Real Property Law

Supreme Ct., Suffolk Cty.

(Emerson, J.)

In an action to foreclose a mortgage, mortgagee sought summary judgment and appointment of a referee. Supreme Court granted the motion, rejecting a junior mortgagee's request that the property secured by the mortgage be sold separately rather than in a single block.

Mortgagee sought to foreclose a commercial mortgage secured by 19 condominium units in Suffolk County. The holder of a junior mortgage opposed the motion, and the mortgagor's guarantors sought dismissal of the complaint. The junior mortgagee sought an order directing that the units be sold separately, and that only so many units be sold as are necessary to satisfy the senior mortgage debt. The guarantors contended that the notice of foreclosure was inadequate, and that mortgagee had orally agreed to accept payments in a smaller amount each month.

In granting senior mortgagee's summary judgment motion, the court first noted that the junior mortgagee was seeking affirmative relief without moving for such relief. But the court went on to hold that in any event, the question of how the units are sold would be determined by the referee, not by the court on this summary judgment motion. The court then rejected the guarantors' notice argument, and observed that both the mortgage and the note contain proscriptions against oral modification, which precluded the argument that mortgagees had orally agreed to accept less money each month.

COMMENT

Where multiple parcels secure a single debt, an appointed referee will generally exercise its discretionary powers in favor of a sale in parcels so long as the sale will satisfy the amount due to mortgagee and will not result in the material injury of an interested party. See RPAPL ' 1351(1) (“The judgment shall direct that the mortgaged premises, or so much thereof as may be sufficient to discharge the mortgage debt, the expenses of the sale and the costs of the action, and which may be sold separately without material injury to the parties interested, be sold by … a referee.”).

However, where it is clear that the mortgaged parcels are inadequate security for mortgagee's debt, the referee may recommend a bulk sale to generate the highest possible sale price. For example, in Gregory v. Campbell, the court directed a bulk sale of the mortgaged property in light of the referee's determination that the property was inadequate security for the debt and was more valuable as a whole than in separate parcels. Gregory v. Campbell, 1858 WL 6820 (N.Y. Sup.Ct. 1858). The court in 4 noted that a portion of the mortgaged parcels could not be sold separately to satisfy the $2,592.08 due without prejudice to the value of the residue of the property, thus jeopardizing the payment of the remaining installments to the mortgagee. Id. In Sawyer Sav. Bank v. Guido, the court directed that the mortgaged premises should be sold as a whole where the seven undeveloped lots at issue shared a common infrastructure and evidence suggested that lots would have considerably less value per lot if sold separately because purchasers would have to reach an agreement amongst themselves regarding the completion of the infrastructure before any homes could be built. Sawyer Sav. Bank v. Guido, 198 A.D.2d 551, 553-54 (1993). See also Coudert v. De Logerot, 3 0 N.Y.S. 114 (Gen. Term 1894) (holding that property that had previously been split up in several parcels, should be sold as a whole to generate the highest sale price where the most valuable use for the property was the operation of a hotel).

Where a referee has determined that the mortgaged property is adequate to satisfy the debt owed to mortgagee, the referee may consider third party interests in determining the order in which the parcels should be sold. In Champlain Valley Fed. Sav.& Loan Ass'n of Plattsburgh v. Ladue, 35 A.D.2d 888 (1970), the court held that where the mortgagor owned two of the five properties as tenants by the entirety with his wife, the property owned exclusively by the mortgager should be sold first. The court acknowledged that it had the right to order the sale of all of the parcels, but stated that its “equitable powers also include the power to direct the order of sale of different parcels in order to protect the rights and preserve the equities of all.” Id. Additionally, in Ingalls v. Morgan, the court considered the interests of junior mortgagees in holding that “where a creditor has a lien upon two funds for the security of his debt, and another party has an interest in either one of those funds, without any right to resort to the other, in such a case equity will compel the creditor to take his satisfaction out of the fund upon which he alone has an interest, so that both parties may, if possible, escape without injury.” Ingalls v. Morgan, 10 N.Y. 178, 186 (1854) .

Time of the Essence Notice Ineffective When Served Before Initial Closing Date

Revital Realty Group, LLC v. Ulano Corp.

