The Recording System

Question 1

THE RECORDING SYSTEM

Answer 1

• What happens if grantor is a double-dealer & conveys same parcel to more than 1 grantee?
• At CL, first in time, first in right.
• Whoever received interest first was entitled to property.
• Recording acts protect BFPs from prior interests that they could not know about.
• Recording gives notice that title to property has been transferred.
• Any subsequent purchaser will have constructive (record) notice of conveyance.
• BFP lacks notice of a prior conveyance, proper recording prevents a later taker from becoming a subsequent “BFP”.

Question 2

Our Model: The Case of the Double Dealer

Answer 2

• O conveys Blackacre to A. Later, O conveys Blackacre, the same parcel, to B. O, our double dealer, has skipped town. In the battle of A vs. B, who wins?
• 3 rules for notice & race-notice jurisdictions:
• In a race jurisdiction, B wins, if he records properly before A does.
• In a notice jurisdiction, B wins if he was BFP when he took, regardless of whether he records b/f A. In a notice state, last BFP to take wins.
• In a race-notice jurisdiction, B wins if B is BFP & he records properly b/f A.
• In both notice & race-notice state, to prevail in a recording system question B must demonstrate that when he took he was BFP.
• A BFP is one who purchases Blackacre for value without notice that someone else (in our model, A) got there first.

Question 3

BONA FIDE PURCHASERS

Answer 3

• To be BFP, grantee must:
  (1) Be purchaser (or mortgage lender), not one who received property by gift, will, or inheritance
  (2) Pay valuable consideration
  (3) Take w/o notice (actual, constructive, or inquiry) of prior conveyance
• BFPs prevail over prior transferees in notice jurisdictions.
• Also prevail in race-notice jurisdictions if record first
• If subsequent grantee is not BFP, they are not protected by recording act & CLR of first in time applies.

Question 4

Purchaser for Value

Answer 4

• Recording statutes protect purchasers.
• Donees, heirs, and devisees not protected b/c they don’t give value, unless shelter rule applies

Question 5

Notice

Answer 5

• “Without notice” means purchaser had no actual, constructive (record), or inquiry notice of a prior conveyance at time they paid & received interest.
• 3 forms of notice that buyer potentially may be charged w/ are:
  A I R:

Question 6

AIR

Answer 6

Actual Notice
- What does actual notice mean?

Inquiry Notice
- Whether he examines Blackacre prior to closing or not, B is on inquiry notice of what an examination of Blackacre would have revealed.
- Buyer of real estate has duty to inspect premises b/f transfer of title
- Inquiry notice means that if recorded instrument makes reference to unrecorded transaction, grantee is on inquiry notice of whatever a reasonable follow-up would have revealed.

Record Notice—Chain of Title
- B is on record notice of A’s deed if, at time B takes, A’s deed was properly recorded w/in chain of title.

Question 7

Tip

Answer 7

Although no one has legal duty to perform a title
search, a subsequent purchaser will be charged
w/ notice that such search would provide, whether/ not she actually searches.

Question 8

TYPES OF RECORDING ACTS

Answer 8

The examiners will not tell you which type of statute to apply; they will give you the language of the statute.

Question 9

Race Statute

Answer 9

• Under race statute, notice of a prior conveyance by grantor doesn’t matter.
• First party to record wins.
• Only a few states have a pure race statute. The language of a typical race statute looks like this:
• A conveyance of an estate in land shall not be valid against a subsequent purchaser for value unless the conveyance is first recorded.

Question 10

Notice Statute

Answer 10

• Subsequent purchaser who had no notice of prior conveyance by grantor will prevail over prior grantee who failed to record.
• Typical notice statute language looks like this:
• A conveyance of an interest in land, other than a
  lease for less than 1 year, shall not be valid against any subsequent purchaser for value, w/o notice thereof, unless conveyance is recorded.

Question 11

Tip

Answer 11

The subsequent purchaser under a notice statute
prevails even if they don’t record. As long as they
had no notice of the prior conveyance, they win.
But if they don’t want the same thing to happen to them, they will have to record to put other subsequent purchasers on notice of their interest.

Question 12

Race-Notice Statute

Answer 12

• To be protected under a race-notice statute, subsequent purchaser must not have any notice of prior grant & must record first.
• Typical race-notice language looks like this:
• Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.

