Opinion ID: 789296
Heading Depth: 2
Heading Rank: 2

Heading: Recordation of the Deed

Text: 71 Superior Bank argued that it was hypocritical for the trustee in bankruptcy to seek to avoid Superior Bank's interest in the property when the debtor's interest was never recorded. Superior Bank's argument was that, because the trustee in bankruptcy did not know about the debtor's interest initially (because it was unrecorded), and because the trustee could or should have known about Superior Bank's interest, the trustee should not be able to avoid Superior Bank's recorded interest when the debtor's interest was not recorded. Superior Bank's argument, therefore, was that the debtor's interest should not be considered because it was unrecorded. The law does not bear this contention out. 72 The majority opinion cites Resh v. Fox, 365 Mich. 288, 112 N.W.2d 486, 488 (1961) for the proposition that a deed only needs to be delivered to be valid; recordation is not necessary for a deed to be valid. I believe that the answer may additionally be found in the clear language of Michigan's recordation statute. Under this statute: 73 Every conveyance of real estate within the state hereafter made, which shall not be recorded... shall be void as against any subsequent purchaser in good faith and for a valuable consideration, of the same real estate or any portion thereof, whose conveyance shall be first duly recorded. The fact that such first recorded conveyance is in the form or contains the terms of a deed of quit-claim and release shall not affect the question of good faith of such subsequent purchaser, or be of itself notice to him of any unrecorded conveyance of the same real estate or any part thereof. 74 M.C.L. § 565.29 (emphasis added). This statute does not require a conveyance to be recorded to be a valid conveyance. It only requires a conveyance to be recorded if the conveyee wants to have his or her interest in the real property valid against a subsequent good faith purchaser. Id. 75 Under § 565.29, even though the debtor's interest in the property was never recorded in the real property records, it is uncontroverted that she received a quitclaim deed to the property. Therefore, the debtor had a valid interest in the property and such property was properly considered by the trustee in bankruptcy. 76 For these reasons, I concur with the majority's decision that the debtor's interest in the property was properly considered by the trustee in bankruptcy. Notes: 1 The facts of Robinson are not applicable here. Superior Bank was not a good faith purchaser for value and without notice who then sought to be subrogated to a security interest to avoid being subject to an intermediate lien. Superior Bank sought to be subrogated to a bank lien that was no longer in effect, not to avoid an intermediate lien that Superior did not know about when retaining a security interest in the debtor's property. Rather, Superior Bank seeks to avoid having its failure to timely record said security interest not be avoided by the trustee in bankruptcy. 2 For example: A is a debtor of B. I, a surety or insurance company, is contractually obligated by B to pay B if A defaults on A 's obligation. If A defaults and I pays B, I can subrogate to B 's rights against A. However, in the case before us, Superior Bank is on A 's side of the equation — Superior Bank was not contractually obligated by B to pay B, but rather by A to pay B. Therefore, under the equitable subrogation doctrine, Superior Bank can only be subrogated to the rights of the debtor — A — and not to Empire National Bank — B.