United States Court of Appeals

For the First Circuit

No. 20-9006

IN RE: JOSÉ ANTONIO LÓPEZ CANCEL; CARMEN NEREIDA MEDINA 

GONZÁLEZ,

Debtors.

WILFREDO SEGARRA MIRANDA, Chapter 7 Trustee for José Antonio 

López Cancel and Carmen Nereida Medina González,

Plaintiff, Appellant,

v.

BANCO POPULAR DE PUERTO RICO, 

Defendant, Appellee, 

JOSÉ ANTONIO LÓPEZ CANCEL; CARMEN NEREIDA MEDINA GONZÁLEZ,

Intervenors, Appellees.

APPEAL FROM THE BANKRUPTCY APPELLATE PANEL

FOR THE FIRST CIRCUIT

Before

Howard, Chief Judge,

Lynch and Kayatta, Circuit Judges.

Rafael Antonio González Valiente, with whom Godreau & 

González Law, LLC was on brief, for appellant. 

Sergio A. Ramírez de Arellano, with whom SARLAW LLC was on 

brief, for defendant-appellee Banco Popular de Puerto Rico.

Noemi Landrau-Rivera, with whom Landrau Rivera & Assoc. was 
on brief, for intervenor-appellees José Antonio López Cancel and 

Carmen Nereida Medina González. 

August 6, 2021
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LYNCH, Circuit Judge. This appeal is one of a number of 

disputes between the bankruptcy trustee ("the Trustee") for the 

estate of José Antonio López Cancel and Carmen Nereida Medina 

González, and Banco Popular de Puerto Rico ("Banco Popular"). The 

Trustee sought to avoid an unrecorded Puerto Rican mortgage and 

preserve it for the benefit of the bankruptcy estate based on his 

assertation that such an unrecorded mortgage is "[a] transfer of 

property of the debtor . . . that is voidable [by a bona fide 

purchaser]." Cf. 11 U.S.C. § 544(a)(3). The Bankruptcy Appellate

Panel for the First Circuit ("BAP"), affirmed the bankruptcy 

court's entry of summary judgment against the Trustee on the 

grounds that Puerto Rico law does not recognize any such property 

interest created by an unrecorded mortgage, so there was no 

"transfer of property of the debtor" that could be voided. Banco 

Popular and the debtor home-owner intervenors urge affirmance. 

Because we agree that an unrecorded mortgage in Puerto Rico is not 

"[a] transfer of property of the debtor. . . that is voidable by 

a bona fide purchaser" that triggers the bankruptcy trustee's 

authority to avoid and preserve the lien, we affirm. 

I.

On November 4, 1981, José Antonio López Cancel and Carmen 

Nereida Medina González acquired a property in San Juan, Puerto 

Rico, which they use as their primary residence. On December 30, 

2003 they took out a mortgage for $163,400.00 on the property. 
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R&G Mortgage Corporation issued the mortgage but never recorded it 

with the Puerto Rico Property Registry. Banco Popular, as servicer 

for Freddie Mac, is the successor-in-interest to R&G and currently 

holds the mortgage. It too did not record the mortgage. 

On September 17, 2015, Cancel and González filed a 

Chapter 7 bankruptcy petition. They claimed Puerto Rico's 

Homestead Exemption over the property in San Juan, removing the 

San Juan property from the bankruptcy estate.1 See 11 U.S.C. § 

522(b)(3) (incorporating state exemptions from the bankruptcy 

estate); P.R. Laws Ann. tit. 31, §§ 1858-1858k. The Homestead 

Exemption limits the Trustee's ability to sell the San Juan 

property to satisfy most unsecured debts, but it does not affect 

secured liens on the property.2 P.R. Laws Ann. tit. 31, § 1858a. 

