In a divorce case, the trial court awarded the marital residence to the wife. Wachovia held a lien on the residence resulting from a home equity loan taken out during marriage by the husband without the wife's knowledge. After divorce, the ex-wife sued Wachovia to remove the cloud on her title and to quiet title because the Texas Constitution requires both spouses to consent to a home-equity loan.
The Texas Constitution's home-equity loan provisions include some violations that can be "cured." For example, the fees incurred in taking out a home-equity loan may not exceed 3% of the amount of the loan. If a borrower complains to the lender, the lender may "cure" the defect by reimbursing funds to the borrower.
A borrower's claims against a lender are not subject to any specific statute of limitations. In the first case to address limitations and Texas home-equity loans, Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834 (Tex. App. - Dallas 2008, no pet.), the parties agreed that Texas' residual four-year statute of limitations applied. Many other courts later invoked the four-year statute to bar borrowers' claims, stating that Rivera held that the four-year statute applied. However, some of these courts held that there is no statute of limitations on a suit to remove a cloud on title and to quiet title.
The divorce in this case took several years to conclude. When the ex-wife sued Wachovia, more than four years had passed since the ex-husband took out the home-equity loan. The ex-wife lost in the trial court on a summary judgment based primarily on limitations and secondarily on the contention that the ex-wife had ratified the home-equity loan.
This brief, filed by the ex-wife, argues (a) that a suit to remove a cloud on title and to quiet title cannot be barred by limitations; (b) that if it can, the four-year statute should apply only to "curable" violations of the home-equity loan provisions of the Texas Constitution, and not to incurable ones such as, in this case, the failure to obtain consent to the loan from both husband and wife; (c) that liens based on home-equity loans cannot be estopped or ratified into existence; and (d) that the summary judgment evidence was inadequate to show any estoppel or ratification of the home-equity loan by the ex-wife.
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