## Facts

- In December 2000, S & F Construction, Inc. (S&F) executed a security deed to Shakrookh (Daniel) Deljoo to secure a loan on subdivision lots in Villas at Hidden Hills.
- The security deed referenced Lots 15 and 16 in the subdivision but misstated the land-lot number (describing the property as in Land Lot 18 rather than the correct Land Lot 28).
- The deed appeared to be signed by Sohrab Moghadam, S&F’s president, but the signature line did not identify his corporate office or representative capacity.
- No other corporate officer signed the deed, and the corporate seal on the deed was illegible.
- In August 2001, Vanguard Builders and Developers, LLC (Vanguard) purchased one of the lots from S&F.
- Years later, Doris Milton bought the lot from Vanguard, financing the purchase with a loan from SunTrust Mortgage, Inc. (SunTrust).
- Because Deljoo’s deed contained the incorrect land-lot description, the title search conducted for Milton’s closing did not reveal Deljoo’s recorded security deed, and Deljoo was not paid off.
- At closing, Vanguard provided an owner’s affidavit stating there were no unpaid liens or other claims against the property.
- SunTrust filed suit seeking to cancel Deljoo’s security deed or otherwise quiet title as against Deljoo’s claimed interest.
- The parties filed cross-motions for summary judgment; SunTrust and Milton argued they were protected as purchasers/lenders for value without notice and also challenged whether S&F properly executed the deed as a corporate act.
- The trial court granted summary judgment to SunTrust and Milton and denied Deljoo’s motion, and Deljoo appealed.

## Issues

1. Whether Deljoo’s recorded security deed, containing an incorrect land-lot description, was outside the chain of title such that Milton and SunTrust took without constructive notice and could claim bona fide purchaser/encumbrancer status.
2. Whether summary judgment was proper on the validity of the security deed where evidence of corporate execution was irregular (no corporate title shown by the signer, no second officer’s signature, and an illegible corporate seal).

## Decision

- The Court of Appeals affirmed the ruling that the incorrect land-lot description placed Deljoo’s security deed outside the chain of title for the property Milton purchased, so the later purchaser and lender were not charged with constructive notice from the record.
- The court therefore affirmed summary judgment in favor of SunTrust and Milton on the chain-of-title/notice issue.
- The Court of Appeals reversed in part because the record showed a genuine dispute of material fact about whether S&F properly executed the security deed as a corporate instrument.
- The case was remanded for further proceedings on the execution/validity question.

## Legal Principles

- Constructive notice from recording depends on whether an instrument is discoverable through a reasonable search of the purchaser’s chain of title; an instrument recorded but indexed or described so that it would not be found in that chain may not provide constructive notice.
- A purchaser or lender for value who takes without actual or constructive notice of a prior interest may be protected as a bona fide purchaser or bona fide encumbrancer.
- The validity of a corporate conveyance can turn on whether the instrument shows execution in a representative corporate capacity and whether required corporate formalities (such as appropriate officer signatures and a corporate seal) were satisfied.
- When the evidence permits competing conclusions about whether a corporation properly executed a deed, the question is for the factfinder and is not suitable for resolution on summary judgment.

## Conclusion

The Court of Appeals held that the land-lot error meant Deljoo’s recorded security deed did not provide constructive notice to Milton and SunTrust through the chain of title, but it also held that irregularities in the deed’s corporate execution created a triable fact question, requiring reversal in part and remand.


Deljoo v. SunTrust Mortgage, Inc., 671 S.E.2d 234 (2008)