Title: Harry W. Cox, et al. v. RKA Corporation, et al.

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). Verniero, J., writing for a majority of the Court. This appeal resolves the question of whether an unrecorded, common-law vendee lien of a purchaser of real property should receive priority over a recorded mortgage that was given to finance the construction of the home. This is an issue of first impression in New Jersey. Plaintiffs entered into a contract in the amount of $106,880 with defendant RKA Corporation, a contractor, to purchase property and construct a home on it. Plaintiffs paid a deposit of $12,000 on the contract, with the balance of the purchase price due at settlement. The contractor then obtained, without plaintiffs' knowledge, a construction loan from Roebling Savings and Loan Association in the amount of $80,250. The contractor provided Roebling with a copy of plaintiffs' contract and Roebling relied on the fact that the property was pre-sold in evaluating its potential risk on the construction loan. However, plaintiffs and Roebling were never in communication with each other and plaintiffs remained unaware of the construction loan between RKA and Roebling. Roebling took back a mortgage on the property as security for the loan and properly recorded the mortgage. Roebling then paid the contractor an initial advance on the loan of $43,335 and, within the following two months, disbursed an additional $30,896. After the mortgage was recorded and the above payments were made to the contractor by Roebling, plaintiffs made several additional payments to the contractor totaling $71,225.53, none of which were due at that time under the terms of the contract. The contractor defaulted on the contract and plaintiffs filed suit seeking specific performance. The contractor then defaulted on the construction loan from Roebling, which took steps to foreclose on its mortgage. Plaintiffs amended their complaint, seeking to void the Roebling mortgage or, alternatively, to obtain a ruling that they possessed a lien in the amount of their total payments of $83,225.53 that was superior to the recorded mortgage. The trial court found that Roebling was on notice of plaintiffs' interest in the property prior to recording the mortgage because it had a copy of the contract between plaintiffs and the contractor. It therefore held that plaintiffs had an equitable lien that was superior to Roebling's mortgage for the entire sum plaintiffs paid to RKA. The Appellate Division affirmed, adding to the analysis that the contractor had provided Roebling with an affidavit stating that no other persons had legal rights in the property. This affidavit, combined with Roebling's knowledge of plaintiffs' contract with the contractor noting the $12,000 initial payment, should have triggered further inquiry by Roebling. Balancing the unusual equit[ies] at issue, the court found in favor of the plaintiffs. One member of the panel dissented, contending that plaintiffs' relief from the recorded mortgage must be limited to the amount of their initial deposit. The matter is before the Supreme Court as an appeal as of right, pursuant to R. 2:2-1(a)(2). HELD: Unrecorded vendee liens for payments voluntarily made by the vendee after the mortgage lender properly records its mortgage do not have priority over the mortgage. This decision will be applied prospectively; therefore, plaintiffs' vendee lien will be accorded priority over Roebling's mortgage interest for the full amount of all payments advanced by plaintiffs against the contract price. 1. New Jersey recognizes two common-law concepts that are applicable here--the vendee lien and the doctrine of equitable conversion. A vendee lien on property occurs when a vendor is in some default for not completing the contract . . . and the vendee is not in default so as to prevent him [or her] from recovering the purchase-money paid. The doctrine of equitable conversion examines the intent of the contracting parties and vests the buyer with certain equitable interests in the property. (Pp. 6-9) 2. Against these two common-law concepts, the Court must consider New Jersey's recording statutes, which establish that as between two competing parties the interest of the party who first records the instrument will prevail so long as that party had no actual knowledge of the other party's previously-acquired interest. Properly recorded instruments constitute constructive notice to all other parties. (Pp. 9-10) 3. The purpose of the recording statutes is to compel the recording of title instruments so that purchasers can rely on the record title and purchase property with confidence. Since the integrity of the recording scheme is paramount, the courts must follow a course that will uphold and encourage the recording system absent any unusual equity. (Pp. 10-11) 4. No New Jersey case resolves the issue of the respective priorities of plaintiffs' vendee lien and Roebling's recorded mortgage. Several other jurisdictions have resolved the issue by finding that the vendee's lien has priority to the extent that the recording party had notice of the value of the vendee's equity in the property. Here, Roebling