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Effect Of Persons In Possession Of Real Estate Other Than The Owner/Vendor On A Buyer's Status As A Bona Fide Purchaser - Arizona State Court Cases

Effect Of Persons In Possession Of Real Estate Other Than The Owner/Vendor On A Buyer's Status As A Bona Fide Purchaser - Arizona State Court Cases

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Published by richdebt
The following compilation of Arizona state court cases address the issue of the effect of possession by an occupant of real property by one other than the seller/vendor thereof on a prospective real estate purchaser's status as a bona fide purchaser.

These cases are presented here to remind the reader of the importance of giving this issue the serious consideration it deserves when attempting to undo/unwind/void an abusive real estate transaction (ie. foreclosure rescue sale leasebacks, fraudulent inducement in the execution of a deed, forgeries, other real estate swindles) where, after scamming or otherwise abusively relieving an unwitting homeowner of his/her title, the scammer either sells the property to an unwitting third party, or encumbers the property with a loan from an unwitting mortgage lender, neither of whom participated in the abusive transaction with the homeowner, nor having any actual knowledge thereof.

Voiding the deeds and mortgages in these cases (in situations where the instruments are voidable, as opposed to being absolutely void - "void ab initio") will turn on whether the subsequent third party purchaser or encumbrancer, despite lacking in actual knowledge of the fraud or other abusive transaction, can otherwise be charged with notice of the fraud, thereby making bona fide purchaser/encumbrancer status unavailable to them and, consequently, subjecting the deeds or mortgages to being voided/rescinded/set aside.

This case law compilation represents raw research only, and certainly does not purport to be an exhaustive list of cases dealing with the issue of possession and the duty to inquire when attempting to establish (or attack) one's status as a bona fide purchaser.

I post it, however, with the view that some readers may find a part of the contents a helpful starting point for additional legal research in an effort to void certain abusive real estate transactions involving unwitting, financially strapped homeowners who have been screwed out of the equity in their homes by unscrupulous real estate operators.
The following compilation of Arizona state court cases address the issue of the effect of possession by an occupant of real property by one other than the seller/vendor thereof on a prospective real estate purchaser's status as a bona fide purchaser.

These cases are presented here to remind the reader of the importance of giving this issue the serious consideration it deserves when attempting to undo/unwind/void an abusive real estate transaction (ie. foreclosure rescue sale leasebacks, fraudulent inducement in the execution of a deed, forgeries, other real estate swindles) where, after scamming or otherwise abusively relieving an unwitting homeowner of his/her title, the scammer either sells the property to an unwitting third party, or encumbers the property with a loan from an unwitting mortgage lender, neither of whom participated in the abusive transaction with the homeowner, nor having any actual knowledge thereof.

Voiding the deeds and mortgages in these cases (in situations where the instruments are voidable, as opposed to being absolutely void - "void ab initio") will turn on whether the subsequent third party purchaser or encumbrancer, despite lacking in actual knowledge of the fraud or other abusive transaction, can otherwise be charged with notice of the fraud, thereby making bona fide purchaser/encumbrancer status unavailable to them and, consequently, subjecting the deeds or mortgages to being voided/rescinded/set aside.

This case law compilation represents raw research only, and certainly does not purport to be an exhaustive list of cases dealing with the issue of possession and the duty to inquire when attempting to establish (or attack) one's status as a bona fide purchaser.

I post it, however, with the view that some readers may find a part of the contents a helpful starting point for additional legal research in an effort to void certain abusive real estate transactions involving unwitting, financially strapped homeowners who have been screwed out of the equity in their homes by unscrupulous real estate operators.