On October 19, 2015, Banco Popular filed a secured claim for 

1 Homestead Exemptions allow debtors in bankruptcy to keep 

their primary residence through bankruptcy, so long as the debtor 

continues to make mortgage payments and payments towards certain 

other types of secured debt. P.R. Laws Ann. tit. 31, § 1858a-b; 

see also 76 Am. Jur. Proof of Facts 3d 1 (2004). When a debtor 

declares bankruptcy his or her property becomes part of the 

bankruptcy estate, unless it is protected by an exemption. 11 

U.S.C. §§ 522(b), 541. The Homestead Exemption removes the 

debtor's primary residence from the bankruptcy estate so that it 

cannot be sold for the benefit of the unsecured creditors. P.R. 

Laws Ann. tit. 31, § 1858a-b. 

2 P.R. Laws Ann. tit. 31, § 1858a states, "[t]he homestead 

right shall not be waived and any agreement to the contrary shall 

be declared null. However, the homestead right shall be deemed to 

be waived in . . . [a]ll cases in which the protected property is 

pledge for a mortgage."
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$127,921.08 -- the remaining balance due on the 2003 mortgage. 

Cancel and González objected to the claim, and because the mortgage 

was unrecorded, the bankruptcy court allowed the objection. It 

treated the mortgage as a "general unsecured" claim, covered by 

the court's earlier discharge order. 

On January 4, 2016, the Trustee then filed this action 

against Banco Popular to avoid the 2003 mortgage and preserve it 

on behalf of the bankruptcy estate. "[T]he trustee's right of 

avoidance under 11 U.S.C. § 544 'vests the trustee with the powers 

of a bona fide purchaser of real property for value, and allows 

the trustee to invalidate unperfected security interests.'" In re 

Traverse, 753 F.3d 19, 26 (1st Cir. 2014) (quoting In re Sullivan, 

387 B.R. 353, 357 (B.A.P. 1st Cir. 2008)). By statute, the trustee 

assumes the voided lien on behalf of the bankruptcy estate, so 

that any portion of the debt the trustee recovers goes to the 

estate, rather than the original lienholder. In relevant part, 11 

U.S.C. §§ 544(a) and (a)(3) state that the bankruptcy trustee "may 

avoid any transfer of property of the debtor or any obligation 

incurred by the debtor that is voidable by . . . a bona fide 

purchaser of real property." 11 U.S.C. § 551 states "[a]ny 

transfer avoided under section . . . 544 . . . of this title . . . 

is preserved for the benefit of the estate." By avoiding and 

preserving the lien, "[t]he trustee, on behalf of the entire 

bankruptcy estate, . . . steps into the shoes of the former 
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lienholder, with the same rights in the collateralized property 

that the original lienholder enjoyed." In re Traverse, 753 F.3d 

at 29 (quoting In re Haberman, 516 F.3d 1207, 1210 (10th Cir. 

2008)). 

The Trustee argued that the 2003 unrecorded mortgage was 

a transfer of the debtor's property that is voidable by a bona 

fide purchaser.3 On May 2, 2016, Cancel and González intervened 

in the Trustee's action against Banco Popular and the parties 

cross-moved for summary judgment. The bankruptcy court initially 

adopted the Trustee's brief in its entirety, and granted summary 

judgment based on this court's decision, based in part on 

Massachusetts real property law, in In re Traverse. That decision 

states, "[w]here a creditor has an unperfected lien on a debtor's 

property, the Bankruptcy Code empowers a trustee to avoid and 

preserve the lien for the benefit of the estate." In re Traverse, 

753 F.3d at 26. It was undisputed in In re Traverse that the 

3 In the alternative, the Trustee argued without elaboration 

that the mortgage was voidable under 11 U.S.C. § 549, which permits 

the trustee to void a transaction "that occurs after the 

commencement of the [bankruptcy] case" and that the debtor was not 

authorized to make. He renews this argument on appeal in the same 

conclusory fashion. This claim is both waived and obviously 

meritless. The Trustee makes no argument beyond quoting § 549 and 

stating that the statutory language somehow applies to this case. 

