TP Investment Properties v. Naama
CourtSuperior Court of Pennsylvania
Date FiledOctober 21, 2026
Docket3084 EDA 2025
JudgeLazarus
StatusUnpublished
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Full Opinion
J-A21016-26
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37
TP INVESTMENT PROPERTIES, LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
NAAMA, LLC, HAWAH MUSA, AND ACT :
LAND SERVICES, LLC :
: No. 3084 EDA 2025
:
APPEAL OF: NAAMA, LLC :
Appeal from the Judgment Entered November 24, 2025
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 230300561
BEFORE: LAZARUS, P.J., BECK, J., and NEUMAN, J.
MEMORANDUM BY LAZARUS, P.J.: FILED OCTOBER 21, 2026
Defendant Naama, LLC (Naama), appeals from the judgment, entered
in favor of Plaintiff TP Investment Properties, LLC (TP), in the Court of
Common Pleas of Philadelphia County, following a non-jury trial. Because TP
was an innocent bona fide purchaser without notice, see 21 P.S. § 351, and
Naama waited 10 months to record its interests in the subject property, id. at
§§ 444, 621, we affirm.
TP is a Philadelphia real estate investment company; Tyler Phillips is
TP’s principal. Naama is a Wyoming limited liability company that operates as
a residential property holding company; Naama’s managing partner/owner is
Kotb “Sam” Elbialy. Naama is also the parent company of Homemart, LLC.
Third-party defendant, ACT Land Services, LLC (ACT), is a Philadelphia title
search company.
J-A21016-26
On March 6, 2023, TP filed a quiet title action against Naama and
Defendant Hawah Musa (Musa) in connection with the sale of a residential
property (the Property) located at 2823 N. 28 th Street, Philadelphia.1 See
Pa.R.C.P. 1061(b). TP’s complaint alleged that on January 2, 2023, Musa
executed a general warrant deed (Deed) conveying the Property to TP for
$75,000.00. The Deed names Musa as the grantee of the Property. See
Complaint, 3/6/23, at 1. At the closing of the sale of the Property on January
13, 2023, the Deed was transferred to TP. On January 23, 2023, the Deed
was recorded in the Philadelphia Department of Records.
The complaint alleged that, following the closing on the Property on
January 23, 2023, “a mortgage [(Naama Mortgage), dated March 21, 2022,
on the Property] was purportedly granted by Defendant Musa in favor of
Defendant Naama [and] was recorded[.]” Id., at 3. The complaint also
alleged that a deed in lieu of foreclosure (Naama Deed) on the Property, dated
March 21, 2022, “purportedly granted by Defendant Musa in favor of
Defendant Naama was recorded on January 23, 2023[.]” Id.
In its complaint, TP alleged that: it had no notice of the Naama
Mortgage or Naama Deed; it did not discover the Naama Mortgage or Deed
until they were recorded on January 23, 2023; it paid fair value to acquire
clear title to the Property; and, it was a bona fide purchaser of the Property.
____________________________________________
1 The Property is a duplex with two residential units—the first floor unit has
two bedrooms, a kitchen, and bathroom and the second floor unit has three
bedrooms, a kitchen, and bathroom. See Answer, 4/17/23, at 16.
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Id. at 3. TP joined Musa as a party, alleging that it breached the Deed’s
warranty and affidavit of title. Id. TP sought a declaration from the court
that both the Naama Mortgage and Naama Deed are void under the
Pennsylvania Recording Act (Act), 21 P.S. § 351, et seq.2 Id.
On April 17, 2023, Naama filed an answer with new matter,
counterclaim, and cross-claim to TP’s complaint. In its answer, Naama alleged
that it executed the Naama Deed, together with a mortgage/promissory note
on March 23, 2022, “prior to the purported sale to [TP and that those]
____________________________________________
2 Pursuant to section 351:
All deeds . . . and other instruments of writing wherein it shall be
the intention of the parties executing the same to grant, bargain,
sell, and convey any lands, tenements, or hereditaments situate
in this Commonwealth, upon being acknowledged by the parties
executing the same or proved in the manner provided by the laws
of this Commonwealth, shall be recorded in the office for the
recording of deeds in the county where such lands, tenements,
and hereditaments are situate. Every such deed, conveyance,
contract, or other instrument of writing which shall not be
acknowledged or proved and recorded, as aforesaid, shall be
adjudged fraudulent and void as to any subsequent bona fide
purchaser or mortgagee or holder of any judgment, duly entered
in the prothonotary’s office of the county in which the lands,
tenements, or hereditaments are situate, without actual or
constructive notice unless such deed, conveyance, contract, or
instrument of writing shall be recorded, as aforesaid, before the
recording of the deed or conveyance or the entry of the judgment
under which such subsequent purchaser, mortgagee, or judgment
creditor shall claim. Nothing contained in this act shall be
construed to repeal or modify any law providing for the lien of
purchase money mortgages.
