Glenview State Bank v. Shyman

Glenview State Bank (Glenview) (plaintiff) held two mortgages on a development owned by Lakeshore Terrace, Inc. (Lakeshore). The loans giving rise to the mortgages were for construction of condominiums on the development. The mortgages were recorded on April 20, 1981, and August 31, 1981, respectively. In February 1981, Leon Shyman (defendant) signed an agreement to purchase an unbuilt condominium, Unit F. The contract contained a rider stating that if the unit was transferred before it was substantially constructed, the title would be subject to Glenview’s construction mortgage. Additionally, Shyman and Lakeshore orally agreed that if Unit A, which was tentatively under agreement at the time, became available, Shyman could have Unit A. Soon after he signed his agreement, Unit A, which was still uncompleted, became available and was conveyed to Shyman. The deed was not recorded until November 18, 1982. At the time Glenview and Lakeshore signed the mortgages, Glenview had knowledge that Lakeshore presold certain units, but did not have knowledge of any purchase of Unit A. The contracts for the other presold units all contained the same rider as Shyman’s contract for Unit F. Glenview foreclosed on the mortgages. Shyman claimed that Glenview had inquiry notice of his interest in Unit A. The trial court agreed and found in favor of Shyman. Glenview appealed.