had notice only of plaintiff's initial $12,000 payment via its copy of the contract between the contractor and plaintiffs, whereas plaintiffs had constructive notice of the mortgage lien prior to their post-deposit payments to the contractor, via the recording of the mortgage. Nothing in the affidavit by the contractor that stated the property was clear of all liens, relied upon by the Appellate Division, gave Roebling notice that plaintiffs would accelerate their payments beyond the requirements of the contract. (Pp. 12-23) 5. The Court rejects the holdings of other jurisdictions that permit a vendee to recover deposit money where the lender is aware of the contract but does not know its terms, the vendee's identity, or the amount of the down payment. By extension, the Court rejects any contention that a vendee should recover all payments, even payments voluntarily made, so long as the lender has knowledge of an underlying contract. (Pp. 23-24) 6. The priority of a vendee's lien should not extend to payments voluntarily made by a vendee after the mortgage is recorded. Between an unrecorded vendee lien and a recorded mortgage, the equities support the mortgagee who has no knowledge of the extent of sums to be advanced by the vendee and who has acted diligently and properly in recording the mortgage instrument. The recording statutes, which must be enforced to preserve the integrity of the conveyance system, would be impaired by a holding to the contrary. (Pp. 24-25) 7. Because of the uncertainty in the law at the time of this transaction, this holding will be applied prospectively. (Pp. 38-40) The judgment of the Appellate Division is AFFIRMED to the extent that it grants priority to plaintiffs' vendee lien as against the recorded mortgage for the amount of plaintiffs' initial deposit and all amounts plaintiffs subsequently advanced. JUSTICE STEIN, concurring in part and dissenting in part, concurs in the majority opinion that its new rule of law should be applied prospectively and in its ruling that plaintiffs' lien for their initial deposit is superior to the recorded mortgage. He dissents as to the issue of the priority of a vendee lien for subsequent payments, and asserts that public policy supports a holding that a vendee lien for post-deposit, non-obligatory payments is superior to a recorded mortgage where the mortgagee had actual notice of the vendee's equitable interest. He contends that mortgagees can protect themselves by requiring a subordination clause in contracts and mortgages. CHIEF JUSTICE PORITZ and JUSTICES O'HERN, GARIBALDI, and COLEMAN join in JUSTICE VERNIERO's opinion. JUSTICE STEIN has filed a separate concurring and dissenting opinion. JUSTICE LONG did not participate. HARRY W. COX and BETTY ELIZABETH ANN COX, his wife, Plaintiffs-Respondents, v. RKA CORPORATION and RICHARD NIEL, jointly, severally, and in the alternative, Defendants, ROEBLING SAVINGS AND LOAN ASSOCIATION, Defendant-Appellant. Argued October 25, 1999 -- Decided June 30, 2000 On appeal from the Superior Court, Appellate Division. Joseph F. Polino argued the cause for appellant (Mr. Polino and Ernest A. Ferri, attorneys). F. Michael Daily, Jr. argued the cause for respondents (Quinlan, Dunne & Daily, attorneys; Mr. Daily and Patricia M. Nigro, on the briefs). Joseph M. Clayton, Jr. submitted a letter brief on behalf of amicus curiae, New Jersey Land Title Association. The opinion of the Court was delivered by VERNIERO, J. Plaintiffs instituted this action to compel specific performance of a building contract involving construction of a new home. Their complaint, as amended, also seeks to void defendant's mortgage interest in the same parcel or, alternatively, to impress a superior lien on the property for the money that they had advanced toward the purchase price. As contract purchasers of real property, plaintiffs acquired a vendees' lien on the property. We must determine the extent to which that unrecorded vendees' lien should be granted priority over defendant's recorded mortgage that was given to finance the home construction. We hold that the priority of an unrecorded vendee's lien does not extend to those payments voluntarily made by the vendee after the lender properly records its mortgage. However, because the issue is essentially one of first impression in New Jersey, we decline to apply our holding to the present dispute. In view of the uncertainty of the law at the time of these transactions, we conclude that plaintiffs' vendees' lien should be given priority as against defendant's mortgage interest for the full amount of their initial deposit, and all sums later advanced toward the contract price. [e]very deed or instrument . . . shall, until duly recorded or lodged for record in the office of the county recording officer in which the affected real estate or other property is situate, be void and of no effect against subsequent judgment creditors without notice, and against all subsequent bona fide purchasers and mortgagees for valuable consideration, not having notice thereof, whose deed shall have been first duly recorded or whose mortgage shall have been first duly recorded or registered; but any such deed or instrument shall be valid and operative, although not recorded, except as against such subsequent judgment creditors, purchasers and mortgagees. By those enactments, New Jersey is considered a race notice jurisdiction, which means that as between two competing parties the interest of the party who first records the instrument will prevail so long as that party had no actual knowledge of the other party's previously-acquired interest. Palamarg Realty Co. v. Rehac, 80 N.J. 446, 454 (1979). As a corollary to that rule, parties are generally charged with constructive notice of instruments that are properly recorded. Friendship Manor, Inc. v. Greiman, 244 N.J. Super. 