NYLJ 12/31/13, p. 22, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In buyer's action for specific performance of a contract to sell real property, seller appealed from Supreme Court's denial of its summary judgment motion and dismissal of its counterclaims. The Appellate Division affirmed, holding that seller's notice purporting to make time of the essence was ineffective to make time of the essence.

On Nov. 30, 2011, buyer contracted to purchase the subject premises for $4,550,000. The contract specified that the closing was to be held 120 days following the date of the contract, which would have been March 29, 2012. On March 13, 2012, seller's lawyer wrote to buyer's lawyer identifying March 29 as the closing date and proclaiming that “time is of the essence.” Purchaser's lawyer wrote back indicating that the contract did not make time of the essence, and asserting that seller could not make time of the essence before the scheduled closing date. Buyer offered to close on April 25 as a reasonable closing date, but seller scheduled the closing for March 29.

On March 28, buyer brought this action for specific performance, and filed a notice of pendency against the property. When buyer did not appear at the closing, seller counterclaimed for damages arising from buyer's breach and from filing of the notice of pendency. When Supreme Court denied seller's summary judgment motion, seller appealed.

In affirming, the Appellate Division emphasized that when a contract for sale of real property does not include a time is of the essence clause, each party has a reasonable time in which it may tender performance. The court held that seller's pre-closing notice that time was of the essence was premature, and also failedto give purchaser a reasonable time to perform. As a result, buyer was not in breach for failure to appear at the March 29 closing.

COMMENT

Where a real estate sale contract requires parties to close by a specific date, but does not state that time is of the essence, courts routinely permit unilateral time of the essence demands after the contract closing date has passed where notice provides a reasonable time for the other party to close before the newly specified closing date ' a factual, case-by-case determination. Zev v. Merman, 134 A.D.2d 555, aff'd 73 N.Y.2d 781 (seller's notice eight days before the new closing date was reasonable where, among other things, the new closing date was over a month after the contract closing date and more than three months after parties had executed the contract, and where buyer failed to object to the new closing date until after the fact); Tarlovsky v. Falk, 2011 WL 223352 (seller's notice sent 21 days before the new closing date was reasonable where, among other things, the new closing date was over three months after the contract closing date and more than six months after parties executed the contract); cf. Miller v. Almquist, 241 A.D.2d 181 (seller's notice 14 days before the new closing date was unreasonable where, among other things, the new closing date was only 15 days after the contract closing date, only six weeks after parties signed the contract, sellers failed to show the delay would have prejudiced them, and buyer was inexperienced and delayed by lender's unanticipated, last minute document request).

It is premature and unreasonable as a matter of law for a party to unilaterally make time of the essence after the contract signing but before the contract closing date. Thus, in Baltic v. Rossi, 289 A.D.2d 430, the court held that buyer's letter demanding time of the essence was ineffective where buyer mailed the letter after signing its real estate sale contract with seller, but twenty-nine days before the contract closing date. Parties' March 2000 contract stipulated the closing would occur “on June 30, 2000,” but did not declare time was of the essence. Id. at 430. Similarly, in Savitzky v. Sukenik, 240 A.D.2d 557, buyer and seller signed a real estate sale contract in June 1994 that called for a closing “no later than Aug. 21, 1994,” but did not make time of the essence. The court held that seller's Aug. 4 letter purporting to make time of the essence if buyer refused to suggest an alternate date was ineffective because seller mailed it 17 days before the contract closing date. Id. at 558. The court also held that seller's notice was unreasonable because it did not provide sufficient time ' or any time for that matter ' for buyer to close after the contract closing date. Id. at 559. While the language in Baltic and Savitzky suggests that one may never make time of the essence until after the contract closing date has passed, in both cases the demanding party gave notice less than a month before the contract closing date. Balltic, supra, at 430; Savitzky, supra , at 558. Thus, it is conceivable that a future court might distinguish these cases based on reasonableness of notice and validate an otherwise premature time of the essence demand where notice is provided long before the contract closing date. A court following this logic might also validate a time of the essence demand where notice is sent before the contract closing date, but makes time of the essence as to a new, later date.

Seller Not Entitled to Vendor's Lien

Malco Realty Corp. v. Westchester Condos, LLC

NYLJ 2/6/14, p. 23, col. 1

AppDiv, First Dept.

