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Court cites 1827 case to affirm mortgage trumps land contract

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A bank that issued a mortgage to a person selling a property on a land contract has the right to foreclose on the loan, the Indiana Court of Appeals ruled, citing caselaw nearly 200 years old.

Judge John Baker cited the “first in time is first in right” doctrine and Chief Justice John Marshall’s ruling in Rankin v. Scott, 25 U.S. (12 Wheat) 177, 179 (1827) to determine that the bank had the senior claim on a property in Cumberland even though a land contract between the owner and buyer had been executed years earlier. The contract wasn’t recorded until after the mortgage was recorded.

In Walter E. Lunsford v. Deutsche Bank Trust Company Americas as Trustee 30A01-1302-MF-63, the appeals panel affirms the summary judgment grant to the bank by Hancock Superior Judge Richard D. Culver.

Lunsford appealed pro se, arguing among other things that Deutsche Bank failed to produce loan documents, that it had no right to acquire a loan as a mortgage-backed security, that it failed to join indispensable parties, that it had no standing to bring the foreclosure action, and that it did not exist. Lunsford also argued on appeal that the bank refused payment from him.

Baker wrote that several of the arguments were waived because they weren’t raised at the trial court, and that the trial court gave Lunsford opportunities to pay the mortgage, but no tender was made.

“The mortgage was recorded on August 25, 2005, by the Recorder of Hancock County,” Baker wrote in an opinion joined by judges Ezra Friedlander and Nancy Vaidik. “Lunsford’s Land Contract was recorded on March 8, 2006, which was over six months after the mortgage was recorded and perfected. … Consequently, the mortgage is senior in priority to Lunsford’s Land Contract.

“Moreover, because Lunsford was made a party to Deutsche Bank’s foreclosure action and given the opportunity to assert his junior interest in the Real Estate, the judgment is conclusive on him,” the panel concluded in affirming the trial court.
 

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