Property 5—Recording

Question 1

Recording of Conveyances:

Answer 1

At common law, in nearly all cases priority was given to grantee first in time.

Example: If O conveyed Blackacre to A and then made an identical conveyance to B, A prevailed over B on the theory that after the first conveyance O had no interest left to convey.

Real Property> Conveyancing >Recording

Question 2

Recording acts

Answer 2

Statutes known as “_________” require a grantee to make some sort of recordation so as to give “notice to the world” that title to certain property has already been conveyed, and thus to put subsequent purchasers on guard

Question 3

notice; everyone

Answer 3

By recording, the grantee gives constructive _______ ( or “record”) to _______

Question 4

subsequent BFP

Answer 4

Proper recording prevents anyone from becoming a _________ _______

Question 5

deed; mortgage; contract to convey

Answer 5

Practically every kind of _____ ,_____, _____, or other instrument creating or affecting an interst in land can be recorded

Question 6

Who must acknowledge a deed before it can be recorded?

Answer 6

The grantor (person giving or selling the land) must acknowledge (sign) the deed.

Property>Conveyancing>Recording>Requirements

Question 7

Who must a grantor acknowledge a deed in front of?

Answer 7

A grantor must acknowledge a deed before a notary public.

Property>Conveyancing>Recording>Requirements

Question 8

Who keeps the official deed records?

Answer 8

Official deed records are ordinarily kept by the county recorder.

Property>Conveyancing>Recording>Mechanics

Question 9

How are official deed records typically organized?

Answer 9

Chronologically.

Property>Conveyancing>Recording>Mechanics

Question 10

Does a county recorder keep a copy or the original instrument in county records?

Answer 10

The county recorder will keep a copy of original, signed deeds in county records.

Property>Conveyancing>Recording>Mechanics

Question 11

What indexes may exist to make title searches easier?

Answer 11

Deed records may be indexed by grantor-grantee and grantee-grantor. Some urban counties also permit deed searching by tract number.

Property>Conveyancing>Recording>Mechanics

Question 12

What are the three types of recording acts?

Answer 12

Notice, race-notice, and race.

Property>Conveyancing>Recording>Types of Recording Acts

Question 13

What is a Notice Statute?

Answer 13

Under a notice statute, a subsequent Bona-Fide Purchaser prevails over a prior grantee who failed to record. The important fact under a notice statute is that the subsequent purchaser had no actual or constructive notice at the time of the conveyance.
Constructive notice includes both record notice and inquiry notice.

Property>Recording>Types of Recording Acts>Notice Statutes

Question 14

What does a typical notice statute provide?

Answer 14

A conveyance of an interest in land, other than a leease for less than one year, shall not be valid against my subsequent purchaser for value, WITHOUT NOTICE THEREOF, unless the conveyance is recorded.

Property>Recording>Types of Recording Acts>Notice Statutes

Question 15

What is a race-notice statute?

Answer 15

Under a race-notice statute, a subsequent BFP is protected only if she records before the prior grantee.
Rationale: The best evidence of which deed was delivered first is to determine who recorded first. To obviate questions about the time of delivery and to add an inducement to record promptly, race-notice statutes impose on the BFP the additional requirement that she record first.

Property>Recording>Types of Recording Acts>Race-Notice Statutes

Question 16

What does a typical race-notice statute provide?

Answer 16

Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaesr for value, without notice thereof, whose conveyance is first recorded

Property>Recording>Types of Recording Acts>Race-Notice Statutes

Question 17

What is a race statute?

Answer 17

Under a pure race statute, whoever records first wins. Actual notice is irrelevant. The rational is that actual notice depends upon extrinsic evidence, which may be unreliable.
VERY FEW STATE HAVE RACE STATUTES

Property>Recording>Types of Recording Acts>Race Statute

Question 18

Who is protected by recording acts?

Answer 18

Only bona fide purchasers “BFPs” are entitled to prevail against a prior transferee under “notice” and “race-notice” statutes. To attain this status, a person most satisfy three requirements (each of which discussed in detail below) The person must:
(i) Be a purchaser (or martgage or creditor if teh statute so allows; see below)
(ii) Take without notice (actual, constructive, or inquiry) of the prior instrument; and
(iii) Pay valuable consideration
Note: If these requirements are not met, the person is not protected by the recording acts, so that the common law rule of first in time prevails.

Property>Recording>Recording Act Protections

Question 19

Do recording acts protect purchasers?

Answer 19

Yes, recording acts protect purchasers (of the fee or any lesser estate).

Conveyance>Recording>Who is Protected by Recording Acts>Purchasers

Question 20

Are donees, heirs, and devisees protected by recording acts?

Answer 20

Donees, heirs, and devisees are not protected because they do not give value for their interests

Conveyance>Recording>Who is Protected by Recording Acts>Purchasers>Donees, Heirs, and Devisees Not Protected

Question 21

Are purchasers from donees, heirs, or devisees protected by recording acts?

