1. Actions: Foreclosure:
Equity. An action to foreclose on real estate is an
action in equity.
Equity: Appeal and Error. On appeal from an
equity action, an appellate court decides factual questions
de novo on the record and, as to questions of both fact and
law, is obligated to reach a conclusion independent of the
trial court's determination.
Contracts: Homesteads: Acknowledgments:
Conveyances. A valid acknowledgment of both spouses
must appear on the face of an instrument purporting to convey
or encumber the homestead of a married person or the
instrument is void.
Property: Mortgages: Deeds: Debtors and
Creditors. In considering the use of property as
security for a debt, a deed of trust that a buyer gives for
the purchase money of real property is generally treated the
same as a mortgage that a buyer gives for the same purpose.
Mortgages: Deeds: Security Interests: Sales.
A purchase-money mortgage refers to a security interest that
a buyer gives for the unpaid purchase money on a sale of
land, as part of the same transaction as the deed, when its
funds are actually used to buy the land.
Mortgages: Title: Sales. A purchase-money
mortgage can refer to a mortgage that a buyer gives to the
seller or to a third-party lender in order to acquire title
to real estate or to make improvements to a property, if the
mortgage is given as part of the same transaction in which
the title is acquired.
Mortgages: Deeds: Security Interests: Homesteads:
Foreclosure. Because courts normally treat the deed
to the mortgagor and the [297 Neb. 480] security interest in
the property as being executed simultaneously, a homestead
claim will not defeat an action to foreclose a purchase-money
Mortgages: Acknowledgments. A mortgage given
by a married person for the purchase money of land, delivered
at the same time of the purchase, is not invalid because it
was not executed and acknowledged by the person's spouse.
Homesteads. The validity of a homestead
right rests on a present right of occupancy or possession.
Mortgages: Security Interests: Vendor and
Vendee. When a purchaser must obtain a
purchase-money mortgage to acquire real property, the
purchaser cannot show a present right of occupancy or
possession until after he or she gives the lender the
Homesteads: Security Interests: Vendor and
Vendee. Restrictions on the encumbrance of a
homestead without a spouse's consent or signature do not
invalidate a security interest in the property that a
purchaser concurrently gives for its purchase price.
from the District Court for Lancaster County: John A.
Colborn, Judge. Affirmed.
W. Watson, pro se.
D. Stalnaker and Robert J. Becker, of Stalnaker, Becker &
Buresh, P.C., for appellee Mutual of Omaha Bank.
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, Kelch,
and Funke, JJ.
NATURE OF CASE
appellant, Robert W. Watson (Watson), appeals from the
district court's summary judgment orders that determined
Mutual of Omaha Bank (Mutual) held a valid and enforceable
deed of trust against Watson's homestead property. The
court determined that the instrument, the primary deed of
trust, had first priority as an encumbrance on the property,
ordered an execution sale, and foreclosed Watson from
asserting any interest in the property.
Neb. 481] Both Watson and his then-spouse, Shona Rae Watson,
signed the primary deed of trust, but the notary did not
certify that Shona had acknowledged the instrument. The
notary did certify that Watson and Shona had both
acknowledged a secondary deed of trust before the notary on
the same day. Watson contends that the court erred in reading
these two deeds of trust together to conclude that Watson and
Shona intended to encumber their homestead through the
primary deed of trust.
de novo review of the record, we conclude that even if the
court erred in that conclusion, it nonetheless reached the
correct result. The undisputed facts show that Watson and
Shona could not have acquired title to the property except by
giving a security interest for the purchase money through the
primary and secondary deeds of trust. Accordingly, the
acknowledgment requirement under the homestead statutes did
not preclude enforcement of the primary deed of trust and
Watson's homestead interest was subject to the seniority
of that instrument. We affirm.
was the manager of Reserve Design, LLC, a company which
designed, built, and sold homes in Lancaster County,
Nebraska. In April 2008, Watson, as the manager of Reserve
Design, executed a deed of trust to secure a loan or line of
credit from Cattle National Bank and Trust Company (Cattle
National). Under the deed of trust, Reserve Design conveyed a
residential property in Lancaster County to Cattle National
as trustee and beneficiary if Reserve Design defaulted on its
loan obligations. The maximum loan amount was $525, 000.