21 P.S. § 351.
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documents were recorded in the Recorder’s Office at 9:29 a[.]m[.] on January
23, 2023—prior to the recording of plaintiff’s deed.” Naama Answer,
4/17/23, at 2 (emphasis in original). Therefore, Naama alleged that TP took
title to the Property “with actual notice of N[aama’s] interest in the [s]ubject
Property.” Id. at 2-3. Naama also alleged that one of TP’s agents, “Luis,”
had been notified in December 2022 of Naama’s first mortgage—prior to
settlement—and, thus, “Luis [also] had actual knowledge of N[aama’s]
interest in the [s]ubject Property.” Id. at 3.
In its answer, Naama further alleged that TP was not a “bona fide
purchaser” because it did not pay fair market value for the Property 3 since the
sale price of $75,000.00 was “substantially below the Fair Market Value based
upon the City of Philadelphia’s assessed value.” Id. Finally, Naama alleged
that on January 22, 2023, it posted a “Notice of Default and Termination of
Agreement” on the Property acknowledging Musa’s default, Naama’s interest
in the Property, and also that it would be recording its deed in lieu of
foreclosure and its mortgage. See id.
Finally, Naama alleged that ACT recorded the Deed electronically on
January 23, 2023, after Naama had informed ACT that the Naama Deed and
Naama Mortgage had already been recorded earlier that day. Id. at 4. A
deed of confirmation for the Naama Deed was recorded by the Department of
____________________________________________
3 In its answer, Naama alleged that, based upon the City’s 2023 assessed
value for the Property, its fair market value was $177,444.00. See id. at 20.
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Records on February 6, 2023. The deed of confirmation changed the
Property’s record owner back to Naama. Id. at 20.
Naama raised a quiet title counterclaim against TP, claiming that Musa
defaulted under the purchase agreement and forbearance agreement it had
with Naama. Naama also raised counterclaims for trespass to property,
slander of title, and fraud. Finally, Naama joined ACT as an additional
defendant, asserting claims of slander of title and fraud. On July 3, 2023, a
default judgment was entered in favor of Naama and against Musa. See N.T.
Non-Jury Trial, 1/27/25, at 5.
A non-jury trial was held on January 27, 2025. Following trial, the court
entered an order, dated June 16, 2025, in favor of TP on its claim for quiet
title, finding that TP owns the property and striking the Naama Deed, Naama
Mortgage, and the deed of confirmation entered in favor of Naama. See
Order, 6/16/25, at 1. The order also: found in favor of Musa on TP’s claim
for breach of warranty of title and intentional misrepresentation; found in
favor of Musa on Naama’s crossclaims for fraud, breach of contract, and unjust
enrichment; found in favor of TP on Naama’s counterclaims for quiet title,
trespass, and slander of title, and fraud; and found in favor of third-party
defendant ACT on Naama’s counterclaims for slander of title and fraud. Id.
at 1-2.
Naama filed a post-trial motion requesting judgment in its favor on its
quite title and slander of title counterclaims. Following oral argument, the
court entered an order, on October 31, 2025, granting, in part, Naama’s
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motion with regard to its crossclaims against Musa only, based the July 3,
2023 default judgment entered in favor of Naama against Musa. 4 See N.T.
Non-Jury Trial, 1/27/25, at 5. The court denied the remainder of Naama’s
post-trial motion.
On November 24, 2025, Naama praeciped to enter judgment in favor of
TP based upon the court’s June 16, 2025 order. Naama filed a timely notice
of appeal and court-ordered Pa.R.A.P. 1925(b) concise statement of errors
complained of on appeal. Naama raises the following issues for our
consideration:
(1) Did the [t]rial [c]ourt err in determining that TP [] is the
owner of the [P]roperty[]?
