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16. The court should decide for
The buyer brought an appropriate action to require the developer to complete the purchase contract.
The recording act of the jurisdiction provides: «Unless the same be recorded according to law, no conveyance shall be good against subsequent purchasers for value and without notice.»
Afterward, the buyer entered into a written contract to convey Blackacre to a developer. The developer objected to the buyer's title and refused to close.
A statute of 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.»
Next, a man (who had no knowledge of the contract or the deed) obtained a substantial money judgment against the corporation. Then, the buyer recorded the deed from the corporation. Thereafter, the man properly filed the judgment against the corporation.
A corporation owned Blackacre in fee simple, as the real estate records showed. The corporation entered into a valid written contract to convey Blackacre to an individual buyer. At closing, the buyer paid the price in full and received an instrument in the proper form of a deed, signed by duly authorized corporate officers on behalf of the corporation, purporting to convey Blackacre to the buyer. The buyer did not then record the deed or take possession of Blackacre.
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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.
D is correct. In this case, the buyer prevails because the judgment received by the man can attach only to a property then owned by the corporation. The judgment does not attach to the property at issue because the corporation already conveyed the deed to the buyer. The judgment will not attach to property already conveyed, even if not recorded. The man also will not be protected by any recording statute because he is not a bona fide purchaser (BFP). He cannot be a BFP because he did not pay value for the judgment. Therefore, he will not be protected by the recording act, and the buyer will prevail.
A is incorrect. Under the majority rule, a judgment creditor is not protected by any recording acts from a prior unrecorded conveyance made by the defendant. The only timing at issue is when the deed was conveyed. The recording act here, a notice statute, cannot protect the man because he is not a BFP. If the man had been a BFP, the notice statute would need to be analyzed.
B is incorrect. The judgment lien did not attach to the property, because the property had already been conveyed
C is incorrect. As explained above, the man is not a BFP, so he is not protected by any recording act statutes.