Title Assurance

Question 1

Generally

Answer 1

• pub records office records all instruments affecting land titles: deeds, mortgages, liens, wills, etc.
• state registers title and issues title certificate to owner
• assurance to title left in hands of private entities; and the govts job is providing parties access to the land in question thru recording system

Question 2

recording system

Answer 2

Land title recs include copies of docs filed w the recorder and indexes to these copied docs; does not in any way affect transfer of the land

Question 3

functions of rec system

Answer 3

• establishes system of pub recordation of land title
• preserves in a secure place documents that could be lost
• protects purchasers for value and lien creditors against prior unrecorded interests. (at common law used to be 1st in time 1st in right - prior interest was always successful)

Question 4

steps in recording

Answer 4

1. filing - go to office and file instrument relating to the land
2. recording - does not gives notice to subsequent purchasers
3. indexing - various methods, done by title companies

Question 5

Purpose of the recording acts

Answer 5

adopted and broadened the equitable doctrine of BFP, bc under them a subsequent BFP is protected against prior unrecorded interests

Question 6

Race statute

Answer 6

• rare, earliest type
• fleet of foot - person who wins race to record prevails
• limits inquiry to matters off record

Question 7

Notice statute

Answer 7

• protects subsequent purchaser who purchased w/o notice of prior unrecorded instrument - pure of heart
• protects sub purchaser against prior unrec instruments even tho subsequent purchaser failed to record

Question 8

race notice statute

Answer 8

• use of this and notice is about 50/50 in US
• protected against prior unrecorded instruments only if subsequent purchaser:
  (1) w/o notice of prior instrument
  (2) records before prior instrument recorded
• by punishing non recording, provides motivation to record making pub records complete

Question 9

Lewis v. Superior Court

Facts

Answer 9

Lewis K’d to buy resident from Shipley. On 2/24 Fontana Films recorded a lis pendens (suit for claim against prop) against Shipley which affected the resident Lewises purchased. Lewises received title at closing on 2/28, lis pendens indexed on 2/29. In march the Lewises finishes paying off prop and spent $ improving it. In Sept they were served w Fontana’s lawsuit which was 1st notice of lis pendens.

Fontana: Even if they took title before the indexing, they were not BFPs bc they didn’t fully pay until after indexing.

Lewis: Paid for prop, should be able to keep it.

Question 10

Lewis v. Superior Court

Issue

Answer 10

Whether BFP of property may be charged w constructive knowledge of an encumbrance on the land where the encumbrance was recorded but not indexed prior to sale.

Question 11

Lewis v. Superior Court

Holding

Answer 11

F’s interest was not fully recorded until it was indexed, and it was not at the time they bought the house so Lewises are BFPs. Under race notice, Lewis was FOF bc although Fontana filed 1st Lewis indexed 1st. POH bc final downpayment and initial payment were before F indexed so he had no notice.

Question 12

Lewis v. Superior Court

Reasoning

Answer 12

David v. Ward not applicable to this case bc (1) one who commits to paying certain amt for land is entitled to believe that once purchase price is complete he will receive clean title (2) case here involved constructive notice - it would be unr’able to burden on buyers to perform record check at each installation payment - they only usually perf rec check before purchase.

Question 13

Lewis v. Superior Court

Rule

Answer 13

If BFP has already received title by time a lien recorded and was not on constructive notice at time he received title, he is protected. Only unprotected when BFP has actual knowledge of facts showing transferor had fraudulent intent - then they acted in bad faith.

Question 14

actual notice

Answer 14

when one is personally aware of a conflicting interest in real property, often due to anothers possession of the property

Question 15

record notice (constructive)

Answer 15

noticed based on properly recorded instruments - if properly recorded provides notice to all.

Question 16

inquiry notice

Answer 16

based on facts that would induce a r’able person to make inquiry into the possible existence of an interest in real prop.
- if rp would make inquiry about possession of prior deed, they will be charged w inquiry notice and recording statute is violated

Question 17

Harper v. Paradise

Facts

Answer 17

In 1922 Susan Harper granted her daughter Maude a life estate in a farm w the remainder to Maude’s children upon Maude’s death. Deed conveying interest misplaced and not found until 1957 and was recorded then. When Susan died her heirs found document acknowledging the deed had been misplaced and that it conveyed her interest to Maude, recorded in 1928. Maude used property to secure a loan and when she defaulted the prop was foreclosed and a sherriffs deed was executed and recorded in 1936. Title to prop continued to pass until it reached the paradises, Maude’s children find them there and file ejectment.

Question 18

Harper v. Paradise

Holding

Answer 18

Verdict for Maude’s children.

Question 19

Harper v. Paradise

Reasoning

Answer 19

Each purchaser of property should have engaged in a more diligent effort to discover the nature of the earlier conveyances. The 1928 deed put subsequent purchasers on notice of the existence of an earlier conveyance. Paradises did not engage in any sort of diligent inquiry thus they are charged w inquiry notice.

Question 20

Harper v. Paradise

Rule

Answer 20

A deed in the chain of title discovered by the investigator is constructive notice of all other deeds which were referred to in the deed discovered.

Question 21

Title insurance

Answer 21

Ks of indemnity b/w insurer and property owner or the mortgagee (bank)

• insurance company guarantees that it has searched the record for defects in title
• bought by 1 premium paid at time issued; has no fixed terms and continues for as long as insured maintains interest in prop

Question 22

dif from ordinary insurance

Answer 22

looks backward in time - protects against past defects already on existence b4 transaction made.

Question 23

Walker Rogge inc v. Chelsea title and guaranty co.

Facts

Answer 23

Walker purchases land from Kosa relying on survey conducted in 1975. Parties understood transaction to involve approx 19 acres of land and the deed did not specify the acreage of land transfer. Rogge purchases title insurance from Chelsea and the policy insured the land against defects in title or liens but had exception for boundary line disputes. In 1985 walker wants to buy adjacent lot and ordered another survey which revealed only 13 acres. Walker sued on the basis that title insurance guaranteed the quantity of the land. However, the K contained an exception that the policy did not insure against matters that could be disclosed by an accurate survey.

Question 24

Walker Rogge inc v. Chelsea title and guaranty co.

Holding

Answer 24

Title insurance guarantees only against the loss of value through defects of title or liens or other encumbrances against the land.

Question 25

Walker Rogge inc v. Chelsea title and guaranty co.

Reasoning

Answer 25

Insured must provide title insurance company w survey and ask for guarantee of the quantity of the land otherwise title insurance policies generally exclude the quantity from coverage. Burden on landowner to have survey conducted and supply it to company for guarantee. The K exception applied. There was a question as to whether Chelsea was negligent bc they had a deed on file that said 13 acres and should’ve conducted a r’able examination.

Question 26

Walker Rogge inc v. Chelsea title and guaranty co.

Rule

Answer 26

While title policies are liberally construed against the insurer and in favor of the insured, courts should not write for the insured a better policy of insurance than the one purchased.

Question 27

Walker Rogge inc v. Chelsea title and guaranty co.

Lawyering lessons

Answer 27

• Get own survey done b4 purchasing property; don’t rely on surveys from others
• title insurance is not a substitute for survey