§501-101.5 Agreements of sale; priority. (a) The rights of a buyer under an agreement of sale which has been duly filed and noted on the certificate of title in accordance with this chapter shall be entitled to priority over the claim of any other person with respect to the real estate covered by the agreement of sale where such claim results:

(1) From a conveyance made to the claimant by the seller of the real estate covered by the agreement of sale if such conveyance was filed after the filing of the agreement of sale; or

(2) From a judgment in favor of the claimant against the seller affecting the real estate covered by the agreement of sale if the judgment or a notice of the action out of which the judgment arises was not filed prior to the filing of the agreement of sale.

(b) Upon the buyer's satisfaction of the agreement of sale, the claim or lien upon the real estate covered by the agreement of sale of any person who shall have such a claim resulting from a conveyance or a judgment referred to in subsection (a), shall be extinguished as to such real estate upon the filing of a transfer of title to such real estate from the seller to the buyer.

(c) For purposes of this section, the following definitions apply:

"Agreement of sale" means an executory contract for the sale and purchase of real estate which binds one party to sell and the other party to buy real estate which is the subject matter of the transaction, and in which the seller retains legal title to the real estate. As used in this section, an agreement of sale includes a subagreement of sale or subsequent subagreement of sale.

"Buyer" means the party who has agreed to purchase, and "seller" means the party who has agreed to sell the real estate pursuant to an agreement of sale, and includes each of their respective assignees and successors in interest in the agreement of sale.

"Conveyance" means every written instrument by which any estate or interest in real estate is voluntarily created, alienated, mortgaged, or encumbered, or by which title to any real estate may be voluntarily affected, other than wills.

"Filed" or "filing" means filed in accordance with this chapter.

"Real estate covered by the agreement of sale" means the real estate which the seller has agreed to sell and the buyer has agreed to buy pursuant to the agreement of sale, including any portion of or any interest in such real estate.

"Satisfaction of agreement of sale" means the full performance of the buyer's obligations under the agreement of sale, and:

(1) The buyer's compliance or tender of compliance with all of the buyer's filed written agreements and filed written consents, if any, with claimants whose claims are superior or subject to the rights of the buyer, and with all filed written directions, if any, of the seller to the buyer to make payments under the agreement of sale to a claimant or claimants;

(2) The buyer's compliance or tender of compliance with all orders, which have been filed, of any court of competent jurisdiction relating to the agreement of sale or to payments under or proceeds of the agreement of sale; and

(3) The buyer's payment of all periodic, interim, prepaid, and final payments under the agreement of sale.

If a claimant's claim or lien upon the real estate covered by the agreement of sale is extinguished according to this section before the claimant actually receives satisfaction of the claim or lien, the claim or lien shall be automatically transferred to the proceeds from satisfaction of the agreement of sale, in the same priority with respect to other transferred claims or liens on such real estate and with respect to other claims or liens on such proceeds, as the transferred claim or lien had immediately before such extinguishment. [L 1984, c 205, §1; am L 1985, c 247, §1]