(memorandum opinion)

In an action by seller for breach of a contract to purchase real property, seller appealed from Supreme Court's dismissal of the breach of contract claim and dismissal of the complaint against subsequent purchasers of the subject property. The Appellate Division modified to reinstate the breach of contract claim, but otherwise affirmed, holding that seller was not entitled to a vendor's lien against a subsequent purchaser, even if the subsequent purchaser took with knowledge of the terms of the sale contract.

In December 2007, corporate seller contracted to sell the subject property to purchaser for $6 million. The contract was signed by seller's principal. The following month, January 2008, the son of seller's principal, who was also seller's principal, signed another sale contract purporting to sell the same property to purchaser for $3.1 million. Corporate seller later brought this action seeking $2.9 million for breach of the December 2007 contract. Seller also sought a vendor's lien against parties to whom purchaser had sold the property in November 2011. Supreme Court held that the December contract was a sham, and dismissed the breach of contract cause of action, as well as the claim for imposition of a vendor's lien.

In modifying, the Appellate Division held that purchaser was not entitled to dismissal of the breach of contract claim based on documentary evidence. The court noted that the January 2008 contract, which was handwritten, nowhere mentioned the corporate seller, and noted that the earlier December 2007 agreement had been recorded in connection with the transaction. As a result, the claim for breach of the December contract should not have been dismissed. But the court affirmed Supreme Court's dismissal of the claims against the subsequent purchaser, noting that seller's notice of pendency had expired by the time of the transfer to the subsequent purchaser. As a result, the court held that seller was not entitled to a vendor's lien against the subsequent purchaser even if the subsequent purchaser had actual knowledge of seller's claim against purchaser. The court emphasized that a seller is not entitled to a vendor's lien against a subsequent purchaser, and rejected seller's claim that the transfer to a subsequent purchaser was a “sham transfer” to an affiliated entity, emphasizing that the transfer was recorded and that transfer taxes were paid at the time of the transfer.

COMMENT

A seller of real property is entitled, in equity, to a lien on property sold until the buyer makes all payments for the full purchase price of the property. This right will be granted by a court “where there is unequivocal evidence that the parties intended to create a mortgage.” As the Court of Appeals put it in dictum in Zeiser v. Cohn, 207 N.Y. 407, the vendor's lien “is a pure invention of equity to protect those who have parted with real estate without security.”

In Village of Philadelphia v. Fortis US Energy Corp., 48 A.D.3d 1193, the court suggested that a vendor's lien is enforceable against any subsequent purchaser with notice of the vendor's interest. In Village of Philadelphia, the court denied a subsequent purchaser's motion for summary judgment seeking dismissal of a vendor's lien claimed by a vendor who sold the property to purchaser's seller. The vendor's claim arose out of an agreement by the subsequent purchaser's seller that part of the purchase price would be paid in 50 annual installments. The court ruled that the vendor raised a triable issue of fact regarding whether the subsequent purchaser had constructive notice of the agreement based on documents in the purchaser's possession and the adequacy of its title search. Implicit in the court's holding is the premise that the vendor would be entitled to enforce the lien against a subsequent purchaser if the subsequent purchaser had notice of the agreement.

While the decision in Malco that a seller could not obtain a vendor's lien against a purchaser with notice of the seller's claim appears inconsistent with Village of Philadelphia, the Malco court's holding preserves the alienability of property in those cases where a claimant has taken inadequate steps to protect its claim against prospective purchasers. To that extent, Malco is consistent with the principle articulated in Da Silva v. Musso, 76 N.Y.2d 436, where the Court of Appeals held that a subsequent purchaser's actual knowledge of a pending appeal regarding the ownership status of a property did not impair the subsequent purchaser's title when the subject property was not subject to a valid notice of pendency. Seller Musso had entered into an agreement to sell property to original purchaser Da Silva but subsequently reneged on the agreement. Da Silva then filed a notice of pendency and commenced an action for specific performance, which was granted by the lower court. When the Appellate Division reversed, the notice of pendency was cancelled. Musso subsequently sold the property to a third party. The Court of Appeals ruled that the subsequent purchaser was entitled to rely on the cancellation of the notice of pendency as proof that the pending litigation was no longer a blight on the title. Id. at 442.Thus, even though the purchaser knew of the outstanding claim, the purchaser ' as in Malco ' was entitled to take free of that claim.

