                              STATE OF MINNESOTA

                                IN SUPREME COURT

                                      A11-1521

Court of Appeals                                                                Stras, J.
                                                                 Dissenting, Dietzen, J.,
                                                             Gildea, C.J., and Wright, J.

Amos Graves,

             Respondent,

vs.                                                           Filed: February 25, 2015
                                                             Office of Appellate Courts
Michael Wayman et al.,

             Respondents,

First Minnesota Bank,

             Appellant.

                             ________________________

Jeramie Steinert, Steinert, P.A., Minneapolis, Minnesota, for respondent Amos Graves.

Thomas G. Wallrich, Peter L. Crema, Jr., Cozen O’Connor, Minneapolis, Minnesota, for
appellant First Minnesota Bank.
                             ________________________

                                   SYLLABUS

      1.     When a homeowner timely cancels a foreclosure reconveyance under Minn.

Stat. § 325N.13 (2014), any deed executed by the homeowner before the cancellation is

rendered void.

      2.     Because a deed that has been rendered void by a timely cancellation notice

under Minn. Stat. § 325N.13 does not transfer title, a mortgagee does not take any


                                           1
interest based on such a deed, even if the mortgagee can establish that it was a bona fide

purchaser.

        3.    It remains an open question, for consideration by the district court on

remand, whether the appellant, the purported mortgagee, has an interest in the property

based on equitable principles.

        Affirmed in part, reversed in part, and remanded.

                                      OPINION

STRAS, Justice.

        This case arises out of the distressed real estate market of the past decade. When

respondent Amos Graves was on the verge of losing his home to foreclosure, Michael

Wayman persuaded Graves to enter into a transaction that would purportedly save his

home.    The transaction required Graves to execute a quitclaim deed in favor of a

corporate entity under Wayman’s control. The day after Graves executed the deed, he

sent a timely cancellation notice, as was his statutory right, to Wayman, who refused to

cancel the transaction. The eventual mortgagee of the property, appellant First Minnesota

Bank, sought ownership of the home in foreclosure when Wayman ceased making

mortgage payments. The district court awarded the property to First Minnesota based on

the bank’s status as a bona fide purchaser, but the court of appeals reversed and awarded

the property to Graves free of any interest of the bank. For the reasons that follow, we

affirm in part, reverse in part, and remand to the district court for further proceedings

consistent with this opinion.




                                             2
                                           I.

      Amos Graves and his late wife bought a home in Saint Paul in 1999. Graves fell

behind on his mortgage payments in early 2007, and his mortgage lender, Wells Fargo

Bank, foreclosed on the home. Wells Fargo purchased the home at a sheriff’s sale on

March 13, 2007, which meant that Graves had 6 months, or until September 13, 2007, to

redeem the home. See Minn. Stat. § 580.23, subd. 1(a) (2014) (providing a mortgagor

with 6 months to redeem a property following a foreclosure sale).

      During the redemption period, Michael Wayman contacted Graves and offered to

help Graves save his home. On August 15, 2007, Wayman met with Graves, who

executed a quitclaim deed purporting to transfer the home to REA Group, a company

controlled by Wayman. In return, Wayman signed a purchase agreement on behalf of

C&M Real Estate Services Group, another of Wayman’s companies, which agreed to pay

$182,000 to Graves. Graves and Wayman also executed a “residential lease” and a “rent-

back agreement” that obligated Graves to pay $1,302 per month to C&M. The rent-back

agreement stated that Graves could “purchase the home back for the amount of

$170,000” within 6 months.      Wayman provided Graves with a form containing the

following caption: “Cancellation of Contract Notice.” The cancellation form notified

Graves that he could cancel the transaction, “without any penalty or obligation, within

three business days.”

      After the meeting with Wayman, Graves changed his mind about the transaction.

He signed and dated the cancellation form later that same night, and mailed it to Wayman

the next day.   Wayman responded by telling Graves that he would not honor the


                                            3
cancellation because, according to Wayman—and contrary to the undisputed facts—

Graves did not timely execute the cancellation form.

       On September 5, 2007, Wayman recorded the quitclaim deed that Graves had

given him at the August 15 meeting. On September 11, 2007—just 2 days before the

expiration of the redemption period for the March 2007 sheriff’s sale—Wayman took

steps to redeem the property through C&M. Specifically, Wayman had REA (which

purportedly held title under the quitclaim deed) grant and record a $100 mortgage to

C&M. C&M then filed and recorded a notice of intent to redeem Graves’s home as a

junior creditor.

       To carry out the redemption, C&M borrowed $145,000 from First Minnesota

Bank and purportedly granted a mortgage to First Minnesota on Graves’s home to secure

the loan.   Wayman faxed the quitclaim deed and the purchase agreement to First

Minnesota on September 13, 2007, and the loan closed 4 days later.           Of the loan

proceeds, roughly $110,000 went to the Ramsey County Sheriff to redeem the property.

Approximately $30,500 was supposed to go to Graves, but he never received that money.

Graves also never received any part of the $182,000 that Wayman and C&M owed him

under the purchase agreement. Nevertheless, Graves continued to live in the home and,

for whatever reason, pay $1,302 per month to C&M through mid-2009.

       At some point in 2008, Wayman and C&M defaulted on the loan from First

Minnesota. In October 2008, First Minnesota sued Wayman, C&M, and REA in Ramsey

County District Court to foreclose its mortgage. Graves was not a party to that action. In

May 2009, the district court granted summary judgment to First Minnesota and entered


                                            4
an order of foreclosure. Based on that order, the sheriff conducted a second foreclosure

sale in August 2009, and First Minnesota bought Graves’s home for $145,000. The

district court subsequently entered an order confirming the sale, and the redemption

period for that sale expired in February 2010.

       Graves brought this action against Wayman, his companies, and First Minnesota

in June 2009, shortly after First Minnesota prevailed in the foreclosure action. Graves’s

amended complaint included 13 separately labeled counts alleging common-law claims

as well as violations of Minnesota’s Home Ownership and Equity Protection Act

(“MHOEPA”),1 see Minn. Stat. §§ 325N.10-.18 (2014); federal lending laws; and various

consumer-protection statutes.    Graves’s kitchen-sink complaint boiled down to two

principal theories.

       First, Graves argued that he did not lawfully sell his home to Wayman in August

2007, and that First Minnesota’s mortgage was therefore invalid.           To support his

argument, he contended that the August 2007 transaction with Wayman was “in fact an

equitable mortgage.” He also asked that the transaction be declared “void” under Minn.

Stat. § 334.05 (2014), which governs usurious contracts, and MHOEPA.               And he

1
       Throughout the litigation, the parties have referred to the law as Minnesota’s
Home Ownership and Equity Protection Act, or “MHOEPA,” likely because of the
formal name of a similar federal law, the Home Ownership and Equity Protection Act of
1994, see Truth in Lending Act, 15 U.S.C. §§ 1601-67f (2012). Although Minnesota’s
law does not appear to have a formal name, we will refer to it here as MHOEPA based on
the parties’ reliance on that acronym and the law’s similarity to, and incorporation of, the
federal statutory scheme. See Minn. Stat. § 325N.17(a)(4) (2014) (requiring a foreclosure
purchaser to comply with the requirements for disclosure, loan terms, and conduct in the
federal Home Ownership and Equity Protection Act).



                                             5
requested that the transaction, “[i]f voidable,” be “rescind[ed]” under the Truth in

Lending Act, 15 U.S.C. §§ 1601-67f (2012); under Minn. Stat. § 8.31 (2014) (a provision

authorizing the Attorney General to investigate and punish consumer fraud); under Minn.

Stat. § 325N.13 (a provision granting a cancellation right to foreclosed homeowners

under MHOEPA); or “as equitable relief under the Minnesota Prevention of Consumer

Fraud Act and common law fraud.”

       Second, Graves argued that, even if he did lawfully sell his home to Wayman in

August 2007, he retained a “vendor’s lien” on the property that was superior to First

Minnesota’s mortgage. Under that theory, Graves argued that he was owed roughly

$71,000 in proceeds from the sale to Wayman and that he should be entitled to foreclose

on his lien and then sell the property to satisfy the outstanding debt.

       The district court held a 1-day bench trial. Before the trial, the district court

ordered Graves to pick a single theory of the case for trial. Under protest, Graves agreed

to proceed on the theory that “the transaction in question was a sale, rather than a

mortgage.” During and after the bench trial, however, Graves shifted his focus to his

arguments under MHOEPA—arguments that have no clear connection to the theory that

the transaction was a sale that gave rise to a vendor’s lien.

       At trial, Graves’s counsel elicited testimony about the cancellation notice and

asserted that the effect of the cancellation should be determined under MHOEPA. In a

written closing argument submitted to the district court after the bench trial, Graves

argued both that the transaction was void at the outset and that Graves had cancelled the

transaction “[w]hether by statutory right or contract right.” Specifically, Graves stated:


                                              6
      [T]he transaction was far from compliant with §§ 325N.11-.14 and was
      void. To be sure, transactions that are contrary to public policy or law are
      illegal, void and null. The deed conveyed nothing and neither could the
      subsequent mortgages.

      Even if the transaction were valid, [Graves] elected to cancel the
      transaction that evening. The following day, [Graves] also mailed [his]
      signed Notice of Contract Cancellation to Mr. Wayman at the address
      indicated on the form. A void transaction cannot be ratified.

Graves framed his vendor’s-lien argument as an alternative to his argument that the

transaction was void.

      The district court issued the first of three orders for judgment in January 2011. In

a January 2011 order, the court found that, “whether by contractual or statutory right,

[Graves] exercised [his] right of rescission” with respect to the August 15, 2007,

transaction. The court also declared “the contracts in this case” to be “void as against

public policy.” Accordingly, the court held that the August 15, 2007, quitclaim deed did

not convey any interest to REA, and that REA therefore “had nothing to convey to

C&M” when REA ostensibly granted a mortgage on the property to C&M. The court

awarded damages to Graves to be “secured by a ‘vendor’s lien’ on the real property.”

