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july exam - real property > The Recording System > Flashcards

The Recording System Flashcards

1
Q

Common Law Rules (Prior to Recording Acts)

A
  • first in time, first in right
  • basically, at common law, whoever bought the property first won, but that incentivized double dealing (bad actors could place loss on subsequent purchasers)
    -> led to modern recording act system - goal was to protect bona fide purchasers from prior interests they had no way of knowing about
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2
Q

Recording - General Purpose

A
  • gives notice to the world that title has been transferred
  • good for subsequent purchasers b/c gives notice
  • good for present owner because helps prevent the subsequent purchaser from becoming a BFP (BFPs always lack notice -> you can protect your title by putting everyone on notice)
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3
Q

Recording Acts - Interests That Arise Through Operation of Law

A
  • subsequent BFPs AREN’T protected by recording acts against interests that arise by operation of law
    -> includes adverse possession, prescriptive easements, and implied easements
  • reason: there’s no instrument to record in those cases (you usually don’t have a valid deed to record)
  • result: BFPs take subject to these interests
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4
Q

Race Jurisdiction - Basic Rule

A
  • subsequent purchaser wins if he records properly before the prior purchaser
  • BFP OR NOT DOESN’T MATTER
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5
Q

Notice Jurisdiction - Basic Rule

A
  • subsequent purchaser wins if they were a BFP when they took, REGARDLESS of whether they record before prior purchaser does so
  • last BFP to take wins
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6
Q

Race-Notice Jurisdiction - Basic Rule

A
  • subsequent purchaser wins if BFP AND records properly before prior purchaser
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7
Q

Bona Fide Purchasers - Requirements

A

Must:
- be a purchaser for value or a mortgage lender (NOT somebody who received the property by gift, will, or inheritance)
- pay valuable consideration
- take without notice (actual, constructive, or inquiry) of prior conveyance
-> notice is judged at time of conveyance, not time of recording

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8
Q

Notice and Race Notice Jurisdictions - What happens if neither is a BFP?

A
  • not protected by recording act -> common law rule applies -> first in time, first in right
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9
Q

BFPs - Purchasers for Value

A
  • doesn’t need to be equivalent to proper market value, just need to have given some consideration
  • heirs, donees, + devisees NOT protected unless shelter rule applies
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10
Q

BFPs - Forms of Notice

A
  • actual notice -> literal knowledge, buyer learns of prior purchaser prior to closing
  • inquiry notice -> buyer is considered on notice for anything an inspection would reveal (even if they don’t actually inspect)
  • record notice -> buyer is considered on notice for any deeds properly recorded in the chain of title

*inquiry notice and record notice are both forms of constructive notice

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11
Q

Inquiry Notice

A
  • buyer is on notice of anything an inspection would’ve revealed (regardless of actual inspection)
  • buyer has duty to inspect premises before transfer of title
  • if prior purchaser is in actual possession, you’d be on notice of their existence
  • also means if recorded instrument makes reference to an unrecorded transaction, buyer is on inquiry notice of whatever a reasonable follow-up would’ve revealed
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12
Q

Record Notice - Chain of Title

A
  • if prior purchaser has properly recorded their deed within the chain of title, the buyer is on notice
  • note that there is no LEGAL duty to do a title search, BUT it’s sort of forego it at your own risk -> if you don’t search, you’re still going to be charged with notice of whatever the search would’ve revealed
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13
Q

If second buyer is a BFP, when do they win?

A

Depends on kind of recording statute:
- Race - buyer 2 wins if they win the race to record
- Notice - Buyer 2 wins as long as they’re the last BFP to take
- Race Notice - Buyer 2 wins if BFP AND they win the race to record

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14
Q

Race Statute - Key Features

A
  • notice doesn’t matter
  • whoever records first wins (if you want to win, just record)
  • only exists in a few states
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15
Q

Race Statute - Typical Language

A

A conveyance of an estate in land shall not be valid against a subsequent purchaser for value [LACK OF REFERENCE TO NOTICE] unless the conveyance is FIRST recorded

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16
Q

Notice Statute - Key Features

A
  • subsequent purchaser w/o notice of prior conveyance wins out over prior grantee who failed to record
  • last BFP wins REGARDLESS of whether they record
17
Q

Notice Statute - Language

A

A 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, unless the conveyance is [NO MENTION OF FIRST] recorded.

18
Q

Race-Notice Statute - Key Features

A
  • subsequent purchaser needs TWO things to win: no notice of prior grant AND first to record
19
Q

Race-Notice Statute - Language

A

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

20
Q

Comparing Language of the Kinds of Statutes

A
  • only “first” -> race statute
  • only “notice” -> notice statute
  • “first” and “notice -> race-notice statute
21
Q

Chain of Title - Basic Concept

A
  • chain of title = the sequence of recorded documents capable of giving record notice to subsequent takers
    -> proper recording helps you safeguard your title, because it means subsequent purchasers will have notice
22
Q

Key Chain of Title Problems

A
  • shelter rule
  • wild deed
  • estoppel by deed
23
Q

Shelter Rule

A
  • anyone who takes from a BFP will prevail against any interest that BFP would’ve prevailed against
    -> even if that transferee would’ve failed to meet BFP requirements, takes shelter in status of original BFP + steps into their shoes
  • doesn’t matter if the transferee had actual notice of the unrecorded conveyance
24
Q

Wild Deed

A
  • wild deed = a recorded deed that isn’t connected to the chain of title
  • DOESN’T give subsequent purchasers any constructive notice because a subsequent purchaser couldn’t feasibly find it
  • as a buyer, you should make sure the prior person recorded their title
25
Q

Estoppel by Deed

A
  • if one party conveys realty to another that they don’t actually have an interest in, that party is estopped from denying the validity of the prior conveyance if they subsequently acquire the title they previously purported to transfer
  • in other words, if X doesn’t own Blackacre but conveys it to A anyway, then finally acquires Blackacre ten years down the road, A would win out over X
    -> note though that if A recorded at the time of the original conveyance, that recording would essentially be a wild deed, and A could lose out to BFPs
26
Q

Deed Recorded Late

A
  • a deed recorded after the grantor parts with title through a subsequent deed is not constructive noice in most states
    -> ex: O conveys to A March 1 and B April 1, then B records April 10 + A on April 15 -> if B conveys to C May 1 + C has no actual or inquiry notice of O-A deed, C wins
    -> most states would hold A’s deed was recorded late + not in C’s chain of title
27
Q

Deed in Chain Referring to Instrument Outside Chain

A
  • reference to another instrument in a recorded doc that’s in the chain of title may impart constructive notice of the instrument referred to
    -> true EVEN IF that instrument is unrecorded or not itself in the chain of title
28
Q

Restrictive Covenants - Deeds from Common Grantor

A
  • courts divided on whether deeds to adjacent lots or lots in a subdivision, executed by the same grantor + containing restrictions + easements involving subject lot, are within chain of title of the subject lot
  • book says the better view is that they aren’t
29
Q

Judgment Creditors

A
  • pl who obtains a money judgment can place judgment lien on def’s property by filing in appropriate county office
  • most states don’t grant judgment creditors protection by recording statutes against prior unrecorded conveyances-> their notice or lack of notice of prior claims is irrelevant
    -> note that this is different from mortgage lenders, who are treated like BFPs

july exam - real property (16 decks)

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