Title Assurances

Question 1

Multiple Purchasers of the Same Realty: CL

Answer 1

Under the CL, there was a strong presumption of first in time, first in right. The first person to have a valid claim to the property via adverse possession, contract, or deed is the one who presumptively owns the property. But recording acts protect subsequent purchasers.

Question 2

Recording Acts

Answer 2

Include:

• Race Statute
• Notice Statutes
• Race-Notice Statutes

Question 3

Interests that Are Not Subject to the Recording Acts

Answer 3

Realty acquired via adverse possession or a prescriptive easement are not subject to the recording acts.

Question 4

Race Statute

Answer 4

The person who records first prevails (race to the courthouse).

Question 5

Notice Statute: When Does One Pay Value?

Answer 5

One pays value by paying more than a nominal amount for realty (e.g. purchase price).

Question 6

Notice Statute

Answer 6

A BFP who takes without notice (actual, constructive, or inquiry) prevails.

Question 7

Constructive Notice

Answer 7

As soon as one records, they give the world constructive notice to the world that the property is theirs. But there will be no constructive notice for a recording that is outside the chain of title (e.g. when one receives a deed from one who did not own the property, therefore, it will not show up in either the grantor or grantee books).

Question 8

Inquiry Notice

Answer 8

What a reasonable person would have learned with an appropriate inquiry.

Question 9

Race-Notice Statute

Answer 9

An unrecorded conveyance is invalid against a subsequent bona fide purchaser who takes without notice and records first.

Question 10

Requirements for BFPS

Answer 10

For one to be a BFP there are to requirements:

• no knowledge
• payment of contemporaneous value

Question 11

Can Judgment Creditors be BFPS?

Answer 11

No because they have not provided any contemporaneous value (they got the judgment from some other previous transaction).

Question 12

Are Beneficiaries of a Gift or Inheritance BFPS?

Answer 12

No because they have not provided value.

Question 13

Can Mortgagees be BFPs?

Answer 13

If they provided a loan in exchange for a mortgage to the realty –> yes (they have provided value).

Question 14

Shelter Rule

Answer 14

Claims that a person who is a successor in interest to a person protected by the recording statute is also protected.

Question 15

Exceptions to the Shelter Rule

Answer 15

• A subsequent person may not take advantage of the shelter rule if that person:
• attempts to “wash” the deed by conveying to a third person and then immediately taking a reconveyance of the property; or
• commits fraud in respect to the deed.

Question 16

Estoppel by Deed

Answer 16

When the “grantor” transfers property to grantee when they did not have legal title but acquires legal title later on.

• Majority rule- the grantor is estopped from denying the property to the grantee.
• Minority rule (operation of law theory)- title automatically passes to the grantee from the date of the initial conveyance (important for the recording acts).

Question 17

Estoppel by Deed: Conveying Greater Interest than One Has

Answer 17

• Remember that estoppel by deed does not only apply to when a “grantor” has no title at all to property, but also when they convey a title to more land than they actually possess. Under the doctrine, when the grantor receives this additional land, they will have to turn it over to the grantee.
• However, if the grantor conveyance is limited to property that they actually own, the doctrine does not apply (the grantee will not be able to acquire the grantor’s after acquired property).

Question 18

Marketable Title Act (Extinguished Interests)

Answer 18

• A statute that provides a cut-off point, which limits time period during which a subsequent purchaser is required to search the records.
• All competing interests recorded prior the root of title are extinguished.

Question 19

Title Insurance

Answer 19

Can be purchased by buyer, so that if there is a defect in the chain of title (unexpected encumbrance), the buyer can make a claim under the insurance policy.

Question 20

If an Insurance Claim is Successful

Answer 20

The title company then obtains subrogation rights to bring any necessary lawsuits to reimburse itself.

Question 21

Title Insurance: Timing of a Title Search

Answer 21

A title search must be performed before title insurance will be issued.

Question 22

Title Insurance: Policy Amount

Answer 22

An owner’s policy is in the amount of the purchase price of the property.