Question 13

Tip:

Answer 13

In determining who is BFP for purposes of protection of recording statutes, remember the purchaser must be w/o notice at time of conveyance. It does not matter if she learns of an adverse claim after conveyance but b/f recording`

Question 14

Tip

Answer 14

An easy way to spot the different statutes is to
look for the words “notice” and “first.”
* “First” only = race statute
* “Notice” only = notice statute
* “Notice” & “first” = race-notice statute

Question 15

Chain of Title

Answer 15

• Back to our original model, note that in either a notice/ race-notice jurisdiction, B’s status as a subsequent BFP would be defeated if A had promptly & properly recorded before B took.
• In other words, A’s proper recordation:
• To give record notice to subsequent takers, deed must be recorded properly, w/inchain of title.
• Chain of title is sequence of recorded doCs capable of giving record notice to subsequent takers.

Question 16

Transferees from BFP—The Shelter Rule

Answer 16

• Anyone who takes from BFP will prevail against any interest BFP would have prevailed against.
• In other words, transferee “takes shelter” in status of her transferor, & thereby “steps into the shoes” of BFP even though she otherwise fails to meet requirements of BFP status.
• True even if grantee had actual notice of a prior unrecorded conveyance.

Question 17

The Problem of the Wild Deed

Answer 17

• “Wild deed”: recorded deed that isn’t connected to chain of title.
• It doesn’t impart constructive notice
• O sells Blackacre to A, who does not record.
• Then, A sells to B. B records the A-to-B deed.

Is the A-to-B deed connected to the chain of title?
- The A-to-B deed, therefore, is a wild deed.
- Rule of wild deed: If deed, entered on the records (A to B), has grantor unconnected to chain of title (O to A), deed is a wild deed & is incapable of giving record notice.

Question 18

Estoppel by Deed

Answer 18

• In 1950, O owns Blackacre.
• He is thinking about selling to X, but for now decides against it. In 1950, X, who does not own Blackacre, sells it anyway, to A.
• A records.
• In 1960, O finally sells Blackacre to X. X records.
• In 1970, X, a double dealer, sells Blackacre to B. B records.
• As between X and A, who owned Blackacre from
  1960-1969?
• The rule: One who conveys realty in which he has no interest (here, X back in 1950), is estopped from denying validity of that conveyance if he subsequently acquires title that he had previously purported to transfer (here, the 1960 O to X sale).
• Who owns Blackacre in 1970?
• Why does B win in a notice state?
• Why does B win in a race-notice state?
• B’s title searcher would not find A’s deed. Why not?
• Remember: A’s 1950 recording is a nullity. A recorded too early.
• Thus, A’s deed won’t be connected to the chain of title.
• So, a grantee is entitled to assume that no one sells or conveys land until they first own it.
• Thus, B’s title searcher would have no reason to discover X’s 1950 pre-ownership transfer to A.

Question 19

Deeds Recorded Late

Answer 19

• A deed recorded after grantor parts w/ title through subsequent deed is not constructive notice in most states (but is in some “race-notice” jurisdictions

Question 20

Deed in Chain Referring to Instrument Outside Chain

Answer 20

• Reference to another instrument in a recorded document that is in the chain of title may impart constructive notice of the instrument referred to—even if it is unrecorded or not itself in the chain of title.

Question 21

Restrictive Covenants—Deeds from Common
Grantor

Answer 21

• Cts are split on whether deeds to adjacent lots/ lots in a subdivision, executed by same grantor & containing restrictions & easements involving subject lot, are w/in chain of title of subject lot.
• The better view is that they are not.

Question 22

JUDGMENT CREDITORS

Answer 22

• A P who obtains money judgment can place a judgment lien on D’s real property by filing judgment in appropriate county office.
• Whether judgment creditors are protected by recording statute against a prior unrecorded conveyance by D depends on the state statute, but most states do not grant them protection.
• Unlike mortgage lenders, who are BFP, judgment creditors & lienors aren’t usually protected by recording acts
• Therefore, their notice/ lack of notice of prior claims is irrelevant.

Question 23

Tip

Answer 23

Most states have statutes requiring a lien holder to record or file the lien in order for it to be enforceable. Don’t confuse this with the recording act; this type of statute doesn’t mean a lien is protected by the recording act.