VI. RECORDING OF INTERESTS & PRIORITY Flashcards
D. WHO CAN USE THE RECORDING ACTS
1, for value
- “For _value” – 2 situations on exam:
a) Bargain basement sale – Where subsequent purchaser pays absurdly low price. In absence of an explicit claim of fraud, any consideration that is out of pocket is enough to be considered value.
It is irrelevant that amount paid does not meet or come close to fair market value. However, nominal is not really out-of-pocket so it is not enough.
b) One who purports to take property as an heir, devisees or by gift cannot be a BFP, and can never defeat the claim of someone who has a prior conveyance from O. They have not given value.
Shelter Rule Exception:
anyone (even heirs, donees and devisees) can shelter under the rights of a BFP.
2, without notice
actual notice
if subsequent purchaser actually knew about prior unrecorded conveyance, that person loses.
Shelter Rule Exception: anyone (even those who actually know of an earlier sale) can shelter under the rights of a BFP by purchasing it from them
2, without notice
record notice
a constructive notice that arises from the record. It is not enough that the deed was recorded at courthouse in order to give subsequent purchaser notice of it, it must be recorded in the chain of title
2, without notice
inquiry notice
1) Where a reading of the deeds on record discloses an unrecorded transaction, subsequent purchaser has to check it out.
Subsequent purchasers are on notice of anything mentioned in a deed in the chain of title.
2) Where subsequent purchaser fails to go out and exam the land and an examination would have shown someone on the land under a prior unrecorded right.
Subsequent purchaser must make inquiry of unexplained possessions or uses.
*****TEXAS Only: Quitclaim deeds in Texas put the grantee on notice of any defects that exist in the chain of title. The grantee under a quitclaim deed cannot be a bona fide purchaser.