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Published by: richdebt on Jul 20, 2014
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4 of 42 DOCUMENTSAnalysisAs of: Jul 14, 2014
PHOENIX TITLE AND TRUST COMPANY, a corporation, Marvin Lustiger andThelma Lustiger, his wife, Henry Steinberg, Lake Mead Land and Water Co., acorporation, Appellants, v. J. M. SMITH and Winnie E. Smith, his wife, Dale D.Smith and Barbara M. Smith, his wife, AppelleesNo. 7705-PRSupreme Court of Arizona
101 Ariz. 101
;
 416 P.2d 425
;
 1966 Ariz. LEXIS 284
June 30, 1966SUBSEQUENT HISTORY: [***1]
 Rehearing Denied September 20, 1966.
DISPOSITION:
 Decision of Appellate Court vacated; judgment of Superior Court affirmed.
CASE SUMMARY:PROCEDURAL POSTURE:
 Defendant sellers sought review of the decision of the Court of Appeals (Arizona),which reversed a decision of the trial court in which the sellers recovered judgment against plaintiff buyers, whobrought suit to quiet title to 40,000 acres of land.
OVERVIEW:
 The sellers entered into an agreement of sale with the buyers for 40,000 acres of land. Theaccompanying deed provided for the reservation of "range-use rights" by the sellers. The buyers brought suit to quiettitle. The court found that the evidence clearly indicated that the sellers entered into the agreement with the expectationof being able to graze their cattle on the land after transfer of the property. The court stated that this was to beeffectuated by a sale of only the "exchange rights." The court held that the reservation of "range-use rights" by thesellers was valid; that they were entitled to the full and exclusive use of the lands for grazing purposes, and that thebuyers could not fence or occupy the lands in such a way as to interfere with this right. The court held that the sellerswere entitled to relief as set forth in the judgment of the lower court and vacated the judgment of the appellate court.
OUTCOME:
 The court vacated the decision of the appellate court and affirmed the judgment of the trial court whichfound in favor of the sellers in the buyers' suit to quiet title.Page 1
 
CORE TERMS:
 reservation, range-use, grantor, deed, ranch, acres, purchaser, grazing, realty, federal government,assign, railroad, real property, easement, heirs, conveyed, notice, federal lands, lands owned, conveyance, executors,reserved, grantee, Taylor Grazing Act, ownership, allotment, grazing purposes, adverse possession, destroy, fence
LexisNexis(R) Headnotes
 Environmental Law > Natural Resources & Public Lands > Grassland ManagementGovernments > Federal Government > Property
[HN1] The Taylor Grazing Act permits a stockman who controls the base properties of a range to secure the grazingallotment on federal land included in such range.
Contracts Law > Types of Contracts > Lease Agreements > General Overview Real Property Law > Estates > General Overview
[HN2] The right of hunting or fowling on another's lands or water may be acquired by grant or lease from the owner,either with or without the soil and with such restrictions or limitations as the owner may see fit to impose. This right,being a right of profit in the land, passes by grant or lease of the land, unless expressly reserved.
 Real Property Law > Estates > General Overview
[HN3] A reservation is a right in favor of the grantor created out of or retained in the granted premises. A grantor hasthe right to make a reservation of an interest in real property. Grass has been held to be part of real property.
 Real Property Law > Estates > General Overview
[HN4] It is perfectly legal for parties to contract and place in their deeds certain reservations or exceptions for the useand possession of the conveyed premises as a part of the consideration thereof to be enjoyed by the grantor, his heirsand assigns, for a stated period of time.
 Real Property Law > Estates > General Overview Real Property Law > Financing > Mortgages & Other Security Instruments > Mortgagee's Interests
[HN5] The purchaser or mortgagee of land in possession of an occupant other than the holder of the record title iscompelled to
 inquire
 of the occupant by what title he holds
 possession,
 or he will be held to have taken subject towhatever
 rights
 a
 proper inquiry
 would disclose the occupant had therein.
Contracts Law > Types of Contracts > Covenants Real Property Law > Limited Use Rights > Easements > General Overview
[HN6] When it appears by the true construction of the terms of a grant that it was the well-understood purpose of theparties to create or reserve a right, in the nature of a servitude or easement, in the property granted, for the benefit of other land owned by the grantor, no matter in what form such purpose may be expressed, whether it be in the form of acondition or covenant or reservation or exception, such right, if not against public policy, will be held to be appurtenantto the land of the grantor, and binding on that conveyed to the grantee, and the right and burden thus created andimposed will pass with the lands to all subsequent grantees.
 Real Property Law > Deeds > Covenants of Title
[HN7] In construing reservations or exceptions in deeds, the courts endeavor, if possible, to ascertain the intention of the parties, particularly of the grantor, from the language of the deed, and to give that intention effect if it does notPage 2101 Ariz. 101, *; 416 P.2d 425, **;1966 Ariz. LEXIS 284, ***1
 