Answer 21

A person who buys land from the donee, heir, or devisee of the record owner is protected against a prior unrecorded conveyance from the record owner.

An heir who purchases the interests of her co-heirs, without notice of the prior unrecorded conveyance, is entitled to the same protection as any other purchaser to the extent of her purchase.

Conveyance>Recording>Who is Protected by Recording Acts>Purchasers>Purchaser from Donee, Heir, or Devisee

Question 22

Are mortgagees protected by recording acts?

Answer 22

Mortgagees for value are treated as “purchasers,” either expressly by the recording act or by judicial classification.

Conveyance>Recording>Who is Protected by Recording Acts>Purchasers>Mortgagees

Question 23

Are judgement creditors protected by recording acts?

Answer 23

In nearly all states, a plaintiff who obtains a money judgment can obtain, by statute, a judgment lien on the defendant’s real estate.

Is a plaintiff who obtains a judgment lien under such a statute protected by the recording acts from a prior unrecorded conveyance made by the defendant? The cases are split, but the majority holds that the judgment lienor is not protected. These courts usually reason either

(i) the plaintiff is not a BFP because he did not pay value for the judgment, or
(ii) the judgment attaches only to property “owned” by the defendant, and not to property the defendant has previously conveyed away, even if that conveyance was not recorded

Conveyance>Recording>Who is Protected by Recording Acts>Purchasers>Judgements Creditors

Question 24

Shelter Rule

Answer 24

A purchaser who takes from a Bona Fide Purchaser will prevail againt the tranferor-Bona Fide Purchaser would have prevailed against even where the transferee had ACTUAL KNOWLEDGE of the prior unrecorded interest.

Ex: O conveys to A, A fails to record. O then conveys to B, a Bona Fide Purchaser who records. B then conveys to C, who has actual knowledge of the O-A deed. C prevails over A. (True whether C is a donee or purchaser)

Recording>Who is protected by Recording Acts>Purchasers> Shelter Rule

Question 25

Rationale for Shelter Rule

Answer 25

If the rule were not not in existence, the Bona Fide Purchaser might not be able to convey an interest in the land. The transferee is not protected for her own sake, but rather for the sake of the Bona Fide Purchaser from who she received title.

Recording>Who is protected by Recording Acts>Purchasers>Rationale

Question 26

Exception “No Shipping Through”

Answer 26

This rule does not apply to someone who previously held title and had notice of the unrecorded interest.

Recording>Who is protected by Recording Acts>Purchasers>No “Shipping Through” Exception

Question 27

Purchaser Under Installment Land Contract

Answer 27

In most states, a purchaser who has paid only part of the purchase price under an installment land contract is protected by the recording acts only to the extent of payment made.

Recording>Who is protected by Recording Acts>Purchasers>Purchaser Under Installment Land Contract

Question 28

Disputes In Installment Land Contracts

Answer 28

In a dispute between the contract purchaser and a prior claimant, the court may:

(1) Award the contract purchaser a share of the property as a tenant in common equal to the proportion of payments made
(2) Award the land to the prior claimant, but give the contract purchaser a lien on the property to the extent of the amount paid (West Park v. Seaton Land), OR
(3) Award the land to the contract purchaser, but give the prior claimant a lien on the property to the extent of teh balance still owed (Sparks v. Taylor)

Recording>Who is protected by Recording Acts>Purchasers>Purchaser Under Installment Land Contract

Question 29

What is the shelter rule?

Answer 29

A subsequent purchaser in land may take shelter and be protected under a recording statute, if a previous transferee of land would have otherwise been protected by a recording statute

Property>Recording>Who is Protected by Recording Acts>Purchasers>Purchaser Under Installment Land Contract> Exception– Shelter Rule

Question 30

What is “without notice”?

Answer 30

“Without notice” means that the purchaser had no actual, record, or inquiry notice of the prior conveyance at the time she paid the consideration and received her interest in the land.

Property>Recording>Who is Protected by Recording Acts>Without Notice

Question 31

What is “Actual notice”?

Answer 31

Knowledge of any unrecorded conveyance from any source such as a newspaper, word-of-mouth, etc.

Property>Recording>Who is Protected by Recording Acts>Without Notice>Actual Notice

Question 32

When is a purchaser charged with notice for “Record notice”?

Answer 32

Only when it is “in chain of title,” which means that it is recorded in a fashion that a searcher could reasonably

Property>Recording>Who is Protected by Recording Acts>Without Notice>Record Notice

Question 33

What is a wild deed?

Answer 33

A deed not connected to the chain of title.

Property>Recording>Who is Protected by Recording Acts>Without Notice>Record Notice>Wild Deeds

Question 34

When does a deed in chain referring to an instrument outside chain impart constructive notice of the other instrument?

