Miller-Lerman, J.

NATURE OF CASE

Jeremy L. Klein and Kimberly J. Klein, husband and wife, and Robert D. Lynch and Elaine M. Lynch, husband and wife, (both couples collectively the appellees) purchased a trust deed at a trustee's sale for certain real estate. Prior to the trustee's sale, treasurer's tax deeds for the same real estate had been issued to a third party. By operation of law, a treasurer's tax deed passes title free and clear of all previous liens and encumbrances, and therefore, the treasurer's tax deeds had divested the trust deed of title. The treasurer's tax deeds were recorded prior to the trustee's sale, but the appellees failed to examine the record prior to the trustee's sale. The appellees brought this action in equity against Oakland/Red Oak Holdings, LLC (Oakland), the appellant, which was the beneficiary of the trust deeds, seeking to set aside the sale and to be reimbursed the purchase price of $40,001. The district court determined that the trustee's sale was void and ordered that Oakland return the purchase price to the appellees. Oakland appeals. For the reasons set forth below, we determine that the district court erred in its determination, and we reverse, and remand with directions.

STATEMENT OF FACTS

Our statement of facts is taken from the parties' stipulated statement of facts on which the case was tried to the district court. The parties' stipulated statement of facts provided as follows:

On January 21, 2014, the appellees filed their complaint against Oakland and the substitute trustee, Michael C. Klein. In their complaint, the appellees alleged that at the time of the trustee's sale, Oakland had no interest in the trustee's deed and, therefore, no interest in the real property. The appellees alleged that they were owed $40,001 plus interest. The appellees did not allege in their complaint a specific basis for recovery, such as rescission due to mistake or unjust enrichment because of a failure of consideration; accident; inadvertence; mutual mistake; relief from caveat emptor based on fraud, misrepresentation, or mistake; or constructive fraud. Nor was the case prosecuted on a specific theory. Compare, French Energy, Inc. v. Alexander, 818 P.2d 1234 (Okla. 1991); First Nat. Bank v. Board of Managers, 252 Ill.App.3d 139, 625 N.E.2d 79, 192 Ill.Dec. 119 (1993).

On February 18, 2014, Oakland filed its answer in which it generally denied the allegations set forth in the appellees' complaint. Michael filed a motion to dismiss, and on May 2, the district court filed an order in which it sustained Michael's motion to dismiss. The court allowed the appellees 14 days to amend their complaint to state a cause of action against Michael, and the court stated that if no amended complaint was filed, the matter would proceed with Oakland as the only defendant. The appellees did not file an amended complaint. Accordingly, Michael is not a party to this appeal.

On April 3, 2015, the district court filed an order in which it found in favor of the appellees and against Oakland. With respect to whether Oakland had an obligation to notify bidders at the trustee's sale of the treasurer's tax deeds, the court stated that the parties were in equal positions prior to the trustee's sale and that both parties could have examined the public records. Thus, the court determined that Oakland "did not have an obligation to disclose the tax deeds and there was no implied warranty to do so."

With respect to whether the trustee's deed contained a representation or warranty that was breached by Oakland, the district court cited Neb. Rev. Stat. § 76-1010(2) (Reissue 2009), which provides in part:

Based on § 76-1010(2), the district court determined that the trustee's deed contained "no representations or warranty as to the quality of title granted by the" trust deed.

With respect to whether the trustee's deed served to convey any rights to the appellees, the district court determined that the trustee's deed did not convey any rights to the appellees because the trustee had no rights to convey. Therefore, the district court determined that the trustee's sale was "improper and a nullity." In making this determination, the district court noted that the parties had stipulated that the treasurer's tax deeds were valid and that the treasurer's tax deeds were recorded on August 28 and September 9, 2013, which was prior to the trustee's sale on October 2. Citing Knosp v. Shafer Properties, 19 Neb.App. 809, 820 N.W.2d 68 (2012), the district court stated that a treasurer's tax deed passes title free and clear of all previous liens and encumbrances. Therefore, the district court stated that "[a]ll of [Oakland's] right, title and interest in the real estate was extinguished by issuance of the tax deeds and therefore [Oakland] had no interest to convey. The trustees [sic] sale should be voided and the money returned to [the appellees]." The district court ordered that Oakland pay the appellees $40,001 plus interest. The court also ordered that costs be taxed to Oakland and that each party pay their own attorney fees.

Oakland appeals.

ASSIGNMENT OF ERROR

Oakland assigns, restated, that the district court erred when it determined that the trustee's sale was void and that the appellees are entitled to a return of the purchase price of $40,001.

STANDARDS OF REVIEW

An action to set aside a trustee's sale sounds in equity. See Gilroy v. Ryberg, 266 Neb. 617, 667 N.W.2d 544 (2003).

On appeal from an equity action, an appellate court tries factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the conclusion reached by the trial court, provided that where credible evidence is in conflict in a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. RGR Co. v. Lincoln Commission on Human Rights, 292 Neb. 745, 873 N.W.2d 881 (2016).