      With respect to First Minnesota, the district court found that it was not a bona fide

purchaser because it had “made no inquiry of [Graves] or [his] possession of the

premises.” The court therefore held that Graves’s “rights in the Property, whether via

Minn. Stat. §§ 325N.10–.18, common law fraud and/or a vendor’s lien” were superior to

First Minnesota’s mortgage. The court awarded title to the home to Graves “free of the

interest of any Defendant.”      Yet the district court also—inconsistently—declared

Graves’s “vendor’s lien” to be “superior to that of First Minnesota.” It is not clear


                                            7
whether the district court meant to say that First Minnesota had no interest in the property

at all, or that First Minnesota had an interest that was subordinate to Graves’s interest.

       In any event, after a post-judgment motion by First Minnesota, the district court

changed its mind and entered a second order for judgment in April 2011. With respect to

the August 15, 2007, transaction, the court again said that the contracts in the case were

void (though it now said that Graves had exercised a right of “cancellation” rather than,

as in the previous order, a right of “rescission”). The court also again held that the

August 15, 2007, quitclaim deed did not convey any interest to REA and that REA

therefore “had nothing to convey to C&M” when it ostensibly granted a mortgage on the

property. The court awarded damages to Graves but did not award him a vendor’s lien.

       With respect to First Minnesota, however, the district court reversed course and

held that First Minnesota was a bona fide mortgagee. The court stood by its factual

finding that First Minnesota did not make any inquiry of Graves about his possession of

the home, but the court then determined, in tension with its first order, that “even if [First

Minnesota] had done so [it] would have only been made aware of the limited extent of

Graves[’s] interest in the property.” Accordingly, the court concluded that “[o]n this

record, this Court finds nothing that should disqualify First Minnesota from its status as a

bona fide mortgagee” and declared that Graves’s “interest in the premises”—whatever

that might be—was “subject to that of First Minnesota.”

       The district court entered a third order for judgment in June 2011 after additional

post-judgment briefing. It appears that the district court intended its third order, which is

two pages, to supplement the second order rather than to replace it. In the third order, the


                                              8
district court concluded that, because First Minnesota had purchased the property at the

August 2009 sheriff’s sale and the redemption period had expired, First Minnesota owned

the house “free and clear of any encumbrances of other parties.”

       Graves appealed, and the court of appeals reversed. Graves v. Wayman, 816

N.W.2d 655 (Minn. App. 2012). The court of appeals ruled in favor of Graves on two

separate theories.   Under the first theory, the court of appeals concluded that First

Minnesota was not a bona fide purchaser. Id. at 667. The court of appeals rejected the

district court’s speculation that, had First Minnesota inquired further into the transaction

between Wayman and Graves, it would have learned nothing more than “ ‘the limited

extent’ ” of Graves’s interest in the property. Id. at 668 (quoting the district court order).

Instead, according to the court of appeals, First Minnesota should have inquired further

because the documents in its possession provided implied notice of Graves’s competing

interest in the property—that is, had First Minnesota made further inquiries, it would

have discovered that Graves had cancelled the transaction with Wayman and his

companies. Id. at 667. The court of appeals also held that First Minnesota had implied

notice that Wayman and his companies had violated MHOEPA, and that First Minnesota

had failed to prove that it lacked actual knowledge of the MHOEPA violations. Id. at

669. Based on First Minnesota’s failure to call the loan officer who conducted the

transaction to testify at trial or to present any other evidence that it was without actual

notice of Graves’s competing claim to the property, the court of appeals concluded that

First Minnesota did not qualify as a bona fide purchaser. Id. at 665-66.




                                              9
       Alternatively, the court of appeals held that Graves’s cancellation of the

transaction with Wayman was “real, not purported,” and that, as a result, “C&M had no

interest . . . to convey” to First Minnesota. Id. at 669. The court of appeals’ second

theory was independent of its first because, according to the court, Graves’s cancellation

of the August 15, 2007 transaction resulted in no interest for C&M to convey to First

Minnesota, regardless of whether First Minnesota was a bona fide purchaser. See id.

Based on these two theories, the court of appeals reversed the district court’s second and

third orders and directed that the first order, which awarded the property to Graves free of

any other interests, be reinstated. Id. at 671. We granted First Minnesota’s petition for

review.

                                            II.

       The Legislature enacted MHOEPA in 2004 to regulate foreclosure reconveyances,

Act of May 28, 2004, ch. 263, §§ 1-18, 2004 Minn. Laws. 953, 953-67 (codified at Minn.

Stat. §§ 325N.01-.18), which are transactions that target homeowners whose homes are in

foreclosure. In general, such transactions, sometimes called “foreclosure rescue scams,”

target homeowners who are in financial distress and have substantial equity in their

homes. See Proctor v. Metro. Money Store Corp., 645 F. Supp. 2d 464, 471 (D. Md.

2009). The foreclosure purchaser obtains title from the homeowner, pays off the balance

owed on the mortgage, and then agrees to allow the homeowner to remain in the home

through a leaseback arrangement or a contract for deed. See Johnson v. Wheeler, 492 F.

Supp. 2d 492, 495-96 (D. Md. 2007).           When the homeowner fails to make the

payments—usually because the terms of the arrangement are unreasonable—the


                                            10
purchaser is able to evict the homeowner and keep the equity that the homeowner had in

the home prior to the transaction. See Brown v. Grant Holding, LLC, 394 F. Supp. 2d

1090, 1094-95 (D. Minn. 2005).

       These    types   of   equity-stripping     transactions   qualify   as   “foreclosure

reconveyance[s]” under MHOEPA because they (1) “transfer . . . title to real property by

a foreclosed homeowner during a foreclosure proceeding”; and (2) involve a “subsequent

conveyance, or promise of a subsequent conveyance, of an interest back to the foreclosed

homeowner.”     Minn. Stat. § 325N.10, subd. 3.        The party who enters into such a

transaction with the foreclosed homeowner is a “foreclosure purchaser.” Minn. Stat.

§ 325N.10, subd. 4.2

       No one disputes that the transaction between Wayman and Graves constituted a

“foreclosure reconveyance,” or that Wayman and his corporate entities were “foreclosure

purchaser[s]” under MHOEPA. Nor is there any dispute that Wayman and his entities

violated MHOEPA in multiple ways. The outcome of this case, however, does not turn

on the MHOEPA violations. Rather, it turns on the legal effect of Graves’s timely

cancellation of the transaction—that is, whether, after Graves cancelled the transaction,

First Minnesota could have obtained rights to the property as a bona fide purchaser

without knowledge of the MHOEPA violations. Based on the statutory scheme, we

2
       A “foreclosure purchaser” does not include “a natural person who shows that the
natural person is not in the business of foreclosure purchasing and has a prior personal
relationship with the foreclosed homeowner” or “a federal or state chartered bank,
savings bank, thrift, or credit union.” Neither of these exclusions is relevant to this case.
Minn. Stat. § 325N.10, subd. 4.



                                             11
conclude that Graves’s timely cancellation left Wayman and his corporate entities with

no interest to convey and that, therefore, First Minnesota did not obtain any rights in the

property as a bona fide purchaser under MHOEPA.

                                            A.

       Graves’s cancellation theory resolves this case, so we focus our attention on

MHOEPA’s text, which is the basis for that theory.3 Interpretation of a statute presents a

question of law that we review de novo. E.g., In re Estate of Butler, 803 N.W.2d 393,

397 (Minn. 2011). When a statute is clear and unambiguous, we apply the statute’s plain

meaning and interpret the words and phrases in the statute according to their plain and

ordinary meanings. Cnty. of Dakota v. Cameron, 839 N.W.2d 700, 705 (Minn. 2013).

                                            1.

       Under MHOEPA, a foreclosed homeowner “has the right to cancel any contract

with a foreclosure purchaser” until the earlier of (1) midnight of the fifth business day

after signing a contract that complies with MHOEPA, or (2) the end of the foreclosed

homeowner’s redemption period. Minn. Stat. § 325N.13(a). Cancellation is “effective

upon mailing” and “occurs when the foreclosed homeowner delivers, by any means,

written notice of cancellation.” Minn. Stat. § 325N.13(b). The cancellation right is “[i]n


3
       First Minnesota also challenges the court of appeals’ conclusion that it failed to
establish bona-fide-purchaser status. See Graves, 816 N.W.2d at 667. We need not
address that question, however, because we agree with the court of appeals’ alternative
conclusion that, even if First Minnesota were a bona fide purchaser, it took no interest in
the property. See id. at 669. Therefore, for the purpose of our analysis, we assume,
without deciding, that First Minnesota was a bona fide purchaser.



                                            12
addition to any other right of rescission” available to the foreclosed homeowner. Id.

§ 325N.13(a). In this case, the district court concluded that Graves exercised his “right of

cancellation” when he timely mailed the cancellation notice to Wayman.4

       The key issue presented by this case is the legal effect of a timely cancellation of a

transaction under MHOEPA. Graves argues that, because he timely exercised his right to

cancel the transaction, First Minnesota cannot take any interest in the property regardless

of whether it qualifies as a bona fide purchaser.         According to Graves, the timely

cancellation rendered the quitclaim deed void, which left C&M with no interest to convey

to First Minnesota. First Minnesota acknowledges that “[t]he general rule, in a standard

transaction, is that neither the Recording Act nor the common law bona fide purchaser

defense will protect a mortgagee if the mortgagor held no interest in the property.” It

nevertheless maintains that MHOEPA provides additional rights to a bona fide purchaser

in a foreclosure-reconveyance transaction.