(2) Did the [t]rial [c]ourt err in finding that N[aama]’s mortgage
and deed are void?
(3) Did the [t]rial [c]ourt err in its interpretation of 21 P.S. §
444 and 21 P.S. § 621?
(4) Did the [t]rial [c]ourt err in its use of principles of equity to
rule in favor of TP[]?
Appellant’s Brief, at 4.
It is well-settled that “[i]n reviewing an action to quiet title, an appellate
court’s review is limited to determining whether the findings of fact are
supported by competent evidence, whether an error of law has been
committed, and whether there has been a manifest abuse of discretion.”
____________________________________________
4 As a result of its post-trial ruling, the court vacated paragraph 4 of its June
16, 2025 order that had found in favor of Musa and against Naama on Naama’s
crossclaims for fraud, breach of contract, and unjust enrichment.
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Regions Mortgage, Inc. v. Muthler, 889 A.2d 39, 41 (Pa. 2005) (internal
citation and quotation marks omitted).
It is not the role of an appellate court to pass on the credibility of
witnesses; hence[,] we will not substitute our judgment for that
of the factfinder. Thus, the test we apply is not whether we would
have reached the same result on the evidence presented, but
rather, after due consideration of the evidence which the trial
court found credible, whether the trial court could have reasonably
reached its conclusion.
Lynn v. Pleasant Valley Country Club, 54 A.3d 915, 919 (Pa. Super. 2012)
(internal citations omitted).
The trial court set forth the following relevant facts in its Rule 1925(a)
opinion:
Musa entered into a lease with option to buy agreement with non-
party Homemart, LLC[,] in December 2021, with an agreement to
pay $1,425[.00] per month for 23.5 years. After Musa made
payments totaling $24,500[.00], Homemart issued a [q]uitclaim
[d]eed to Musa for the [P]roperty on March 21, 2022[]. On the
same date, Musa signed three documents: 1) a Promissory Note
with [] N[aama] for the principal sum of $393,850.00 [5][]; 2) a
mortgage for the same amount in favor of Naama as the
“lender”[]; and 3) a Deed in Lieu of Foreclosure conveying title to
Naama for the cancellation of debit as secured by the mortgage[].
The mortgage and deed in lieu [of foreclosure] were not recorded
until January 23, 2023.
Mr. Phillips learned about the property through an email
advertisement sent by Peguero Development, LLC (non-party [6]).
____________________________________________
5 Elbialy testified that when he sold the Property to Musa
in March 2022, it
had a fair market value of $199,000.00. See N.T. Non-Jury Trial, 1/27/25, at
68-69.
6 Phillips testified that Peguero is a third-party wholesale real estate company
that listed the Property and was the entity with whom TP negotiated the
agreement to buy the Property. Id. at 77-82.
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TP negotiated a price and entered into a contract on December
10, 2022[,] to receive an assignment of Peguero’s interest in the
contract for the purchase sale of the [P]roperty.
On January 2, 2023, Musa executed a General Warranty Deed to
convey the property to [] TP. The closing on the sale of the
[P]roperty took place on January 13, 2023, at which time the
[D]eed was transferred to TP. ACT [] was the title company and,
after an initial title search and a “rundown” search conducted just
before closing, found no encumbrances on the [P]roperty. ACT
received a title commitment for the [P]roperty effective December
23, 2022. In addition, Musa executed a sworn affidavit stating
that there were no mortgages on the [P]roperty.
On January 22, 2023, . . . Musa notified [] Elbialy, [a] principal of
both Homemart and N[aama], that she sold the property.
Homemart then issued a [d]efault [n]otice to Musa and posted it
at the [P]roperty on January 22, 2023. The first notice that TP
had of this competing interest in the [P]roperty was when Mr.
Phillips (TP) went to the [P]roperty and saw the posting.
The following day, January 23, 2023, [] Elbialy recorded
N[aama’s] [] Mortgage and Deed in Lieu of Foreclosure at 9:29 []
am. Mr. Phillips recorded [the] Deed on the same day, at 10:31
am (62 minutes later). N[aama] then recorded a Deed of
Confirmation on February 6, 2023.
Trial Court Opinion, 4/10/26, at 2-4.
