In re Clare House Bungalow Homes, LLC

Senior-living facility Clare House Bungalow Homes required residents to pay a lump sum for a lease-like right to occupy a bungalow until death or disability, later refunding a set percentage to the resident's estate; only two of twenty-six residents (plaintiffs) recorded their lease agreements in county records. Three groups of creditors (defendants) that had loaned Clare House money and recorded deeds of trust argued their interests took priority over the twenty-four residents' unrecorded leases, even though all three creditor groups had extended credit under circumstances that would have put a reasonable person on notice the bungalows were rented and occupied.