Opinion ID: 3194429
Heading Depth: 2
Heading Rank: 3

Heading: The Trustee’s Strong-Arm Powers

Text: The trustee’s interest in the land contract payments cannot take priority over the bank’s earlier recorded mortgage interest. Under 11 U.S.C. § 544(a)(1), a bankruptcy trustee has “the rights and powers” of a judicial lien creditor on the property of the debtor at the commencement of the bankruptcy case. The bank’s proper recording of its mortgage defeats the trustee’s attempt to take the Blanchards’ interest as land contract vendors under § 544(a)(1). See Wis. Stat. § 409.322(1); see also South Milwaukee Savings Bank v. Barrett, 611 N.W.2d 448, 450 (Wis. 2000) (“In determining priority of interests in real estate, including judgment liens, Wisconsin is a ‘race-notice’ state.”). Section 544(a)(3) provides similar powers, giving the trustee the position of a “bona fide purchaser of real property” from the debtor as of the commencement of the bankruptcy case. Standing in for a bona fide purchaser, the trustee would not be able to take priority over the bank’s earlier-recorded mortgage. See Wis. Stat. § 706.08(1)(a) (unrecorded conveyances are void against subsequent good faith purchasers for value who record their conveyance first); South Milwaukee Savings Bank, 611 N.W.2d at 450.