Bynum v. Barker
39 So.3d 1013 (2009)
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Rule of Law:
A recorded instrument containing a material misnomer of the grantor, such as the omission of an ampersand, is outside the chain of title and fails to provide constructive notice to a subsequent bona fide purchaser who relies on the public record index.
Facts:
- On January 19, 1996, Wells Fargo Bank conveyed real property to a company named 'Davis & Associates, LLC'.
- On February 1, 2006, Frank K. Bynum loaned $43,000 to Davis & Associates, LLC.
- The loan was secured by a mortgage on the property, but the mortgage document incorrectly identified the borrower as 'Davis Associates, LLC', omitting the ampersand.
- On December 22, 2006, Davis & Associates, LLC conveyed the property to TMS Properties, LLC.
- On March 15, 2007, TMS Properties conveyed the property to Angel Barker, who financed the purchase with a mortgage from Homecomings Financial, LLC.
- Davis & Associates, LLC, subsequently defaulted on its mortgage payments to Bynum.
- Bynum notified Barker that he intended to foreclose on the property to satisfy the defaulted mortgage.
Procedural Posture:
- Angel Barker and Homecomings Financial filed an action in an Alabama trial court against Frank K. Bynum, seeking a declaratory judgment that they were bona fide purchasers.
- The trial court granted a motion to substitute GMAC Mortgage, LLC, as a plaintiff in place of Homecomings Financial.
- Barker and GMAC filed a motion for summary judgment.
- Bynum filed a counterclaim seeking foreclosure on his mortgage.
- The trial court granted summary judgment in favor of Barker and GMAC, holding they were bona fide purchasers and that Bynum's mortgage was outside the chain of title.
- Bynum, as appellant, appealed the trial court's judgment to the Supreme Court of Alabama.
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Issue:
Does a recorded mortgage that omits an ampersand from the grantor's correct legal name ('Davis Associates, LLC' instead of 'Davis & Associates, LLC') provide constructive notice to a subsequent bona fide purchaser?
Opinions:
Majority - Bolin, J.
No, a recorded mortgage that materially misstates the grantor's name does not provide constructive notice to a subsequent bona fide purchaser. The mortgage was indexed under the incorrect name provided by Bynum, 'Davis Associates, LLC'. Because computerized indices rely on exact alphabetical searching, the absence of the ampersand placed the mortgage outside the property's chain of title. A purchaser is only charged with notice of instruments found within that chain. The fault lies with Bynum for preparing the mortgage deed with an error, not with the probate clerk who correctly indexed the incorrect name provided. As between the party who had the ability to protect his interest by using the correct name and a bona fide purchaser relying on the records, the bona fide purchaser prevails.
Dissenting - Murdock, J.
Yes, the recorded mortgage should have been considered sufficient notice. The names 'Davis & Associates, LLC' and 'Davis Associates, LLC' are so similar that a reasonable and prudent title examiner should have been prompted to make further inquiry. The transition to computerized search systems does not absolve an examiner of the duty to account for common human imprecision and inconsistency in recorded names. A 'reasonable search' should include investigating such minor variations, and the failure to do so means the purchaser was not without notice.
Analysis:
This decision solidifies the principle that the party filing a real property instrument bears the risk of errors in that instrument. It highlights the increased importance of precision in the digital age, as computerized record systems are less forgiving of minor name variations than manual, book-based indices might have been. The ruling provides greater certainty for bona fide purchasers, allowing them to rely on the accuracy of an exact-name search of the public record. Consequently, it places a strict duty of care on lenders and other creditors to ensure the grantor's name is perfectly accurate on all recorded documents to protect their security interests.
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