       MHOEPA provides a right to the foreclosed homeowner to “cancel” the

transaction with the foreclosure purchaser, but does not define the word “cancellation” or

4
       First Minnesota challenges the district court’s finding that Graves cancelled the
transaction and suggests that, although Graves testified that he cancelled the transaction,
he may have cancelled only the rent-back agreement. First Minnesota further argues that
the court of appeals erroneously concluded that it had forfeited its right to challenge the
finding that there had been a cancellation. See Graves, 816 N.W.2d at 669 (concluding
that “[t]he foreclosed homeowners’ cancellation of the quitclaim deed and other
documents is real, not purported,” and that First Minnesota “did not file a notice of
related appeal to challenge the district court’s conclusion”). Regardless of whether First
Minnesota properly raised the issue before the court of appeals, it did not preserve the
issue for review by this court because it failed to raise the issue in its petition for review.
See State v. Koppi, 798 N.W.2d 358, 366-67 (Minn. 2011) (explaining that matters not
raised in a petition for review are generally deemed forfeited).


                                              13
explicitly describe the legal effect of a cancellation. The plain and ordinary meaning of

“cancel” is “[t]o annul or invalidate.” The American Heritage Dictionary of the English

Language 270 (5th ed. 2011); see also id. at 73 (defining the word “annul” to mean, “to

. . . declare void or invalid” (emphasis added)); Black’s Law Dictionary 247 (10th ed.

2014) (defining “cancellation” as “[a]n annulment or termination of a promise or an

obligation”).   The statute as a whole indicates that MHOEPA uses the word

“cancellation” in various provisions, including section 325N.13, to refer to the foreclosed

homeowner’s right to invalidate or rescind the transaction with the foreclosure purchaser.

For example, MHOEPA describes cancellation as a remedy “[i]n addition to any other

right of rescission,” Minn. Stat. § 325N.13(a) (emphasis added), which indicates that the

act of cancellation itself is a form of rescission under MHOEPA. Indeed, MHOEPA’s

treatment of cancellation as a form of rescission is consistent with general principles of

equity and our case law, which describes “ ‘[t]he equitable remedies of cancellation,

rescission, surrender up, and discharge of instruments [as] one and the same remedy,

depending upon the same rules.’ ” Chilstrom v. Enwall, 168 Minn. 293, 295, 210 N.W.

42, 43 (1926) (quoting 2 Pomeroy, Equity Jurisprudence § 684)).

       “Rescission” is “the unmaking or abrogation of a contract.” Abdallah, Inc. v.

Martin, 242 Minn. 416, 420, 423, 65 N.W.2d 641, 644, 646 (1954) (“[T]o rescind a

contract is not merely to terminate it but to abrogate it and undo it from the beginning.”

(citing 1 Black, Rescission and Cancellation § 1 (2d ed.))). In the real estate context, we

have said that “[r]escission annihilates the contract, and, after a binding election to

rescind, each party is returned to his previously existing rights.” Brown v. Cal. & W.


                                            14
Land Co., 145 Minn. 432, 436, 177 N.W. 774, 776 (1920) (emphasis added). Thus,

“[t]he effect of the remedy of rescission is generally to extinguish a rescinded contract so

effectively that in contemplation of law it has never had existence.” Chase Manhattan

Bank, N.A. v. Clusiau Sales & Rental, Inc., 308 N.W.2d 490, 494 (Minn. 1981).

Accordingly, Graves’s timely cancellation was the statutory equivalent of rescission,

which rendered void all of the instruments—including the quitclaim deed that Wayman

and his entities obtained from Graves in the foreclosure-reconveyance transaction—and

returned each of the parties to their “previously existing rights.” See Brown, 145 Minn. at

436, 177 N.W. at 776; see also Cooper v. Finke, 38 Minn. 2, 7, 35 N.W. 469, 471 (1887)

(explaining that a void instrument is an instrument that “never had any legal existence or

binding force”).

       Our interpretation of MHOEPA also is consistent with the common-law delivery

requirement. See Slawik v. Loseth, 207 Minn. 137, 139, 290 N.W. 228, 229 (1940) (“It is

of course elementary that delivery of a deed is essential to a transfer of title.”). As we

have stated, “delivery of a deed is complete only when the grantor has put it beyond his

power to revoke or reclaim it,” Babbitt v. Bennett, 68 Minn. 260, 263, 71 N.W. 22, 22

(1897) (emphasis added), and an undelivered deed cannot transfer legal title, even to a

bona fide purchaser, because lack of delivery renders the deed void, see White & St.

Townsite Co. v. J. Neils Lumber Co., 100 Minn. 16, 22, 110 N.W. 371, 374 (1907).

       In this case, although Graves physically transferred a quitclaim deed to Wayman,

delivery did not occur because Graves never put the deed “beyond his power to revoke or

reclaim it.” See Babbitt, 68 Minn. at 263, 71 N.W. at 22. Instead, Graves retained the


                                            15
power to revoke or reclaim the deed during the statutory cancellation period under Minn.

Stat. § 325N.13(a)-(b), which made delivery impossible during the cancellation period.

Nor did Graves have the intent to convey title at the conclusion of the cancellation period,

because he had already cancelled the transaction. Accordingly, without delivery of the

deed to Wayman, the common law treats the quitclaim deed as void. See White & St.

Townsite Co., 100 Minn. at 22, 110 N.W. at 374.

       Whether analyzed in terms of delivery or rescission, other provisions of MHOEPA

reinforce our conclusion that a homeowner’s timely notice of cancellation invalidates—

that is, renders void—a deed obtained by the foreclosure purchaser. For example, under

section 325N.14(a), a contract between a foreclosure purchaser and a homeowner must

contain “a conspicuous statement” informing the homeowner of the right to “cancel this

contract for the sale of [his or her] house without any penalty or obligation” before the

end of the cancellation period. Minn. Stat. § 325N.14(a) (emphasis added); see also

Minn. Stat. § 325N.14(b) (requiring the same statement in the notice-of-cancellation form

provided to the homeowner). Section 325N.14(a) demonstrates the Legislature’s intent to

return the homeowner to the same position as before the transaction with the foreclosure

purchaser, which is identical to how rescission operates. See Brown, 145 Minn. 432, 436,

177 N.W. at 776 (stating that rescission returns each party “to his previously existing

rights”). Moreover, section 325N.13(d) requires a foreclosure purchaser who receives a

cancellation notice to “return without condition any original contract and any other

documents signed by the foreclosed homeowner,” Minn. Stat. § 325N.13(d) (emphasis

added), which provides support for the theory that, under MHOEPA, Graves could not


                                            16
have delivered the deed to Wayman or his entities before the cancellation period had

expired. In fact, far from “abrogat[ing] the common-law delivery rule,” as the dissent

claims, MHOEPA is consistent with the common-law delivery rule by requiring a

foreclosure purchaser to both notify a homeowner of the right to cancel the transaction

“without any penalty or obligation” and to return, “without condition,” all of the

documents (including the deed) signed by a homeowner once cancellation occurs. Minn.

Stat. §§ 325N.13(d), .14(a); see Shaw Acquisition Co. v. Bank of Elk River, 639 N.W.2d

873, 877-78 (Minn. 2002) (explaining in a mortgage-foreclosure case that courts must

presume that a statute is consistent with the common law, and that, if a statute abrogates

the common law, it must do so by express wording or necessary implication). Finally,

Minn. Stat. § 325N.17(f)(2) expressly forbids a foreclosure purchaser from taking any

steps during the cancellation period to transfer a homeowner’s interest in the property,

including recording or filing any documents signed by the homeowner. These provisions

collectively signal the Legislature’s clear intent that a cancelled foreclosure-

reconveyance transaction is a legal nullity.

       In this case, the cancellation of the foreclosure reconveyance became “effective”

and “occur[red]” on August 16, 2007, when Graves mailed the notice of cancellation to

Wayman. Minn. Stat. § 325N.13(b). The dissent does not dispute that “Graves satisfied

the requirements for cancellation of the foreclosure reconveyance under section

325N.13.” But the dissent then proceeds to interpret a different statute than the one the

Legislature actually enacted. Specifically, the dissent faults Graves for failing to record

his cancellation notice—a requirement that is nowhere to be found in MHOEPA and is


                                               17
contrary to the statute, which says that “cancellation” becomes “effective” and “occurs”

when a homeowner mails notice of the cancellation to the foreclosure purchaser. Id.

Instead of creating a novel recording requirement, we simply follow the plain language of

the statute and conclude that Graves’s cancellation became “effective” and “occur[red],”

even as to third parties, when Graves mailed his written cancellation notice to Wayman.

                                            2.

      First Minnesota does not dispute that Wayman and his entities lacked a legal

interest in the property following Graves’s cancellation, but claims that it nevertheless

has rights in the property as a bona fide purchaser. We disagree.

      The bona-fide-purchaser doctrine is a venerable common-law rule of real estate

law, see Leqve v. Smith, 63 Minn. 24, 28, 65 N.W. 121, 123 (1895) (Mitchell, J.,

concurring), that is codified in Minnesota’s Recording Act, Minn. Stat. § 507.34 (2014).

The Recording Act “serves to protect bona fide purchasers who purchase a property in

good faith and lack notice of others’ outstanding rights to the property.” Bruggeman v.

Jerry’s Enters., Inc., 591 N.W.2d 705, 710-11 (Minn. 1999). Here, First Minnesota

claims that it is a bona fide purchaser because it paid valuable consideration for the

mortgage in reliance on the quitclaim deed recorded by REA and lacked notice of either

Graves’s competing rights to the property or the MHOEPA violations.

      Although the bona-fide-purchaser doctrine provides substantial protections against

adverse claims when there is no record notice of a prior inconsistent interest, a bona fide

purchaser cannot acquire an interest in property when the grantor’s underlying deed is

void. See generally Caryl A. Yzenbaard, Residential Real Estate Transactions § 6:25


                                            18
n.47 (2005) (explaining that a void deed represents “one of the ‘hidden risks’ of the

recording system”). It is well established under Minnesota law that when a grantor has

“no power” to convey land due to a void deed, the purchaser does not acquire title, and

“it is immaterial whether [the purchaser] was a bona fide purchaser or not.” White & St.

