ILNews

Appellate court rules on bona fide purchaser dispute

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The Indiana Court of Appeals has upheld a ruling by a Marion Superior judge in a land title case, finding that a bona fide property purchaser can not be held responsible for deficiencies in the court record that led to the underlying dispute.

In Calvin Hair v. Mike Schellenberger and Lawyers Title Ins. Corp., Wells Fargo Bank, N.A., Felix Adejare, and Sharon Adejare, No. 49A02-1107-PL-685, the court affirmed the judgment by Judge Ted Sosin concerning who owned a superior title to a piece of property on Talbott Street in Indianapolis.

When Mike Schellenberger bought the Talbott Street property at a foreclosure sale in 2008, the title search did not show a money judgment that Calvin Hair had obtained against former owners Felix and Sharon Adejare. The judgment had never been indexed in the county records, and Schellenberger was unaware of it until a year later when Hair sent him a letter claiming that he had a judgment lien on the property. Schellenberger later tried to remove the cloud on the title, arguing that he was a bona fide purchaser as a matter of law. The trial court ruled against Hair’s argument that the Adejares fraudulently conveyed the property and he had a valid judicial lien that should be enforced.

Examining the issue, the Court of Appeals found that Hair’s judgment was outside the chain of title and that Schellenberger was a bona fide purchaser as a matter of law. Schellenberger can only be responsible for what he knew about, and it was up to Hair to take steps to cure any deficiencies in county records that might be important. For example, Hair could have checked the records to ensure his judgment was on record and perfected, giving rise a lien, or he could have acted within the statute of limitations and raised the alleged fraudulent conveyance during other court proceedings.

The court pointed out that Hair was in a better position to prevent the dispute at hand, and as a result the trial court did not err in granting full summary judgment to the appellees.

 

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