Glenview State Bank v. Shyman
Appellate Court of Illinois
496 N.E.2d 1078 (1986)
Glenview State Bank (plaintiff) recorded two construction mortgages on a condominium development in 1981, aware that the developer had presold certain units under contracts containing a rider subjecting title to the bank's construction mortgage if conveyed before substantial completion; Leon Shyman (defendant) had contracted for one unit (Unit F) with the same rider, but separately reached an oral side agreement to instead take a different unit, Unit A, if it became available, which it soon did, with Shyman receiving a deed that went unrecorded until 15 months after the bank's mortgages. When the bank foreclosed, Shyman argued the bank had inquiry notice of his Unit A interest based on its general knowledge that other units were presold; the trial court agreed and ruled for Shyman, and the bank appealed.
Whether a construction mortgagee's general knowledge that some condominium units were presold under contracts subject to its mortgage gives it inquiry notice of a specific, separately arranged buyer interest in a different, later-recorded unit.