C F Investments, Inc. v. Option One Mortgage Corp.
163 N.H. 313
| N.H. | 2012Background
- CF Realty Trust owned the Property; CF Investments later succeeded to assets but did not record its interest.
- In 2002, Fuller conveyed the Property to himself and borrowed from First Eastern Mortgage Corp., which recorded a mortgage; First Eastern later assigned to the defendants and recorded.
- CF Investments challenged the July 2008 foreclosure sale, arguing CF Realty Trust lacked authority to convey and that Fuller could not encumber the Property.
- The Superior Court ruled First Eastern was a bona fide purchaser without notice and favored the defendants; CF Investments appealed.
- New Hampshire is a race-notice jurisdiction; recording provides notice to subsequent purchasers/mortgagees absent notice of the plaintiff’s interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether First Eastern was a bona fide purchaser without notice | CF Investments contends First Eastern had inquiry notice of competing interest. | First Eastern lacked notice via the chain of title and the Rye-area mortgages did not place it on notice. | Yes; First Eastern was not on notice, so its mortgage remains senior. |
| Whether the Rye parcels' mortgage/certificate created inquiry notice | Search of CF Realty Trust would reveal lack of authority and ownership issues. | Rye-records did not pertain to the Property or its chain of title. | No; Rye documents did not place First Eastern on inquiry notice of CF Investments. |
| Scope of inquiry duty in title search (chain-of-title vs outside records) | A reasonable search would uncover CF Investments’ interest through a chain-of-title review. | Duty was limited to the property encumbered by the mortgage; outside records need not be pursued. | Duty did not extend to outside Rye parcels; not on inquiry notice. |
Key Cases Cited
- Amoskeag Bank v. Chagnon, 133 N.H. 11 (1990) (race-notice recording principles for bona fide purchasers)
- Mansur v. Muskopf, 159 N.H. 216 (2009) (inquiry notice and constructive knowledge standards)
- In re Colon, 563 F.3d 1171 (2010) (constructive notice limited to contents of chain of title)
- LLK Trust v. Town of Wolfeboro, 159 N.H. 734 (2010) (deference to trial court on credibility and weight of evidence)