On January 28th, the Ninth Circuit addressed the issue of whether a Chapter 7 bankruptcy trustee had actual notice of an unrecorded refinanced mortgage when the bankruptcy petition was electronically filed simultaneously with schedules listing the mortgage as a secured debt. The Court held that the trustee lacked actual notice. The Court found that the filing of the petition was a separate event from the filing of the schedules. The trustee was therefore a bona fide purchaser for value without notice and under state bona fide purchaser law, the trustee could avoid the unrecorded mortgage. The Court also rejected the bank's equitable subrogation claim because the creditor whose debt it paid off, itself, had no lien since the bank recorded the deed of reconveyance when it refinanced the mortgage. Secondly, equitable subrogation could not apply because the trustee was considered a bona fide purchaser for value without notice. Finally, the Court concluded that state law gave priority to bona fide purchasers over those claiming equitable subrogation. Chase Manhattan Bank, USA, N.A. v. Taxel.