A screw-up without consequences

Avakian v. Citbank, N.A., No. 14-60175 (5th Cir. Dec. 9, 2014).

Burnette and Norair Avakian, husband and wife, signed two separate but identical deeds of trust in favor of Citibank, which refinanced their mortgage. Citibank now wants to foreclose on their property, but the Avakians say that Citibank lacks a valid mortgage because it failed to comply with the formalities of Mississippi law. 

Real estate law is famously formalistic, and there are good reasons for that. The Mississippi statute in this case is a good example. It provides that a valid mortgage requires that both spouses to sign “a ... deed of trust” on their mutual homestead. The question facing the Fifth Circuit in this case is whether getting each spouse to sign a separate deed of trust—with the signatures of both spouses appearing on neither deed—create a valid mortgage that can be enforced by the mortgage lender.

Despite the language of the statute and the formalities of real estate law, the Fifth Circuit decides that, under Mississippi law, the Avakians’ two deeds of trust created what was effectively one integrated document. And that integrated document included both of those signatures—which, in turn, means that Citibank has a valid mortgage on the property that it can foreclose on.