104, 108 (App. Div. 1990) ( In the context of the race notice statute, constructive notice arises from the obligation of a claimant of a property interest to make reasonable and diligent inquiry as to existing claims or rights in and to real estate. ), certif. denied, 126 N.J. 321 (1991). This Court has recognized the underlying purpose of the recording statutes: An historical study of the [Recording] Act, as well as an analysis of the cases interpreting it, leads to the conclusion that it was designed to compel the recording of instruments affecting title, for the ultimate purpose of permitting purchasers to rely upon the record title and to purchase and hold title to lands within this state with confidence. The means by which the compulsion to record is accomplished is by favoring a recording purchaser, both by empowering him to divest a former non recording title owner and by preventing a subsequent purchaser from divesting him of title. This ability to deprive a prior bona fide purchaser for value of his property shows a genuine favoritism toward a recording purchaser. It is a clear mandate that the recording purchaser be given every consideration permitted by the law, including all favorable presumptions of law and fact. It is likewise a clear expression that a purchaser be able to rely upon the record title. [Palamarg, supra, 80 N.J. at 453 (quoting Donald B. Jones, The New Jersey Recording Act _ A Study of its Policy, 12 Rutgers L. Rev. 328, 329-30 (1957)).] Courts have thus held that the integrity of the recording scheme is paramount. '[A]bsent any unusual equity' the stability of titles and conveyancing requires the judiciary to follow that course 'that will best support and maintain the integrity of the recording system.' Friendship Manor, supra, 244 N.J. Super. at 113 (quoting Palamarg, supra, 80 N.J. at 453). Additionally, we do not share our colleague's restrictive view of the purposes underlying the recording statutes. The concurring-dissenting opinion states: Because the recording statutes are intended primarily to address priority issues among purchasers who have no knowledge of prior encumbrances, they should not be invoked to resolve the priority issues in this appeal. Post at ___ (slip op. at 23). Again, we disagree. The statutes are intended to protect not only purchasers but subsequent judgment creditors and mortgagees, entities or persons in exactly the same position as Roebling. The principal purpose of enactment of the New Jersey recording act . . . 'was to protect subsequent judgment creditors, bona fide purchasers, and bona fide mortgagees against the assertion of prior claims to the land based upon any recordable but unrecorded instrument.' 29 New Jersey Practice, Law of Mortgages 102, at 386 (Roger A. Cunningham & Saul Tischler (1975)) (paraphrasing Glorieux v. Lighthipe 88 N.J.L. 199, 202 (E. & A. 1915)). One commentator has observed, the provisions [of the recording statutes] are in reality a broad declaration of public policy. Jones, supra, 12 Rutgers L. Rev. at 329. Our colleague also refers to an extensive litany of foreign case law, the inference being that a majority of jurisdictions would find in favor of the Coxes. In reality, there is no case directly addressing plaintiffs' situation. We have no quarrel with the statement that the vast majority of cases hold that a vendee has an equitable lien for the reimbursement of money advanced under the contract and make no distinction between obligatory and voluntary advances. Post at ___ (slip op. at 11 12). We conclude much the same today. Ante at ___ (slip op. at 12) ( Plaintiffs' payments, seemingly made in good faith, entitle them to be equitably vested with a ratable portion of the estate. ). Our disagreement concerns how to determine the priority of plaintiffs' lien when measured against Roebling's recorded mortgage. The cases cited in the concurring-dissenting opinion do not answer that precise question. In Jaeger v. Hardy, 27 N.E. 863 (Ohio 1891), described as the preeminent case, post at ___, (slip op. at 12), the purchaser did not advance a series of voluntary payments after a lender properly recorded its mortgage. Rather, the purchaser in Jaeger was required by the contract to make a series of installment payments in accordance with a fixed schedule. Specifically, $100 was due on or before April 10, 1873; $50 was due on or before May 10, 1873; and the balance of the purchase price was due in twelve semi-annual payments of $100 each, with interest from April 1, 