In Credential Leasing Corp. of Tenn., Inc. v. White, No. E2015-01129-COA-R3-CV (Tenn. Ct. App. May 17, 2016), plaintiff lender brought various claims against defendant lawyer, including claims for professional negligence and fraudulent misrepresentation, related to the drafting of a deed of trust. Defendant attorney prepared a 2010 deed of trust in favor of plaintiff, conveying title to a parcel of land owned in part by defendant’s brother. Defendant stated that he would do the title work, prepare the deed of trust, and issue title insurance for the property at issue, though he never actually issued any title insurance.
The property was actually owned by the brother and another man as tenants in common. In 2007 a deed of trust had been executed on the same property to secure a loan from another bank, and defendant attorney had notarized the signatures of the grantors (and correct property owners) on that deed. Despite the fact that the brother only owned a half interest in the property, the 2010 deed of trust did not mention the other owner’s interest. Instead, it listed the brother and the brother’s wife as grantors, even though the wife had no interest in the property. Further, while the warranty deed and previous deed of trust used a “lot and block” description of the property, the 2010 deed of trust described the property by metes and bounds.
In 2011, the brother declared bankruptcy. Plaintiff received a notice of the bankruptcy filing, which showed the other creditor having a first lien, which plaintiff was already aware of. Almost two years later, however, plaintiff learned that the property had been sold at foreclosure, and plaintiff had not received notice. Only after learning of this sale did plaintiff find out that the brother had only owned a one-half interest in the property, and that their deed of trust thus had not covered the entire property.