In a case in which the facts are stipulated, an appellate court reviews the case as if trying it originally in order to determine whether the facts warranted the judgment. Jacobson v. Solid Waste Agency of Northwest Neb., 264 Neb. 961, 653 N.W.2d 482 (2002).

ANALYSIS

Oakland argues that the district court erred when it determined that the trustee's sale was void and ordered Oakland to return the $40,001 purchase price to the appellees. Oakland generally argues that caveat emptor should apply and that when the appellees purchased the trustee's deed, they were on record notice of the treasurer's tax deeds that were issued to Vandelay Investments and recorded prior to the trustee's sale. We agree, and we reverse the decision of the district court.

The Nebraska Trust Deeds Act, Neb. Rev. Stat. § 76-1001 et seq. (Reissue 2009) (the Act) governs this case. A "[t]rust deed" is defined as "a deed executed in conformity with sections 76-1001 to 76-1018 and conveying real property to a trustee in a trust to secure the performance of an obligation of the grantor or other person named in the deed to a beneficiary." § 76-1001(3). The parties to a trust deed are the trustor, the trustee, and the beneficiary. The "[t]rustor" is defined as "the person conveying real property by a trust deed as security for the performance of an obligation." § 76-1001(2). The "[b]eneficiary" is defined as "the person named or otherwise designated in a trust deed as the person for whose benefit a trust deed is given, or his successor in interest." § 76-1001(1). A "[t]rustee" is defined as "a person to whom title to real property is conveyed by trust deed, or his successor in interest." § 76-1001(4).

With respect to the Act, we stated in First Nat. Bank of Omaha v. Davey, 285 Neb. 835, 838, 830 N.W.2d 63, 66 (2013):

We further stated in First Nat. Bank of Omaha v. Davey that

285 Neb. at 840-41, 830 N.W.2d at 68. In the absence of any indication to the contrary, we also give the language of the statutes of the Act their plain and ordinary meaning. See First Nat. Bank of Omaha v. Davey, supra.

We have noted that Nebraska's recording act, set forth in Neb. Rev. Stat. § 76-238 (Cum. Supp. 2014), is intended to impart to a prospective purchaser notice of instruments which affect the title of land in which such a purchaser is interested. Section 76-238(1) provides:

Section 76-238(1) is a "`race-notice recording statute.'" Westin Hills v. Federal Nat. Mortgage Assn., 283 Neb. 960, 965, 814 N.W.2d 378, 383 (2012). We have stated that

Ihde v. Kempkes, 228 Neb. 433, 436, 422 N.W.2d 788, 790 (1988), quoting Campbell v. Ohio National Life Ins. Co., 161 Neb. 653, 74 N.W.2d 546 (1956). Fundamental to the law of registry is the principle of establishing priority of title. Westin Hills v. Federal Nat. Mortgage Assn., supra.

Within the Act, with respect to instruments that are entitled to be recorded and put parties on notice of such instruments, § 76-1017 provides:

In Nebraska, we have long held that the doctrine of caveat emptor applies to judicial sales. See, Enquist v. Enquist, 146 Neb. 708, 21 N.W.2d 404 (1946); Norton v. Neb. Loan & Trust Co., 35 Neb. 466, 53 N.W. 481 (1892). With respect to the application of caveat emptor to judicial sales, we have stated:

Enquist v. Enquist, 146 Neb. at 714, 21 N.W.2d at 407, quoting Norton v. Neb. Loan & Trust Co., supra.

We have not previously stated that the doctrine of caveat emptor applies to nonjudicial sales, such as a trustee's sale. However, other jurisdictions have applied caveat emptor in nonjudicial sales. See, e.g., McPherson v. Purdue, 21 Wn.App. 450, 585 P.2d 830 (1978); Michie v. National Bank of Caruthersville, 558 S.W.2d 270 (Mo. App. 1977); Feldman v. Rucker, 201 Va. 11, 109 S.E.2d 379 (1959).

Regarding the application of caveat emptor in the context of trustee's sales, it has been recognized that

1 Grant S. Nelson et al., Real Estate Finance Law § 7.22 at 979 (6th ed. 2014).

In Michie v. National Bank of Caruthersville, supra, the court stated in a trustee's deed case that "[a] purchaser at a foreclosure sale buys under the doctrine of caveat emptor ... and the purchaser is required to take notice of everything in the recorded chain of title." 558 S.W.2d at 275. In discussing caveat emptor, the U.S. Supreme Court has stated:

Slaughter's Administrator v. Gerson, 80 U.S. (13 Wall.) 379, 385, 20 L.Ed. 627 (1871). In accordance with these other jurisdictions and authorities noted above, just as we have applied the doctrine of caveat emptor in judicial sales, we now hold that the doctrine of caveat emptor applies in trustee's sales.