[O]ur precedent has long recognized the purpose of recording is
to protect the purchaser or mortgage holder’s bona fide status and
“to give public notice in whom the title resides; so that no one
may be defrauded by deceptious [] appearance of title.” Salter
[v. Reed], 15 Pa. [260,] 263 [(1850)]. See also First Citizens
Nat. Bank v. Sherwood, [] 879 A.2d 178, 181 ([Pa.] 2005)
(“legal effect of the recording of a written agreement such as a
mortgage is to give subsequent purchasers constructive notice of
the mortgage”). Moreover, a failure to record results in a clear
consequence—the mortgagee runs the risk of losing its status and
being deprived of property rights—and a party that chooses not
to record a conveyance or ownership interest pursuant to [s]ection
351 does so at its own peril.
MERSCORP Inc. v. Del. Cty., 207 A.3d 855, 869 (Pa. 2019).
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After a review of the parties’ briefs, certified record, and applicable
caselaw and statutes, we affirm the trial court’s judgment in favor of TP and
against Naama based on the trial court’s June 16, 2025 findings of fact and
conclusions of law, as well as its April 9, 2026 opinion, all authored by the
Honorable Susan L. Schulman. The court’s findings of fact are supported by
competent evidence in the record. Regions, supra. Moreover, the court
reasonably reached its conclusion—that TP was an innocent bona fide
purchaser without notice—based upon the evidence it found credible. Lynn,
supra.
In particular, the testimony showed that Naama did not record the
Naama Mortgage or Naama Deed in Lieu of Foreclosure at the time of their
conveyance, but waited 10 months, or until January 23, 2023, to do so. See
N.T. Non-Jury Trial, 1/27/25, at 26-28, 30, 38, 52. Moreover, the court found
that Elbialy testified credibly that, on January 22, 2023—the day before
Naama filed its documents—Musa told him that she had sold the property. Id.
at 36-37. Additionally, the court found Philips credible when he testified that
he did not have notice of the Naama Mortgage at the time TP purchased the
Property on January 13, 2023. Id. at 85, 88, 93-94.
We advise the parties to attach a copy of Judge Schulman’s findings of
fact and conclusions of law, as well as her decision, in the event of further
proceedings in the matter.
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Judgment affirmed.7
Date: 10/21/2026
____________________________________________
7 We reject the application of equitable principles to the instant matter and,
instead, rely upon principles of law to affirm the court’s decision. See Hassel
v. Franzi, 207 A.3d 939, 957 n.6 (Pa. Super. 2019) (this Court not limited by
trial court’s rationale and may affirm its decision on any basis).
- 10 -
Circulated 10/01/2026 02:39 PM
IN THE COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY
FIRST JUDICIAL DISTRICT OF PENNSYVANIA
TRIAL DIVISION - CIVIL
TP INVESTMENT PROPERTIES, LLC ii -
1
Plaintiff, Case ID: 230300561 ; UJ
V.
NAAMA, LLC and HAWAH MUSA 3084 EDA 2025 . ' ' ' ;
, ■■ J
Defendants. • ' ■ :>
V. ' •' io ' j
ACT LAND SERVICES, LLC , ■> . j»
Third-party Defendant. ro ■ ,
OPINION
SCHULMAN, S.I., J.
Defendant/Appellant, NAAMA, LLC files this appeal from the judgment entered against
it on November 24, 2025.
PROCEDURAL HISTORY
This action arises from a quiet title action pertaining to a residential property located at
2823 N. 28 th Street, Philadelphia, PA. This Court issued Findings of Facts and Conclusions of
Law on June 16, 2025, a copy of which is attached hereto and incorporated herein.
This lawsuit was initiated by Plaintiff/Appellee, TP Investment Properties, LLC (“TP”)
on March 6, 2023, alleging an action for quiet title against Defendant/Appellee, NAAMA, LLC
(“NAAMA”), as well as an action for breach of warranty of title, and intentional
misrepresentation against co-defendant, Hawah Musa (“Musa”). 1
1Tyrell Phillips is the principal of TP. NAAMA is a holding company that acts by and through its
managing member, Kotb “Sam” Elbialy (“Elbialy”). Ebaily holds a Doctorate degree in Business
Administration and conducts business through various real estate investment companies, including
NAAMA, and (non-parties) Home Experts, LLC and Homemart, LLC.