"[I]ssues . . . unaccompanied by some effort at developed 

argumentation[] are deemed waived." United States v. Zannino, 895 

F.2d 1, 17 (1st Cir. 1990). In any event, the 2003 mortgage 

plainly pre-dates the 2015 bankruptcy petition, so this argument 

is meritless.
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bankruptcy trustee could avoid and preserve for the benefit of the 

estate an unrecorded Massachusetts mortgage. Id. at 27. 

Cancel and González timely appealed the bankruptcy 

court's decision to the district court for the District of Puerto 

Rico. While that decision was on appeal, the bankruptcy court 

considered the same issue in an almost identical case between the 

same Trustee on behalf of another estate and Banco Popular and 

reached the opposite result. In re Garcia, Ch. 7 No. 15-02402, 

Adv. Case No. 17-00076, 2018 WL 1956177 (Bankr. D.P.R. Apr. 24, 

2018). It concluded that under Puerto Rico law, recording a 

mortgage is a "constitutive" act, and an unrecorded mortgage is 

merely an "unsecured personal obligation." Id. at *2 (quoting 

Soto-Rios v. Banco Popular de Puerto Rico, 662 F.3d 112, 121 (1st 

Cir. 2011)). After further procedural hurdles not relevant here,4

the bankruptcy court granted Cancel and González's motion for 

reconsideration based on the In re Garcia decision. 

As the BAP later noted, although the bankruptcy court 

only referenced the In re Garcia decision in its order granting 

4 After the In re Garcia decision, Cancel and González filed 

an emergency motion for relief from the bankruptcy court's summary 

judgment order. The bankruptcy court entered an indicative ruling 

stating that it lacked jurisdiction to rule on the motion for 

reconsideration while the appeal to the district court was pending, 

but it stated that it would grant relief if the district court 

chose to remand the case back to the bankruptcy court. The 

district court remanded based on that order, and the bankruptcy 

court granted the motion for reconsideration. 
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the motion for reconsideration, the Trustee had in fact filed at 

least four identical claims against Banco Popular, all seeking to 

avoid and preserve unrecorded mortgages on behalf of various 

bankruptcy estates. In re López Cancel, No. PR 19-001, 2020 WL 

278395, at *2 (B.A.P. 1st Cir. Jan. 15, 2020) (citing In re Rivera 

Mercado, 599 B.R. 406, 422 (B.A.P. 1st Cir. 2019) (affirming grant 

of summary judgment against the Trustee); In re Garcia, 2018 WL 

1956177 at *4 (finding the Trustee could not avoid and preserve an 

unrecorded Puerto Rican mortgage); In re Schwarz Reitman, Ch. 7 

Case No. 14-08184, Adv. No. 15-0020, slip. op. (Bankr. D.P.R. Nov. 

29, 2016)(same); In re Matienzo Lopez, Ch. 7 Case No. 15-06967, 

Adv. Case No. 16-00123, slip. op. (Bankr. D.P.R. Aug. 23, 2017) 

(granting summary judgment in favor of the Trustee without 

discussion)). In all but one of these, the bankruptcy court found 

that the Trustee could not avoid and preserve an unrecorded 

mortgage, because under Puerto Rican law, an unrecorded mortgage 

is not a property interest. 

After the bankruptcy court granted the motion for 

reconsideration the Trustee appealed to the BAP. See 28 U.S.C. 

§ 158(c) (the losing party in the bankruptcy court may appeal 

either to the district court or to the bankruptcy appellate panel). 

While that appeal was pending, the BAP affirmed the decision of 

the bankruptcy court in another of the Trustee's avoid-andpreserve actions against Banco Popular. In re Rivera Mercado, 599 
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B.R. at 426-27. In In re Rivera Mercado the BAP reasoned that "in 

Puerto Rico, a mortgage does not provide the mortgagee with title 

to the mortgaged property, and an unrecorded mortgage is 

'nonexistent' and a 'nullity.'" Id. at 424. In this case, the 

BAP concluded that it was bound by its earlier decision in In re 

Rivera Mercado, and affirmed the bankruptcy court. In re López 

Cancel, 2020 WL 278395, at *4. The Trustee brought this timely 

appeal. 

II.