contravene any rule of law.
 Real Property Law > Estates > General Overview
[HN8] It cannot be questioned that the grantor, being the owner of the fee, before giving his deed has a right to go andcome as he will, using any part or all of the land for such purpose, and to invite, authorize, or grant permission, expressor implied to anyone to transverse the land as he saw fit, or to exclude therefrom anyone entering thereon unlawfully.Such right the grantors never parted with, never conveyed, but by the reservation, retained.
COUNSEL:
 Lewis, Roca, Scoville, Beauchamp & Linton, John P. Frank, Walter Cheifetz, Phoenix, for appellants.Hughes & Hughes, John C. Hughes, Hess Seaman, Renz L. Jennings, Phoenix, for appellees.
JUDGES:
 In Banc. McFarland, Justice. Struckmeyer, C. J., Bernstein, V. C. J., and Udall, J., concur.NOTE: JusticeLORNA E. LOCKWOOD did not participate in the determination of this appeal.
OPINION BY:
 McFARLAND
OPINION[*102] [**426]
 Pursuant to
 Rule 47(b), Rules of the Supreme Court, 17 A.R.S.
, and
 A.R.S. § 12-120.24
, wegranted a petition to review the decision of the Court of Appeals reported in
 1 Ariz.App. 424, 403 P.2d 828 
, whichreversed a decision of the trial court in which the defendants, appellees, J. M. Smith and Winnie E. Smith, husband andwife, and Dale D. Smith and Barbara M. Smith, husband and wife, hereinafter referred to as the Smiths, recovered judgment against the plaintiffs, appellants herein, Phoenix Title and Trust Company, a corporation; Marvin Lustiger andThelma Lustiger, husband and wife; Henry Steinberg; Lake Mead Land and Water Co., a corporation,
 [***2]
 whobrought suit to quiet title to some 40,000 acres of land in Mohave County, Arizona.The questions presented call for an interpretation of the provisions of an agreement of sale and escrow instructionsand accompanying deed which provided for reservation of "range-use rights" by the defendant-sellers.In the trial there was submitted to the jury an interrogatory which was answered by the jury in favor of thedefendants.
 1
The court, in an opinion, set forth the historical background and facts in regard to the land development inMohave County.
 2
The material facts set forth in the opinion, based on the record and on matters of which the courtcould take judicial knowledge, were incorporated in the findings of facts by the court which adopted the findings of the jury in answer to the interrogatory and which, together with conclusions of law, formed the basis for the judgment of thecourt.1 The question presented to the jury:"Under the evidence, was the use of the words 'range use rights' by the defendants when they sold the landin question to Southwestern Realty Company sufficiently definite and certain to inform
 subsequent purchasers
thereof that they could not fence, improve or occupy such lands, but were merely given the right to exchangethem for lands owned by the United States Government?(Write an Answer 'Yes' or 'No.')Answer -- Yes."
[***3]
2 The late Charles Elmer, in his opinion and order for judgment, set forth ably the historical background of land development in the west.Page 3101 Ariz. 101, *; 416 P.2d 425, **;1966 Ariz. LEXIS 284, ***1

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