1873. Ibid. Upon execution of a contract, prior to the recording of the subsequent mortgage, the purchaser took possession of the premises and remained in possession for ten years until the dispute arose on March 1, 1884. On August 8, 1874, the seller mortgaged the property to one Jaeger, who recorded the mortgage five days later on August 13, 1874. Importantly, at the time the mortgagee recorded the mortgage instrument, the vendee had already made many of the payments required by the contract. The seller defaulted on its loan to Jaeger and a dispute arose concerning the priority of the vendee's and mortgagee's respective interests. Ibid. In deciding in favor of the vendee, the court noted in the first sentence of its decision, [p]ossession of lands by a vendee under a contract for their future conveyance to him, is constructive notice of the contract, and of his equity in the land. Id. at 864. The court further noted, [a] mortgage executed by the vendor, on the premises, after the purchaser is put in possession, is subordinate to his prior equity. Ibid. (emphasis added). Thus, the court relied heavily on the fact that the vendee was in actual possession of the premises for ten years prior to the commencement of the lender's action, making all required payments during that time. That is not the case here. The equities portrayed in Jaeger are far afield from the equities evident in the case at bar. Our colleague also cites to several cases for the proposition that [o]ther jurisdictions likewise have held that monies advanced under a contract to buy real property represent a lien superior to that of a subsequent mortgagee who executes a mortgage to the vendor with knowledge of the preexisting interest. Post at ___ (slip op. at 13). That proposition ignores the quantum or value of the interest that the other jurisdictions have granted the vendee as well as significant distinctions from the present case. In National Indemnity Co. v. Banks, 376 F.2d 533, 534 (5th Cir. 1967), a builder entered a contract with the purchasers for the property and for the construction of a home for $15,000. At the time of the contract the builder did not own the property but was to purchase it from the seller for $3,500. The deed to the property was to be placed in escrow pending the builder's purchase. Ibid. The purchasers conveyed the equity in their existing home to the builder and received a credit of $6,700 toward the purchase price. A construction lender provided the builder with $11,400 to complete the construction of the home and recorded its mortgage interest. The house was completed and the purchasers occupied the house prior to the scheduled settlement date. Ibid. However, on the settlement date the builder could not convey clear title to the purchasers because of the builder's failure to pay the $3,500. Thus, the builder did not own the property. Ibid. A fire later destroyed the home and the issue of priority of a lien arose between the lender and the purchasers with regard to insurance money. Ibid. In finding the purchasers had a valid vendees' lien for $6,700 superior to that of the lender, the court noted the undisputed testimony that the lender had actual notice of the $6,700 payment made by the [purchaser]. Id. at 535. Although our colleague cites National Indemnity as support for concluding the Coxes had a superior lien for monies paid after Roebling recorded its mortgage, that case supports our view. Similar to the construction lender in National, Roebling had actual knowledge of the $12,000 deposit that was stated in the Coxes' contract. However, Roebling had no actual knowledge of the additional advances that the Coxes made after it recorded its mortgage interest and, therefore, its mortgage had priority over the Coxes' subsequent payments. Thus, the cases may be harmonized. Additionally, in Larson v. Metcalf, 207 N.W. 382, 383 (Iowa 1926), the purchaser entered into a land sale contract with the seller and paid $10,000 for the property on March 1, 1920. On the same date the purchaser took possession of the property by and through a tenant. Ibid. On August 6, 1921, the seller declared a forfeiture and properly served the purchaser. About the same time, the purchaser instituted an action to recover the $10,000 payment. Following the purchaser's action, the seller conveyed the land to one Metcalf, a banker, on August 10, 1921. Ibid. Prior to the seller's conveyance to Metcalf, the bank for which Metcalf worked requested security for money the seller owed the bank. Id. at 385. The seller informed Metcalf he would receive notes and a mortgage from the purchaser and would put them up for security. Ibid. Metcalf met with the purchaser and asked the purchaser about his contract with the seller. There was conflicting testimony at trial concerning whether Metcalf knew the purchaser paid the seller $10,000. Id. at 385-86. The Supreme Court of Iowa found that Metcalf, prior to taking the deed to the land, had both actual and constructive notice of the purchaser's interest. Id. at 386. The court found that the purchasers had a vendee's lien in the amount of their $10,000 payment. Larson is distinguishable from the present case in that