Alaska Holds Improperly Recorded Lien Effective Under "Equitable Mortgage" Doctrine

On December 7, 2022, the Alaska Supreme Court ("the Court") issued an opinion in the matter of Jae Chang v Jungmok Rhee, LEXIS 135 (Dec. 7, 2022, No. S-17827), holding that an improperly-recorded lien could still be held effective under the "equitable mortgage" doctrine, but could not confer adequate notice to defeat a bona fide purchaser for value claim put forth in opposition to its enforcement.

Between 2014 and 2016, Plaintiff Jae Chang ("Plaintiff") issued three personal loans to Hyeran and George Hunziker ("the Hunzikers") which cumulatively totaled $115,000. Each of these loans was secured by a promissory note stating that the loan had been collateralized by the Hunzikers' personal residence. In connection with the first loan, which was issued in February 2014, a "Claim of Lien" was recorded in the county recording office using a form intended for the recordation of mechanics' liens. This form nevertheless identified Plaintiff as "Lienholder," the Hunzikers as