Case Summary:
Matthew and Jennifer Bach purchased a home financed by Countrywide Bank which took a mortgage to secure its note. Although the mortgage identified the house’s street address and tax key number, it failed to include a legal description of the house. Subsequently, Debtor purchased the house from Jennifer Bach and gave her a mortgage securing a debt of $116,000. Countrywide later assigned its mortgage to Green Tree Servicing, LLC. After the Debtor filed his bankruptcy petition, Green Tree filed a timely proof of claim asserting a security interest in the property. However, both the Debtor and the Chapter 7 Trustee objected to Green Tree’s claim on the basis that the lack of a legal description in the Countrywide mortgage made it void as against subsequent purchasers under Wis. Stat. §706.08(1). Specifically, they argued that the lack of a legal description in the mortgage made it undiscoverable in the tract index at the time debtor purchased the house. Citing Bank of New York Mellon Trust Co. v. Wittman, No. 12-C-846, 2013 WL 173801 (E.D. Wis. Jan. 16, 2013), Green Tree contended that disclosure in tract indexes is not dispositive of validity and constructive notice in Wisconsin. The Court agreed, holding that so long as the information provided in the Countrywide mortgage made it discoverable through the grantor/grantee index, a subsequent purchaser would have been on constructive notice of the existence of the mortgage. Accordingly, the Court held that Green Tree’s mortgage was valid as against both the Debtor and the Trustee.

Statute/Rule References:
Wis. Stat. § 706 -- Conveyances of Real Property, Recording, Titles

Key Terms:
Chain of Title
Grantor/Grantee Index
Land Description