the Coxes did not take possession of the property personally or through a tenant. Also, unlike the purchaser of the property in Larson, neither Roebling nor any of its agents met with the Coxes to discuss their interest in the property. Finally, unlike the purchaser in Larson who filed a lawsuit prior to the time the seller conveyed the property, the Coxes did not file a lawsuit for their deposit money or their additional advances until after Roebling acquired and recorded its mortgage. In addition to those distinctions, the purchaser in Larson recovered the amount of the original payment made prior to the subsequent purchaser's interest (in effect, the same relief as here). In Shirley v. Shirley, 1 845 WL 2932, 1 (Ind. 1845), the purchasers entered into a contract for the sale of land with the seller on October 4, 1838, and paid an initial deposit of $382.42 toward the total purchase price of $1,600. In December 1838, the purchasers paid an additional sum of $109.05. The purchasers then offered to pay the seller the remainder of the purchase price but the seller refused to comply with the contract and thereafter sold the land to one Monicle. Ibid. The court found that the purchasers had a vendees' lien for the amount of money paid toward the purchase price prior to the sale of the property to Monicle. Id. at 3. In reaching its decision, the court found that Monicle had a conversation with the purchasers prior to his purchase of the land and knew they had a claim on the land. Ibid. The court also found that the subject matter of the conversation consisted of the purchasers informing Monicle that if he purchased the property, they would claim a lien for the money that they had paid. Ibid. The court concluded that Monicle purchased the property with full knowledge of the purchasers' equity and that he took the land subject to the vendees' lien. Ibid. In Shirley, the purchasers' interest was valued at the amount they paid toward the purchase price prior to the intervening interest of the subsequent purchaser. Thus, the case, as the others referred to above, supports a finding in favor of the Coxes for their initial deposit made prior to Roebling's recorded mortgage and about which Roebling had knowledge at the time it acquired its interest. The case does not, however, address advances made after a subsequent purchaser or creditor has acquired an interest in the property and has recorded that interest. Shirley is significantly different from the present case in that, unlike the situation in Shirley, Roebling never had a meeting or conversation with the Coxes that would have informed Roebling of their intended future payments. Further, in Palmer, supra, 510 P.2d at 270, the purchaser entered into a contract with a land developer for the sale of property and construction of a home for $35,000 on May 29, 1969. The contract provided for a $3500 down payment and contained a clause that provided that if the contract was breached by the seller or terminated by the purchaser, the $3500 down payment would be returned to the purchaser. Ibid. The land developer received a loan from a lender in the amount of $26,250, and the lender took back a mortgage on July 7, 1969. The lender recorded its mortgage on July 31, 1969. Ibid. The land developer defaulted and abandoned the construction project. Ibid. In finding the purchaser had a vendee's lien in the amount of $3,500 superior to the lender's lien, the court stated [a]n inchoate vendee's lien was created . . . when the contract for construction of the house was signed. Id. at 274. The court also found [a]n incomplete mortgage lien existed when the lender executed the mortgage. Ibid. The court stated that [b]ecause of the chronological order in which the liens originated, the vendee's lien of [the purchaser] in the amount of $3,500 is prior and superior to the mortgage lien. Ibid. However, unlike the present case, Palmer addresses the vendee's lien only with regard to deposit monies and not additional advances made by the purchaser after the lender obtained and recorded its mortgage, without knowledge of the purchaser's additional advances. In Lowe v. Maynard, 115 S.W. 214 (Ky. 1909), the purchasers entered into a contract for the sale of land and paid the seller $200. A total of $600 was due on or before April 3, 1907. The purchasers alleged that they complied with the conditions of the contract by paying the remainder of the purchase price on or before the due date. Ibid. The seller sold the land to one Scalf who in turn sold it to one Leslie. Id. at 215. The court found that the original purchasers were entitled to the $200 and that the subsequent purchasers purchased the land subject to the rights of the original purchasers. Ibid. In so holding, the court found that both Scalf and Leslie actually knew of the prior purchase by the [purchasers] and of the fact that the [purchasers] had paid a part of the purchase money. Ibid. To the extent that Lowe supports a finding that the Coxes were entitled to a vendee's lien in the amount of their initial deposit, we agree. However, Lowe does not address the question concerning the vendee's superior rights to a lien for monies advanced after