The Recording System Flashcards
What do all cases w/r/t the recording system reduce to?
Our model: the case of the double dealer. All cases reduce to this.
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?
2 brightline rules w/r/t recording
I. If B is a bona fide purchaser, and we are in a notice jdxn, B wins regardless of whether or not she records before A does
II. If B is a bona fide purchaser and we are in a race-notice jdxn, B wins if she records properly before A does.
Basically, onus is on you as a purchaser to check whether who the land belongs to.
First, recording acts exist to protect only bona fide purchasers and mortgagees (creditors)
What is the bona fide purchaser (BFP)
a. buys blackacre for value
AND
b. without notice that someone else got there first
BFP requirement of buying blackacre for value
Buying blackacre for value
a. Doesn’t matter if you got a bargain basement sale, just have to put down substantial pecuniary consideration
b. Must actually buy it. If the double dealer OR sold to one person and the other person is a donee, heir or devisee, they ARENT a bona fide purchaser, because they didn’t buy for value.
i. Exception: unless the shelter rule applies
Can only be a BFP if you don’t have notice that someone else got there first. what counts as notice?
3 forms of notice buyer may be charged with AIR. Prevents a purchaser from being a bona fide purchaser
a. Actual
b. Inquiry
c. Record
c. Actual notice: prior to B’s closing, B learns of A
d. Inquiry notice: on whatever an exam would show. Buyer has a duty to inspect before transfer of title, to see, for ex, if anyone else is in possession.
i. Must also do reasonable follow up, for ex if a recorden instrument makes reference to an unrecorded tx
e. Record notie: constructive notice. On notice if at the time B takes, A’s deed was recorded properly
f. If A has not recorded properly at the time B takes, assuming B is bona fide purchaser, who wins? Depends on jdxn.
i. In a notice state – B wins
ii. In a race-notice state – B must be BFP and B must also win the race to record.
Recording statutes: the notice statute
a. The notice statute: “ a conveyance of an intrest in land isn’t valid against a subsequent purchaser for valie, without notice thereof, unless the conveyance is recorded.”
i. If a at the time B takes, he is a bona fide purchaser, he wins. It wont matter that B never records.
1. The last bona fide purchaser to take wins!! we punish people who buy land and fail to record it.
Recording statutes, the race-notice statute
any conveance of an interest in land shall not be valid against any subsequent purchaser for value, without notice therof, whose conveyance is first recorded.”
i. To prevail, B must 1) be a bona fide purchaser and B must 2) win the race to record.
1. Ex. On March 1, O conveys to A, a bona fide purchaser who does not record. On April 1, O conveys the same parcel to B, a bona fide purchaser, who does not record. On May 1, A records.
a. Notice jdxn→ B wins
b. Race notice jdxn→ A wins
What can you do as a buyer to defeat a subsequent claim of another BFP?
c. NB: no matter what, B’s status as a subsequent BFP will be defeated if A had promptly and properly recorded before B takes. A’s proper recordation puts later buyers on record notice, thus defeating their status as BFPs.
What is PROPER recording
d. To give record notice to subsequent takers, the deed must be recorded properly, within the chain of title. That’s a sequence of recorded docs capable of giving record notice. Usually chain of title established through a title search through grantor-grantee index.
Three discrete chain of title problems
1) shelter rule, 2) the problem of the wild deed, 3) estoppel by deed
Shelter Rule
a. One who takes from a BFP will prevail against an entity that the transferor-BFP would have prevailed against. In other words, the EE takes shelter in the status of her OR, thereby stepping into the shoes of the BFP even though she otherwise fails to meet BFP status
b. Ex 71: O conveys to A, who does not record. Later, O conveys to B, a BFP, who records B. B then conveys to C, who is a mere donee or who has actual knowledge of the O to A transfer. In the contest of A v. C, who prevails?
i. C wins, in both a notice and race notice state because of the shelter rule. C steps into the shoes of B, who was a BFP who recorded.
1. Protects B by making it easier for B to transfer successfully, without being penalized for O’s double dealings
2. even though C had notice OR wasn’t a BFP. But B is a BFP, and the shelter rule has B’s back, makes it easier for him to transfer successfully without being saddled by the sins of O. Even though on their own, the C wouldn’t be eligible. Shelter in B’s status.
The problem of the wild deed
a. O sells Blackacre to A who doesn’t record. The, A sells to b. B records the A-to-B deed. But it’s not recorded properly!! O to A link is missing.
i. The A to B deed therefore is a wild deed.
b. Rule of wild deed—if a deed entered on the records has a grantor unconnected to the chain of title, the deed is a wild deed. It is incapable of giving record notice of its existence.
i. TREATED AS IF NEVER RECORDED
ii. job of purchaser to make sure everything is in order.
c. O, iniial double dealer, then sells to C. Assume C has no actual or inquiry knowledge of earlier dealings. C records. O skips town. In the contest of B vs. C who wins?
i. C wins in both notice and race notice state.
ii. Noteice state—because at time she takes she is a BFP
iii. Race notice—wins because at time of recording she wins race to record.
1. Bs recording is a nullity, because the wild deed is incapable of giving record notice of its existence.
Estoppel by deed
grantor gave an implied covenant that title will be conveyed to the grantee
i.e. if grantor conveys a estate she does not own, her subsequent acquisition automatically inures to the benefit of the grantee
grantee can sue to compel the conveyance
BFP: but if there is a sale to a bona fide purchaser for value, the grantee’s right to estoppel by deed is cut off
a. Ex: In 1990, O owns Blackacre. He is thinking about selling it to X, but for now decides against it. In 1990, X, who does not own Blackacre, is a fraud and sells it anyway, to A. A records.
i. In 2000, O finally sells Blackacre to X. X records.
ii. In 2010, X, a double dealer, sells Blackacre to B. B records.
b. As etween X and A who owned blackacre from 200 -2010
i. A did because the rule of estoppel by deed. rescues A
c. Who owns blackacre in 2010?
i. B as long as he is a BFP.
1. He wins in a notice system bc he’s a BFP. He wins in a race notice jdxn because he is a BFP who recorded first
IIInstallment land contracts and recording
However, when a purchaser has paid only part of the purchase price under an installment land k, most courts hold that purchaser is protected by recording acts only to the extent of the payment paid. Depending on equity in the case, 3 options for court
a. tenancy in common with the k purchaser receiving a share of property equal to % of payment made
b. award the land to the prior claimant, but give contract purchaser a right to recover the amount she paid
c. award the land to the k purchaser, but require the k purchaser to make remaining payments to prior claimant.
