TN Man loses property due to not recording his deed
The gist of this case is that a man named Mr. Eads bought a commercial property in Nashville, TN in July of 1986 from a Mr. Whiteaker. Mr. Eads paid off the promissory note and received a deed to the property in December of 1990 from Mr. Whiteaker. Mr. Eads put that deed away and failed/forgot to record it. He maintained and improved the property over the years and paid the property taxes. Due to the non-recording of the deed, the tax records still indicated that Mr. Whiteaker owned the property.
Mr. Whiteaker later had a real-estate venture in Florida that failed and resulted in his creditors getting a 1.9 million judgement against him in 2008. By 2009 that judgement had been registered as a judgment lien against Mr. Whiteaker's real property of record in Davidson County (Nashville). Mr. Whiteaker passed in 2014 and by 2016 his creditors were going after any assets of his estate. Ultimately Mr. Whiteaker's creditors found that the 99 Hermitage Avenue property was listed in the tax records as being owned by Mr. Whiteaker and got a Court order to have the property sold. Soon after, on November 8th, 2016 the administrator of Mr. Whiteaker's estate, accompanied by law enforcement officers, entered the property at 99 Hermitage Avenue and changed the locks. Mr. Eads recorded his deed a week later on November 16th, 2016. Per the court order, the property was sold at a sheriff's sale on January 19th, 2017.
Tennessee is a "race" state. Meaning that if there are two or more competing deeds, the first party to record their deed will typically prevail. By not recording his deed in a timely fashion, Mr. Eads appears to have lost the race to the courthouse. He ultimately tried to regain possession of the property by claiming both Statutory and Common-Law Adverse Possession. The majority opinion from the Tennessee State Supreme Court said that Mr. Eads possession could not be adverse to Mr. Whiteaker due to the deed and that his possession was too short against the creditors and the entity that bought the property at the sheriff's sale to meet either the statutory or common-law adverse possession requirements. The dissenting opinion presents the argument that Mr. Ead's possession was adverse to Mr. Whiteaker's interest as the owner of record and to the world at large.
I've attached the Majority Opinion & the Dissenting Opinion (Separate Opinion) below. The Majority Opinion is a deep dive into 200 years of Tennessee State Supreme Court decisions and precedents on both statutory and common-law adverse possession with a solid discussion of the recording law. The Dissenting Opinion was written by the Chief Justice and makes an interesting argument as well.
I can't say that I possess the knowledge to know which opinion/argument is correct, but I learned a lot about the nuances of statutory & common-law adverse possession in Tennessee, that hold regardless of which opinion is correct. Also, be sure to record your deeds so that your fate isn't decided by the courts.
Oof, that's a tough lesson there. I haven't read the attached documents yet but based on the synopsis I'm a little bit surprised the deed he has doesn't sufficiently count as a written contract even though it hadn't been recorded, especially in conjunction with him paying for the land AND paying the taxes. I'll have to take look at the court's opinions when I get some free time.
The facts of this case are a bit complicated.
The quality of the writing for the opinion of the 1st appeal is awful:
It's easy to see how the Court of Appeals botched their analysis, if that is the norm for said group.
Although, the TN Supreme Court admits their AP decisions/evaluations are wildly inconsistent, and acknowledge it would not be difficult to come to differing conclusions, even with similar facts in a particular case. So much so, this decision overrules a handful of prior cases. (So much for wisdom, care, and stare decisis?!)
Fun Fact: Majority opinion written by the newest member to the TN S.C.: 42 years old and 13 years of legal experience.
However, at the end of the day, it's hard to feel bad for anyone who initiates an installment loan, satifies the loan, receives the deed they paid for, then fails to record the deed to perfect title.
And maybe it was a bit shady for Whiteaker to pledge the "Eads" property as collateral for concurrent real estate deals in FL, while mid-term for Eads preexisting real estate deal/promissory note? Developers gonna develop...
And the Chief Justice absolutely shreds the majority opinion.
Thank you for posting this. I passed it along to three coworkers studying for their PS exam. It's also a great reminder that as professionals, we should bring these things to our client's attention. A too common problem here in NC is the failure of land owners to record new deeds after a recombination. A simple solution to this is to email your clients a month or so after any recombination survey and ask if they recorded new deeds. I can't remember an hour ago, so I schedule send an email reminder to me, that way I'll see it at my work station and in twenty seconds I can get an email out to the client.
Interesting read but, if I am making payments on a property purchase, I certainly would want to file something to encumber the deed, based on my equity in the property to put everybody on notice of my financial interests in the property.
The whole situation seems odd to me. I would never put myself in a situation like that, I would take out a mortgage, pay in full at settlement and have a deed filed at the time of closing. Theat would totally eliminate the race to file situation as the lender would want to protect their interests.
Why would any PLS assume that the average boundary client would understand any part of what they do? Boundary surveying is a good stand-in for the definition of esoteric. I've met many clients that don't know what a deed is, let alone the importance of recording or what that means. Unfortunately, the more knowledgeable one is in a given subject, the more difficult it becomes to understand the ignorance of others in the same. Those who value humility are additionally burdened in that they find it uncomfortable to imagine themselves as a subject expert. This leads to overestimating the knowledge of others, while underestimating ones own. A reasonable solution is to email your boundary client a one or two page pdf that explains some of the basics of surveying including the definition of terms and an, "After the Survey," section. I think I got the idea for this from Dan Beardslee.
Would you mind sharing an example of that pdf? I like the idea.
@murphy Eads was not your "average boundary client". They were sophisticated business/land people, as evidenced by their history of real estate transactions. To suggest otherwise doesn't align with the facts. So, in the instant case, that vague assertion seems a bit misplaced.
Do I understand the point you are making? Yes, absolutely. Would the Eads have fared better had they recorded said deed? Probably. Should anyone have "reminded" Eads to record? That's a bit murky...
But this case isn't about surveying, per se. Nor is it really about "they lost their land because they didn't record a deed". The crux of the case was the improper application of the tenants of property law with respect to quiet title action via adverse possession. The outcome of this case is likely not correct. That is the point the dissent was making. Either way, I suspect another case like this will come along shortly, and challenge the current TN S.C. ruling on the very matter. The TN S.C. didn't really do itself any favors here.
We don't have details of the trial court, but it seems the attorney for Eads limited the scope of their initial complaint to their detriment. (Amazing they were able to file anything on the day before the Sheriff's Sale). There may be a very small chance this could be appealed to the US S.C., but not likely.
They were sophisticated business/land people, as evidenced by their
history of real estate transactions. To suggest otherwise doesn’t align
with the facts.
Actually, the fact that this guy apparently forgot or chose not record his deed is, to me, exactly the opposite of what a "sophisticated" real estate person would do. So, I think your estimation of this guy is 100% backwards.
You are naive to think that Whiteaker and Eads were simpletons or stupid.
Your comment tells me you did not read both cases. (And so does your prior admission, but I thought maybe you did read them between now and then.)
Do the work, or be just like every other lackey surveyor with an uninformed/unread opinion.
You can think whatever you like, but you would be wrong about me and my estimation(s).