a subsequent party obtains an interest, without knowledge of the original purchaser's intended advances toward the purchase price. In South Carolina Federal, supra, 413 S.E.2d at 853, the lender, a bank, took a mortgage for a construction loan that it gave to a real estate developer for the construction of a condominium project. As a precondition to the loan, the developer had to presell a certain number of residential units in the project. Ibid. Several purchasers entered into contracts with the developer and made cash down payments. The contracts required the developer to refund the deposit money if it did not complete the contract within two years. Ibid. At the time it made the construction loan, the bank knew that the developer entered into the contracts with the purchasers and received deposit money. The developer defaulted on its obligations to the bank and failed to complete the construction of the condominium project within the two-year time frame as required by its contracts with the purchasers. Id. at 854. The court held that the equitable liens of the [p]urchasers under earlier contracts of sale, of which the [b]ank had notice, take priority over the [b]ank's lien under its later construction loan agreement and mortgage. Id. at 855. One distinguishable aspect between the present case and South Carolina Federal is that unlike the lender in South Carolina Federal, the lender in the present case did not require that the developer presell the property prior to the granting of the loan. Although it was a factor in Roebling's decision to grant RKA construction funds, it was not required. Additionally, to the extent that South Carolina Federal allows the purchasers to recover their deposit monies, it is not at odds with the rule enunciated today. In sum, the present case requires us either to enhance or diminish the effect of a properly-recorded mortgage. We choose to enhance the effect of the mortgage while, at the same time, affording priority to a fair portion of a vendee's lien. In so doing, we believe our decision will provide greater stability and predictability to our system of land titles, which, in turn, will benefit buyers, sellers, and lenders alike. To the extent that the cases and outside statutes cited by our colleague would provide a rationale to exempt purchasers from the effects of the notice provisions of the recording statutes, we decline to adopt such a rule for the several reasons already noted. Accordingly, we conclude that prospective application of our holding provides the fairest and most equitable disposition. SUPREME COURT OF NEW JERSEY A- 81 September Term 1998 HARRY W. COX and BETTY ELIZABETH ANN COX, his wife, Plaintiffs-Respondents, v. RKA CORPORATION and RICHARD NIEL, jointly, severally, and in the alternative, Defendants, ROEBLING SAVINGS AND LOAN ASSOCIATION, Defendant-Appellant. STEIN, J., concurring in part and dissenting in part The Court has determined that as between contract purchasers of property who make non-obligatory payments under their contract, and construction lenders with knowledge of that contract, the recorded lien of the construction lenders is superior and has priority over a vendee's common law lien for those non-obligatory payments. The Court concludes that the underlying purpose of New Jersey's Recording Statutes, N.J.S.A. 46:21-1 and 46:22-1, requires that result. I disagree with today's ruling, pursuant to which contract purchasers who make non-obligatory payments to their builder subsequent to the builder's obtaining a construction loan secured by a recorded mortgage, have a lien inferior to that of the mortgagee even if the mortgagee had knowledge of the contract. I concur with the balance of the Court's holding to the effect that a vendee's lien generally is superior to that of a mortgagee with notice of the vendee's interest, and that today's holding should be prospective -- thereby entitling the Coxes to recoup the monies they have expended. I believe, however, that the Court has unduly emphasized the role of New Jersey's recording statutes in this case; has diminished the significance of common law equitable principles; and has overlooked the significance of generally accepted real estate practices, including the routine and standard practice of obtaining a subordination of the vendee's lien in situations where third parties, with notice of the vendee's prior claim, become the vendor's buyers or creditors. I therefore dissent from the remainder of the Court's holding. The overarching goal of the vendee's lien is to ensure that a vendee may have the opportunity to recoup his investment in real property. That a vendee's lien is superior to liens of other purchasers who have purchased with knowledge of the vendee's equitable interest is a basic principle of property law. 29 New Jersey Practice, Law of Mortgages 101, at 374 (Roger A. Cunningham & Saul Tischler) (1975). NO. A-124 HARRY W. COX and BETTY ELIZABETH ANN COX, his wife, Plaintiffs-Respondents, v. RKA CORPORATION and RICHARD NIEL, jointly, severally, and in the alternative, Defendants, and ROEBLING SAVINGS AND LOAN ASSOCIATION, Defendant-Appellant. DECIDED June 30, 2000 Chief Justice Poritz