Summary
The Nebraska Supreme Court affirmed summary judgment for Nationstar Mortgage LLC in a dispute over the priority of a mortgage lender's interest against purchasers' interest under an executory land contract. The court held that subordination agreements are generally enforceable in land contracts and that the clause at issue unambiguously subordinated the purchasers' rights to the seller's lender and its successors and assigns.
Topics
Practice areas
Questions Presented
- Whether genuine issues of material fact precluded summary judgment on the priority of Wintroub's land-contract interest relative to Nationstar's mortgage.
- Whether the land contract's subordination clause was enforceable against Wintroub and subordinated his interest to the mortgage held by Nationstar and its predecessors and assignees.
- Whether the subordination clause was ambiguous.
Holdings
- A subordination agreement contained in a contract for the sale and purchase of land is generally enforceable under Nebraska law.
- The subordination clause was unambiguous and subordinated the Wintroubs' rights and interest to the rights of the seller's lenders until the contract price was paid in full. The subordination extended to Lehman Brothers Bank's mortgage and its successors and assignees, including Nationstar.
- Summary judgment was proper because no genuine issue of material fact remained regarding the operation of the subordination clause or the priority of Nationstar's mortgage.
Key quotations
“We hold that generally, a subordination agreement set forth within a contract for the sale and purchase of land is enforceable.” (303 Neb. at 21-22)
“An instrument is ambiguous if a word, phrase, or provision in the instrument has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings.” (303 Neb. at 22)
“There is no genuine issue that under the subordination clause, Nationstar’s mortgage has priority over Wintroub’s interest.” (303 Neb. at 23)
Factual background
Edward Wintroub and his wife entered into a land contract with the Steve Faller Revocable Trust to purchase a residence. The land contracts provided that, until all amounts due were paid, the land contract would be subordinated to any rights held by the seller's lender. Shortly after the first land contract, the trust executed a promissory note and deed of trust to Lehman Brothers Bank to refinance an existing mortgage and pay a construction lien; the note and deed of trust were later assigned to Nationstar. The Wintroubs did not timely pay the contract price, the trust defaulted on the loan, and Wintroub sought to enjoin the scheduled trustee sale.
Procedural history
Wintroub filed suit in the Douglas County District Court to enjoin a trustee sale, asserting that his interest under a land contract was superior to Nationstar's mortgage interest. The district court granted Nationstar summary judgment, concluding that the mortgage had priority under the land contract's subordination clause and that the priority extended to Nationstar as assignee. Wintroub appealed, and the Nebraska Supreme Court affirmed.