The recording system

Question 1

Recording statutes exist to protect…

Answer 1

ONLY

1. Bona fide purchasers
2. Mortgagess/creditors

Question 2

Bright-line rules for cases of double-dealing

Answer 2

1. B is bona fide purchaser + notice jurisdiction = B wins, (regardless of whether B records before A).
2. B is bona fide purchaser + race-notice jurisdiction = B wins if she properly records before A.

Question 3

What is a bona fide purchaser

Answer 3

One who:
1. Purchases Blackacre for value
AND
2. Without notice that someone else got there first.

Question 4

What is a buyer for value?

Answer 4

Buyer remits substantial pecuniary consideration (BUT can still be a fraction of the fair market value).

Question 5

Doomed donees

Answer 5

Recording statutes do not protect donees, heirs, or devisees (UNLESS the Shelter Rule applies).

Question 6

Forms of notice

Answer 6

1. Actual
2. Inquiry
3. Record

Question 7

Actual notice

Answer 7

Prior to B’s closing, B actually learns that A already bought Blackacre.

Question 8

Inquiry notice

Answer 8

1. B is on inquiry notice of whatever an exam of Blackacre would show (whether B actually inspected or not).
   – B has duty to inspect before transfer of title.
   – If another is in possession, B has automatic inquiry notice.
2. If a recorded instrument makes reference to an unrecorded transaction, B is on inquiry notice of whatever a reasonable follow up would show.

Question 9

Record notice

Answer 9

B is on record notice of A’s deed if, at the time B takes, A’s deed was properly recorded (whether B actually checked the record or not).

Question 10

Identify: “A conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, unless the conveyance is recorded.”

Answer 10

Notice statute.

Question 11

Notice statute

Answer 11

The last bona fide purchaser to enter wins.

Question 12

Identify: “Any conveyance of an interest in land shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.”

Answer 12

Race-notice statute.

Question 13

To prevail in a race-notice jurisdiction…

Answer 13

B must:

1. Be a bona fide purchaser, and
2. Win the race to record.

Question 14

What is proper recordation of a deed?

Answer 14

The deed must be recorded properly within the CHAIN OF TITLE (i.e., within the sequence of documents capable of giving record notice to later takers).

• (In most states, the chain of title is established through a title search of the grantor-grantee index.)

Question 15

Types of discreet chain of title problems

Answer 15

1. The Shelter Rule
2. The Wild Deed
3. Estoppel by Deed

Question 16

Shelter Rule

Answer 16

One who takes from a bona fide purchaser will prevail against any entity that the transferor-BFP would have prevailed against.

I.e., the transferee septs into the shoes of the BFP and “takes shelter” in the BFP (even if the transferee would not otherwise be a BFP).

Question 17

Wild Deed

Answer 17

E.g., O sells to A, who does not record. A sells to B. B records the A>B deed.

The A>B deed is a wild deed because it is not connected to the chain of title from O (because the O>A deed is not recorded).

The recording of a wild deed is a nullity—it is incapable of giving record notice of its existence.

• So B is not protected by recording—it was negligent because B did not make A record the O>A deed.

Question 18

Estoppel by deed

Answer 18

One who conveys realty in which he has no interest is estopped from denying the validity of that conveyance if he later acquires the previously transferred interest in that realty.

E.g., X does not own Blackacre, but conveys it to A. A records. Then O sells Blackacre to X. A owns Blackacre—X is estopped from denying the validity of the X>A conveyance.

• But against subsequent BFPs, A’s recording is a nullity—A could have learned that X did not own the land by checking the record.