October 26, 2009, Watson and Shona purchased the same home,
which Reserve Design had built but had been unable to sell.
Watson and Shona were both members of Reserve Design, but
they purchased the home in their personal [297 Neb. 482]
capacities. The property became their homestead. On October
26, Watson executed and delivered a promissory note for $417,
000 and a second promissory note for $118, 414.50 to
Community Bank of Lincoln (Community Bank) to fund the
purchase price of the residential property and to pay off the
prior indebtedness owed to Cattle National by Reserve Design.
Upon receiving the payoff, Cattle National released its deed
of trust for the property.
and Shona signed the primary deed of trust to secure the
$417, 000 note and a secondary deed of trust to secure the
$118, 414.50 note. The instruments conveyed the same property
in trust that had been security for the deed of trust in
favor of Cattle National. Angela Schwartz, a Community Bank
officer, notarized the instruments, but her certification on
the primary deed of trust stated that only Watson had
acknowledged the instrument before her. That same day,
Community Bank assigned the primary deed of trust to TierOne
on October 26, 2009, Watson signed an addendum to a
settlement statement in which he verified that $532, 140.08
was the payoff to Cattle National. The next day, October 27,
Community Bank transferred by wire $532, 140.08 to Cattle
November 5, 2009, Community Bank recorded the primary deed of
trust and the assignment. A title insurance company issued a
title insurance policy, which stated that the insured was
TierOne Bank, and its successors or assignees. Subject to
exclusions, the policy covered the insured against defects in
the deed caused by various circumstances, including "a
document affecting Title not [being] properly created,
executed, witnessed, sealed, acknowledged, notarized, or
TierOne Bank was placed in receivership in June 2010, the
receiver sold TierOne Bank's servicing rights to a
different bank. In October, the receiver and the other bank
assigned all their rights in the primary deed of trust to
Neb. 483] Watson eventually defaulted on the note, and in
January 2013, Mutual brought suit for judicial foreclosure.
December 16, 2013, Mutual deposed Shona. She and Watson had
divorced in 2010, and, at some point, she moved to Missouri.
She stated that they had purchased a new home while they were
married, but she did not know how the financing was handled.
She agreed that her signature appeared to be on the primary
deed of trust. But she did not recall any significant facts
regarding the execution: i.e., signing the document, being at
the closing, which bank she would have been at, or whether a
notary was present. She said that Watson would just tell her
when to show up and sign papers if he needed her signature
and that this happened several times while they were married.
She said that she did not know the purpose of the documents.
She also did not recall signing the secondary deed of trust
for Community Bank but agreed that it looked like her
December 31, 2013, an unspecified party filed a
"Corrective Deed of Trust" that purported to
correct Schwartz' certification for the primary deed of
trust. The new certification stated that on October 26, 2009,
the primary deed of trust had been acknowledged before
Schwartz by both Watson and Shona. Schwartz' statement
was undated, and neither Watson nor Shona signed the
2015 deposition, Watson testified that he could not recall
(1) signing the primary deed of trust, (2) whether he had
signed the loan documents at Community Bank, (3) whether
Shona was present, or (4) whether the loan officer was
present when he signed them. Watson said that he had
sometimes signed loan documents at his office or his home. He
admitted that the signature on Mutual's copy of the
primary deed of trust looked like his.
filed its operative amended complaint in January 2014 in
which it alleged that Watson had failed to "make [297
Neb. 484] the payments . . . which became due on May 1, 2012,
and thereafter" and that Mutual had elected to declare
the whole indebtedness due at once. It alleged that it was
the holder of a deed of trust that "is, or in equity
should be determined to be, a first lien" on the
property. Mutual also sought an accounting, a determination