The instant case was tried in equity, and accordingly, we try factual questions de novo on the record and, as to questions of both fact and law, we are obligated to reach a conclusion independent of the conclusion reached by the trial court. See RGR Co. v. Lincoln Commission on Human Rights, 292 Neb. 745, 873 N.W.2d 881 (2016). Our de novo review of the record shows that in March 2010, prior to the date of the trustee's sale, the real estate was sold at a public tax sale to Situs, LLC, for delinquent taxes pursuant to § 77-1801 et seq. Situs received a certificate of tax sale, which Situs subsequently assigned to Vandelay Investments in February 2013. After providing notice, Vandelay Investments filed applications for tax deeds. On July 25, 2013, the county treasurer issued a tax deed to Vandelay Investments, and the treasurer's tax deed was recorded on August 1. A second treasurer's tax deed was issued to Vandelay Investments on August 28, and the second treasurer's tax deed was recorded on September 9. All of this occurred prior to the trustee's sale, which occurred on October 2.

In Knosp v. Shafer Properties, 19 Neb.App. 809, 817, 820 N.W.2d 68, 74 (2012), the Nebraska Court of Appeals held that "a treasurer's tax deed, issued pursuant to § 77-1837 and in compliance with §§ 77-1801 to 77-1863, passes title free and clear of all previous liens and encumbrances." The parties in this case stipulated that they "do not dispute the validity of the treasurer's tax deeds that were issued to Vandelay Investments. Accordingly, pursuant to Knosp, the treasurer's tax deeds that were issued to Vandelay Investments passed title free and clear of all previous liens and encumbrances, including the trust deed at issue in this case. Therefore, at the time of the trustee's sale on October 2, 2013, the trust deed had been divested of title due to the issuance of the treasurer's tax deeds.

As set forth above, the record shows that both treasurer's tax deeds issued to Vandelay Investments were recorded prior to the trustee's sale. The parties stipulated that neither party had "received actual knowledge" of the issuance of the treasurer's tax deeds; however, the parties further agreed that the treasurer's tax deeds "were matters of public record at the time of the [t]rustee's sale of the real estate." Because the treasurer's tax deeds were recorded before the trustee's sale was held, the appellees were on record notice of the treasurer's tax deeds. See §§ 76-238(1) and 76-1017.

The appellees in this case sought relief from entering into a deal with an unfavorable outcome. The district court focused on the outcome of the transaction and determined that because the trust deed had been divested of title, the trustee's sale was void, and ordered Oakland to return the purchase price to the appellees. The district court's determination does not comport with the doctrine of caveat emptor, which we have determined applies in this case. Under the doctrine of caveat emptor, the purchaser "`is bound to examine the title'" and if the purchaser "`buys without such examination, he does so at his peril, and must suffer the loss occasioned by his neglect.'" Enquist v. Enquist, 146 Neb. 708, 714, 21 N.W.2d 404, 407 (1946), quoting Norton v. Neb. Loan & Trust Co., 35 Neb. 466, 53 N.W. 481 (1892). In this case, had the appellees examined the title, they would have realized that the treasurer's tax deeds had been issued and that the trust deed had been divested of title. In taking such steps to examine the chain of title, the appellees would have protected themselves from entering into an unfortunate deal. We have stated that a purchaser of real estate is required to take notice of instruments properly placed of record in the office of the register of deeds. See Ihde v. Kempkes, 228 Neb. 433, 422 N.W.2d 788 (1988). However, because the appellees failed to examine title before bidding at the trustee's sale, they "`must suffer the loss occasioned by [their own inattention].'" Enquist v. Enquist, 146 Neb. at 714, 21 N.W.2d at 407.

We have stated that "[e]quity will not relieve a purchaser of his own negligence." Norton v. Neb. Loan & Trust Co., 35 Neb. at 471, 53 N.W. at 482. See, also, Slaughter's Admistrator v. Gerson, 80 U.S. (13 Wall.) 379, 383, 20 L.Ed. 627 (1871) (stating that "[a] court of equity will not undertake, any more than a court of law, to relieve a party from the consequences of his own inattention and carelessness"). Therefore, we determine that the district court erred when it relieved the appellees of the consequences of their inattention, determined that the trustee's sale was void, and ordered that Oakland return the purchase price to the appellees. We reverse the decision of the district court and remand the cause with directions that the district court enter judgment in favor of Oakland and dismiss the appellees' complaint.

CONCLUSION

In this case, prior to the trustee's sale, the treasurer's tax deeds were issued to Vandelay Investments. Our law is clear that a treasurer's tax deed passes title free and clear of all previous liens and encumbrances, and accordingly, the treasurer's tax deeds issued to Vandelay Investments divested the trust deed of title. The treasurer's tax deeds were recorded prior to the trustee's sale, but the appellees failed to examine the record.

We conclude that the doctrine of caveat emptor applies to a trustee's sale, and in this case, the appellees must suffer the consequence of their own inattention. In this case, the trust deed had previously been divested of title by issuance of the treasurer's tax deeds to Vandelay Investments which tax deeds were recorded. The appellees purchased the trust deed without examining the record, but they are nevertheless deemed to be on record notice. Despite the appellees' failure, the district court determined that the trustee's sale was void and ordered Oakland to return the purchase price to the appellees. These rulings were error. We reverse the decision of the district court and remand the cause with directions that the district court enter judgment in favor of Oakland and dismiss the appellees' complaint.

REVERSED AND REMANDED WITH DIRECTIONS.