Junior Mortgagee Fails in Effort to Require Senior Mortgagee to Sell Security Separately

Bethpage FCU v. Northwood Village

NYLJ 1/8/14, p. 21, col. 3

Supreme Ct., Suffolk Cty.

(Emerson, J.)

In an action to foreclose a mortgage, mortgagee sought summary judgment and appointment of a referee. Supreme Court granted the motion, rejecting a junior mortgagee's request that the property secured by the mortgage be sold separately rather than in a single block.

Mortgagee sought to foreclose a commercial mortgage secured by 19 condominium units in Suffolk County. The holder of a junior mortgage opposed the motion, and the mortgagor's guarantors sought dismissal of the complaint. The junior mortgagee sought an order directing that the units be sold separately, and that only so many units be sold as are necessary to satisfy the senior mortgage debt. The guarantors contended that the notice of foreclosure was inadequate, and that mortgagee had orally agreed to accept payments in a smaller amount each month.

In granting senior mortgagee's summary judgment motion, the court first noted that the junior mortgagee was seeking affirmative relief without moving for such relief. But the court went on to hold that in any event, the question of how the units are sold would be determined by the referee, not by the court on this summary judgment motion. The court then rejected the guarantors' notice argument, and observed that both the mortgage and the note contain proscriptions against oral modification, which precluded the argument that mortgagees had orally agreed to accept less money each month.

COMMENT

Where multiple parcels secure a single debt, an appointed referee will generally exercise its discretionary powers in favor of a sale in parcels so long as the sale will satisfy the amount due to mortgagee and will not result in the material injury of an interested party. See RPAPL ' 1351(1) (“The judgment shall direct that the mortgaged premises, or so much thereof as may be sufficient to discharge the mortgage debt, the expenses of the sale and the costs of the action, and which may be sold separately without material injury to the parties interested, be sold by … a referee.”).

However, where it is clear that the mortgaged parcels are inadequate security for mortgagee's debt, the referee may recommend a bulk sale to generate the highest possible sale price. For example, in Gregory v. Campbell, the court directed a bulk sale of the mortgaged property in light of the referee's determination that the property was inadequate security for the debt and was more valuable as a whole than in separate parcels. Gregory v. Campbell, 1858 WL 6820 (N.Y. Sup.Ct. 1858). The court in 4 noted that a portion of the mortgaged parcels could not be sold separately to satisfy the $2,592.08 due without prejudice to the value of the residue of the property, thus jeopardizing the payment of the remaining installments to the mortgagee. Id. In Sawyer Sav. Bank v. Guido, the court directed that the mortgaged premises should be sold as a whole where the seven undeveloped lots at issue shared a common infrastructure and evidence suggested that lots would have considerably less value per lot if sold separately because purchasers would have to reach an agreement amongst themselves regarding the completion of the infrastructure before any homes could be built. Sawyer Sav. Bank v. Guido, 198 A.D.2d 551, 553-54 (1993). See also Coudert v. De Logerot, 3 0 N.Y.S. 114 (Gen. Term 1894) (holding that property that had previously been split up in several parcels, should be sold as a whole to generate the highest sale price where the most valuable use for the property was the operation of a hotel).

Where a referee has determined that the mortgaged property is adequate to satisfy the debt owed to mortgagee, the referee may consider third party interests in determining the order in which the parcels should be sold. In Champlain Valley Fed. Sav.& Loan Ass'n of Plattsburgh v. Ladue, 35 A.D.2d 888 (1970), the court held that where the mortgagor owned two of the five properties as tenants by the entirety with his wife, the property owned exclusively by the mortgager should be sold first. The court acknowledged that it had the right to order the sale of all of the parcels, but stated that its “equitable powers also include the power to direct the order of sale of different parcels in order to protect the rights and preserve the equities of all.” Id. Additionally, in Ingalls v. Morgan, the court considered the interests of junior mortgagees in holding that “where a creditor has a lien upon two funds for the security of his debt, and another party has an interest in either one of those funds, without any right to resort to the other, in such a case equity will compel the creditor to take his satisfaction out of the fund upon which he alone has an interest, so that both parties may, if possible, escape without injury.” Ingalls v. Morgan, 10 N.Y. 178, 186 (1854) .

Time of the Essence Notice Ineffective When Served Before Initial Closing Date

Revital Realty Group, LLC v. Ulano Corp.

