## Facts

- William L. Daniels contracted in 1977 to buy two residential lots from James Anderson and Stephen Jacula.
- The contract granted Daniels (1) a right of first refusal to purchase a contiguous parcel owned by the sellers and (2) rights to an access easement/strip for ingress and egress to 79th Street.
- The contract was not promptly recorded, and Daniels’s deed omitted the right of first refusal and the easement terms.
- Nicholas Zografos later contracted to purchase the contiguous parcel from the same sellers and made substantial payments without notice of Daniels’s rights.
- Before Zografos completed payment and took/recorded title, he learned of Daniels’s right of first refusal, but he proceeded to finish the transaction.
- Daniels sued seeking specific performance of the right of first refusal and recognition/enforcement of the access easement.
- The trial court ordered Zografos to convey the contiguous parcel to Daniels and required Daniels to reimburse Zografos for the purchase price and taxes; it also enforced the easement.
- The appellate court affirmed, and the Illinois Supreme Court affirmed with a minor modification clarifying the easement’s description.

## Issues

1. Whether Zografos was a bona fide purchaser for value without notice, given that he learned of Daniels’s unrecorded rights before completing payment and obtaining title.
2. Whether Illinois applies the pro tanto rule, protecting a purchaser only to the extent consideration was paid before notice of a prior unrecorded interest.
3. Whether the merger doctrine barred enforcement of the contractual easement because the deed to Daniels did not include the easement terms.

## Decision

- The court affirmed specific performance requiring conveyance of the contiguous parcel to Daniels, with equitable reimbursement to Zografos.
- The court held Zografos lacked full bona fide purchaser protection because he proceeded with payment after receiving notice of Daniels’s rights.
- The court applied the pro tanto rule: protection extends only to amounts paid before notice, not to payments made after notice.
- The court held the contractual easement did not merge into the deed and remained enforceable; it approved a clarified description of the easement’s location/dimensions.

## Legal Principles

- A purchaser who receives notice of a prior interest before completing payment and taking the legal estate proceeds at the purchaser’s risk as to subsequent payments and cannot claim full bona fide purchaser status.
- Under the pro tanto rule, a purchaser is protected as a bona fide purchaser only to the extent of consideration paid before notice of the prior interest.
- The merger doctrine does not extinguish contractual property rights omitted from the deed when the deed does not perform the relevant contractual obligation or when the obligation is collateral and not intended to be discharged by delivery of the deed.
- Specific performance affecting real property may be paired with equitable adjustments, including reimbursement of the later purchaser’s payments and taxes, to avoid unjust enrichment while enforcing the prior contractual right.

## Conclusion

The Illinois Supreme Court enforced Daniels’s unrecorded right of first refusal and access easement against a later purchaser who acquired notice before completing the transaction, applying the pro tanto bona fide purchaser rule and rejecting merger where the deed failed to perform the contractual easement obligation.


Daniels v. Anderson, 162 Ill. 2d 47, 642 N.E.2d 128 (Ill. 1994)