Mutual of Omaha Bank v. Watson, 297 Neb. 479

Background

In October 2009 Robert and Shona Watson bought a home that became their homestead; Community Bank funded the purchase by two promissory notes ($417,000 and $118,414.50) secured by a primary and secondary deed of trust both signed by Robert and Shona.
The primary deed of trust’s notary certificate showed only Robert acknowledged it; the secondary deed of trust’s certificate showed both spouses acknowledged. A later undated corrective certificate (filed 2013) purported to add Shona’s acknowledgement to the primary deed.
The lender that received the primary deed (TierOne) was later placed in receivership; Mutual of Omaha Bank ultimately acquired the deed and sued in 2013 to foreclose after Robert defaulted.
Robert defended that the primary deed was void under Nebraska homestead statutes because it lacked the wife’s on‑face acknowledgement and asserted counterclaims tied to title insurance and alleged collusion; the district court dismissed those counterclaims.
The district court granted summary judgment for Mutual, treating the primary and secondary deeds as one transaction and ruling the primary deed had first priority; the Nebraska Supreme Court affirmed on de novo review, holding the purchase‑money mortgage rule precluded a homestead defense.

Issues

Issue	Plaintiff's Argument (Mutual)	Defendant's Argument (Watson)	Held
Enforceability of primary deed of trust given missing on‑face spouse acknowledgement	Primary and secondary deeds are one transaction; extrinsic evidence and corrective certificate validate acknowledgement or deed is a purchase‑money security interest that defeats homestead claim	Primary deed is void under Neb. Rev. Stat. § 40‑104 because Shona’s acknowledgement does not appear on the face of the primary deed	The deed is enforceable: treated as a third‑party purchase‑money mortgage executed contemporaneously with conveyance, so no homestead right existed prior to the encumbrance
Whether the primary and secondary deeds should be read together	Instruments executed same day for same purpose are construed together; reading together shows intent to encumber	They are separate instruments; primary is facially defective	Court may construe the instruments together; but decision rests on purchase‑money mortgage doctrine regardless
Validity of corrective deed/certification filed later to cure acknowledgement defect	Corrective certificate supplies evidence of acknowledgement and supports deed	Unilateral corrective certification cannot retroactively cure fatal on‑face homestead defect without supporting evidence	Court rejects unilateral corrective‑deed argument as insufficient on its own but deems unnecessary because purchase‑money rule applies
Dismissal of Watson’s counterclaims based on title insurance and collusion	Watson is not an insured under the title policy; Mutual’s foreclosure seeks loan default relief, not title damages	Payment of premiums and listing as owner make Watson an insured or entitled to setoff/indemnity	Counterclaims dismissed: Watson is not an insured under the policy; dismissal is moot given validity of deed

Key Cases Cited

Prout v. Burke, 51 Neb. 24, 70 N.W. 512 (1897) (mortgage given as part of the purchase transaction is effective despite lack of spouse’s acknowledgment because homestead right arises only after title acquisition)
Commerce Savings Lincoln v. Robinson, 213 Neb. 596, 331 N.W.2d 495 (1983) (purchase‑money mortgage treated as having priority over other claims when executed as part of the same transaction as the deed)
Blum v. Poppenhagen, 142 Neb. 5, 5 N.W.2d 99 (1942) (a deed is valid between the parties though not acknowledged, except as to homestead interests)
Lindquist v. Ball, 232 Neb. 546, 441 N.W.2d 590 (1989) (discussing homestead acknowledgement requirements and related principles)