Townsite Co., 100 Minn. at 22, 110 N.W. at 374; cf. Bausman v. Faue, 45 Minn. 412,

417, 48 N.W. 13, 15-16 (1891) (“[W]here a deed was stolen from the [owner], or its

possession fraudulently got by the [grantor], . . . a bona fide purchaser [is] in no better

condition than his grantor.”). Accordingly, under longstanding principles of real estate

law, First Minnesota could not gain any rights in the property from C&M, even as a bona

fide purchaser, because C&M had nothing to convey to First Minnesota. Nothing plus

nothing still equals nothing.5



5
       The dissent disagrees with our characterization of the cancelled foreclosure
reconveyance as “void,” claiming that we actually mean that the transaction was
“voidable.” Consistent with the cancellation provisions of MHOEPA, Minn. Stat.
§ 325N.13, we interpret “void” to mean “[o]f no legal effect; to null,” Black’s Law
Dictionary 1805 (10th ed. 2014), which is consistent with MHOEPA’s direction that a
homeowner who timely cancels incurs no “penalty or obligation,” Minn. Stat.
§ 325N.14(a). It is clear that, once Graves cancelled the transaction, the Wayman entities
had absolutely no legal interest in the property and thus had nothing to convey, contrary
to the position adopted by the dissent, which views the foreclosure reconveyance as
merely “voidable”—that is, “capable of being affirmed or rejected,” Black’s Law
Dictionary 1805. Tellingly, First Minnesota is not claiming an interest in the property
under either the Recording Act or the common law. In fact, First Minnesota
acknowledges that a bona fide purchaser generally has no protection against a voided
transfer. See, e.g., White & St. Townsite Co., 100 Minn. at 22, 110 N.W. at 374.
Consequently, the position of the dissent goes beyond the position of First Minnesota and
would grant protections to bona fide purchasers under the Recording Act and the
common law that even First Minnesota candidly admits that it lacks.



                                            19
                                               3.

       First Minnesota acknowledges the “general rule” that a mortgagee—here, First

Minnesota—cannot claim an interest in property as a bona fide purchaser if the

mortgagor—here, C&M—“held no interest in the property.” However, First Minnesota

argues that the general rule does not apply in this case because MHOEPA grants

additional rights beyond the common law and the Recording Act that allow a bona fide

purchaser to take an interest from a void deed. First Minnesota relies primarily on Minn.

Stat. § 325N.17(f)(3), which prohibits a foreclosure purchaser during the cancellation

period from “transfer[ring] . . . or purport[ing] to transfer . . . any interest in the residence

in foreclosure to any third party,” but expressly provides that “no grant of any interest or

encumbrance is defeated or affected as against a bona fide purchaser . . . for value and

without notice of a violation of [MHOEPA].” Because this provision applies even when

a foreclosure purchaser “purport[s] to transfer” an interest in property, id., First

Minnesota argues that the protections afforded to bona fide purchasers under MHOEPA

extend even to purported transfers.

       As an initial matter, we observe that section 325N.17(f)(3) has no application here

because, by its terms, it does not apply to transfers or purported transfers of property that

occur after the cancellation period has expired. See Minn. Stat. § 325N.17(f) (proscribing

specified acts “until the time during which the foreclosed homeowner may cancel the

transaction has fully elapsed”). Consequently, regardless of the scope of rights available

to bona fide purchasers under section 325N.17(f)(3), the provision protects bona fide

purchasers only with respect to transactions that take place during the cancellation period.


                                               20
In this case, because C&M did not transfer or purport to transfer an interest in the

property to First Minnesota until after the cancellation period had expired,6 section

325N.17(f)(3) does not provide First Minnesota with rights to the property as a bona fide

purchaser.

      Remarkably, the dissent asserts that Minn. Stat. § 325N.17(f)(3) applies in this

case because “REA’s grant of a mortgage to C&M during the cancellation period was a

violation of Minn. Stat. § 325N.17(f)(3), and the violation triggered the proviso that ‘no

grant of any interest is defeated or affected as against a bona fide purchaser or

encumbrance for value.’ ”     In other words, the dissent takes a nominal transaction

between two Wayman entities for $100, conducted solely to further the scheme, and

gives it decisive significance in determining the third-party rights of First Minnesota.

Even apart from the fact that C&M cannot be a bona fide purchaser because Wayman

necessarily had actual knowledge of his own violations, the dissent reads section


6
        The length of the cancellation period under MHOEPA expires on the earlier of
(1) “midnight of the fifth business day following the day on which the foreclosed
homeowner signs a contract that complies” with MHOEPA, or (2) “8:00 a.m. on the last
day of the period during which the foreclosed homeowner has a right of redemption.”
Minn. Stat. § 325N.13(a). The district court concluded that the 5-day cancellation period
never began to run because the parties never executed a contract that complied with
MHOEPA. See Minn. Stat. § 325N.14(d) (“The five business days during which the
foreclosed homeowner may cancel the contract must not begin to run until all parties to
the contract have executed the contract and the foreclosure purchaser has complied with
this section.”). But even if the district court was correct and the 5-day period never
commenced, the cancellation period expired, at the latest, on September 13, 2007, which
was the last day of Graves’s redemption period. See Minn. Stat. § 325N.13(a). C&M
purported to convey a mortgage to First Minnesota on September 17, which was 4 days
after the last day of the redemption period. Therefore, the purported transfer from C&M
to First Minnesota occurred after the cancellation period had expired.


                                           21
325N.17(f)(3) too broadly.      Section 325N.17(f)(3) provides only that a foreclosure

purchaser shall not, during the cancellation period, “transfer or encumber or purport to

transfer or encumber any interest in the residence in foreclosure to any third party”

(emphasis added). Setting aside the lack of any interest for C&M or REA to convey to

First Minnesota—and the fact that the transaction between REA and C&M occurred after

Graves had cancelled—the dissent’s analysis is inconsistent with the district court’s

findings and conclusions. Specifically, the district court concluded that (1) REA and

C&M were alter egos of Michael Wayman and that each “could only act through

Wayman”; (2) C&M “acted in joint venture with REA”; and (3) REA was “merely a

pawn to create a $100.00 mortgage.” Accordingly, there was no transfer or purported

transfer of an interest in the property to a third party during the cancellation period that

could have triggered the bona-fide-purchaser provision, even under the dissent’s creative

interpretation of the transaction that occurred in this case.7

       We also disagree more broadly with the dissent’s interpretation of the statute,

which effectively negates the statutory protections afforded to foreclosed homeowners

under MHOEPA.         The dissent criticizes us for our “inequitable treatment” of First

Minnesota, without mentioning that Graves did everything he was required to do under

MHOEPA, yet would still lose his home under the dissent’s approach. In effect, the

7
       Contrary to the dissent’s suggestion, the district court did not conclude that C&M
was a “third party” for the purpose of Minn. Stat. § 325N.17(f)(3). Rather, the district
court concluded that Wayman transacted with Graves on behalf of both REA and C&M
and that REA and C&M were each “foreclosure purchaser[s]” under Minn. Stat.
§ 325N.10, subd. 4, “act[ing] in furtherance of a joint venture.”



                                              22
dissent turns a statute protecting homeowners from the predatory practices of foreclosure

purchasers into one protecting third-party lenders at the expense of homeowners. The

dissent is, however, correct about one thing: section 325N.17(f)(3) does protect the rights

of a bona fide purchaser that obtained an interest in the property during the cancellation

period. But it does so only when a homeowner does not cancel the transaction.

       The dissent asserts that our interpretation of Minn. Stat. § 325N.17(f)(3) is “far-

fetched” because the bona-fide-purchaser provision would apply only in “a scenario . . .

too fanciful to be taken seriously.” According to the dissent, the bona-fide-purchaser rule

would apply under our interpretation only in the unlikely scenario that a foreclosed

homeowner has strategically allowed the cancellation period to expire without cancelling

the transaction. While the posited scenario is indeed unlikely, as the dissent claims, the

dissent ignores the far more common scenario in which a homeowner fails to cancel the

transaction, the foreclosure purchaser violates some requirement in MHOEPA, and the

foreclosure purchaser has conveyed the property to a bona fide purchaser during the

cancellation period. Under those circumstances, when a homeowner has failed to cancel

the transaction, a bona fide purchaser takes an interest in the property, regardless of the

foreclosure purchaser’s violation of “sections 325N.10 to 325N.18,” so long as the bona

fide purchaser had no notice of the MHOEPA violations. Minn. Stat. § 325N.17(f)(3). It

is only when a homeowner timely cancels a transaction that a bona fide purchaser’s

interest is defeated by a homeowner’s superior right to the property.

       More fundamentally, the dissent’s interpretation of Minn. Stat. § 325N.17(f)(3)

disregards other provisions of MHOEPA and would have far-reaching consequences for


                                            23
unsuspecting homeowners. For instance, the dissent never explains how its interpretation

gives any meaning to the statutory warning, which must accompany both the contract and

the cancellation notice, informing a homeowner that he or she may exercise the

cancellation right without “any penalty or obligation.” Minn. Stat. § 325N.14(a)-(b).

       Furthermore, the dissent’s broad reading of MHOEPA’s bona-fide-purchaser

provision, taken at face value, would apparently allow a bona fide purchaser to take an

interest in the property even if the foreclosure purchaser had used a forged or stolen deed

to convey an interest, so long as the bona fide purchaser had no knowledge of the forgery

or theft. According to the dissent, the only two “triggering requirements” for bona-fide-

purchaser status under MHOEPA are that the conveyance to the third party must occur

during the cancellation period and that the third party must be a “bona fide purchaser . . .

for value and without notice of a violation of sections 325N.10 to 325N.18.” Yet there is

no indication that MHOEPA casts aside the black-letter rule, long recognized by the

common law, that to convey an interest in the property, the grantor must actually have an

interest to convey. See, e.g., White & St. Townsite Co., 100 Minn. at 22, 110 N.W. at

374; see also Shaw Acquisition Co., 639 N.W.2d at 877-78 (stating the general rule that

the Legislature only abrogates the common law by express wording or necessary

implication). Just as a bona fide purchaser cannot take an interest from a forged or stolen

deed, neither can a bona fide purchaser take an interest when a homeowner has timely

cancelled a foreclosure reconveyance.

