Bankr. E.D.N.C.: In re The Willows, II- Discrepancy between the Date of Promissory Note and Deed of Trust Does not Per Se Invalidate Lien


The Deed of Trust held by BB&T against real property references a promissory note dated September 7, 2005. The actual promissory note, however, is dated September 8, 2005. Relying on Beaman v. Head (In re Head Grading Co.), 353 B.R.122, 123- 24 (Bankr. E.D.N.C. 2006), the Debtors attacked the validity of the lien.

BB&T first argued that because the Debtor had executed a Change in Terms Agreement, explicitly affirming the note, it should be estopped from now contesting the enforceability. The knowledge of the Debtor is not, however, imputed to the debtor-in-possession in a § 544(a)(3) action, who instead proceeds as a hypothetical judgment lien creditor. As the Change in Terms Agreement had not been recorded with the Register of Deeds (or otherwise made a public record) the debtor was not estopped.

In determining whether the Deed of Trust properly identified the promissory note, the bankruptcy court turned to the Beckhart line of cases, Beckhart v. Nationwide Trustee Serv. Inc. (In re Beckhart), 2011 Bankr. LEXIS 4622, at *6-21, 2011 WL 5902598, at *2-7 (Bankr. E.D.N.C. July 21, 2011), aff’d, Beckhart v. Nationwide Tr. Serv. Inc., 2012 U.S. Dist. LEXIS 120132, 2012 WL 3648105, at *3-9 (E.D.N.C. Aug. 21, 2012), which held that a failure to identify the date of the promissory note does not per se invalidate a Deed of Trust.

Instead, Citing to the North Carolina Supreme Court decision in Walston v. Twiford, 248 N.C. 691, 105 S.E.2d 62 (1958), the bankruptcy court held that to be valid “it is necessary for the mortgage to identify the obligation secured.” This rationale is based on a requirement that a mortgage must be “sufficient to put subsequent purchasers upon inquiry and to charge them with notice…” Harper v. Edwards,115 N.C. 246, 20 S.E. 392 (1894), and also must also be confined to the obligations intended to be secured by the parties to the mortgage agreement. See also, Belton v. Bank, 186 N.C. 614, 120 S.E. 220 (1923).

Because the Deed of Trust contained numerous references that identified the Note as the secured obligation, including the loan number, reference to the commitment letter, and accurate reference to the variable interest rate, the small discrepancy between the dates was likely simply an error.


The opinion did not completely close the door on using date discrepancies to attack the validity of a mortgage, stating that “a significantly larger discrepancy is more likely to suggest that the note produced may not have actually been the obligation intended to be secured.”

There is currently a case pending in the Middle District of North Carolina, Hutson v. BB&T, Case No. 12-9025, where the discrepancy is exactly one year, which may further illuminate this issue.

For a copy of the opinion, please see:

Willows, II- Discrepancy between the Date of Promissory Note and Deed of Trust Does not Per Se Invalidate Lien.pdf


1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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