■■■H
OPFLD- Ip Investment Properties Lie Vs Naama, Lie Etal [VKSJ
23030056100183
NAAMA filed a counter claim against TP for Quiet Title, Trespass to Property, Slander
of Title and Fraud. NAAMA filed a crossclaim against Musa for Fraud, Breach of Contract, and
Unjust Enrichment. NAAMA also filed a joinder complaint against additional defendant, ACT
Land Services LLC (“ACT”), claiming Slander of Title and Fraud. On July 3, 2023, a default
judgment was entered in favor of NAAMA against Musa.
The case proceeded to trial and after post-trial submissions, the Court issued an order on
June 16, 2025: 1) finding in favor of TP and against NAAMA on TP’s claim for Quiet Title; 2)
finding in favor of Musa and against TP on TP’s claims of Breach of Warranty of Title and
Intentional Misrepresentation; 3) finding in favor of TP and against NAAMA on NAAMA’ s
counterclaims for Quiet Title, Trespass to Property, Slander of Title and Fraud; 4) finding in
favor of Musa and against NAAMA on NAAMA’ s crossclaim for Fraud, Breach of Contract and
Unjust Enrichment; and 5) finding in favor of Third Party Defendant ACT and against NAAMA
on NAAMA’ s claims for Slander of Title and Fraud.
NAAMA filed a timely post-trial motion. After further briefings and oral argument, on
October 31, 2025 the Court granted NAAMA’ s post-trial motion only as to NAAMA’ s
crossclaims against Musa, due to a previous default judgment that had been granted on those
claims. The remainder of the post-trial motion was denied. Judgment was entered against
NAAMA on November 24, 2025. NAAMA filed a timely appeal on November 25, 2025 and
complied with the Court’s 1925(b) Order.
FACTS
The case involves a dispute over the ownership of a property located at 2823 N. 28 th
Street, Philadelphia, PA. In summary, Appellee/co-defendant Musa entered into a lease with
option to buy agreement with non-party Homemart, LLC in December 2021, with an agreement
2
to pay $1,425 per month for 23.5 years. (Ex. D-7). After Musa made payments totaling
$24,500, Homemart issued a Quitclaim Deed to Musa for the property on March 21, 2022? (Ex.
D-8). On the same date, Musa signed three documents: 1) a Promissory Note with Appellant
NAAMA for the principal sum of $393,850.00 (Ex. P-2); 2) a mortgage for the same amount in
favor of NAAMA as the “lender” (Ex. D-2); and 3) a Deed in Lieu of Foreclosure conveying title
to NAAMA for the cancellation of debt as secured by the mortgage. (Ex. D-l). The mortgage
and deed in lieu were not recorded until January 23, 2023.
Mr. Phillips learned about the property through an email advertisement sent by Peguero
Development, LLC (non-party). TP negotiated a price and entered into a contract on December
10, 2022 to receive an assignment of Peguero’s interest in the contract for purchase and sale of
the property.
On January 2, 2023, Musa executed a General Warranty Deed (Ex. P-12) to convey the
property to Appellant, TP. The closing on the sale of the property took place on January 13,
2023, at which time the deed was transferred to TP. ACT Land Services was the title company
and, after an initial title search and a “rundown” search conducted just before closing, found no
encumbrances on the property. ACT received a title commitment for the property effective
December 23, 2022. In addition, Musa executed a sworn affidavit stating that there were no
mortgages on the property.
On January 22, 2023, the day following the closing, Musa notified Sam Elbialy, principal
of both Homemart and NAAMA, that she sold the property. Homemart then issued a Default
2The court’s Findings of Fact issued on June 16, 2025 contained a misstatement in paragraph 15:
Homemart conveyed a Quitclaim Deed (not a Deed in Lieu of Foreclosure as stated in the
Court’s Findings of Facts) to Musa on March 21, 2022. NAAMA raised this issue in its 1925(b)
statement, at paragraph 9. This inadvertent misstatement does not affect this Court’s decision.
3
Notice (Ex. D-9) to Musa and posted it at the property on January 22, 2023. The first notice that
TP had of this competing interest in the property was when Mr. Phillips (TP) went to the
property and saw the posting.
The following day, January 23, 2023, Mr. Elbialy recorded NAAMA’s First Mortgage
and Deed in Lieu of Foreclosure at 9:29am. Mr. Phillips recorded his Deed on the same day, at
10:31 am (62 minutes later). NAAMA then recorded a Deed of Confirmation on February 6,
2023. The question at issue in this matter is who is the rightful owner of the property based on
their conflicting deeds: TP or NAAMA.
