Citizens Bank & Trust v. Brothers Construction & Manufacturing, Inc.
Court of Appeals of Arkansas
859 P.2d 394 (1993)
Citizens Bank and Trust (plaintiff) foreclosed on two mortgages against a property occupied under an unrecorded lease by Brothers Construction and Manufacturing (defendant), even though the bank had actual knowledge Brothers was occupying the property; the bank did not join Brothers as a party to the foreclosure action. After buying the property at the foreclosure auction, the bank demanded Brothers vacate and, when Brothers refused, brought a forcible detainer action. The trial court granted summary judgment for Brothers, and the bank appealed.
Whether a lender's mortgage foreclosure extinguishes the rights of existing tenants if the lender had actual knowledge of the tenants' possession and occupancy.