Answer 34

If a recorded document in the chain of title refers to another instrument, such reference may be sufficient to impart constructive notice of the other instrument, even if it is unrecorded or is not itself in the chain of title

Property>Recording>Who is protected by recording acts>Without notice>Record Notice-Chain of Title>Deed in chain referring to instrument outside chain

Question 35

Suppose the O, a subdivider, is developing a residential subdivision. She sells lot #1 to A, and the deed provides that lot #1 is restricted to residential use. The deed also provides that “O on behalf of herself, her heirs, and assigns promises to use her remaining lots (#2, #3, etc.) for residential purposes only.” A records the deed. O then sells lot #2 to B. The deed to B contains no restrictions. B wishes to erect a gas station. Is B bound by the restrictions in the OA deed of which he had no actual notice?

Answer 35

The courts are split.

(a) Some charge B with reading all deed given by a common grantor, not just the deeds to his particular tract. Hence, B has constructive notice and is bound by the restriction.
(b) However, the better view is contra; i.e., because the burden of title search would be excessive, deeds to other lots given by a common grantor are not in B’s chain of title. (But if B has actual inquiry notice of the restriction, it may be enforced as an equitable servitude).

Property>Recording>Who is protected by recording acts>Without notice>Record Notice-Chain of Title>Restrictive covenants-deeds from common grantor>Subdivision restrictions

Question 36

Supposed the O owns lot #1 and lot #2. She grants lot #2 to A with an easement of way over lot #1. The deed to A is indexed as a deed to lot #2; no mention id made of lot #1. Subsequently, O conveys lot #1 to B without mentioning the easement. How will the court rule?

Answer 36

As with subdivision restrictions, the courts are split as to whether B is required to read O’s deeds of adjoining lots

Property>Recording>Who is protected by recording acts>Without notice>Record Notice-Chain of Title>Restrictive covenants-deeds from common grantor>Adjacent Lots

Question 37

How is a “search cut-off date” established?

Answer 37

In some states, a search cut-off date is established by statute; e.g., defects of title reaching back farther than 40 years are barred (a title searcher need only check the chain of title back 40 years). The exact cut-off point varies from state to state

Property>Recording>Who is protected by recording acts>Without notice>Record Notice-Chain of Title>Marketable Title Acts

Question 38

What is Inquiry Notice?

Answer 38

Inquiry notice means that if the subsequent grantee is bound to make reasonable inquiry, she will be held to have knowledge of any facts that such inquiry would have revealed (even though she made none).

RECORDING>Who Is Protected By Recording Acts>Without Notice>Inquiry Notice

Question 39

Generally, do Quitclaim Deeds have Inquiry Notices?

Answer 39

In a majority of states, quitclaim grantees are treated the same as warranty deed grantees under the recording system. They are not charged with inquiry notice from the mere fact that a quitclaim deed was used.

RECORDING>Who Is Protected By Recording Acts>Without Notice>Inquiry Notice> Generally No Inquiry from Quitclaim Deed

Question 40

What is the Inquiry Notice standard for References in Recorded Instruments?

Answer 40

If a recorded instrument makes reference to an unrecorded transaction, the grantee is bound to make inquiry to discover the nature and character of the unrecorded transaction.

RECORDING>Who Is Protected By Recording Acts>Without Notice>Inquiry Notice> Inquiry from References in Recorded Instruments

Question 41

What is the Inquiry Notice standard for Unrecorded Instruments in Chain of Title?

Answer 41

When a grantor’s deed is unrecorded, the grantee is expected–at her peril-to demand a viewing of her grantor’s title documents at the time of the purchase and insist that they be recorded.

RECORDING>Who Is Protected By Recording Acts>Without Notice>Inquiry Notice> Inquiry from Unrecorded Instruments in Chain of Title

Question 42

When must one make an inquiry of possession?

Answer 42

A title search is not complete without an examination of possession. If the possession is unexplained by the record, the subsequent purchaser is obligated to make inquiry. The subsequent purchaser is charged with knowledge of whatever an inspection of the property would have disclosed and anything that would have been disclosed by inquiring of the possessor.

Conveyancing>Recording> Who is protected by recording acts>Inquiry Notice> inquiry from possession

Question 43

When does one have valuable consideration?

Answer 43

A person is protected by the recording statute only from the time that valuable consideration was given. Thus, if a deed was delivered before the consideration was paid,the purchaser will not prevail over deeds recorded before the consideration was given. Valuable consideration must be more than merely nominal.

Conveyancing>Recording> Who is protected by recording acts>Inquiry Notice> Valuable Consideration

Question 44

How does one show valuable consideration?

Answer 44

The claimant must show that he is not a donee but a purchaser. The consideration need not be adequate, nor the market value of the property, but it must be of substantial pecuniary value. (“Love and affection” is not valuable consideration.)