ISSUES RAISED ON APPEAL
The Court has edited the issues complained of on appeal for length to include here.
NAAMA alleges the Court erred as follows:
1. Finding that TP and not NAAMA is the owner of the property.
2. Finding TP was a bona fide purchaser with no notice of NAAMA’s prior
interest.
3. Finding that NAAMA should be prejudiced in its claim of ownership by not
recording the mortgage and deed in lieu.
4. Finding that ACT’s failure to timely record the deed from Musa to TP was
based on a reasonable explanation and it would not be foreseeable that harm
could be caused by the delay in recording.
5. Finding that NAAMA’s recording of the mortgage and deed in lieu was in bad
faith.
6. Finding that the NAAMA mortgage was made without valid consideration. TP
had no legal standing to challenge the validity of the mortgage between Musa
and NAAMA. Musa received the deed to the property in consideration for the
mortgage.
7. Finding that the alleged equities dictated a ruling in favor of TP. There is no
basis on which the court should apply any principles of equity, including that TP
has an adequate remedy at law.
8. Finding that TP prevailed on its burden to prove it was a bona fide purchaser of
the property and acquired title to the property free and clear of any claims.
4
9. Finding that on March 21, 2022 Homemart conveyed a deed in lieu of
foreclosure to the property to Musa. To the contrary, Musa received a deed to
the property. In return for the deed Musa executed a promissory note,
mortgage and deed in lieu of foreclosure.
10. Finding that TP had no knowledge of NAAMA’s claim of ownership in the
property because TP saw a posted notice on the property on January 22, 2023
and learned about NAAMA’s claim on the property, prior to TP’s deed being
recorded. Thus the court erred in ruling against NAAMA on its claim for
slander of title.
11. Striking the deed in lieu of foreclosure, mortgage and deed of confirmation.
12. Denying the NAAMA’s motion for post-trial relief.
DISCUSSION
Issues 1, 2, 4, 8, 11, 12; The Court Erred in finding that TP is a bona fide purchaser and is
entitled to the protections of the recording statute.
NAAMA argues that Pennsylvania is a Race-Notice jurisdiction and since NAAMA was
first to record its mortgage and deed in lieu of foreclosure, it has priority over the interest of TP
in the property. According to NAAMA the Court’s sole inquiry should be the chronological
order of recording. (NAAMA proposed conclusions of law, pg. 9)
TP argues that it was a bona fide purchaser of the property at the time it closed on the
property since it was, at that time, free and clear of any encumbrances. Further, TP argues that
NAAMA knew that TP held title to the property when it recorded its Mortgage therefore
NAAMA was not a bona fide. Mortgagee; and finally that NAAMA did not convey any value in
exchange for the NAAMA Mortgage and is therefore not a bona fide Mortgagee. (TP proposed
conclusions of law p. 9.)
An action to quiet title is brought pursuant to Pa. R.C.P. 1061. The provisions of the
statute are intended to protect the interests of bona fide purchasers of land. Roberts v. Estate of
5
Pursley, 718 A.2d 837 (Pa. S. 1998). “The purpose of recording is to protect the purchaser or
mortgage holder’s bona fide status and ‘to give the public notice in whom the title resides; so
that no one may be defrauded by deceptions [sic] appearance of title.”’ Merscorp, Inc. v. Del.
Cty, 652 Pa. 173 (Pa. 2019) citing Salter v. Reed, 15 Pa. 260, 263 (1850). “Failure to record
results in a clear consequence - the mortgagee runs the risk of losing its status and being
deprived of property rights - and a party that chooses not to record a conveyance or
ownership interest pursuant to Section 351 does so at its own peril.” Id at 196. (emphasis
added). “The recording statute was intended to protect bona fide purchasers who give value for
land. Long John Silver's Inc. v. Fiore, 255 Pa.Super. 183, 190, 386 A.2d 569, 573
(1978) (citing Lund v. Heinrich, 410 Pa. 341, 189 A.2d 581 (1963)). In order to qualify as a bona
fide purchaser, the subsequent buyer must be without notice of a prior equitable interest. Id.
