ST. LOUIS - The Missouri Court of Appeals, Eastern District has reversed a St. Charles County ruling that honored conveyance of a quitclaim deed to a builder/lender after the owner of the Wentzville home allegedly fell behind on payments.
According to the ruling issued Oct. 17, St. Charles Circuit Judge Jon Cunningham had granted summary judgment to Jeff Kelly Homes and other defendants who had been sued by Michelle Gacki over the home she purchased from them in 2010.
A loan agreement that Gacki held with the defendants indicated that if she fell 30 days or more behind in payments on the loan the quitclaim deed would return possession to them, which is what happened in February 2012, the ruling states.
Background information in the ruling states that Gacki entered a purchase contract with Jeff Kelly Homes for $188,900 and was to seek financing for it from co-defendant Timely Disbursements Pension & Profit Sharing Trust Fund. Gacki, however, was denied a loan for the amount sought because of a "poor credit history," the ruling states.
The contract was amended to change the price to $176,900 with Gacki paying a $10,000 down payment.
"After Gacki disclosed to (co-defendant) John W. Kelly that she was getting a divorce and was expecting to be awarded around $40,000 from the divorce proceedings, the Fund agreed to issue a loan to Gacki upon certain specific conditions," the ruling states.
Among those conditions were that Gacki would make $1,254.80 monthly payments and an additional $40,000 toward the principal balance - which would have been $166,900 after the initial down payment - upon her divorce being finalized. When that happened, her monthly payments would be reduced, the ruling states.
Other conditions included charges and fees if she was late on her monthly payments, and an acceleration clause in the contract declaring that the full loan balance could be due if she fell 30 days or more behind.
Inn 2011, disputes arose between the parties when payment withdrawals from her bank would not process due to insufficient funds, however, the ruling states that in November 2011 withdrawals were being made a day earlier than payment terms established.
The court of appeals reversed summary judgment and remanded for further proceedings, finding genuine issues of material fact "regarding multiple issues."
"...[W]e need not ultimately determine the effect of using a quitclaim deed in conjunction with the Loan Agreement in this case," the ruling states. "However, we note concerns with the effect of the trial court’s judgments that enforced the Loan Agreement, but did not order the Fund to sell the home and apply the proceeds to any deficiency, as would be typical in a foreclosure proceeding where the defaulting borrower would only pay the deficit of the loan balance minus the sale proceeds. The trial court’s judgments here awarded the home to the Fund while also holding Gacki responsible for the entire balance due under the agreement—without any set off for either the value of the home or proceeds from the sale of the home."