The Recording System Flashcards
What happens when a grantor grants to Party A and then to Party B?
It depends on the jdx.
(a) in a race jurisdiction; B will win if he records properly before A does
(b) in a notice jurisdiction; B will win if he was a BFP (bona fide purchaser) when he took (regardless of who records first)
(c) in a race-notice jurisdiction, B will win ONLY if he is a BFP AND he records properly before A does
What is recording?
Once someone transfers property it must be properly recorded - thereby giving constructive/record notice to prospective buyers that the property may not be transferred.
Note: mortgage lenders are covered by recording acts, but lienors and creditors are not
What is a bona fide purchaser? (I.e. what must B show to get land in notice and race-notice jdx’s)
to be BFP, must:
- be a purchaser (or mortgage lender) - NOT receiving by git, will, inheritance
- pay valuable consideration
- take without notice of the prior conveyance (actual, constructive, or inquiry)
What qualifies as sufficient notice of prior conveyance that will destroy a claim of BFP?
- Actual notice
- inquiry notice:
- anything an examination of property COULD have revealed (e.g. party A is in the house)
- recorded instrument references unrecorded transaction - is on notice of what follow up research would reveal
- record notice = A has properly recorded within chain of title
Note: Party must be without notice at TIME of CONVEYANCE (notice after won’t destroy claim)
The following language indicates what type of recording jdx?:
A conveyance of an estate in land shall not be valid against a subsequent purchaser for value unless the conveyance is first recorded.
This is a race jdx, which means that the first party to record wins.
The following language indicates what type of recording jdx?:
A conveyance of an estate in land, other than a lease for less than one year, shall not be valid against a subsequent purchaser for value without notice thereof, unless the conveyance is recorded.
This is a notice jdx, which means Party B will prevail over A if they are a BFP and A failed to record.
The following language indicates what type of recording jdx?:
A conveyance of an estate in land, other than a lease for less than one year, shall not be valid against a subsequent purchaser for value without notice thereof, whose conveyance is first recorded.
This is a race-notice jdx, which means that Party B can only prevail against A if B is a BFP and B recorded first.
What does it mean for a deed to be properly recorded “within chain of title”? What types of deeds will fail this test, i.e. destroying a claim of BFP?
The chain of title is the sequence of docs capable of giving record notice to subsequent buyers. The following types of deed will not be properly within the chain of title, and thus do not give notice of the transfer:
- wild deeds - ones that have a grantor not connected to the chain of title (e.g. O sells to A, A doesnt record, A sells to B, A is not connected, so A-B is wild deed)
- deeds recorded after grantor parts with title (e.g. O sells to A then B, then B records, then A records - future conveyances by B to C, C will be deemed to have no notice of the O-A deed
BUT: if there is a recorded deed in chain of title that references another conveyance, may be enough to impart constructive notice
What is the shelter rule?
The shelter rule says that anyone who takes property from BFP will prevail against an interest the BFP would have prevailed against (in cases when O gives to both A and B). So, even if new party fails to meet BFP status, they get benefits of that status.
E.g., O conveys to A, A does not record, A conveys to B who records. B conveys to C who is NOT a BFP (e.g. donee), C will get property over A.
What is the estoppel by deed rule?
Someone who conveys realty in which he has no interest (i.e. wrongfully sells something he doesnt have), is estopped from denying the validity of that conveyance if he later acquires title that he previously purported to have.
