Trumble v. GMAC Mortgage & Key Home Equity Services, 213 W. Va. 780

Summary

The Supreme Court of Appeals of West Virginia answered a certified question concerning whether a bankruptcy trustee, possessing bona fide purchaser status under 11 U.S.C. § 544(a)(3), prevails over the holder of a recorded deed of trust that was improperly acknowledged. The court held that priority depends on whether an improper benefit was obtained or harm resulted from the defective acknowledgment. If neither occurred, the deed of trust provides constructive notice under West Virginia law; otherwise, the trustee prevails.

Holdings

1. A bankruptcy trustee's priority over the holder of a recorded but improperly acknowledged deed of trust depends on whether an improper benefit was obtained by the notary or any party to the instrument and whether any harm flowed from the transaction. If neither an improper benefit nor harm resulted, the imperfectly acknowledged deed of trust provides constructive notice under West Virginia law and the trustee does not prevail; if either occurred, the acknowledgment is invalid, the deed of trust provides no constructive notice, and the trustee prevails.
2. Certified legal questions are reviewed de novo.

Questions Presented

1. Whether a bankruptcy trustee possessing the status of a bona fide purchaser without notice under 11 U.S.C. § 544(a)(3) prevails over the holder of a deed of trust that was recorded but improperly acknowledged.
2. Whether an improperly acknowledged deed of trust provides constructive notice under West Virginia law when no improper benefit was obtained and no harm flowed from the transaction.

Disposition

other