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10. If the court holds for the owner in this action, it will most likely be because
Shortly after entering into the contract, the buyer found another property that much better suited her needs and decided to try to avoid her contract with the owner. When the buyer discovered the existence of the mortgage, she asserted that the title was encumbered and that she would not close. The owner responded by offering to provide for payment and discharge of the mortgage at the closing from the proceeds of the closing. The buyer refused to go forward, and the owner brought an appropriate action against her for specific performance.
The owner of Greenacre, a tract of land, mortgaged Greenacre to a bank to secure his preexisting obligation to the bank. The mortgage was promptly and properly recorded. The owner and a buyer then entered into a valid written contract for the purchase and sale of Greenacre, which provided for the transfer of «a marketable title, free of encumbrances.» The contract did not expressly refer to the mortgage.
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A is incorrect. Priority is irrelevant to the marketability issue at hand.
B is incorrect. The doctrine of equitable conversion is irrelevant to the facts presented — it addresses who bears the risk for damage or destruction of a property after the sale contract is executed.
D is incorrect. A buyer's «real reason» for refusing to close, whatever it may be, does not affect the parties' respective rights and responsibilities at law.