Opinion ID: 1183420
Heading Depth: 2
Heading Rank: 3

Heading: duty to convey a lease until august 1986

Text: The Mannhalters' duty arises from an express promise to convey a lease to 1986. In order to withstand a Civil Rule 41(b) motion, the Winns must present evidence that their eviction by Partnership was rightful. The Winns argue that the lease term was never validly extended beyond August 1981. Although the letter of June 1978 extended the term to 1983, that extension was expressly revoked by the letter of August 1978. According to the Winns, the August letter was merely an offer which was never accepted by the Mannhalters. The Mannhalters and Area contend the August 1978 letter was a valid extension, since it was incorporated by reference in the Assignment and Modification of Lease, which was signed by the Winns, the Mannhalters and Landlord. The Assignment and Modification of Lease was signed by the Winns, the Mannhalters and Landlord; however, it does not incorporate the August 1978 letter, only that of June 1978. [3] We conclude that the Winns made out a prima facie case of duty and breach. The Winns also contend that, even if the lease was extended, Partnership's interest has priority over the extension as a matter of law because the deed of trust was recorded before the lease extension. The Mannhalters contend the foreclosure did not affect the lease extension because Partnership's deed states it is subject to recorded and unrecorded leases. The buyer at a nonjudicial foreclosure of a deed of trust takes title equivalent to that of the trustor at the time the trust was executed. AS 34.20.090(a). [4] Therefore, the buyer at a trust deed sale takes title subject only to encumbrances existing at the time the trust deed was executed; the buyer's knowledge of subsequently-created interests is irrelevant. Burnett, Waldock & Padgett Investments v. C.B.S. Realty, 668 P.2d 819, 822-23 (Alaska 1983); Alaska Laborers Training Fund v. P & R Enterprises, 583 P.2d 825, 826-27 (Alaska 1978); Lynch v. McCann, 478 P.2d 835, 836-37 (Alaska 1970). When Bank purchased the property at foreclosure, it took title equivalent to that of Landlord in January 1978. At that time, the property was subject only to the Mannhalters' pre-existing lease expiring in 1981. Bank's interest was not subject to the subsequent lease extension, even if Bank had notice thereof. However, the deed from Bank to Partnership expressly stated that Partnership's interest was taken subject to recorded and unrecorded leases. [5] The lease extension letter of August 1978 was recorded. We therefore conclude that the deed by which Partnership acquired the property from Bank subordinated Partnership's interest to that of the Winns. [6] Therefore, the lease was valid until at least 1983. The question on remand is whether the lease was validly extended to 1986. If it was, the Mannhalters satisfied their duty.