Falk v. Fannie Mae

This case involved a dispute between the trustee of a Trust and Fannie Mae concerning which party’s mortgage lien on certain apartments had priority status. N.C. Gen. Stat. 45-37(b) establishes a conclusive presumption that the conditions of prior liens are satisfied after fifteen years from either the date on which the instrument requires performance or the date of maturity of the last installment of debt. The statute further authorizes a senior lienholder to extend the “life of the lien” by filing an affidavit with the register of deeds. Here, the trial court granted summary judgment for Fannie Mae, ruling that, pursuant to section 45-37(b), the Trust’s lien had expired, and the Trust’s failure to file an affidavit extending the life of its lien enabled Fannie Mae to foreclose on the property unencumbered. The Court of Appeals reversed. The Supreme Court reversed, holding (1) section 45-37(b) allows creditors or purchasers for value from a grantor to benefit from the conclusive presumption that prior liens expire after fifteen years irrespective of when those creditors obtain their interest; and (2) in this case, section 45-37(b) acted to terminate the Trust’s lien and permitted Fannie Mae to foreclose on the property unencumbered by a senior lien. View "Falk v. Fannie Mae" on Justia Law