A tale of two deeds
Think your financial stake is safe once you close on your home? Ask this District homebuyer who came home to find his front door padlocked with a note: "Call Me ASAP! You Should Not Be in This House!”
EVERYONE TOLD ME THAT BUYING and renovating a house would be more work than I anticipated, and I believed them. But I never expected it to take triple the most amount of time I could conceive.
None could have anticipated that in fewer than two years, I would spend my life savings remodeling it and end up suing a Texas LLC for $2.7 million and title.
After six months of shopping, I found a three-story rowhouse with a basement in a neighborhood developing so fast, The New York Times published an article about it.
The house had not been meaningfully renovated since 1895. I plotted and planned for 18 months, installed new windows and completed other maintenance so I could live there.
After the architect drafted plans and I obtained permits, we gutted the house to remove all of the plaster, plumbing, wiring, and wooden framing. Of course, there, in the deepest depths of the remodeling is where my nightmare begins.
My contractor didn’t just call me during the middle of an important work meeting. He called, he left emails, and he texted; my phone was exploding.
"Ownership is an ephemeral security; I believed a fiction that no one can take from me my control over material objects. I was wrong."
I learned from my contractor that, while I was at work, the Maryland agent of a company I'll refer to as the "Texas LLC" padlocked my brand new, steel front door to the upstairs, broke into my basement, pounded signs in my yard selling my house, and hung more signs on a nearby light post.
He jammed a business card between the padlock and my door that read, “Call Me ASAP! You Should Not Be in This House!”
In the cab ride home, I felt like I was going to crawl out of my own skin trying to figure out what happened.
My fingers could barely dial the number on the card from my apoplexy, but I reached one of the Texas LLC’s agents. She knew my house. It must have been notorious around the office because she knew enough to tell me that the Texas LLC had bought my house at a tax sale in 2006, that their tax deed was superior to my mortgage deed, and that they owned my house.
She referred me to the lawyer who was handling the tax deed, but only the paralegal was available to take my call. He emailed me the District of Columbia Superior Court default judgment and order directing the mayor to issue a deed for my house to the Texas LLC.
Seeing the court orders crushed me. By invading my house, I believed the Texas LLC had taken from me every material good for which I had worked and suffered my entire life.
By asserting that now it owned all of my property and all of my money and all of my toil, the Texas LLC forced me to confront, over the days ahead, the reality that ownership is an ephemeral security; I believed a fiction that no one can take from me my control over material objects.
I was wrong.
I called my title company who referred me to my title insurance underwriter (who knew that these were different companies?).
The underwriter immediately hired council. After two months without response to our attempts to contact the Texas LLC and resolve our dispute amicably, my title insurance underwriter's council and I sued for $2.7 million.
IN ENGLAND AND AMERICA, we have been litigating title for a thousand years, so I expected that a formula would determine title to the house.
Indeed, D.C. Code § 42-1207, passed only six years before my situation arose, plainly resolved the case in my favor.
Generally, if a buyer has no notice that someone else owns the house, by recording or otherwise, that buyer is a bona fide purchaser whose title is superior even if the prior owner had sold the title to or lost the title to someone else. In my case, my house’s prior owner had failed to pay his property taxes.
The District just wants its taxes, so it allows other people to pay outstanding property taxes, and if the property owner does not repay the new taxpayer, that other person can obtain title by filing a lawsuit.
"I called my title company who referred me to my title insurance underwriter (who knew that these were different companies?). The underwriter immediately hired council."
In almost all circumstances, the property owner redeems the property by paying the new taxpayer, and, in D.C., with 18 percent accrued interest. But in my situation, while the Texas LLC paid the previous owner's property taxes, the previous owner had not redeemed. So the Texas LLC had filed a lawsuit to obtain title to my house.
Under the common law, that lawsuit would have given me notice of the outstanding claim on title, but D.C. Code § 42-1207 required the Texas LLC also to record a piece of paper, a notice of lis pendens, with the clerk and recorder, so title companies could easily uncover other claims to title.
The Texas LLC’s lawyers had not completed this step, which is why no flags were raised during the initial title search when I bought the house. Just the same, I was a bona fide purchaser, and my title was superior to the Texas LLC’s title.
When all parties appropriately assess litigation risks of a case, parties usually settle to avoid the attorney and expert fees from litigation. This case was no different.
Once the Texas LLC understood the case, it agreed to settle. It sought its property taxes from the District, and my title insurance paid me about $7,000 in my hard losses for a ruined front door and lost income from an inability to rent my rooms as I had planned.
About 18 months after the Texas LLC’s agents broke into my house, the judge signed the order quieting title in my name.
My nightmare was over.