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SettlePou Scores Win for Bona Fide Third-Party Foreclosure Purchaser


SettlePou recently obtained summary judgment on behalf of its client in a quiet title suit contesting the third-party foreclosure purchaser’s ownership of the property based upon an alleged (and admittedly never-consummated) agreement by the prior owner to sell the property to another third party prior to foreclosure. Specifically, in Kumar L. Machani v. Ditech Financial, LLC, et al., Case No. 4:18-cv-01729 (S.D. Tex. Feb. 20, 2019), Plaintiff Machani sued foreclosing lender Ditech, as well as third-party foreclosure purchaser Breckenridge Property Fund 2016, LLC, alleging a variety of claims against Ditech related to a residential foreclosure, and a quiet title claim against both Ditech and Breckenridge seeking essentially to rescind the foreclosure.

Breckenridge filed a motion for summary judgment on the basis of its bona fide purchaser affirmative defense, which requires proof that the foreclosure purchaser is a third party (i.e., not the foreclosing lender or its agent), paid value, bought in good faith, and had no actual or constructive knowledge of the adverse claim to title at the time the third party acquired title. The first two elements were uncontested and indeed admitted on the face of Machani’s Complaint, which demonstrated that Breckenridge was a true third party and paid significant value. The third and fourth elements were proven by Breckenridge’s uncontroverted summary judgment evidence, which proved that it bought the property in good faith and without actual or constructive knowledge of any alleged defect or adverse claim prior to the foreclosure. Breckenridge thus argued it was entitled to judgment as a matter of law because there was no fact dispute that it was a bona fide purchaser for value. The Southern District of Texas agreed, granting summary judgment to Breckenridge and entering Final Judgment in its favor accordingly.

Breckenridge was represented in this case by Michael R. Steinmark of SettlePou. For more information or if you have any questions, please contact Michael at 214.560.1732 or msteinmark@settlepou.com.