Ashton wished to raise additional capital for his business and arranged with Banyon for a $10,000 mortgage on his estate, Blackacre. Ashton did not disclose the fact that he had previously borrowed $10,000 from Clayton by way of a mortgage, and Clayton had not registered his mortgage against the title of Blackacre. Shortly after the mortgage to Banyon was registered, Ashton conveyed the estate to Dayton, for $25,000. Dayton was unaware of the mortgages to Banyon and Clayton and did not examine the title to Blackacre when he registered his deed. Dayton would be obliged to pay Banyon's registered mortgage to obtain a clear title to Blackacre.

Question

Quizplus · Accepted Answer

Since Banyon's mortgage was registered before Dayton acquired Blackacre, it would be considered a legal encumbrance on the property. Dayton, to obtain a clear title, would need to satisfy Banyon's mortgage, regardless of his knowledge about it at the time of purchase.

Ashton Wished to Raise Additional Capital for His Business and Arranged