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20. If the court decides for the buyer, it will most probably be because
The creditor brought an appropriate action to enforce her lien against Blackacre in the buyer's hands.
The recording act of the jurisdiction 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.»
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.»
A landowner owned Blackacre in fee simple, as the land records showed, when he contracted to sell Blackacre to a buyer. Two weeks later, the buyer paid the agreed price and received a warranty deed. A week thereafter, when neither contract nor deed had been recorded and while the owner remained in possession of Blackacre, a creditor properly filed a money judgment against the owner. She knew nothing of the buyer's interest.
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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.
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.
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.
B is correct. The recording statute identified in the facts is a notice act. Although the facts indicate that the creditor filed her judgment without actual notice or record notice of the conveyance (it had not been recorded yet), the recording act in this jurisdiction protects purchasers for value, meaning BFP's. Therefore, if the buyer wins, it is most likely because the creditor was not a BFP.
A is incorrect. Equitable conversion is a doctrine of the law of real property under which a purchaser of real property becomes the equitable owner of title to the property at the time she signs a contract binding him/her to purchase the land at a later date. The seller retains legal title of the property prior to the date of conveyance, but this land interest is considered personal property. The risk of loss is then transferred to the buyer. Equitable conversion is not at issue here, however, because it only applies to the time period between contracting and closing.
C is incorrect. This question is asking a hypothetical; IF the court found for the buyer, WHY would the court have done so. Thus, this answer choice cannot be correct. The owner's possession gave the creditor constructive notice of the owner's interest, not the buyer's.
D is incorrect. The buyer had nothing to take notice to. As explained above, the judgment lien attaches to the landowner, not the property.