In re Jones (Ch. 7 Case No. 17-50626, Adv. No. 17-05027)

The debtor pledged his home as security for a loan.  The recorded copy of the security deed was missing the signature page for the grantor.  Recorded contemporaneously with the security deed was a Waiver of Borrower’s Rights Rider which was signed by the debtor and properly attested by unofficial and official witnesses.  
The trustee sought to avoid the lender’s interest in the debtor’s home arising from the recorded but defective security deed.  11 U.S.C. § 544(a)(3).  The court held that the trustee could not avoid the lender’s interest because the security deed and waiver, when construed together, provided inquiry notice to a subsequent purchaser.  Had that purchaser done further inquiry, by contacting the debtor or lender, the purchaser would have discovered the existence of the lender’s security interest.

Monday, November 27, 2017