Security of Title

Question 1

Recording Acts

Answer 1

• Land is indexed in county that the land is located, by buyer and seller
• Basic penalty: don’t record, run the risk of losing property / not enforcing lien
• Common Law – priority determined according to acquisition; whoever acquires first has priority in ownership, recording didn’t matter
o US has rejected

Question 2

• Race:

Answer 2

whoever records first takes priority, regardless if there is notice of subsequent purchases

Question 3

• Notice:

Answer 3

bona fide purchaser prevails over earlier grantee who failed to record so long as later purchaser has no actual or constructive notice of prior transaction at time of purchase (prospective purchaser is held to have notice of properly recorded legal instruments whether actually aware or not)

Question 4

• Race-notice:

Answer 4

subsequent grantees who purchase without notice are protected against prior purchasers who fail to record, so long as they record prior to previous grantee

Question 5

• Leasing Enterprises, Inc. v. Livingston – SC (1987)

Answer 5

o F: D defaults on forklift loan in CA; P, creditor, attacks conveyance of D’s property in SC
 When D made K with P (1980), implied collateral property existed
 3 years prior (1977), D had actually transferred property by quitclaim deed to his mother
 Quitclaim recorded in 1983
• But invalid b/c lacked two witnesses
 1984- CA judgment recorded against D, enforced against property
o H: For P; deed between D and mother was not valid
 If deed transfer were legitimate, then recording deed would allow D to prevail (because recorded first)

Question 6

• Shelter rule:

Answer 6

O to A; O to B; B records w/o notice; B to C, who knows about original trx from O to A; A records [under notice or race-notice statute]
o B’s title superior to A
o Traditionally, C wins over A because otherwise B would be penalized, who had no notice (since B’s interest is protected as he took w/o notice; wouldn’t be fair for him to never be able to sell the property)

Question 7

Marketable Title Acts

Answer 7

• Purpose – clear title after a certain number of years (traditionally 70 years though some jurisdictions are shorter)
o Easements determinable by visual inspection of the property are not eliminated by marketable title act
• Biggest problem – unreleased liens
• Determine root of title based on current date – most recent deed that is still valid
o Property is only subject to interests that appear in the record after the root of title
• Potential takings issue?

Question 8

• Marshall v. Hollywood, Inc. – FL (1970)

Answer 8

o F: Marshall & Weidling form company; transfer land to the company (1923); company transfers to Terry (fraudulently; posing at Mrs. Marshall); Terry to Hollywood Realty; Hollywood to Homeseekers; Homeseekers to Highway, then to Hollywood Inc (1931); P brings suit against Hollywood in 1967
 Hollywood’s deed goes back to the 1923 trx which is clearly fraudulent
 Marketable title act 30 years
o H: For D, despite fraudulent transfer
 Penalizes for not asserting rights quickly enough

Question 9

• Wild deed:

Answer 9

“Comes from nowhere” – two totally different parties emerge in the record

Question 10

Fraudulent Deed

• Two types:

Answer 10

o Where someone is defrauded through no fault of their own – this is like theft; property must be returned and third party must sue fraudster
o Where someone is defrauded through their negligence – tend to protect 3rd party purchaser (fraud in the inducement); they keep the property and defrauded party must sue the fraudster

Question 11

• Hauck v. Crawford – SD (1953)

Answer 11

o F: P thinks he’s signing a lease, in reality he’s actually signing away the mineral rights to his property; then sells the mineral rights to D (innocent purchasers? Strangers from TX buy this very quickly)
 Want to protect defrauded party, but also innocent subsequent purchasers
 Here, ct. says that Hauck is not at fault for his negligence b/c this is forgery
o H: For P – fraud in the factum
 If P had been found to contribute to his own victimization, then could only recover from party who defrauded him, but not from D here (3rd party)
• General rule: “once land is conveyed to a bona fide purchaser without notice of the fraud, the bona fide purchaser will prevail if the defrauded party was sufficiently negligent to share part of the blame”

Question 12

• General rule (Fraud):

Answer 12

“once land is conveyed to a bona fide purchaser without notice of the fraud, the bona fide purchaser will prevail if the defrauded party was sufficiently negligent to share part of the blame”

Question 13

• Anti-discrimination:

o Jones v. Alfred H Mayer Co. – S. Ct. (1968)

Answer 13

 P sues D alleging D refuses to sell to P because of his race
 §1982 applies to public and private – Congress can regulate sale of private property in order to prevent racial discrimination
o Fair Housing Act protections today (broader than just race)