument that Midland Mortgage had bargained for more than a mortgage encumbering only Mr. Risher’s interest.

Furthermore, plaintiff has not alleged it lacked an adequate remedy at law. The master allowed plaintiff to proceed with its foreclosure action against Mr. Risher’s undivided one-half interest. There was no dispute plaintiff had a valid mortgage against Mr. Risher’s interest and, if necessary, the right to proceed with a deficiency claim against his estate.

Unjust Enrichment

For restitution to be warranted, It is not enough that the defendant has knowledge of the plaintiff’s conduct; he must have induced the plaintiff to confer the benefit. There was no evidence that Mrs. Risher induced Midland Mortgage to make a loan secured only by Mr. Risher’s undivided one-half interest but in an amount greatly exceeding the value of that interest. To the contrary, the evidence shows Midland Mortgage was aware that Mrs. Risher, though she was named on the sales contract with Mr. Risher as a purchaser, did not sign the note or the mortgage and never requested that she do so.

Other Relief

In a standard real estate transaction, the closing attorney represents the borrower. Nonetheless, even though Midland Mortgage did not prepare or review the deed, it processed the Rishers’ loan application and prepared the other closing documents. We found nothing in the record suggesting Midland Mortgage would have not had access to the contract of sale, which listed both Rishers as purchasers. Furthermore, although Mrs. Risher accompanied Mr. Risher when he applied for the loan, she was never asked to complete an application or to sign either the note or the mortgage. We therefore hold that although Midland Mortgage was not formally represented by counsel at the closing, it had sufficient information to avoid the loss it sustained.

Affirmed.