       First Minnesota and the dissent also rely on the bona-fide-purchaser provision in

Minn. Stat. § 325N.18, subd. 3, which provides: “[n]o action under this section shall


                                            24
affect the rights in the foreclosed property held by a good faith purchaser for value under

sections 507.34, 508.48, 508A.48, or other applicable law.” This section, by its terms,

only protects First Minnesota’s existing rights—that is, “rights . . . held,” Minn. Stat.

§ 325N.18, subd. 3—and does not create additional rights in favor of a third party whose

claim of title rests on a void deed. First Minnesota acknowledges that the Recording Act

and the common law do not protect a good faith purchaser for value when the underlying

transaction is void. Therefore, First Minnesota cannot claim an interest in the property

based on Minn. Stat. § 325N.18, subd. 3.

       In conclusion, although two provisions of MHOEPA address the bona-fide-

purchaser rule, Minn. Stat. § 325N.17(f)(3) and Minn. Stat. § 325N.18, subd. 3, neither

creates new rights for a bona fide purchaser nor changes the fact that the quitclaim deed

was void because Graves timely exercised his right to cancel the transaction. In short,

because the deed underlying First Minnesota’s mortgage was void, First Minnesota took

no legal interest in the property based on its claimed status as a bona fide purchaser.

                                             B.

       After concluding that First Minnesota is not entitled to rights in the property as a

bona fide purchaser, the court of appeals awarded title to the property to Graves, free of

the interest of any other party, including First Minnesota. Graves, 816 N.W.2d at 671.

First Minnesota argues that the court of appeals failed to consider the consequences of

Graves’s failure to redeem the property from the original sheriff’s sale.

       We agree that just because First Minnesota lacked a valid mortgage does not

necessarily mean that the district court should have awarded the property to Graves.


                                             25
After all, 5 months before the August 2007 transaction between Graves and Wayman,

Wells Fargo purchased Graves’s home at a sheriff’s sale, and Graves did not redeem the

home during the redemption period. Logically, if C&M was not a proper redemptioner in

September 2007 because the quitclaim deed under which it took a mortgage was void,

then legal title would have vested in Wells Fargo upon expiration of the redemption

period. See Minn. Stat. § 580.12 (2014) (providing that once a sheriff’s certificate of sale

is recorded, “upon expiration of the time for redemption, the certificate shall operate as a

conveyance to the purchaser or the purchaser’s assignee of all the right, title, and interest

of the mortgagor”).

       First Minnesota argues that granting Graves “free and clear title” is unjust “in light

of the fact that it was [First Minnesota’s] funds that redeemed the Property from the prior

foreclosure.”   Because the equitable arguments have not been fully developed or

considered by the courts below, we reverse the court of appeals’ conclusion that Graves

should be awarded title to the property free of any interest of First Minnesota. We also

remand to the district court for further proceedings to determine whether First Minnesota

has an interest in the property based upon equitable principles. See Knight v. Schwandt,

67 Minn. 71, 74, 69 N.W. 626, 627 (1896) (stating that a party who had redeemed

property from a sheriff’s sale based on a void deed “was not a legal redemptioner,” but




                                             26
that “it does not follow that his redemption is nugatory as to the purchaser at the

mortgage sale, which accepted and retained his money”).8

                                           III.

       For the foregoing reasons, we affirm the decision of the court of appeals in part,

reverse in part, and remand to the district court for further proceedings consistent with

this opinion.

       Affirmed in part, reversed in part, and remanded.




8
      The dissent contends that, because we have refrained from setting out “any basis
upon which First Minnesota could be entitled to equitable relief,” the prospect of
equitable relief must be “illusory.” The court of appeals did not discuss the availability
of equitable relief, and First Minnesota did not seek review of any issue relating to
equitable relief. Accordingly, our decision to refrain from engaging in a full discussion
of the equitable relief to which First Minnesota may be entitled simply reflects our
respect for the general rule that we do not address issues that are not properly before us
on appeal. See, e.g., State v. Koppi, 798 N.W.2d 358, 366-67 (Minn. 2011).



                                           27
                                       DISSENT

DIETZEN, Justice (dissenting).

       Minnesota law, as expressed in the common law and codified in the Recording

Act, has long protected the rights of a bona fide purchaser of real property against an

unrecorded right in the same property. Those rights were preserved and extended by the

Legislature when it enacted Chapter 325N. Today the majority ignores and disregards

those rights. Instead, the majority engages in reasoning best characterized as a fast skate

across thin ice to conclude that in a foreclosure repurchase transaction, the rights of a

seller of real property trump the rights of a bona fide purchaser. Such a determination is

not only contrary to the express provisions of Minn. Stat. §§ 325N.17(f)(3) and 325N.18,

subd. 3 (2014), it is also contrary to the common law. Further, the majority’s opinion

casts doubt on the ability of a buyer to rely on record title for any transaction that occurs

during a foreclosure redemption period. Consequently, I dissent.

       The issue in this case is whether First Minnesota, which loaned $145,000 against

the security of Graves’s house, has any right to recover its loan from Graves when it had

no notice that Graves had exercised his statutory cancellation right—indeed, when it had

no notice that any party had an interest in the property except Michael Wayman and his

entities (collectively, “Wayman”).1 The issue is not whether Wayman was a scoundrel


1
     Or so we must assume. Although the court of appeals concluded that First
Minnesota was not a bona fide purchaser, see Graves v. Wayman, 816 N.W.2d 655, 664-
69 (Minn. App. 2012), the majority holds that even a bona fide purchaser in First
Minnesota’s position has no rights against a homeowner. Supra at 12, n.3.



                                            D-1
who defrauded Amos Graves and his wife: the district court settled that question when it

found that Wayman committed numerous violations of Minn. Stat. §§ 325N.10-.18

(2014), and granted an award of exemplary damages against Wayman, and in favor of

Graves, in an amount more than $107,000.2

       The question is purely one of law—does Graves’s cancellation of his conveyance

to Wayman under Minn. Stat. § 325N.13 operate as a legal bar to First Minnesota’s bona

fide purchaser defense under sections 325N.17(f)(3) and 325N.18, subdivision 3? To

answer this question, I will first examine and interpret the text of Minn. Stat. §§ 325N.13,

325N.17(f)(3), and 325N.18, subd. 3, in the context of the Recording Act, Minn. Stat.

§ 507.34 (2014), and then address the arguments raised by the majority.

                                             I.

       In 2004 the Legislature enacted Minn. Stat. §§ 325N.10-.18. Act of May 28,

2004, ch. 263, §§ 10-18, 2004 Minn. Laws 953, 959-67.             The statute regulates a




2
       Under the majority’s approach, Graves receives not only the $107,000 judgment
against Wayman, but also the continuing right to possession of the foreclosed property
worth $182,000, notwithstanding that Graves has never redeemed the property.


                                            D-2
“foreclosure reconveyance”3 between a “foreclosed homeowner”4 and a “foreclosure

purchaser.”5 A foreclosure reconveyance must comply with a number of requirements,

including that the reconveyance be in the form of a written contract, Minn. Stat.

§ 325N.11; that the contract contain the entire agreement of the parties and include a

notice of cancellation, Minn. Stat. § 325N.12; and that the notice of cancellation state the

foreclosed homeowner has the right to cancel the foreclosure reconveyance by mailing

the notice to the foreclosed purchaser within the cancellation period, Minn. Stat.

§§ 325N.13-.14.




3
       A “foreclosure reconveyance” means a transaction involving:

       (1) the transfer of title to real property by a foreclosed homeowner during a
       foreclosure proceeding . . . that allows the acquirer to obtain title to the
       property by redeeming the property as a junior lienholder; and
       (2) the subsequent conveyance, or promise of a subsequent conveyance, of
       an interest back to the foreclosed homeowner by the acquirer or a person
       acting in participation with the acquirer that allows the foreclosed
       homeowner to possess either the residence in foreclosure or other real
       property, which interest includes, but is not limited to, an interest in a
       contract for deed, purchase agreement, option to purchase, or lease.

Minn. Stat. § 325N.10, subd. 3.
4
       A “foreclosed homeowner” means “an owner of residential real property,
including a condominium, that is the primary residence of the owner and whose mortgage
on the real property is or was in foreclosure.” Minn. Stat. § 325N.10, subd. 2.
5
       A “foreclosure purchaser” means “a person that has acted as the acquirer in a
foreclosure reconveyance” as well as “a person that has acted in joint venture or joint
enterprise with one or more acquirers in a foreclosure reconveyance.” Minn. Stat.
§ 325N.10, subd. 4.



                                            D-3
       No one disputes that Graves was a foreclosed homeowner, that Wayman was a

foreclosure purchaser, that the transaction between Graves and Wayman was a

foreclosure reconveyance, or that Wayman violated multiple provisions of sections

325N.10-.18. Instead, the dispute is about whether First Minnesota is protected as a bona

fide purchaser, notwithstanding Graves’s cancellation of the foreclosure reconveyance.

Thus, we must examine the statute’s cancellation provisions and its protections for bona

fide purchasers.

       Graves exercised the right of cancellation set out in Minn. Stat. § 325N.13, which

provides that “[i]n addition to any other right of rescission, the foreclosed homeowner has

the right to cancel any contract with a foreclosure purchaser” within a specified

cancellation period. Minn. Stat. § 325N.13(a). Section 325N.13 goes on to provide that

“[c]ancellation occurs when the foreclosed homeowner delivers, by any means, written

notice of cancellation.” Minn. Stat. § 325N.13(b). I agree with the majority and the

lower courts that Graves satisfied the requirements for cancellation of the foreclosure

reconveyance under section 325N.13.

