The Recording System

Question 1

How do we assure title for private parties?

Answer 1

(1) General Warranty Deed
(2) Inspecting the premises (and/or)
(3) Survey
(4) Title Insurance if no general warranty deed

Question 2

Why doesn’t the govt. assure property?

Answer 2

Opposed by:

1) Title Insurance Companies
2) Title Abstract Companies
3) The Bar Association

Question 3

What is the purpose of the Recording System? (3)

Answer 3

(1) Provides a system / a way to keep publicly accessible records of land titles that anyone can access
(2) Preserves documents that might otherwise be lost if only kept in private hands
(3) Protects new buyers of land

Question 4

Does the recording system affect validity of title?

Answer 4

NO

If a deed is not recorded, but is otherwise valid, it remains valid

Question 5

How does the recording system protect new buyers?

Answer 5

New buyers can search public records before they buy to see if the seller has good and clear title

-i.e., look for encumbrances, liens, mortgages, restrictive covenants, easements

The govt. acts as the librarian for you to reach your own conclusions about the results you find

Govt. does NOT certify contents or validity of title / doesn’t certify good title

Question 6

Under the Common Law, who had title?

Answer 6

The purchaser who was first in time

Created a societal problem because how can a later purchaser ever be assured when he or she buys land that

First in time rule makes it so that the people will be more reluctant to buy land

Land markets became uncertain under common law

Recording System was created to deal with this issue

Question 7

How does a title problem arise?

Answer 7

When there is more than one purchaser of / deed to the same land – Harper v. Paradise

Question 8

How do recording statutes address the problem of first in time?

Answer 8

1. Creates incentive for grantees of land to record their purchases
   - If we encourage recording, then future buyers can discover if the land has been transferred to someone else
2. Generally protect later subsequent purchasers of land from being ousted by unrecorded purchasers
   - Recorded purchases give notice to the world and all subsequent purchasers of land

Question 9

Kinds of Notice (3)

Answer 9

1) Actual
2) Constructive (indexed) – Lewis v. Superior Ct.
3) Inquiry – Harper v. Paradise

Question 10

What is actual notice?

Answer 10

Notice of a prior instrument, recorded or unrecorded

Question 11

What is constructive notice?

Answer 11

Recording system only penalized unrecorded documents from having priority

In the absence of actual notice, subsequent purchasers will not normally be charged with notice of unrecorded documents

If a prior instrument is properly recorded, indexed, it provides all subsequent purchasers with notice

Question 12

What is inquiry notice?

Answer 12

If a purchaser of land is in a contest of priority with another purchaser, and they have facts that would cause a reasonable purchaser to make an inquiry about the existence of a prior deed

Question 13

Requirements to be a BFP? (PURE OF HEART)

Answer 13

1. Purchases in good faith; innocent
2. Have to pay money, value, some consideration
3. No notice of prior title being in someone else OR no notice of an encumbrance

Question 14

Do Recording Statutes give you title?

Answer 14

NO

Just allow you to establish priority of title between two people when one records first / one has notice

Question 15

Race Statute (Common Law)

Answer 15

Rewards (protects) the Fleet of Foot

Only NC and LA use race statutes

EFFICIENCY THEORY

E.g. – O conveys deed to A. A does not record. O conveys same land, different deed to B. B pays consideration but B has actual notice of A’s prior deed (NOT PURE OF HEART). B records first.

B wins – fleet of foot

Question 16

Notice Statute

Answer 16

Rewards (protects) the Pure of Heart

Pure of heart when both deeds are unrecorded

Protects subsequent purchasers who have no prior notice / knowledge of a prior unrecorded deed

Most popular, half the states use

WELFARE THEORY

E.g. – O conveys to A. A doesn’t record. O conveys to B. B has NO ACTUAL NOTICE (pure of heart), pays consideration. B doesn’t record.

B wins – pure of heart

If A recorded first, then B would’ve had constructive notice and A wins

Question 17

Notice Statute – Shelter Rule

Answer 17

One who takes from a BFP will prevail against any interest the transferor-BFP would’ve prevailed against, even if the transferee had actual notice of a prior conveyance

e.g. – O to A. A doesn’t record. O to B. B doesn’t record, has no actual notice of prior deed. Then B transfers deed to C. C has notice of prior deed to A.

C wins, even though not pure of heart

C is sheltered and stands in B’s pure of heart shoes even tho C has notice of prior deed to A

Question 18

Race-Notice Statute

Answer 18

Rewards (protects) fleet of foot who are ALSO pure of heart

California

Creates an incentive to record deeds ASAP

If you record first you are fleet of foot, and subsequent purchasers can no longer be pure of heart

E.g. – O to A. A doesn’t record. O to B. B doesn’t know of A’s deed. A records, then B records.

A wins