Full access allows:
- Solve all tests online without limits;
- Remove all advertisements on website;
- Adding questions to favorite list;
- Save learning progress;
- Save results of practice exams;
- Watching all wrong answered questions.
10. In this action, the judgment should be for
At the closing, the buyer declined to accept the title of the financier on the ground that the customer's judgment lien encumbered the title he would receive and rendered it unmarketable. The financier brought an appropriate action against the buyer for specific performance of the contract and joined the customer as a party.
There are no other relevant statutory provisions.
The recording act of the jurisdiction authorizes recording of contracts and also provides: «No conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law.»
Thereafter, but before the date scheduled for the closing, an old customer obtained and properly filed a final judgment against the financier in the amount of $1 million in a personal injury suit. A statute in the jurisdiction provides: «Any judgment properly filed shall, for 10 years from filing, be a lien on the real property then owned or subsequently acquired by any person against whom the judgment is rendered.»
The buyer decided to protect his interest and promptly and properly recorded the contract.
A financier was the owner of Greenacre, a large tract of land. The financier entered into a binding written contract with a buyer for the sale and purchase of Greenacre for $125,000. The contract required the financier to convey marketable record title.
Comments (0)
There are no comments at the moment. If you found an error or think question is incorrect, tell everyone about it
Only signed in users can write comments
Signin
Under a notice statute, a subsequent bona fide purchaser (i.e., a person who gives valuable consideration and has no notice of the prior instrument) prevails over a prior grantee who failed to record. The important fact under a notice statute is that the subsequent purchaser had no actual or constructive notice at the time of the conveyance.
Under a race-notice statute, a subsequent BFP is protected only if she records before the prior grantee. The operative words in a race-notice statute are «without notice» and «first recorded.» Under a pure race statute, whoever records first wins. Actual notice is irrelevant.
Only BFPs are entitled to prevail against a prior transferee under notice and race-notice statutes. To attain this status, a person must satisfy three requirements: (i) be a purchaser; (ii) taking without notice of the prior instrument; and (iii) pay valuable consideration. If these requirements are not met, the person is not protected by the recording acts.
A judgment lien is a court ruling that gives a creditor the right to take possession of a debtor's real property if the debtor fails to fulfill his or her contractual obligations. A judgment lien may be made against an individual or business and allows the creditor to access the debtor's business, personal property and real estate, among other assets, to pay the judgment. A plaintiff who obtains a monetary judgment is described as a «judgment creditor,» while the defendant becomes a «judgment debtor.»
The majority rule states that a plaintiff who obtains a judgment lien under this kind of statute is not protected by any recording acts from a prior unrecorded conveyance made by the defendant. This is because a plaintiff is not a BFP because he did not pay value for the judgment, or the judgment attaches only to property owned by the defendant, and not the property the defendant has previously conveyed away, even if that conveyance was not recorded.
B is correct. The recording act identified in the facts is a notice statute. In this case, the jurisdiction authorizes the recording of contracts, and the buyer chose to record his contract. Here, the buyer recorded his interest, so the customer had constructive notice of the prior instrument. Therefore, the customer is not a BFP and will not prevail over the buyer's interest. Because the buyer will be able to receive marketable title from the financier at the time of closing, the financier's request for specific performance will be granted.
A is incorrect. As explained above, the majority rule is that a plaintiff who obtains a judgment lien is not protected by recording acts from a prior unrecorded conveyance. However, if the judgment lien attached to the land before the contract had been formed, the purchaser would have taken subject to the lien.
C is incorrect. The financier will be able to complete the transaction because the buyer will be able to receive good title, but the financier will still be responsible for the customer's judgment.
D is incorrect. Recording act statutes determine whether or not a judgment lien takes precedence over a BFP.