Where Debtor Granted Mortgage with Covenants, He was Estopped by After-Acquired Title Doctrine from Claiming Mortgage Did Not Attach to Entire Parcel.

The plaintiff was the holder of two promissory notes secured by a mortgage covering property, only 50 percent of which was actually owned by the defendant at the time. Five years after giving the mortgage, the defendant received a warranty deed effectively granting it 100 percent ownership in the mortgaged property. The plaintiff successfully sued in federal court to collect on the amounts due on the promissory notes and then filed its state action to foreclose the mortgage on the entire property on the basis of the after-acquired title doctrine. After several procedural appeals and remands, the district court applied the after-acquired title doctrine and concluded that because the defendant granted the mortgage at issue "with mortgage covenants," it was estopped from claiming that the mortgage did not attach to the entire property when it subsequently obtained a 100 percent interest. The trial court granted summary judgment for the plaintiff, and the defendant appealed. Affirming the judgment, the court ruled that the defendant’s grant of the mortgage with mortgage covenants purported to convey a 100-percent interest in the property. As such, the district court properly applied the after-acquired title doctrine. The district court did not, as the defendant argued, rely on the defendant’s intent in so ruling. Rather, it held that a party granting a mortgage with mortgage covenants is estopped by the after-acquired title doctrine from claiming that the mortgage did not attach to the entire parcel at the time the party later acquired a 100 percent interest.  Rabo Agrifinance, Inc. v. Terra XXI, LTD., No. 32,697, 2014 N.M. App. LEXIS 64 (N.M. Ct. App. Jun. 25, 2014).

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