Beardon contested a foreclosure action under the illegality defense claiming that real property was sold to her under the pretense that a prostitution ring would be maintained on the property.
The illegality defense is only available if the seller actively participates in the illegal conduct.
Carroll sold real estate to Beardon in which Beardon defaulted on the first mortgage payment. Carroll instituted an action to foreclose on the action and Beardon claimed tht the contract was unenforceable because the contract was illegal because Carroll previously used the house to run a prostitution ring. Beardon claimed that the property was sold for the purposes of maintaining the prostitution ring. The trial court ruled in favor of Carroll.
Whether a seller can use the illegality defense if the seller is not actively involved in the illegal conduct?
No. Beardon established that Caroll was aware of Beardon’s use for the property, and therefore has not satisfied the illegality defense. The judgment of the trial court is affirmed.
(Adair, J.) Both parties are involved in illegal conduct so Beardon should not be relieved of the duties to make mortgage payments under the contract.
The illegality defense is only available for land-sale contracts if only the buyer is involved in illegal activity. In order for the buyer to prevail under the defense of illegality, the buyer must prove the seller’s involvement in illegal activity.