The Pennsylvania recording statute at issue provides as follows:
All deeds, conveyances, contracts, and other instruments of writing wherein it shall be the
intention of the parties executing the same to grant, bargain, sell, and convey any lands,
tenements, or hereditaments situate in this Commonwealth, upon being acknowledged by
the parties executing the same or proved in the manner provided by the laws of this
Commonwealth, shall be recorded in the office for the recording of deeds in the county
where such lands, tenements, and hereditaments are situate. Every such deed,
conveyance, contract, or other instrument of writing which shall not be
acknowledged or proved and recorded, as aforesaid, shall be adjudged fraudulent
and void as to any subsequent bona fide purchaser or mortgagee or holder of any
judgment, duly entered in the prothonotary’s office of the county in which the lands,
tenements, or hereditaments are situate, without actual or constructive notice unless
such deed, conveyance, contract, or instrument of writing shall be recorded, as
aforesaid, before the recording of the deed or conveyance or the entry of the
judgment under which such subsequent purchaser, mortgagee, or judgment
creditor shall claim. Nothing contained in this act shall be construed to repeal or modify
any law providing for the lien of purchase money mortgages.
21 Pa. Stat. Ann. § 351 (West), (emphasis added)
The Pennsylvania Supreme Court recognizes that the purpose of Pennsylvania's land
recording statutes is to “protect subsequent bona fide purchasers by providing notice of
6
conveyances and any other restrictions on land and guarding against a fraudulent title.”
MERSCORP, Inc. v. Delaware Cnty., 652 Pa. 173, 191, 207 A.3d 855, 866 (2019). A person is a
bona fide purchaser “if at the time of the sale he was without notice of an adverse interest and
value was given for the purchase of the land. " Roberts v. Est. of Pursley, 718 A.2d 837, 841 (Pa.
Super. Ct. 1998).
Section 351 provides “[e]very such deed, conveyance, contract, or other instrument of
writing which shall not be acknowledged or proved and recorded, as aforesaid, shall be
adjudged fraudulent and void as to any subsequent bona fide purchaser or mortgagee or
holder of any judgment ... without actual or constructive notice ...” 21 P.S. § 351 (emphasis
added). The Pennsylvania Supreme Court has stated that “[t]his emphasized language indicates a
conveyance is rendered void only (1) with respect to a limited class of individuals — subsequent
bona fide purchaser or mortgagee or holder of any judgment; and (2) under limited
circumstances — when the subsequent bona fide purchaser does not have actual or constructive
notice of the transfer." MERSCORP, Inc. v. Delaware Cnty., 652 Pa. 173, 192, 207 A.3d 855,
866(2019).
On the date that he closed on the property, January 13, 2023, neither TP nor the title
company, ACT, had any reason to believe that there was an encumbrance on the property. Tyrell
Philips, owner of TP Investments, credibly testified that he did not have notice of the NAAMA
mortgage at the time of the purchase of the property. ACT, the title company, received a title
commitment for the property effective December 23, 2022. Musa executed an affidavit stating
that there were no other mortgages adversely affecting her ownership. ACT also obtained a
“rundown” title search on Januaiy 12, 2023, which is conducted after the initial title search, right
before closing, to look for any new interests that were not present at the time of the initial title
7
search, which did not show any new interests. (N.T. 1/27/25, p. 93-94, 11
1). Thus, there is no
evidence that TP had notice of NAAMA’s interest at the time that title was transferred.
In furtherance of its argument that TP was not a bona fide purchaser, NAAMA calls into
question the validity of the sales price paid for the property. TP purchased the property from
Musa as an assignee of a wholesaler, Peguero for $100,000. Of that price, $75,000 was for
purchase of the property and $25,000 was for wholesaler fees and commissions. (N.T. 1/27/26,
p. 101). There is no evidence of record that this was not fair value for the property.
NAAMA also argues that TP had actual or constructive notice at the time that it
recorded its deed, on January 23, 2023 at 10:31am, because NAAMA had recorded its
Mortgage and Deed in Lieu of Foreclosure on January 23, 2023 at 9:29am. However, the deed
was transferred to TP at the closing on January 13, 2023, ten days before NAAMA recorded its
mortgage and deed in lieu. (N.T. 1/27/25, pp. 89, 1
12). There is no evidence that TP had any
notice of NAAMA’s mortgage and deed in lieu of foreclosure at the time ofclosing.
