In April 2012, Samantha Melton, a settlement coordinator for BridgeTrust Title Group, received an order from a lender. It requested she act as title and settlement agent for a $75,000 retail services loan that would use North Carolina property for collateral. The order listed the property owner and borrower as "Niles Jaures." When Samantha opened the file and retained a North Carolina attorney to complete the title exam, their report of the title immediately set off warnings.

The property was actually owned 50 percent by Niles Jaures and 50 percent by another individual who had acquired the property in 2011. The conveyance of each interest was granted by Sam B. Jacobs, II. The title exam revealed two outstanding Deeds of Trust in the name of Sam Jacobs and a judgment against Sam B. Jacobs, II in the amount of $97,464.79.

The judgment originated in Richmond, Va., where it was docketed in 1999. Judgments are valid in Virginia for 20 years (making its expiration 2019). In 2004, a summary judgment was signed by a judge, and the judgment was docketed in Dare County, N.C. Judgments are valid in North Carolina for 10 years. Samantha took the stance that the North Carolina judgment was still a valid encumbrance against the property based on the date of the summary judgment in 2004.

Samantha issued a Fidelity title commitment requiring the payment and release of both existing deeds of trust and the judgment. She also drafted a detailed letter to the loan officer spelling out the title issues and making sure she was aware of the outstanding liens. The loan officer let Samantha know she would contact the borrower to discuss the liens.

Samantha then began receiving calls and messages from Jaures, the borrower. Jaures first stated his attorney advised him the judgment was only good for seven years and he should not be penalized for a judgment against the prior owner. Samantha let Jaures know our office would require the payment and release based upon the 10 year North Carolina statute. Jaures said he would consult his attorney and hung up.

The next day she got another call from Jaures. This time he stated his lawyer confirmed the 10 year statute in North Carolina, but since the judgment was originally dated in 1999 in Virginia, the 10 years had expired.

Samantha was unsure of how the multi–state docketing of the judgment affected its duration. She still felt it was valid for 10 years from when it was signed and dated in North Carolina, but because she was not certain, she took the file to her agency president. The agency president suggested she call the regional claims counsel, who happened to be a North Carolina attorney.

The claims counsel stated it was possible to find attorneys who would argue the case both ways. He also stated he agreed with Samantha in erring on the side of caution, by requiring the cancellation and release of the judgment based on the 2004 North Carolina date.

Samantha drafted another detailed email to the loan officer to secure written evidence of the exchange. She informed the loan officer the risk imposed by the judgment was too great and Our Company would not be able to insure the loan without cancellation of the judgment. Our company was stepping down as title and settlement agent for the transaction. Samantha did not receive a response.

Weeks later she received a call from another loan officer in the same office. He thanked Samantha for not letting them close the loan and informed her that Sam B. Jacobs, II had just been indicted on more than 20 counts of fraud. It appears there was a good chance Sam Jacobs had been dumping assets when he made the conveyance to his brother in 2011, and the transaction could have been deemed a fraudulent transfer in his ongoing prosecution.

Samantha said she was not certain Jaures and the co–owner were intentionally trying to take out a fraudulent loan. She also doubted the loan officer was participating in the fraud, since he cancelled the loan based upon Samantha's email. However, she felt there were too many unusual variables involved with the transaction.

Samantha did not know if the court would rule the judgment was expired, or the transfer to Jaures and his partner was clear. She did know she did not want to put her agency, or Fidelity, in the position of having to find out.