       But section 325N.13 is subject to two separate provisions that, notwithstanding a

possible violation of that statute or other provisions of Minn. Stat. §§ 325N.10-.18,

protect a bona fide purchaser’s rights. First, Minn. Stat. § 325N.18, subd. 3, which is part

of the enforcement section of the statute, affords a foreclosed homeowner a private right

of action except that “[n]o action under this section shall affect the rights in the

foreclosed property held by a good faith purchaser for value under sections 507.34,

508.48, 508A.48, or other applicable law.”        Thus, section 325N.18, subdivision 3,


                                            D-4
provides that an action to enforce rights under Minn. Stat. §§ 325N.10-.17 is subject to

the limitations of Minn. Stat. § 507.34, which is commonly known as the Recording Act.

       The Recording Act has long defined the rights of a bona fide purchaser under

Minnesota law. See, e.g., Minn. Gen. Stat. ch. 40, § 21, at 330-31 (1866) (enacting

substantively identical predecessor to the Recording Act); Miller v. Hennen, 438 N.W.2d

366, 369 (Minn. 1989). It provides that any unrecorded “conveyance of real estate” is

“void as against any subsequent purchaser in good faith and for a valuable consideration

of the same real estate, or any part thereof, whose conveyance is first duly recorded.”

Minn. Stat. § 507.34. A “purchaser” under the Recording Act includes a mortgagee, and

a “conveyance” broadly includes “every instrument in writing whereby any interest in

real estate is created, aliened, mortgaged, or assigned or by which the title thereto may be

affected in law or in equity.” Minn. Stat. § 507.01 (2014). The purpose of the Recording

Act is to “protect persons who buy real estate in reliance upon the record.” Miller, 438

N.W.2d at 369 (citing Strong v. Lynn, 38 Minn. 315, 317, 37 N.W. 448, 449 (1888)). As

we have observed at least as long ago as 1880, these protections facilitate functioning real

estate markets:

       But if titles held under such sales are liable to be defeated by secret frauds,
       which the vigilance of a purchaser cannot guard against, they can hardly be
       regarded as salable titles. No prudent man could pay a fair price for a title
       liable to such imputation. Make it a rule that sales perfectly fair on their
       face, which, so far as appears, have been conducted according to law, and
       which have been confirmed by the court ordering them, may be at any time
       and by any body shown to be null, and the titles under them entirely
       defeated, by proof of a secret understanding between a trustee and a
       purchaser, and such sales, as a means of obtaining the value of the land
       sold, will be impracticable.



                                            D-5
       The uncertainty which such a rule would introduce into titles would be
       contrary to the general policy of the law on the subject of titles, to real
       estate. That policy is to give stability to titles, and to enable purchasers
       using proper caution to be secure in the titles they take. This is the purpose
       of the statute regulating the registering of deeds [i.e., the Recording Act].

White v. Iselin, 26 Minn. 487, 492-93, 5 N.W. 359, 363 (1880) (emphasis added).

       For purposes of the Recording Act, we have defined a “subsequent purchaser in

good faith,” which we have also referred to as a “bona fide purchaser,” as one who

acquires property (1) in good faith; (2) for valuable consideration; and (3) without actual,

constructive, or implied notice of others’ prior adverse claims at the time of conveyance.

Anderson v. Graham Inv. Co., 263 N.W.2d 382, 384 (Minn. 1978); Bergstrom v.

Johnson, 111 Minn. 247, 250, 126 N.W. 899, 900 (1910).

       The basic requirements of section 325N.18, subdivision 3, are satisfied in this

case. Minnesota Statutes § 325N.18, subd. 3, states that “[n]o action under this section

shall affect the rights in the foreclosed property held by a good faith purchaser for value

under” the Recording Act. Graves brought his action in relevant part under section

325N.18,6 so the factual predicate of the statute is satisfied. And for purposes of the

Recording Act, it is evident that Graves’s cancellation notice meets the description of an

“instrument in writing whereby any interest in real estate is created, aliened, mortgaged,


6
      In his Amended Complaint, Graves requests the court to “rescind[] the transaction
between Plaintiff and Defendants . . . under the Truth in Lending Act, Minn. Stat.
§ 325N.13, Minn. Stat. § 8.31, or as equitable relief under the Minnesota Prevention of
Consumer Fraud Act and common law fraud” (emphasis added). See Minn. Stat.
§ 325N.18, subd. 1 (providing remedies for “[a] violation of sections 325N.10 to
325N.17”).



                                            D-6
or assigned or by which the title thereto may be affected in law or in equity,” Minn. Stat.

§ 507.01 (emphasis added)—that is, a conveyance. Because Graves’s cancellation notice

was a “conveyance” under the Recording Act, and because it undisputedly was not

recorded,7 the Recording Act provides that it is “void as against any subsequent purchaser

in good faith and for a valuable consideration of the same real estate,” Minn. Stat.

§ 507.34—in this case, First Minnesota.

       Second, Minn. Stat. § 325N.17(f)(3) provides specific protections for bona fide

purchasers in certain situations. Section 325N.17(f)(3), a part of the prohibited practices

section of the statute, forbids the foreclosure purchaser from engaging in various

practices, including:

       (f) do[ing] any of the following until the time during which the foreclosed
       homeowner may cancel the transaction has fully elapsed:
       ....
              (3) transfer or encumber or purport to transfer or encumber any
              interest in the residence in foreclosure to any third party, provided
              no grant of any interest or encumbrance is defeated or affected as
              against a bona fide purchaser or encumbrance for value and without
              notice of a violation of sections 325N.10 to 325N.18, and knowledge
              on the part of any such person or entity that the property was
              “residential real property in foreclosure” does not constitute notice
              of a violation of sections 325N.10 to 325N.18. This section does not
              abrogate any duty of inquiry which exists as to rights or interests of
              persons in possession of the residential real property in foreclosure
              ....



7
       The majority suggests that by applying the Recording Act I would create a “novel
recording requirement.” Supra at 18. As I have described in the main text, there is
nothing novel about the Recording Act’s requirements, or the right of a bona fide
purchaser to rely upon record title.



                                           D-7
(emphasis added). That is, section 325N.17(f)(3) comes into effect when a foreclosure

purchaser “transfer[s] or encumber[s] or purport[s] to transfer or encumber any interest in

the residence in foreclosure to any third party,” and provides that no such “grant of any

interest or encumbrance is defeated or affected as against a bona fide purchaser” who

lacks notice of a violation of sections 325N.10-.18. Id.

       Like the general preservation of bona-fide-purchaser rights under Minn. Stat.

§ 325N.18, subd. 3, the specific proviso in Minn. Stat. § 325N.17(f)(3) clearly applies to

preserve the bona-fide-purchaser rights of a party such as First Minnesota in this case.

The target of section 325N.17(f)(3) is the transfer or encumbrance of the foreclosed

property that occurs during the cancellation period. Such a transaction is prohibited,

subject to the rights of a bona fide purchaser. It is undisputed that a Wayman entity,

REA, granted a mortgage to C&M (and that mortgage was recorded) during the

cancellation period.8 REA’s grant of a mortgage to C&M during the cancellation period

was a violation of Minn. Stat. § 325N.17(f)(3), and the violation triggered the proviso

that “no grant of any interest or encumbrance is defeated or affected as against a bona

fide purchaser or encumbrance for value.” Id.

       First Minnesota has established that a Wayman entity encumbered the foreclosed

property during the cancellation period in violation of Minn. Stat. § 325N.17(f)(3). The


8
       Because Wayman had never provided a contract that complied with sections
325N.10 to 325N.15, the cancellation period extended until September 13, 2007, which
was the last day that Graves had a right to redeem under the foreclosure of the Wells
Fargo loan. See Minn. Stat. § 325N.13(a).



                                           D-8
relevant question is whether First Minnesota was a bona fide purchaser within the

meaning of the statute.

                                             II.

       The majority contends that the bona fide purchaser provisions of section

325N.17(f)(3) are not applicable because First Minnesota did not take title during the

cancellation period.      The majority misreads the statute.    The protections of section

325N.17(f)(3) apply only when two separate and distinct factors are present. First, a

prohibited transaction must occur during the cancellation period.               Minn. Stat.

§ 325N.17(f).    As discussed above, REA granted a mortgage to C&M during the

cancellation period in violation of the statute.9 Second, the purchaser seeking protection

must be “a bona fide purchaser . . . for value and without notice of a violation of sections

325N.10 to 325N.18.” Minn. Stat. § 325N.17(f)(3). If both factors are present, then the

purchaser is entitled to the protections of the statute, which specifies that “no grant of any

9
       The majority asserts, based on the district court’s finding that REA and C&M
were alter egos of each other and of Wayman, that the grant of the mortgage was not a
grant of an interest to a “third party” as proscribed by section 325N.17(f)(3). Supra at
21-22. This is flatly contradicted by the district court’s conclusion, unchallenged by any
party in this appeal, that one of many acts by Wayman that “violate Minn. Stat.
§ 325N.17(f)” was that “REA executed a mortgage to C&M during the rescission period
and recorded the same.”

         The damage caused by the majority’s position goes far beyond its disregard of the
proceedings in this case. In striving to reach its desired outcome, the majority asserts that
a violation of the plain language of Minn. Stat. § 325N.17(f)(3) is not an actual violation
if it is “nominal” and “conducted solely to further the scheme.” Not only was the grant of
the mortgage to C&M in this case “conducted solely to further the scheme,” it was vital
to the perpetuation of the scheme. Yet the majority ignores the language of the statute to
hold that it was not a violation.



                                            D-9
interest or encumbrance is defeated or affected” against such a purchaser. Id. At this

stage of the proceeding, we must assume that First Minnesota is a bona fide purchaser

without notice.    Because both triggering requirements are present in this case, the

requirements of section 325N.17(f)(3) are satisfied.

       Not only does this interpretation of section 325N.17(f)(3) give effect to the plain

meaning of the statute, it also makes sense from a policy standpoint. It would make little

sense to provide protections for a bona fide purchaser who took the property during the

cancellation period, and then have those protections not extend to a subsequent

transferee.

