Nature of the Case
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Facts
P is a retired 69-year-old man with a ninth-grade education. He worked as a laborer and subsists on a small pension and social security benefits. In 1971, P had purchased a house for $8,600. After 12 years of payments, P fell badly behind in his mortgage payments. The monthly payment was $98 per month at that time. By April 1984, he owed in excess of $1,000 in arrearages. A fair market value of the house was $19,800. The balance of the loan was less than $8,000. The mortgage lender instituted foreclosure proceedings and a default judgment in the amount of $7,843.26 was entered. A sheriff's sale was scheduled for June 12, 1984. D is a licensed real estate broker, on Sunday, May 13, 1984, arrived at P's home unannounced and informed P that he could help him keep his house. P understood that D offered to lend him the money to make up the back payments and to take a deed to secure repayment. D reports that he offered to buy the house and to let P continue to live in it as a tenant. The next day D drove P to D's lawyer to sign documents. P was never told he could seek counsel. P thought he was signing loan documents but signed a deed transferring the property to D. P says that he signed the documents without reading them because he trusted D's statements that the papers were loan documents. The deed recited $7,000 consideration, but P got nothing. The house belonged to D and P remained liable for the mortgage. A lease was executed for close to the original mortgage amount but was steadily increased from $100 a month to $310 per month. The mortgage payment also increased $93 in 1984 to $120 in 1991. P eventually stopped paying. D commenced an eviction. The court stayed to consider cancellation of the deed.
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