The Recording System

Question 1

what kind of interests in land can be recorded?

Answer 1

Practically any kind of instrument affecting an interest in land can be recorded, including deeds, mortgages, contracts to convey, or judgments affecting title to property.

Question 2

what does recording do?

Answer 2

Recording gives notice to the world that title to property has been transferred. So, any subsequent purchaser will have constructive (or record) notice of the conveyance.

Question 3

recording acts protect from what?

do not protect from what?

Answer 3

PROTECT FROM:
recording acts were enacted to protect bona fide purchasers from prior interests that they could not know about.

NO PROTECTION:
A subsequent BFP is not protected by the recording acts against interests that arise by operation of law (for example, prescriptive and implied easements, or title by adverse possession). Why? Because in such instances there is no instrument to record, so the recording acts do not apply and subsequent purchasers take subject to these interests.

Question 4

Example of a race jurisdiction, notice jurisdiction, and race-notice jurisdiction statute and the rules that go along with each

Hypo for reference: O conveys parcel 1 to A; O conveys same parcel to B. O skips town.

Answer 4

RACE JURISDICTION

B wins if B records properly before A does

NOTICE JURISDICTION

The last BFP to take, wins. So, B wins if B was a BFP when he took, which means he had no notice of prior conveyance when he took, regardless of whether or not he records before A does

RACE-NOTICE JURISDICTION

B wins if B is a BFP and he records properly before A does.

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

Question 5

what is a Bona Fide Purchaser (BFP)?

Answer 5

To be a bona fide purchaser, a grantee must:

(1) be a purchaser or mortgage lender - not a donee (gift), devisee (will), or receive property by inheritance

Exception: donee, heir, or devisee can be protected by recording statute if shelter rule applies
.
.
.
(2) pay valuable consideration

and

(3) take without notice (actual, constructive, or inquiry) of the prior conveyance [AIR]

Question 6

what is synonymous with BFP?

Answer 6

“good faith purchasers” - acquires property for valuable consideration, in good faith, and without notice of another’s prior claim to the property

Question 7

when can a donee, devisee, or heir be protected by a recording statute as a BFP when they otherwise would not be?

Answer 7

when the shelter rule applies

Question 8

What does it mean to say the BFP takes without notice? what are the types of notice and acronym?

Answer 8

“Without notice” means the purchaser had no actual, constructive (record), or inquiry notice of a prior conveyance at the time they paid consideration and received the interest.

[AIR]

Actual
– prior to B’s closing, B learns of prior conveyance/A’s title

Inquiry
– Buyer real estate has a duty to inspect the premises before transfer of title to see if anyone else was in possession; if another person is in possession, subsequent purchaser is charged with inquiry notice regardless of whether they actually bothered to inspect

– if a recorded instrument makes reference to an unrecorded transaction, such as the absence of a grantor’s deed from the chain of title, grantee is on inquiry notice of whatever a reasonable follow-up would have revealed

Record
– subsequent purchaser is on record notice of prior deed if, at the time B took, prior person’s deed was properly recorded within chain of title

– nobody has a legal duty to perform a title search, but a subsequent purchaser will be charged with the notice that such a search would provide, whether or not she actually searches

Question 9

For the purposes of a recording statute, what happens if a subsequent BFP learns of an adverse claim after the conveyance but before recording?

Answer 9

doesn’t affect her claim as a BFP under recording statutes because protection depends on being without notice AT THE TIME OF CONVEYANCE

Question 10

How to spot difference between statutes

Answer 10

“First” only = race statute

“Notice” only = notice statute

“Notice” & “first” = race-notice statute

Question 11

what type of recording statute is this and what is its effect?

“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded.”

Answer 11

“notice” only = Notice statute

subsequent BFP wins [no notice]

Question 12

what type of recording statute is this and what is its effect?

“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded.”

Answer 12

“first” only = race statute

whoever wins race to record takes, or, grantee who records first wins

Question 13

what type of recording statute is this and what is its effect?

“No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded.”

Answer 13

“first” and “notice” = race-notice statue

subsequent BFP who records first wins

Question 14

how to give record notice ?

Answer 14

deed must be recorded properly, within the chain of title

Question 15

what is chain of title?

Answer 15

sequence of recorded documents capable of giving record notice to subsequent takers

Question 16

what are the chain of title problems and solutions?