In an appeal from the BAP, "we accord no particular 

deference to determinations made by the first-tier appellate 

tribunal but, rather, focus exclusively on the bankruptcy court's 

determinations." In re Montreal, Me. & Atl. Ry., Ltd., 956 F.3d 

1, 6 (1st Cir. 2020). "[T]he 'legal standards traditionally 

applicable to motions for summary judgment . . . apply without 

change in bankruptcy proceedings.'" In re Hannon, 839 F.3d 63, 69 

(1st Cir. 2016) (alteration in original) (quoting In re 

Moultonborough Hotel Grp., 726 F.3d 1, 4 (1st Cir. 2013)). Summary 

judgment is appropriate if there is "no genuine dispute as to any 

material fact and the movant . . . is entitled to judgment as a 

matter of law." Taite v. Bridgewater State Univ., Bd. of Trustees, 

999 F.3d 86, 92-93 (1st Cir. 2021) (quoting Fed. R. Civ. P. 56(a)). 

We review the bankruptcy court's legal conclusions de novo. In re 
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Montreal, Maine & Atl. Ry., Ltd., 956 F.3d at 6. We review the 

bankruptcy court's findings of fact only for clear error. Id. 

11 U.S.C. §§ 544 and 551 permit the bankruptcy trustee 

to avoid and preserve "any transfer of property of the debtor or 

any obligation incurred by the debtor that is voidable by . . . a 

bona fide purchaser of real property." 11 U.S.C. §§ 544(a), 

(a)(3). The trustee argues that under Puerto Rican law conveying 

an unrecorded mortgage is a transfer of property of the debtor 

that would be voidable by a bona fide purchaser. He states that 

Puerto Rico's mortgage rules are "nearly identical" to 

Massachusetts law as to the significance of recording, and this 

court's comments in In re Traverse should control. We disagree. 

State law governs interested parties' property rights, 

the scope of those rights, and the voidability of any such rights 

in a bankruptcy proceeding. Raleigh v. Ill. Dep't of Revenue, 530 

U.S. 15, 20 (2000); Soto-Rios v. Banco Popular de Puerto Rico, 662 

F.3d 112, 117 (1st Cir. 2011). Federal law governs the terms used 

in the bankruptcy code. In re 229 Main St. Ltd. P'ship, 262 F.3d 

1, 5-7 (1st Cir. 2001); see also Soto-Rios, 662 F.3d at 117. 

The core question under 11 U.S.C. §§ 544(a) and (a)(3) 

is whether under state law the debtor conveyed a property interest 

in the real property at issue that gives the current holder some 

enforceable rights to the property beyond a mere personal 

obligation of the property owner. In Soto-Rios for example, this 
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court found that under related sections of the bankruptcy code, a 

Puerto Rican mortgage that had been properly presented to the 

Property Registry was an "interest in property" because presenting 

the mortgage preserved the lien-holder's priority over other lienholders. See Soto-Rios, 662 F.3d at 121-22. 

This court's decision in In re 229 Main Street Ltd. 

Partnership, again interpreting the related phrase "interest in

property" as used in the automatic stay provision, is also 

instructive. 262 F.3d at 5-7. We held that "interest in property" 

encompasses more than just a recorded lien. Id. at 7. The court 

looked instead to whether, under state law, the claimed property 

interest was "effective against entities which already had 

acquired rights in the property." Id. at 12. 

In In re Traverse, on which the Trustee relies, there 

was no dispute that an unrecorded Massachusetts mortgage was a 

transfer of an interest in real property. Massachusetts applies 

a "title theory" of mortgages. A Massachusetts mortgage is a 

"conditional conveyance vesting in the mortgagee legal title of

the property." Soto-Rios, 662 F.3d at 117; see also Bank of Am., 

N.A. v. Casey, 52 N.E.3d 1030, 1035 n. 10 (Mass. 2016)("[U]nder 

Massachusetts law the effect of a mortgage is to transfer legal 

title to the mortgage property from the mortgagor to the mortgage 

holder . . . ."). Recording makes the lien a matter of public 

record and gives notice to third parties. See Allen v. Allen, 16 
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N.E.3d 1078, 1084 (Mass. App. Ct. 2014); Singer, Property § 11.4.5 

