Posting for

Monday, June 29, 1998

by: Bert Rush

brush@firstam.com

NOTICE REQUIREMENTS/FORECLOSURE/REMAINDERMEN

After last week's discussion of life estates I stumbled across this interesting decision, from the Missouri Supreme Court.

In his will, Aubra Wrather left real property comprising 72 acres to his daughter "Reba Wrather LaFont, and her bodily heirs, in fee simple."

Aubra died and his estate was probated. The probate court distributed the 72 acres to "Reba Wrather LaFont and her bodily heirs." During probate (but apparently after the order of distribution) the executor and Reba LaFont mortgaged the 72 acres and other property. The loan went into default and the lender foreclosed on the 72 acres. Successful bidders at the foreclosure sale (in 1988) were Sherman Kimes and family. In 1990 the Kimes family conveyed the 72 acres to a family trust.

Reba LaFont died in 1993, while the 72 acres was still in possession of the Kimes family trust. Two of Reba LaFont's children survived her (Anita and James), while a third child predeceased her leaving two heirs (Heather and Lesley).

Anita (together with other heirs of Reba) sued to recover the 72 acres--on grounds they did not receive actual notice of the foreclosure sale as required by Missouri statute. The pertinent statute required notice 40 days prior to the sale date "To the person shown by the records in the office of the recorder of deeds to be the owner of the property...at the foreclosing mortgagee's last known address for said record owner...."

Problem was the foreclosing lender didn't give notice to Anita or the other "bodily heirs" of Reba, apparently because the lender did not recognize their "ownership" interest in the property. (Instead, the lender in 1988 gave notice to the executor in probate and Reba LaFont, the mortgagors.)

But the Supreme Court held:

To the defendants Kimes' argument that the presumptive heirs' receipt of constructive notice--through publication and actual notice to the executor and life tenant--should be sufficient, the Court answered that under the statute constructive notice to an owner is insufficient, and there was "no proof" the contingent remainder holders received actual notice of the foreclosure sale until after Reba's death.

So Anita, et al., were entitled to immediate possession of the 72 acres.

This decision surprises me because I'm slow to recognize that a vesting in "Reba LaFont and her bodily heirs" creates a life estate with contingent remainder interests. And, if that's the case, isn't the real problem here that the mortgage encumbered only the life estate--as was the problem in the claims discussed last week? So the foreclosure shouldn't have wiped out their interests even if the remaindermen got notice(?).

Food for thought--and a case that searchers and examiners should at least be aware of.

The official citation is Williams v. Kimes, 949 S.W.2d 899 (1997).

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