## Facts

- Jackie Bolen conveyed Knott County, Kentucky property (land with four rental trailers) by recorded deed (Apr. 5, 1994) to Mabel Bolen, Andy Bolen, and Barbara Porter as grantees “with rights of survivorship.”
- The parties also signed a lay-prepared installment “Sale Contract Agreement” setting a $55,000 payment schedule ($500/month) and a right of first refusal; the deed and related recorded instruments reflected $25,000 consideration.
- Neither the deed nor the installment contract reserved a lien, mortgage, vendor’s lien, or other security interest in the property, and neither contained default or foreclosure terms.
- The installment contract was recorded later (Aug. 27, 1997).
- In 1995, Barbara filed Chapter 7 bankruptcy, listing Jackie as a secured creditor; she later received a discharge eliminating her personal liability.
- After Mabel’s death (1999) and Andy’s death (2001), Barbara became sole owner by survivorship.
- Following payment default, Jackie sued in state court for the balance due and amended to seek equitable reconveyance of the property.

## Issues

1. Whether a circuit court may order equitable reconveyance of real property to a seller after default when the seller failed to reserve or perfect any lien or security interest in the conveyance documents.
2. Whether the doctrine of merger and the buyer’s Chapter 7 discharge prevent equity-based relief that effectively recreates a security interest or divests title.

## Decision

- The Kentucky Court of Appeals reversed the judgment ordering reconveyance and remanded.
- The court held the seller had no secured real-property interest because no lien or security interest was reserved or properly perfected.
- The court rejected using equitable powers to compel reconveyance where it would function as a substitute for a non-existent lien and would conflict with the recorded deed, merger principles, and the bankruptcy discharge.

## Legal Principles

- A conveyance by deed without an express, retained, and properly recorded lien generally leaves the seller with unsecured, contract-based remedies rather than an in rem property remedy.
- Under the doctrine of merger, provisions in a prior sale contract typically merge into the deed upon delivery and acceptance, limiting enforcement to what is preserved in the deed or validly created security instruments.
- Equity cannot be used to impose, after the fact, a security interest or title remedy that the parties did not create and perfect through required real-property formalities, particularly where doing so would undermine the effect of a bankruptcy discharge.
- Equitable reconveyance is generally inappropriate absent traditional equitable grounds (e.g., fraud or mistake) and cannot serve as a proxy foreclosure remedy where no lien exists.

## Conclusion

The appellate court held that, because the seller conveyed title by survivorship deed without reserving or perfecting any lien and the buyer’s personal liability had been discharged in bankruptcy, the trial court improperly ordered equitable reconveyance; the judgment was reversed and the case remanded for further proceedings consistent with those limits on equitable relief.


Bolen v. Bolen, 169 S.W.3d 59 (Ky. Ct. App. 2005)