Conveyancing>Recording> Who is protected by recording acts>Inquiry Notice> Valuable Consideration> Test- Substantial Pecuniary Value

Question 45

Does a security for a preexisting debt give valuable consderation?

Answer 45

Receiving a deed or mortgage only as a security for a preexisting debt had not given valuable consideration

Conveyancing>Recording> Who is protected by recording acts>Inquiry Notice> Valuable Consideration>Property receivced as security for antecedent debt is insufficient

Question 46

Why does one have a title search performed?

Answer 46

To ensure that the person selling the property really owns the property and to determine if there are any encumbrances on their title.

Conveyancing>Recording> Who is protected by recording acts>Inquiry Notice> Valuable Consideration> Title search

Question 47

What is the process for a Title Search in a Tract Index Search

Answer 47

The searcher looks at the page indexed by block and/or lot describing Blackacre and at a glance can see prior recorded instruments conveying, mortgaging, or otherwise dealing with Blackacre

Property>Recording>Title Search>Tract Index Search

Question 48

What is a Grantor and Grantee Index Search?

Answer 48

A tool used by most counties in the US to record the transferring of property ownership. The Grantor-Grantee index is the official documentation of land transfers, and courts look to these indexes to see who owns property

Property>Recording>Title Search>Grantor and Grantee Index Search

Question 49

What other events may affect title?

Answer 49

Marriage, divorce, interest in land being recorded elsewhere, land passing by will or intestacy

Property>Recording>Title Search>Other Instruments and Events Affecting Title

Question 50

What is the general effect of recordation?

Answer 50

Proper recordation gives all prospective subsequent grantees construct notice of the existence and contents of the recorded instruments

Property>Recording>Effect of Recordation

Question 51

What is the effect of proper recordation?

Answer 51

Proper recordation gives all prospective subsequent grantees constructive notice of the existence and consents of the recorded instruments; i.e. there can be no subsequent BFPs. Recordation also raises presumptions that the instrument has been validly delivered and that it is authentic. These presumptions are rebuttable, not conclusive.

Property>Recording>Effect of Recordation

Question 52

Does recordation protect a subsequent purchaser against interests that arise by operation of law?

Answer 52

No. Recordation does not protect a subsequent purchaser against interests that arise by operation of law, rather than from a recordable document (e.g., dower rights; prescriptive and implied easements; title by adverse possession). Because there is no instrument to record in order to perfect such interests, the recording acts do not apply, and subsequent purchasers take subject to the interests. (Remember: If the recording act is inapplicable, the common law priority rules apply.)

Property>Recording>Effect of Recordation

Question 53

Example: O is the record owner of Blackacre. X adversely possesses Blackacre for the period of the statute of limitations. O then conveys Blackacre to A, a BFP. Who prevails?

Answer 53

Even though X’s interest has never been recorded, X prevails against A.

Property>Recording>Effect of Recordation

Question 54

Must a court protect a subsequent BFP from an unrecorded implied easement that is not visible upon inspection of the premises (e.g., an underground sewer)?

Answer 54

NO. A court MAY protect a subsequent BFP from an unrecorded implied easement that is not visible upon inspection of the premises (e.g., an underground sewer).

Property>Recording>Effect of Recordation

Question 55

When is an instrument recorded? Does it matter if the instrument is actually listed on the indexes?

Answer 55

An instrument is considered recorded from and after the time it is filed at the recorder’s office, irrespective of whether it is actually listed on the indexes. If the recorder’s office has made an error in the recording, the subsequent purchaser has an action against the recorder’s office. There is a strong minority view that protects the searcher.

Property>Recording>Effect of Recordation

Question 56

The recording acts require that before an instrument can be recorded, it must be acknowledged by the grantor before whom?

Answer 56

A notary.

Property>Recording>Effect of Recordation

Question 57

Does an unacknowledged deed give constructive notice to subsequent purchasers?

Answer 57

No. An unacknowledged deed does not qualify for recordation, thus, it does not give constructive notice to subsequent purchasers.

Unless the subsequent purchaser has other notice of the earlier deed, the subsequent purchaser will prevail.

Property > Recording > Effect of Recording Unacknowledged Instrument > no acknowledgement - no constructive notice

Question 58

Does the defective acknowledgement of a deed give constructive notice to subsequent purchasers?

Answer 58

Yes. When a recorded instrument has been acknowledged, but the acknowledgment is defective for some reason not apparent on the face of the instrument, the better view is that the recordation does impart constructive notice.

A hidden defect in the acknowledgement should not be allowed to destroy constructive notice the document otherwise clearly imparts - purchasers should be entitled to rely on what appears to be a perfectly recorded document.

Property > Recording > Effect of Recording Unacknowledged Instrument > compare - defective acknowledgement