       But the majority’s interpretation suffers from an even more serious defect. The

majority interprets the proviso in section 325N.17(f)(3) to apply only when a foreclosure

purchaser engages in a prohibited practice and the foreclosed homeowner does not cancel

the transaction during the cancellation period. Then and only then, on the majority’s

account, is the bona-fide-purchaser proviso triggered. The majority’s interpretation is

unreasonably narrow: the most natural reading of the text is that the proviso applies

whether the foreclosed homeowner does or does not cancel. Indeed, nothing in the

statutory text limits the bona-fide-purchaser proviso to a circumstance when the owner

does not exercise his cancellation right, and the majority does not even try to identify a

provision in the text that would do so. The majority’s interpretation adds words to the

statute, limiting the rights of a bona fide purchaser, that the Legislature has not supplied.

“[W]e will not read into a statute a provision that the legislature has omitted, either




                                           D-10
purposely or inadvertently.” Reiter v. Kiffmeyer, 721 N.W.2d 908, 911 (Minn. 2006) (per

curiam).

       Moreover, the majority’s interpretation is far-fetched and contrary to common

sense. Regardless of whether section 325N.17(f)(3) applies in this case, it must apply in

some case. It is, after all, a legislative command that we construe every statute “to give

effect to all its provisions.” Minn. Stat. § 645.16 (2014); see, e.g., Jackson v. Mortg.

Elec. Registration Sys., Inc., 770 N.W.2d 487, 496 (Minn. 2009). The majority suggests

that the proviso applies to prevent a foreclosed homeowner from allowing the

cancellation period to expire without cancellation, and then, because a prohibited

transaction occurred, claim that its rights are superior to those of a bona fide purchaser.

Such a scenario is too fanciful to be taken seriously. But even if a foreclosed homeowner

were to attempt to carry out such a far-fetched plan, he would have no rights against the

bona fide purchaser, even absent the proviso, because his transfer to the foreclosure

purchaser would be valid and uncancelled, depriving him of any rights in the property.

Accordingly, the bona-fide-purchaser proviso would be meaningless.

       In sum, the majority’s proposed interpretation is unreasonable and far-fetched.

Section 325N.17(f)(3) applies when the foreclosure purchaser engaged in a prohibited

transaction during the cancellation period, regardless whether the foreclosure purchaser

timely cancelled the transaction, and the bona fide purchaser acquired its interest in the

property without notice of a violation of sections 325N.10-.18. Accordingly, I conclude

that the protections of Minn. Stat. § 325N.17(f)(3) apply to First Minnesota.




                                          D-11
                                            III.

       Next, the majority concludes that Graves’s cancellation deprives First Minnesota

of its rights as a bona fide purchaser under the statute, because a cancellation has the

effect of “annul[ing] or invalidat[ing]” the quitclaim deed that Graves gave to Wayman,

making it “a form of rescission” that represents “the unmaking or abrogation of a

contract.” Supra at 14. In short, the majority concludes that the cancellation rendered

Graves’s quitclaim deed “void,” and there (in the majority’s view) the matter ends. The

majority ignores our case law and fails to take the next step in the legal analysis to

determine whether a bona fide purchaser has rights against the unrecorded rights of a

seller: the conclusion that a transaction is void marks the beginning, not the end, of the

analysis in this case. In describing the rights of bona fide purchasers, we have long

drawn a distinction between “void” transactions that are merely voidable and those that

are void ab initio. Specifically, a bona fide purchaser is entitled to the protections of the

Recording Act if he claims title from a transaction that is voidable, but not one that is

void ab initio.

                                             A.

       A transaction that is void ab initio is “of no legal effect” or “null,” whereas a

voidable transaction is “valid until annulled” and “capable of being affirmed or rejected

at the option of one of the parties.” Onvoy, Inc. v. SHAL, LLC, 669 N.W.2d 344, 353 n.9

(Minn. 2003) (citing Black’s Law Dictionary 1568 (7th ed. 1999)); see also Spartz v.

Rimnac, 296 Minn. 390, 394, 208 N.W.2d 764, 767 (1973) (explaining with regard to

voidable, as opposed to void contracts, “that action is necessary in order to prevent the


                                           D-12
contract from producing the ordinary legal consequences of a contract” (quoting

Restatement of Contracts § 13 cmt. e (1932))).

       On the one hand, transactions which a party originally intends to be valid but later

seeks to cancel for various reasons such as fraud, misrepresentation, or mistake, are

voidable. See Dahlberg v. Young, 231 Minn. 60, 67, 42 N.W.2d 570, 575 (1950) (“A

deed which is procured through fraud or undue influence is not void but only voidable.”);

Schaps v. Lehner, 54 Minn. 208, 212, 55 N.W. 911, 912 (1893) (stating general rule that

a contract entered into by an insane person is not void, “but at most only voidable”);

Cochran v. Stewart, 21 Minn. 435, 438 (1875) (explaining that a contract of sale for

personal property induced by fraud is not void, but voidable at election of vendor, and

election must be made before fraudulent vendee sells to a bona fide purchaser).

       Likewise, transactions that are rendered void because they did not comply with an

applicable statute are generally considered voidable at the option of the aggrieved party,

rather than void ab initio. See Greer v. Kooiker, 312 Minn. 499, 504-05 & n.2, 253

N.W.2d 133, 138 & n.2 (1977) (explaining that statute of frauds, which states that certain

contracts “shall be void,” actually renders them voidable (citing Minn. Stat. § 513.05

(2014))); In re Sprain’s Estate, 199 Minn. 511, 514-16, 272 N.W. 779, 781 (1937)

(holding that sale of property by interested personal representative in probate proceeding

in violation of statute stating any sale “made contrary to the provisions of this section

shall be void,” was voidable rather than void ab initio); Willard v. Finnegan, 42 Minn.

476, 478-79, 44 N.W. 985-86 (1890) (holding that sale of property made contrary to

statute providing that “if the mortgaged premises consist of separate and distinct farms or


                                          D-13
tracts, they shall be sold separately,” was voidable rather than void ab initio); White v.

Iselin, 26 Minn. 487, 489, 493, 5 N.W. 359, 360, 364 (1880) (holding that sale of minor’s

property by minor’s interested guardian, in violation of statute stating that any sale “made

contrary to the provisions of this section shall be void,” was voidable rather than void

ab initio).

       A voidable transfer of title does not defeat a bona-fide-purchaser’s rights. See

First Fiduciary Corp. v. Blanco, 276 N.W.2d 30, 33 (Minn. 1979) (finding when

transaction was merely voidable, not void ab initio, a bona fide purchaser was entitled to

protection); In re Sprain’s Estate, 199 Minn. at 514-15, 272 N.W. at 781; White, 26

Minn. at 493, 5 N.W. at 364; see also Bausman v. Faue, 45 Minn. 412, 417, 48 N.W. 13,

16 (1891) (distinguishing “on the matter of estoppel between a deed that is void and one

that is only voidable, holding that the latter may and the former may not be the basis of

estoppel”).

       On the other hand, transactions in which the deed is forged or lacks a required

signature are void ab initio, or void from the beginning. See Dvorak v. Maring, 285

N.W.2d 675, 677 (Minn. 1979) (“[W]ithout the signatures of both spouses a conveyance

of homestead property is not merely voidable but is void and the buyer acquires no rights

whatsoever.”); Blanco, 276 N.W.2d at 33 (“Where a deed to a homestead is not executed

by one of the spouses, the transfer is wholly void, not merely voidable, regardless of the

equities of the matter.”); Bausman, 45 Minn. at 417, 48 N.W. at 15-16 (“[W]here a deed

was stolen from the grantor . . . or the grantee had altered the deed so as to make it void, a

bona fide purchaser was in no better condition than his grantor.”). A deed that is void


                                            D-14
ab initio transfers no interest and cannot pass title even in favor of a bona fide purchaser.

See White & St. Townsite Co. v. J. Neils Lumber Co., 100 Minn. 16, 22, 110 N.W. 371,

374 (1907) (because deed purporting to transfer title was “void, not simply voidable,”

given that grantor “had no power” to convey because he never “acquired any title,” it was

“immaterial” whether a subsequent purchaser was bona fide); Bausman, 45 Minn. at 417-

18, 48 N.W. at 15-16.

       When Graves exercised the statutory right of cancellation pursuant to section

325N.13, he rendered the transaction between him and Wayman of no legal effect as

between them. But if he had never cancelled, the transaction would have been valid and

enforceable between Graves and Wayman. A transaction that is “valid until annulled”

and can be “affirmed or rejected at the option of one of the parties” is voidable, rather

than void ab initio. See Onvoy, 669 N.W.2d at 353 n.9. Indeed, that is its defining

characteristic. Accordingly, such a transaction carries with it the protections in favor of a

bona fide purchaser set forth in the Recording Act, Minn. Stat. § 507.34 and the

corresponding protections in sections 325N.17(f)(3) and 325N.18, subdivision 3.

                                             B.

       The majority attempts to blur these distinctions with the glib statement that

“[n]othing plus nothing still equals nothing.” But as we have seen, in the field of bona

fide purchasers, there are degrees of “nothing”: an agreement that is void ab initio was,

in a sense, always nothing, while an agreement that is merely voidable becomes nothing

only at the option of a party. The latter type of transaction, we have long held, passes an

interest that can be protected in favor of a bona fide purchaser even if a party later


                                           D-15
chooses to void it. Indeed, both the majority’s analysis of the meaning of the term

“cancel,” and its analysis of cancellation as a form of rescission, support the conclusion

that the transaction was voidable, rather than void ab initio.