NAAMA had the signed mortgage and deed in lieu in March of 2022, and then waited
ten months, until January 23, 2023, to record its interests in the property, exposing itself, as well
as TP, to exactly the type of situation that transpired. As such, this is the exact scenario against
which the recording statute seeks to protect. NAAMA sat on its rights and created a situation
that allowed an innocent third party, TP, to purchase the property. Had NAAMA timely
recorded its documents, this issue would never have occurred.
Pennsylvania protects an innocent purchaser of property pursuant to 21 P.S. § 35 1
. TP
was an innocent purchaser and only became aware of NAAMA’s interest when Phillips saw the
Notice of Default posted by NAAMA on his property. In contrast, NAAMA had ample
8
opportunity to record its Mortgage and gain protection from the recording statute. Instead, it kept
its interest in the property from public knowledge.
NAAMA’s contention that ACT is to blame does not negate NAAMA’s liability. ACT
offered a reasonable explanation for its 10 day delay in recording the deed. (See Act’s proposed
conclusions of law p. 6)
Issues 6 and 11; The Court erred by finding that NAAMA’s mortgage and deed are void,
and TP has standing to challenge these documents.
Here, NAAMA argues that TP does not have standing to challenge the validity of the first
mortgage between NAAMA and Musa because under Pa.R.C.P. 2002, only a real party in
interest may prosecute a claim. NAAMA argues that TP is a stranger to the contracts between
Musa and NAAMA and therefore has no basis to challenge them. However, because TP will be
negatively impacted by these documents, it is afforded standing to challenge the NAAMA
mortgage and Deed in Lieu of Foreclosure. Pittsburgh Palisades Park, LLC v. Commonwealth
ofPa., 585 Pa. 196, 203-204, 888 A.2d 655, 659-660 (2005)(“The keystone to standing in these
terms is that the person must be negatively impacted in some real and direct fashion.”)
NAAMA argues that the Court erred in finding that the mortgage was not supported by
valid consideration because Musa did receive valuable consideration - she received the deed to
the property, the value of which supports consideration for the mortgage given by Musa to
NAAMA. However, the mortgage and deed in lieu of foreclosure between Musa and NAAMA
are void.
"A valid mortgage requires a manifestation of mutual assent by a principal or agent of
each party and a consideration." Restatement (Second) of Contracts § 17(1); See Federal Savings
and Loan Assoc, v. Brennan. 598 A.2d 997, 999 (Pa. Super. 1991) (Notunlike other written
9
instruments, mortgages are governed by the law of contracts and interpreted accordingly). Musa
entered into the lease to buy agreement with Homemart in December, 2022. The following
March, Homemart conveyed a Quitclaim Deed for the property to Musa reflecting consideration
paid to Homemart in the amount of $24,500. On the same day, NAAMA issued the Promissory
Note and First Mortgage to Musa for a debt totaling $393,850.20. NAAMA did not produce
evidence that it gave consideration to either Musa or Homemart when Musa signed the NAAMA
mortgage. In fact, NAAMA’ s principal admitted that “the note doesn’t mean anything” and the
property wasn’t worth $393,850.00. (N.T. 1/27/25, p. 29). NAAMA argues that the deed was
consideration for the mortgage, but Homemart gave the deed to the property to Musa, not
NAAMA. Moreover, the Default Notice and Termination Agreement that was issued to Musa
on January 22, 2023, was issued by Homemart, not NAAMA, and states that Musa “did not
satisfy Homemart, LLC’s mortgage.” (D-9, emphasis added). Thus, NAAMA did not give
anything to Musa in exchange for the mortgage and deed in lieu of foreclosure, rendering the
mortgage null and void.
An invalid document, even if recorded, does not preclude a subsequent purchaser from
acquiring superior title to a property. See In re Johnston, No. CV 3:2005-453, 2007 WL
9808160, at *1 (W.D. Pa. Jan. 29, 2007). The mortgage recorded by NAAMA was invalid for
lack of consideration. The deed in lieu of foreclosure was likewise invalid, as it was based on
the invalid mortgage: “This Deed is given as an absolute conveyance of title in consideration for
the cancellation of the debt as secured by the mortgages dated March 21 st , 2022, in the ori ginal
amount of Three Hundred Ninety Three Thousand Eight Hundred Fifty Dollars and 0/100
($393,850.00), in favor of NAAMA, LLC; that is signed and notarized.” (D-l, p.l).