Klein v. Oakland/Red Oak Holdings, Ltd. Liab. Co. - 294 Neb. 535, 883 N.W.2d 699 (2016)

Rule:

Under the doctrine of caveat emptor, a purchaser is bound to examine the title to real estate the purchaser buys, and if the purchaser buys without such examination, he or she does so at his or her peril, and must suffer the loss occasioned by his or her neglect.

Facts:

Jeremy L. Klein and Kimberly J. Klein, husband and wife, and Robert D. Lynch and Elaine M. Lynch, husband and wife (collectively, the appellees), purchased a trust deed at a trustee's sale for certain real estate. Prior to the trustee's sale, treasurer's tax deeds for the same real estate had been issued to a third party. By operation of law, a treasurer's tax deed passes title free and clear of all previous liens and encumbrances, and therefore, the treasurer's tax deeds had divested the trust deed of title. The treasurer's tax deeds were recorded prior to the trustee's sale, but the appellees failed to examine the record prior to the trustee's sale. The appellees brought the present action in equity against Oakland/Red Oak Holdings, LLC (Oakland), the appellant, which was the beneficiary of the trust deeds, seeking to set aside the sale and to be reimbursed the purchase price of $40,001. The district court determined that the trustee's sale was void and ordered that Oakland return the purchase price to the appellees. Oakland appealed. 

Issue:

Were the appellees entitled to reimbursement from appellant trust deed beneficiary of their purchase price or a determination that the trustee's sale was void? 

Answer:

No.

Conclusion:

The court reversed the judgment of the district court, holding that the appellees were not entitled to reimbursement from appellant trust deed beneficiary of their purchase price or a determination that the trustee's sale was void when title to the land at issue had already passed by a treasurer's tax deed, which had been recorded, because, under the doctrine of caveat emptor, the purchasers were on record notice of the tax deed, under Neb. Rev. Stat. §§ 76-238(1) (Supp. 2014) and 76-1017 (Reissue 2009).