       First, the majority notes that “cancel” means “to annul or invalidate.” But as

described above, our case law clearly states that a transaction that is “valid until

annulled” is voidable, not void ab initio. The majority also points out that to “annul”

means “to . . . declare void or invalid.” But while the majority emphasizes the word

“void” in the latter definition, the important word is actually “declare.” A cancellation

declares a contract void; but a transaction that is void ab initio is always void, and neither

the parties nor anyone else can ever have any rights under it, regardless of their

declarations. “The practical distinction between a deed voidable and one wholly void is

that the former may be ratified . . . while a deed wholly void is incapable of ratification.”

Law v. Butler, 44 Minn. 482, 485, 47 N.W. 53, 54 (1890); see also Logan v. Panuska,

293 N.W.2d 359, 362 (Minn. 1980) (as between “voidable” and “void” contracts, “only a

voidable contract can be ratified or confirmed”); Dayton v. Nell, 43 Minn. 246, 248, 45

N.W. 231, 232 (1890) (“[A]cts absolutely void cannot be ratified, while those that are

voidable merely may be.”).

       Second, the analogy of Graves’s cancellation to a right of rescission also supports

the proposition that the transaction between Graves and Wayman was voidable. Our

cases make clear that a right of rescission is relevant only for voidable contracts, not

those void ab initio. Thus, in Mlnazek v. Libera, we stated that a contract induced by

fraud “is not . . . as a rule, void, but only voidable at the election of the defrauded party,”


                                            D-16
and the defrauded party has the “election of two remedies,” namely rescission and

damages. 83 Minn. 288, 291, 86 N.W. 100, 101 (1901); see also Hatch v. Kulick, 211

Minn. 309, 310, 1 N.W.2d 359, 360 (1941) (“A contract [induced by fraud] is voidable.

The victim may affirm and, keeping what he has received, sue at law for what damage he

has sustained by reason of the fraud. Or he may, in equity or by his own act, rescind the

tainted contract . . . .”); McQueen v. Burhans, 77 Minn. 382, 393, 80 N.W. 201, 205

(1899) (Mitchell, J., concurring) (discussing “the subject of the rescission of voidable

contracts”).

       Although the majority cites numerous cases that stand for the proposition that

rescission thoroughly unmakes a contract between the parties, none of those cases

suggest that rescission deprives a potential bona fide purchaser of any rights it may have

acquired in a chain of title from one of the parties. In Abdallah, Inc. v. Martin, 242 Minn.

416, 65 N.W.2d 641 (1954), the question was whether a buyer’s actions in returning

defective goods constituted a rescission. We held that it did not, because the return of

defective goods could be consistent with an award of damages under the contract. In

Brown v. Calif. & W. Land Co., 145 Minn. 432, 177 N.W. 774 (1920), the question was

whether defendants’ offer of performance, made after plaintiffs had rescinded, was

effective; we held that it was not, because after plaintiffs had rescinded, there was

nothing to perform. In Chase Manhattan Bank, N.A. v. Clusiau Sales & Rental, Inc., 308

N.W.2d 490 (Minn. 1981), the question was whether a party who had rescinded could

nevertheless enforce a waiver of defense provision in the rescinded contract; we held that




                                           D-17
the whole contract was rescinded. In none of these cases was a third party’s rights even

at issue.

       In sum, the cases cited by the majority are singularly unhelpful to the issue at

hand. No party disputes that Graves’s cancellation returned Graves and Wayman to their

pre-existing rights with regard to each other.      Rather, the question is whether the

unrecorded cancellation deprives a bona fide purchaser of its rights. For the reasons

described above, I conclude the Legislature clearly answered the question in the

negative.10

                                            C.

       The majority also claims to find support for its theory that cancellation

extinguishes a bona fide purchaser’s rights in the requirement at common law that a deed

be delivered to be valid. It is true that our cases at common law have stated that

“delivery of a deed is essential to a transfer of title,” Slawik v. Loseth, 207 Minn. 137,

139, 290 N.W. 228, 229 (1940), and that “delivery of a deed is complete only when the

grantor has put it beyond his power to revoke or reclaim it.” Babbitt v. Bennett, 68 Minn.

260, 263, 71 N.W. 22, 22 (1897). We have also held, in a different situation, that an



10
       The majority argues that the distinction between transactions that are void ab initio
and those that are merely voidable is not relevant to this case because First Minnesota did
not rely on it. But the interaction between a foreclosed homeowner’s rights and the rights
of a bona fide purchaser is at the heart of this case, both on the majority’s account and on
the dissent’s. And under our well-established case law, we cannot assess the parties’
respective rights without inquiring whether Graves’s sale to Wayman was void or merely
voidable.



                                           D-18
undelivered deed is void ab initio, not merely voidable. White & St. Townsite Co., 100

Minn. at 22, 110 N.W. at 374.

       How the common-law delivery rule applies to a statutory right of cancellation such

as the one in Minn. Stat. § 325N.13 is a potentially interesting question. Delivery is

primarily a question of fact depending on the intent of the parties. Exsted v. Exsted, 202

Minn. 521, 525, 279 N.W. 554, 557 (1938) (“Whether or not there has been a delivery is

a question of fact.”); Babbitt, 68 Minn. at 262-63, 71 N.W. at 22 (“Delivery is a question

of fact, and is mainly and primarily one of the intention of the grantor.”). We have never

addressed whether a party who has the intent to deliver a deed, but is prevented by

operation of statute from doing so, has “delivered” the deed. I am aware of no authority

holding that delivery of a deed was ineffective because the transaction was subject to a

statutory right of cancellation.11

       The question is academic with respect to the cancellation right set forth in section

325N.13, however, because the Legislature has clearly abrogated the common-law

delivery rule insofar as it applies to transactions during the cancellation period.

Specifically, the common-law delivery rule is inconsistent with any conceivable reading

of Minn. Stat. § 325N.17(f)(3). Section 325N.17(f)(3) is triggered by a foreclosure

purchaser “transfer[ing] or encumber[ing] or purport[ing] to transfer or encumber any


11
       The parties did not address this issue before this court, and the district court made
no findings of fact regarding it—understandably, because the parties apparently did not
believe the delivery rule was relevant to the issues in this case and therefore have never
mentioned it.



                                           D-19
interest in the residence in foreclosure to any third party” before “the time during which

the foreclosed homeowner may cancel the transaction has fully elapsed.” Application of

the common-law delivery rule to chapter 325N would render any transaction during the

cancellation period completely ineffective, because so long as the cancellation period has

not yet expired, the foreclosed homeowner has not yet put the deed “beyond his power to

revoke or reclaim.” See Babbit, 68 Minn. at 263, 71 N.W. at 22. But the obvious intent

and effect of the proviso in section 3252N.17(f)(3) is to protect a bona fide purchaser

without notice, notwithstanding that the bona fide purchaser’s title derives from a

transaction that occurred when the foreclosed homeowner had a statutory right to reclaim

the deed. The protection for a bona fide purchaser’s rights that the Legislature explicitly

provided for this situation is therefore flatly inconsistent with the common-law delivery

rule.

                                           IV.

        Finally, the majority faults my approach because, under it, Graves “did everything

he was required to do under MHOEPA, yet would still lose his home.” Supra at 22.

Underlying the majority’s reasoning is the implicit assumption that if Graves had not

become involved in the transaction with Wayman, or if Wayman had reacted lawfully to

Graves’s cancellation, then Graves would have kept his home. As the majority seems to

recognize, see supra Part II.B., the record demonstrates the falsity of this assumption.

The district court found that Wells Fargo had already foreclosed on Graves’s home, and

he was facing a deadline of September 13, 2007, to redeem, when Wayman approached

him less than a month before the deadline. Graves had already attempted, unsuccessfully,


                                           D-20
to secure financing to redeem the property. Graves had “received various offers for his

interest in the home, including one for $15,000.00,” but he rejected them because they

would not have preserved his ability to stay in his home.

       In short, there is no reason to believe that absent Wayman’s involvement, Graves

would still be in his home. If Wayman had never come onto the scene, or had responded

lawfully to Graves’s cancellation, Graves would still have lost his home, not as a “penalty

or obligation” imposed by the cancellation, see Minn. Stat. § 325N.14(a), but as the result

of the prior foreclosure by Wells Fargo and Graves’s own inability to redeem.

       To be sure, Wayman defrauded and harmed Graves. The district court found that

as a result of his dealings with Wayman, Graves lost the equity that he had in the home,

and unnecessarily made rent payments to Wayman pursuant to Wayman’s fraudulent

scheme. But the district court accounted for all these losses and awarded exemplary

damages to Graves in the amount of one and one-half times his actual damages,

providing a substantial remedy for his losses (an award that the majority allows to stand).

                                             V.

       By enacting Minn. Stat. §§ 325N.10-.18, the Legislature provided protections for

foreclosed homeowners such as Graves. But in protecting foreclosed homeowners, the

Legislature did not intend to overrule more than a century of other protections in favor of

bona fide purchasers. Instead, it explicitly incorporated those protections into the statute.

Those protections allow real estate markets to work smoothly, providing assurances to

purchasers that they have good title when they purchase property that has been involved




                                           D-21
in a foreclosure.12 Here, the majority makes those protections meaningless. And because

a foreclosure purchaser’s failure to provide a contract that complies with sections

325N.10 to 325N.15 extends the cancellation period until the last day that a foreclosed

homeowner has a right to redeem, the majority’s opinion calls into question the title of a

foreclosed property throughout the redemption period. The majority’s approach creates

disincentives for reputable purchasers to make loans for properties in foreclosure, thereby

making it harder for homeowners in foreclosure to sell their property.

       For these reasons, I respectfully dissent.

GILDEA, Chief Justice (dissenting).

       I join in the dissent of Justice Dietzen.

WRIGHT, Justice (dissenting).

       I join in the dissent of Justice Dietzen.




12
       The majority remands the case to the district court “to determine whether First
Minnesota has an interest in the property based upon equitable principles,” apparently in
an attempt to soften the blow of the inequitable treatment it visits upon First Minnesota.
The majority does not suggest any basis upon which First Minnesota could be entitled to
equitable relief, and therefore I suspect the prospect of relief on such grounds is illusory.



                                             D-22
