Monday, October 27, 2014

Collections: Parties Liable for Credit Card Debts

  The Richmond Circuit Court, in the case of Chevy Chase Savings Bank v. Strong, ruled that a husband who was only an “authorized user” on a bank credit card issued to his wife was not liable to the bank for a $5,024 cash advance check he wrote on the credit card; only the wife was liable.

     In Virginia Code §11-31, Virginia has codified the rule that use by an authorized agent of a cardholder shall be the equivalent of use by the cardholder.  That rule, however, does not address the question of the liability of the agent.  The court reasoned that while it does not appear that any Virginia Court has addressed the issue, the language used in the statute and case law from other jurisdictions led the Court to believe that the issue was governed by agency law.

     The Court stated that it was well established in Virginia that when an agent contracts for a disclosed principal, credit is extended to the principal, and the benefits of the contract are accepted by the principal, there is no personal liability on the agent. In this case, the bank was well aware that the principal was the wife. It extended credit to her based on her application for a card. They were aware that no contract was ever made with husband individually and, therefore, they knew that he was simply an authorized agent.
     The Court found that there was no indication in this case that husband exceeded his authority in executing the check against the account, or that he agreed to be personally liable for any debt incurred on his wife’s account. Accordingly, the court ruled that the liability for the debts belonged only to wife. The court ruled that the husband was not liable for any portion of the outstanding balance, including the amount of the check that he personally wrote.

     The lesson from Strong - do not confuse guarantors with authorized users.

Monday, October 20, 2014

LAW Business work

     Many of you have inquired about my availability to do business work and attend corporate, credit union, and homeowner’s association meetings. I do this, and, I am available.

     When it comes to board work, I recognize that most board members are volunteers. Having experienced counsel available to provide advice, guidance and continuity as boards change is crucial for productive and efficient boards, as well as for avoiding potential board member liability in lawsuits.
     When it comes to larger meetings (stockholders, credit union members, or homeowner’s associations), having experienced counsel available to explain rights and options, as well as analyze courses of action and provide advice can be invaluable.

     If you think that you may have a need, please call me so that we can discuss. I can structure a reasonable rate to fit your needs.

Monday, October 13, 2014

Foreclosure: Default

Question: When is a loan in default? Answer: Under one or more of several circumstances. The most common way that a borrower is in default is monetary – e.g., the borrower fails to make a required payment. However, default can be for a non-monetary reason as well, such as:

1. Failure to pay taxes.

2. Failure to pay insurance.

3. Failure to remove or bond over mechanic’s liens.

4. Failure to perform requirements unique to the loan.

Monday, October 6, 2014

LAW Real Estate Matters

     Many of you have recently asked if I handle real estate work. The answer is YES! I do residential and commercial transactions – especially for Credit Unions. I handle first and second loans, as well as refinances, equity lines of credit, and foreclosures. I have two very experienced real estate paralegals (Donna Dunn and Sandra Milburn), who have been working in the real estate field for many years.

     Unlike other attorneys and real estate settlement companies, I will always provide you with the real cost of your transaction in advance, not have “hidden costs” with different names buried in the settlement statement.

     I invite you to please call me so that we can discuss your real estate needs.