Answer 16

(1) transferees from BFP - shelter rule

RULE: anyone who takes from a BFP will prevail against any interest BFP would win against …. transferee takes shelter in transferor-BFP’s status

(2) Wild deed

wild deed is one not connected to chain of title

RULE: if a deed, entered on the record, has a grantor unconnected to the chain of title, the deed is a wild deed and is incapable of giving record notice of its existence. Thus, a recording of a wild-deed is a nullity and a subsequent taker will win.

O to A, who does not record. A to B, who does record. A is a grantor unconnected to chain of title. B has a wild deed. Now, O to C. C has no actual, inquiry or record notice [no record notice because B’s deed is wild]. C will win in a notice jurisdiction because he was the last BFP. C will win in a race-notice state because he was the last BFP and technically “recorded first” since the prior recording by B was a nullity.

(3) Estoppel by deed

If grantor purports to convey to a grantee when grantor really did not own the property, and then later acquires title to the property, title is vested in grantee by “estoppel” at the moment the grantor acquires title. Grantor is estopped from denying validity of pre-acquisition conveyance

BUT, if subsequent BFP buys from original conveyor, that BFP will win in a notice or race-notice statute state because the earlier recording is outside chain of title.

O owns Blackacre. X does not own Blackacre. X sells blackacre to A. A records. 10 years later, O sells black acre to X. ESTOPPEL BY DEED MAKES IT SO THAT A OWNS BLACKACRE.

10 years after that, X sells blackacre to B. B records. B now owns black acre since he recorded properly since A’s recording did not count.

(4) deeds recorded late

A deed recorded after grantor parts with title through a subsequent deed is not constructive notice in most states, but is in some race-notice jurisdiction

(5) deed in chain referring to instrument outside chain

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.

(6) restrictive covenants

Courts are split on whether deeds to adjacent lots or lots in a subdivision, executed by the same grantor and containing restrictions and easements involving the subject lot, are within the chain of title of the subject lot. The better view is that they are not.

Question 17

how is chain of title established in most states?

Answer 17

title search of grantor/grantee index

Question 18

what is the shelter rule

Answer 18

Anyone who takes from a BFP will prevail against any interest the BFP would have prevailed against - and the person who takes from the BFP need not be a purchaser himself/can be a donee etc. .

In other words, the transferee “takes shelter” in the status of her transferor, and thereby “steps into the shoes” of the BFP even though she otherwise fails to meet the requirements of BFP status.

This is true even if the transferee had actual notice of a prior unrecorded conveyance.

EXAMPLE
O to A, then O to B. B is a BFP who records first. B to C by gift. C knows about the O to A transfer. C is protected against contest from A even though C knows about the prior transfer and even though C is not a BFP because C steps into B’s shoes.

REASON FOR IT:
protects BFP by making it easier for his transfer to be successful

Question 19

what is a wild deed

Answer 19

A recorded deed that isn’t connected to the chain of title

It doesn’t impart constructive notice because a subsequent purchaser could not feasibly find it.

Ex: O to A. A does not record. A to B. B records. The A to B deed is a wild deed.

Question 20

what is the issue with judgment creditors and are they protected under a recording statute?

Answer 20

A plaintiff who obtains a money judgment can place a judgment lien on the defendant’s real property by filing the judgment in the appro- priate county office.

Whether judgment creditors are protected by the recording statute against a prior unrecorded conveyance by the defendant depends on the state statute, but most states do not grant them protection.

Unlike mortgage lenders, who are the same as any other BFP, judgment creditors and lienors aren’t usually protected by the recording acts. Because they aren’t covered by the recording act, their notice or lack of notice of prior claims is irrelevant.

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.

Question 21

what do recording statutes apply to? not apply to?

Answer 21

apply to most interests in land: fee simple, easement, mortgages, life estates etc.

do not apply to short term leases of less than a year

do not apply to interests arising by operation of law (AP)

Question 22

when mortgages are involved, recording statutes affect that ______ bu not the _____ of the mortgages?

Answer 22

recording statutes affect the priority but not the validity of the mortgages

first to record = priority

Question 23

how do courts treat judgment creditors

Answer 23

most courts reason that a recording statute will not apply to a jdugement creditor who fails to record his lien before the tortfeasor obtains or inherits land, and then only records the lien when the tortfeasor has already conveyed away the land, because –

(a) a judgment creditor is not a bona fide purchaser bc he did not pay contemporaneous value for the judgment

or

(b) the judgment only attaches to property owned by the debtor, not to properly previously conveyed away, even if that conveyance was not recorded

-

but courts will say that if the judgment creditor records immediately, and then the tortfeasor obtains or inherits land, the creditor would have a recorded lien on the land as soon as the tortfeasor acquired it