NYLJ 12/31/13, p. 22, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In buyer's action for specific performance of a contract to sell real property, seller appealed from Supreme Court's denial of its summary judgment motion and dismissal of its counterclaims. The Appellate Division affirmed, holding that seller's notice purporting to make time of the essence was ineffective to make time of the essence.

On Nov. 30, 2011, buyer contracted to purchase the subject premises for $4,550,000. The contract specified that the closing was to be held 120 days following the date of the contract, which would have been March 29, 2012. On March 13, 2012, seller's lawyer wrote to buyer's lawyer identifying March 29 as the closing date and proclaiming that “time is of the essence.” Purchaser's lawyer wrote back indicating that the contract did not make time of the essence, and asserting that seller could not make time of the essence before the scheduled closing date. Buyer offered to close on April 25 as a reasonable closing date, but seller scheduled the closing for March 29.

On March 28, buyer brought this action for specific performance, and filed a notice of pendency against the property. When buyer did not appear at the closing, seller counterclaimed for damages arising from buyer's breach and from filing of the notice of pendency. When Supreme Court denied seller's summary judgment motion, seller appealed.

In affirming, the Appellate Division emphasized that when a contract for sale of real property does not include a time is of the essence clause, each party has a reasonable time in which it may tender performance. The court held that seller's pre-closing notice that time was of the essence was premature, and also failedto give purchaser a reasonable time to perform. As a result, buyer was not in breach for failure to appear at the March 29 closing.

COMMENT

Where a real estate sale contract requires parties to close by a specific date, but does not state that time is of the essence, courts routinely permit unilateral time of the essence demands after the contract closing date has passed where notice provides a reasonable time for the other party to close before the newly specified closing date ' a factual, case-by-case determination. Zev v. Merman, 134 A.D.2d 555, aff'd 73 N.Y.2d 781 (seller's notice eight days before the new closing date was reasonable where, among other things, the new closing date was over a month after the contract closing date and more than three months after parties had executed the contract, and where buyer failed to object to the new closing date until after the fact); Tarlovsky v. Falk, 2011 WL 223352 (seller's notice sent 21 days before the new closing date was reasonable where, among other things, the new closing date was over three months after the contract closing date and more than six months after parties executed the contract); cf. Miller v. Almquist, 241 A.D.2d 181 (seller's notice 14 days before the new closing date was unreasonable where, among other things, the new closing date was only 15 days after the contract closing date, only six weeks after parties signed the contract, sellers failed to show the delay would have prejudiced them, and buyer was inexperienced and delayed by lender's unanticipated, last minute document request).

It is premature and unreasonable as a matter of law for a party to unilaterally make time of the essence after the contract signing but before the contract closing date. Thus, in Baltic v. Rossi, 289 A.D.2d 430, the court held that buyer's letter demanding time of the essence was ineffective where buyer mailed the letter after signing its real estate sale contract with seller, but twenty-nine days before the contract closing date. Parties' March 2000 contract stipulated the closing would occur “on June 30, 2000,” but did not declare time was of the essence. Id. at 430. Similarly, in Savitzky v. Sukenik, 240 A.D.2d 557, buyer and seller signed a real estate sale contract in June 1994 that called for a closing “no later than Aug. 21, 1994,” but did not make time of the essence. The court held that seller's Aug. 4 letter purporting to make time of the essence if buyer refused to suggest an alternate date was ineffective because seller mailed it 17 days before the contract closing date. Id. at 558. The court also held that seller's notice was unreasonable because it did not provide sufficient time ' or any time for that matter ' for buyer to close after the contract closing date. Id. at 559. While the language in Baltic and Savitzky suggests that one may never make time of the essence until after the contract closing date has passed, in both cases the demanding party gave notice less than a month before the contract closing date. Balltic, supra, at 430; Savitzky, supra , at 558. Thus, it is conceivable that a future court might distinguish these cases based on reasonableness of notice and validate an otherwise premature time of the essence demand where notice is provided long before the contract closing date. A court following this logic might also validate a time of the essence demand where notice is sent before the contract closing date, but makes time of the essence as to a new, later date.

Seller Not Entitled to Vendor's Lien

Malco Realty Corp. v. Westchester Condos, LLC

NYLJ 2/6/14, p. 23, col. 1

AppDiv, First Dept.

