Opinion ID: 1653664
Heading Depth: 1
Heading Rank: 5

Heading: Mound Property

Text: In early 1999 Ryerson and Swensen informed L.J. about an investment property they had located in Mound, Minnesota. Ryerson and Swensen suggested that L.J. purchase the property, allow them to renovate the property, and proposed the three of them split the profits from the sale. L.J. agreed, and on February 18, 1999, L.J. signed a purchase agreement and paid $2,000 in earnest money on the Mound property. Ryerson told L.J. that it would be easier to finance the property if E.B.'s name was on the title, so L.J. agreed to include E.B.'s name. E.B. supposedly signed the purchase agreement but did not contribute financially to the purchase of the Mound property. At the closing on May 19, 1999, Ryerson signed E.B.'s name as attorney-in-fact using a short form power of attorney. The forensic document examiner testified that there was a strong probability that the E.B. signature on the power of attorney was not genuine. Investigation revealed that Swensen had obtained the notarization of the E.B. signature under false pretensesthe notary testified that he had notarized the power of attorney form at the request of Swensen and had not seen E.B. actually sign the document. The total purchase price of the Mound property was $274,436.38. L.J. used a mortgage loan to pay $176,250, and she paid the remainder in cash at the May 19, 1999, closing. Once she owned the property, L.J. paid $37,939.70 for repairs to the property and paid Ryerson and Swensen an additional $25,804.41 for supplies used in the improvement of the property. When the repairs to the Mound property were completed in September 1999, L.J. received a refund of the $33,000 she had paid into escrow at the time of closing. L.J. then requested that Ryerson and Swensen sell the property as previously agreed, but no such action was taken. Instead, Ryerson and Swensen told L.J. they intended to obtain financing to purchase L.J.'s interest in the property, and unbeknownst to L.J., the property went into foreclosure. At the sheriff's sale held on March 27, 2003, the property was sold to Mortgage Electronic Registration Systems, Inc. The last day of the statutory foreclosure redemption period for the Mound property was September 27, 2003. Shortly before the expiration of the redemption period, Ryerson falsely told L.J. that she and Swensen had obtained financing to purchase the home. Ryerson asked L.J. to attend a closing on the financing scheduled for September 23, 2003. While attending that closing, L.J. learned for the first time that the Mound property was in foreclosure and that the redemption period was set to expire in five days. She also learned the refinancing was actually a sale of the property to Mark O'Brien. According to O'Brien, Ryerson had approached him with information that the Mound property was in foreclosure and could be purchased for $100,000 or less. After L.J. learned about the foreclosure sale and the current status of the property, she objected to the closing. The closing was cancelled, but shortly thereafter Ryerson and Swensen convinced L.J. that it was in her best interest to go forward with the closing before the redemption period expired. Ryerson and Swensen told L.J. that she would lose her entire interest in the property if she did not proceed with the sale, so L.J. agreed to a second closing on September 26, 2003. The purchase price at the second closing was $345,000, which was then reduced by a seller's equity gift of $69,000. L.J. testified that she was unaware of the $69,000 gift to O'Brien and did not agree to it. O'Brien paid the entire purchase price of the Mound property with the proceeds from a mortgage loan. The net proceeds from the sale ultimately came to $56,778.33; L.J. received $45,000 and the remaining $11,778.33 went to VR Construction. By the time of the sale, L.J. had invested nearly $128,930.49 into the Mound property. Ryerson received the portion of the proceeds paid to VR Construction. She also received an additional payment from O'Brien. O'Brien testified that on August 24, 2004, he obtained a $95,000 second mortgage on the Mound property, approximately half of which he paid to Ryerson. On September 30, 2004, L.J. filed an action to recover the loss she incurred because of Ryerson's actions. When L.J. and Ryerson settled the action in 2005, the Mound property was returned to L.J., although it was still encumbered by the two mortgages taken out by O'Brien.