(3d ed. 2010) (describing operation of recording acts). If a valid 

mortgage is not recorded, the mortgagee retains superior title 

compared to the mortgagor, the mortgagor's issue, heirs, or 

assignees, and any third parties with actual knowledge of the 

mortgage. Mass. Gen. Laws ch. 183, § 4. The holder of an 

unrecorded mortgage has inferior title compared to third parties 

without actual knowledge of the mortgage, but he or she retains an 

interest in the underlying real property. Id.; see also Solans v.

McMenimen, 951 N.E.2d 999, 1004 (Mass. App. Ct. 2011) (holding 

that writ of attachment against all "right, title and interest" 

covered an unrecorded mortgage held by the defendant). Failure to 

record the mortgage under Massachusetts law makes the mortgage 

voidable by a bona fide purchaser of the property without notice. 

Tramontozzi v. D'Amicis, 183 N.E.2d 295, 297 (Mass. 1962). 

Puerto Rico has a fundamentally different scheme of 

mortgage rights. It uses a Property Registry system. A deed is 

not "recorded" until the Property Registry judges that the deed is 

valid. P.R. Laws Ann. tit. 30, §§ 2255, 2267. Recording in Puerto 

Rico does more than provide public notice. It is part of the 

process of creating a valid property instrument.5 See Id. §§ 2255, 

2267.

5 For a discussion of the differences of title recordation 

and registration, see generally Arruñada, Institutional 
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Under Puerto Rican law, a mortgage must be recorded for 

it to confer any interest in the underlying real property.6 By 

statute, "it is indispens[a]ble, in order that the mortgage may be 

validly constituted, that the instrument in which it is created be 

entered in the registry of property." P.R. Laws Ann. tit. 31, 

§ 5042; see also P.R. Laws Ann. tit. 30, § 2607 (a mortgage must 

be stipulated in a deed and "recorded in the Property Registry"). 

"[R]ecordation [at the Property Registry] is a constitutive act 

through which the security produces real effects and becomes 

operative erga omnes in the sphere of real rights." Rosario Pérez

v. Registrar, 15 P.R. Offic. Trans. 644, 648 (P.R. 1984); see also

Teachers' Ret. Bd. of P.R. v. Registrar, 9 P.R. Offic. Trans. 757, 

777 (P.R. 1980) (describing mortgages as "rights created by their 

registration"). 

The Supreme Court of Puerto Rico's decision in Rosario 

Pérez illustrates that in Puerto Rico a mortgage-holder does not 

acquire property rights to the underlying real property until the 

Foundations of Impersonal Exchange: Theory and Policy of 

Contractual Registries 45–47, 51–52, 55–58 (2012), reprinted in 

Smith & Merrill, Property: Principles and Policies 903-908 (3d ed. 

2017) and Singer, supra § 11.4.7.

6 At oral argument, the Trustee argued that an unrecorded 

mortgage was "property" even if it was not necessarily an interest 

in the debtor's San Juan home. We need not decide whether an 

unrecorded mortgage is "property" in some sense of the term. Even 

if an unrecorded mortgage were personal property or some other 

interest, it would still fail to satisfy the statutory language in 

11 U.S.C. § 544(a)(3). 
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mortgage is recorded, or at least until the mortgage-holder begins 

the registration process. There, one party issued a mortgage on 

property but failed to record the lien. Several years later 

another party recorded a writ of attachment, which barred any new 

transaction alienating an interest in the property. The mortgageholder then immediately attempted to record their existing 

mortgage, and the Property Registry refused, citing the writ of 

attachment. Rosario Pérez, 15 P.R. Offic. Trans. at 646-47. The 

Supreme Court of Puerto Rico agreed that the writ barring any new 

transaction barred the mortgagee from recording their existing 

mortgage. It stated, "[w]e are not dealing here with a dispositive 

act prior to the entry [of the writ of attachment], because the 

mortgage had not been recorded and, therefore, the real security 

of the mortgage had not been constituted." Id. at 649.

