Johnson v. Washington
United States Court of Appeals for the Fourth Circuit
559 F.3d 238 (2009)
The Johnsons (plaintiffs), facing bad credit and unable to refinance their home, accepted Washington's (defendant) written proposal to deed him their house for $212,800 (mostly paying off their existing mortgage), in exchange for staying in the home indefinitely and receiving a 13-month option to repurchase; the Johnsons made 12 monthly payments toward Washington's mortgage but stopped after a few months and sued, alleging misrepresentation and mortgage-law violations. The district court granted Washington summary judgment, and the Johnsons appealed.
Whether the presence of indebtedness and other equitable circumstances distinguishes an equitable mortgage from an absolute sale.