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Ameriquest Mortgage Company v. Cottrell

A-0421-02T5 (N.J. Super. App. Div. 2003) (Unpublished)

MORTGAGES; FORECLOSURE—A property’s co-owner who did not sign a mortgage is entitled to pursue a counterclaim against a lender, in a foreclosure action by that lender, on the theory that the lender should have conducted a title search before making its loan.

In a foreclosure action, the lower court dismissed a counterclaim by a 25% co-owner of the property who asserted that the loan was taken out, and the property mortgaged, without his consent. It ruled that the co-owner failed to state a claim upon which relief could be granted because he failed to allege that the bank’s conduct fell below a required standard and he failed to allege any facts that would impose liability on the bank. The Appellate Division reversed. In determining whether or not to dismiss a complaint, the court must decide if a valid cause of action is suggested by the facts even if not articulated and if so, a court should give the claimant an opportunity to amend the pleading to state a viable cause of action. The Appellate Division noted that the co-owner’s factual allegations suggested a duty on the part of the bank to at least order a title search before lending the money. The co-owner claimed that had a title search been ordered, the bank would have been made aware of his ownership interest in the property prior to funding the loan. The Court reversed the dismissal to afford the co-owner the opportunity to amend his complaint to allege more succinctly the bank’s wrongful conduct and the standards it should have observed in lending the money and accepting the mortgage.

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