This court's decision in Soto-Rios is consistent with 

that view of Puerto Rican law.7 There, Banco Popular issued two 

mortgages on a property in Puerto Rico, and properly presented the 

liens to the Property Registry for recording. The Property 

Registry, however, failed to complete the registrations. Although 

7 The Trustee appears to read Soto-Rios as supportive of 

Cancel and González's position, and states that Soto-Rios is 

"completely distinguishable" from this case. Accordingly, he has 

waived any argument that the exception recognized in Soto-Rios

applies here. See Young v. Wells Fargo Bank, N.A., 828 F.3d 26, 

32 (1st Cir. 2016).
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Banco Popular took all the necessary steps to record the mortgages, 

they remained "pending recordation when the debtors filed for 

bankruptcy nearly three years later." Soto-Rios, 662 F.3d at 114. 

The Soto-Rios court acknowledged that decisions from Puerto Rico 

"suggest that an unrecorded mortgage deed provides a lender with 

no more than an unsecured personal debt under Puerto Rico law." 

Id. at 119. But this court did not decide what rights, if any, an 

unrecorded mortgage confers under Puerto Rican law. We observed 

instead that recording in Puerto Rico relates back to the date the 

party properly filed, not the date the Property Registry enters 

the record, and that a party who has filed for recording has 

additional statutory rights. Id. at 120-21. On that basis we 

concluded that a mortgage-holder who timely began the process of 

recording the mortgage had at least some interest in the underlying 

real property which would be enforceable against other existing 

titleholders. Nothing in that decision recognizes property rights 

created by a mortgage when the issuer simply failed to present the 

lien to the Property Registry. 

Other cases from this circuit underscore the narrowness 

of the Soto-Rios exception. In In re Las Colinas, Inc., 426 F.2d 

1005, 1016 (1st Cir. 1970), this court stated, "under Puerto Rican 

law recording is essential to the validity of a mortgage, [and]

one that is not recorded is a nullity." (footnote omitted). And 

in In re Vázquez Laboy, 647 F.3d 367, 370-71, 377 (1st Cir. 2011), 
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this court remanded to the bankruptcy court a petition for damages 

for willfully violating the bankruptcy stay against a creditor who 

attempted to record a pre-existing mortgage after the automatic 

stay took effect.8

We conclude that an unrecorded mortgage in Puerto Rico 

does not trigger the trustee's avoidance powers under 11 U.S.C. 

§§ 544(a) and (a)(3). Under Puerto Rican law, the holder of the 

unrecorded mortgage lacks any title to the underlying property 

that is enforceable against other existing titleholders. 

Accordingly, the unrecorded 2003 mortgage is not "[a] transfer of 

property of the debtor" that would allow the Trustee to invoke 11 

U.S.C. § 544. 

III.

The judgment of the bankruptcy court is affirmed. Costs 

are awarded against appellant Trustee. 

8 The District of Puerto Rico has also consistently stated 

that an unrecorded mortgage is merely an unsecured personal 

guarantee under Puerto Rican law. See, e.g., Roig Com. Bank v. 

Dueno, 617 F. Supp. 913, 914-15 (D.P.R. 1985)("Failure to promptly 

record the mortgage deed turn[s] the promissory note into a 

personal obligation, unsecured, solely enforceable against the 

maker."); Roosevelt Cayman Asset Co. II v. Cruz-Rivera, 232 F. 

Supp. 3d 230, 232 (D.P.R. 2017) (mortgage deed that was pending 

recordation was a "nullity"); United Fed. Sav. & Loan Ass'n of

P.R. v. Nones, 283 F. Supp. 638, 639 (D.P.R. 1968)("[An] unrecorded 

mortgage can not prejudice innocent third parties with rights over 

the property object of the mortgage since the mortgage represents 

only a personal credit."). These cases join the consensus in the 

bankruptcy court generated by the Trustee's own litigation against 

Banco Popular.