In ruling against the bank, the Fourth Circuit noted, first, that the Bankruptcy Code specifically provides that a trustee "is imputed with only the knowledge imputable to a bona fide purchaser" regardless of the trustee's knowledge of the lien. In observing, moreover, that the test under North Carolina law is not whether a bona fide purchaser had knowledge of a lien or whether the trustee in bankruptcy is imputed with such knowledge, but whether the lien was recorded in the official index, the Court concluded that in this case a deed of trust must be recorded in the PIN index in order to be effective against a bona fide purchaser, and thus against a trustee.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
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