(memorandum opinion)

In an action by seller for breach of a contract to purchase real property, seller appealed from Supreme Court's dismissal of the breach of contract claim and dismissal of the complaint against subsequent purchasers of the subject property. The Appellate Division modified to reinstate the breach of contract claim, but otherwise affirmed, holding that seller was not entitled to a vendor's lien against a subsequent purchaser, even if the subsequent purchaser took with knowledge of the terms of the sale contract.

In December 2007, corporate seller contracted to sell the subject property to purchaser for $6 million. The contract was signed by seller's principal. The following month, January 2008, the son of seller's principal, who was also seller's principal, signed another sale contract purporting to sell the same property to purchaser for $3.1 million. Corporate seller later brought this action seeking $2.9 million for breach of the December 2007 contract. Seller also sought a vendor's lien against parties to whom purchaser had sold the property in November 2011. Supreme Court held that the December contract was a sham, and dismissed the breach of contract cause of action, as well as the claim for imposition of a vendor's lien.

In modifying, the Appellate Division held that purchaser was not entitled to dismissal of the breach of contract claim based on documentary evidence. The court noted that the January 2008 contract, which was handwritten, nowhere mentioned the corporate seller, and noted that the earlier December 2007 agreement had been recorded in connection with the transaction. As a result, the claim for breach of the December contract should not have been dismissed. But the court affirmed Supreme Court's dismissal of the claims against the subsequent purchaser, noting that seller's notice of pendency had expired by the time of the transfer to the subsequent purchaser. As a result, the court held that seller was not entitled to a vendor's lien against the subsequent purchaser even if the subsequent purchaser had actual knowledge of seller's claim against purchaser. The court emphasized that a seller is not entitled to a vendor's lien against a subsequent purchaser, and rejected seller's claim that the transfer to a subsequent purchaser was a “sham transfer” to an affiliated entity, emphasizing that the transfer was recorded and that transfer taxes were paid at the time of the transfer.

COMMENT

A seller of real property is entitled, in equity, to a lien on property sold until the buyer makes all payments for the full purchase price of the property. This right will be granted by a court “where there is unequivocal evidence that the parties intended to create a mortgage.” As the Court of Appeals put it in dictum in Zeiser v. Cohn, 207 N.Y. 407, the vendor's lien “is a pure invention of equity to protect those who have parted with real estate without security.”

In Village of Philadelphia v. Fortis US Energy Corp., 48 A.D.3d 1193, the court suggested that a vendor's lien is enforceable against any subsequent purchaser with notice of the vendor's interest. In Village of Philadelphia, the court denied a subsequent purchaser's motion for summary judgment seeking dismissal of a vendor's lien claimed by a vendor who sold the property to purchaser's seller. The vendor's claim arose out of an agreement by the subsequent purchaser's seller that part of the purchase price would be paid in 50 annual installments. The court ruled that the vendor raised a triable issue of fact regarding whether the subsequent purchaser had constructive notice of the agreement based on documents in the purchaser's possession and the adequacy of its title search. Implicit in the court's holding is the premise that the vendor would be entitled to enforce the lien against a subsequent purchaser if the subsequent purchaser had notice of the agreement.

While the decision in Malco that a seller could not obtain a vendor's lien against a purchaser with notice of the seller's claim appears inconsistent with Village of Philadelphia, the Malco court's holding preserves the alienability of property in those cases where a claimant has taken inadequate steps to protect its claim against prospective purchasers. To that extent, Malco is consistent with the principle articulated in Da Silva v. Musso, 76 N.Y.2d 436, where the Court of Appeals held that a subsequent purchaser's actual knowledge of a pending appeal regarding the ownership status of a property did not impair the subsequent purchaser's title when the subject property was not subject to a valid notice of pendency. Seller Musso had entered into an agreement to sell property to original purchaser Da Silva but subsequently reneged on the agreement. Da Silva then filed a notice of pendency and commenced an action for specific performance, which was granted by the lower court. When the Appellate Division reversed, the notice of pendency was cancelled. Musso subsequently sold the property to a third party. The Court of Appeals ruled that the subsequent purchaser was entitled to rely on the cancellation of the notice of pendency as proof that the pending litigation was no longer a blight on the title. Id. at 442.Thus, even though the purchaser knew of the outstanding claim, the purchaser ' as in Malco ' was entitled to take free of that claim.