Why recorded deeds won out against unrecorded deals – see what sank NVR at Spring Oaks
On December 8, 2025, the Delaware Court of Chancery dismissed NVR, Inc.’s lawsuit over remaining lots in the Spring Oaks residential development in Middletown, Delaware. For mortgage and development professionals, the core point is clear: in Delaware, a sheriff’s sale cuts off unrecorded purchase rights tied to the prior owner, and later recorded deeds by a new buyer stand ahead of those unrecorded claims.
Here’s what happened. In 2018, NVR entered a Lot Purchase Agreement (LPA) with three sellers – Spring Oaks Development, LLC; Hoover & Hoover, LLC; and Spring Oaks Lots 47-85, LLC – to buy 158 of 246 lots in phases. The LPA tied takedowns to site work and permitting and required a $1,050,000 deposit. To secure the deposit’s return, NVR recorded a mortgage on the property. By agreement, the LPA itself was not recorded and even barred recording a memorandum of the deal. Over the next several years, NVR acquired and built on 130 lots. Twenty-four lots remained undelivered and were owned by Spring Oaks Development, LLC, controlled by Zachary Pearce.
In October 2020, Spring Oaks Development recorded a second mortgage on the remaining lots. After a default in May 2022, foreclosure followed. Public records show that on May 23, 2022, NVR recorded a Satisfaction of Mortgage, asking the Recorder to enter satisfaction of its deposit-backed mortgage. At a sheriff’s sale on August 9, 2022, a new entity formed the day before, Spring Oaks Development Purchaser, LLC, bought the remaining lots.
NVR contacted Pearce after the sale to explore continuing under the LPA. According to NVR, Pearce’s initial response was positive but he sought higher lot prices based on increased site work costs. NVR said it would discuss pricing only after site work and permitting were completed as the LPA contemplated.
Discussions apparently stopped there. Pearce then sold twelve of the remaining lots to U.S. Home, LLC, a direct competitor to NVR, and U.S. Home recorded the deeds. NVR says it discovered U.S. Home’s activity on July 12, 2025 from signage and marketing at Spring Oaks, sent a breach notice on July 17, and filed suit on July 22. NVR sought quiet title and a declaration that it held equitable title, specific performance of the LPA, damages for breach of contract, and tortious interference. NVR also filed a lis pendens and then voluntarily cancelled it.
The court granted motions to dismiss by Spring Oaks Development Purchaser, LLC and U.S. Home, LLC, dismissing all claims with prejudice. The court held that any equitable ownership NVR claimed under the LPA was extinguished by the sheriff’s sale under 10 Del. C. § 5066, which provides that a foreclosure sale transfers property “discharged from all equity or redemption, and all other incumbrances made and suffered by the mortgagor.” The court cited Matter of Spencer for the point that “after a foreclosure judgment and execution both the equity of redemption and equitable ownership are extinguished.”
The court also addressed recording priority. Under Delaware’s “pure race” regime, a buyer who records first takes ahead of earlier unrecorded claims. Applying Bathla v. 913 Market, the court explained that U.S. Home’s recorded deeds took precedence regardless of any notice of NVR’s prior, unrecorded agreement. Separately, NVR had already recorded satisfaction of its own deposit-secured mortgage months before the sheriff’s sale, so there was no recorded lien left to assert when the sale occurred.
Contract-based claims did not survive. Neither Spring Oaks Development Purchaser nor U.S. Home was a party to the 2018 LPA, and NVR did not adequately allege that the post-foreclosure purchaser assumed that contract. Without a viable allegation of assumption, the court declined to treat the new owner as bound to the LPA’s terms. The tortious interference claims failed as well because the foreclosure sale – rather than defendants’ later actions – ended any enforceable rights NVR had under the LPA, and the post-sale transactions did not cause a breach of a contract NVR could no longer enforce.
For practitioners, the decision tracks settled Delaware rules rather than breaking new ground. Sheriff’s sales reset title as to interests made or suffered by the mortgagor. Unrecorded purchase rights do not survive that reset. And under Delaware’s pure race statute, recorded deeds outrun unrecorded expectations. In projects where phased takedowns and site-work contingencies are common, this case is a reminder that the protections that matter most are the ones in the public record.
