(15) The recording system
Typical notice statute language looks like this:
"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."
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?
(1) If we are in a RACE jurisdiction, B i wins IF he records before A (2) If B is a BFP, and we are in a NOTICE jurisdiction, B wins, regardless of whether or not she records before A does. (2) If B is a BFP and we are in a RACE-NOTICE jurisdiction, B wins if she records properly before A does.
What are the 3 types of recording statutes?
(1) Race statutes (2) notice statutes (3) race-notice statutes
A bona fide purchaser is one who what?
(1) buys for value; and (2) without notice that someone else bought there first
There are two routine value questions what are they?
(1) the bargain basement sale (2)The case of the doomed donee
What are the 3 chain of title problems?
(1) the shelter rule (2) the problem of the wild deed (3) estoppel by deed
Therefore, in a dispute involving an installment K, in a dispute with a prior claimant, the court may award the purchaser:
1) a share of the property as a tenant in common equal to the proportion of the payments made (2) a lien on the property to the extent to the amount paid (3) the entire property subject to a lien on the property to the extent to the balance still owed
Who takes in a race-notice jurisdiction?
A - A BFP when she took AND who wins the race to record
Who takes in a race jurisdiction?
A - the first to record, we don't care about whether she is a BFP
The three forms of notice that a buyer may potentially be charged with are:
A I R: Actual notice Inquiry Notice Record Notice I & R are both forms of constructive notice
The language of a typical race statute looks like this:
A conveyance of an estate in land shall not be valid against a subsequent purchaser for value unless the conveyance is first recorded. NOTE: No one has to be a BFP
O conveys to A, a BFP, on January 1. A does not record. O conveys to B, a BFP, on January 15 for valuable consideration. B has no notice of the conveyance to A. A records on January 18. B records on January 20. Result?
A prevails over B because B did not record first.
B's title searcher would not find A's deed. Why not?
A's 1950 recording is a nullity. She recorded too early. Thus, her deed won't be connected to the chain of title. (One is entitled to assume that no one sells land until they first own it. Thus, B's title searcher would have no reason to discover X's 1950 pre-ownership transfer to A.)
Typical race-notice language looks like this:
Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser for value, without notice thereof, whose conveyance is first recorded.
In determining who is a BFP for purposes of protection of the recording statutes, remember that the purchaser must be without notice when?
At the time of conveyance. It does not matter if she learns of an adverse claim after the conveyance but before recording.
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. Who takes Blackacre in a notice jurisdiction?
B - the last BFP to take
In 1970, X, a double-dealer, sells Blackacre to B. B records.Who owns Blackacre in 1970?
B as long as he is a BFP.
What is record notice?
B is on record notice of A's deed if at the time B takes, A's deed was properly recorded within the chain of title.
O conveys to A, a BFP, on January 1. A does not record. O conveys to B, a BFP, on January 15. B has no notice of the conveyance to A. Who prevails?
B prevails over A. It is irrelevant whether A records after January 15 or before B records, because B had no notice of A at the time he took. (This distinguishes notice and race-notice statutes.) If, at the time B takes, he is a BFP, he wins. It won't matter that A may ultimately record first, before B does. It won't matter, in the A vs. B contest, that B never records.
Why does C win in a notice state?
Because C was the last BFP to take.
Who do the recording acts protect?
Bona fide purchasers and mortgagees (creditors)
O, our initial grantor and dirty double dealer, then sells Blackacre to C. Assume that C has no actual or inquiry knowledge of the O-to-A or A-to-B conveyances. C records. O has skipped town. In the contest of B vs. C, who prevails?
C
O conveys to A, who does not record. Later, O conveys the same parcel to B, a BFP, who records. 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 vs. C, who prevails?
C in both a notice and race notice state. C steps into Bs shoes and B was a BFP who recorded 1st.
Why does C win in a race-notice state?
C is a BFP who wins the race to record. Remember: B's recording is a nullity.
Most states do what?
Do NOT grant them protection
Who is not protected by the recording acts?
Donees, heirs and devisees b/c they do not give value
A plaintiff who obtains a money judgment can place a judgment lien on the defendant's real property by doing what?
Filing the judgment in the appropriate county office.
Why does B win in a race-notice state?
He's a BFP who wins the race to record.
Why does B win in a notice state?
He's the last BFP to take
What is the rule of the wild deed?
If a deed, entered on the records (A to B), has a grantor unconnected to the chain of title (O to A), the deed is a wild deed. It is incapable of giving record notice of its existence.
Under inquiry notice if another is in possession then what?
If another is in possession, B is charged with inquiry notice of that fact, regardless of whether B actually bothered to inspect or not. Thus, in our model of the double dealer, if A had taken possession, B would be on inquiry notice of that fact, thereby defeating B's status as a bona fide purchaser.
Reference to another instrument in a recorded document that is in the chain of title, may do what?
Impart constructive notice of the instrument referred to, even if it is unrecorded or not itself in the chain of title!
Does it matter whether this is a notice or race-notice jurisdiction?
No
May Chris sue for breach of Jerry's implied promise, in the land contract, to provide marketable title to Chris at closing?
No - once we have gotten to the closing the land K dies and the promise to provide marketable title is a promise contained in the K.
O sells Blackacre to A, who does not record. Then, A sells to B. B records the A-to-B deed. Is the A-to-B deed connected to the chain of title?
No the A-to-B deed is a wild deed b/c the O-A link is missing from the records.
In 2015, Jerry sold Blackacre to Tiffany. Tiffany did not record but immediately assumed possession of Blackacre, where she continues to live. In 2020, Jerry sold Blackacre, the same parcel, to Chris by statutory special warranty deed. Chris recorded the deed but never assumed possession. Thereafter, Jerry fled the jurisdiction. Blackacre is in a state whose recording statute provides: A conveyance of an interest in land is not valid against any subsequent purchaser for value without notice thereof, unless the conveyance is recorded. This jurisdiction has a 10-year statute of limitations for claims of breach of warranty in a deed. Identify this recording statute.
Notice
What is Estoppel by deed?
One who conveys realty in which he has no interest is estopped from denying the validity of that conveyance if he subsequently acquires the title that he had previously purported to transfer
What is the shelter rule?
One who takes from a BFP will prevail against any entity that the transferor-BFP would have prevailed against. In other words, the transferee "takes shelter" in the status of her transferor, and thereby "steps into the shoes" of the BFP even though she otherwise fails to meet the requirements of BFP status.
What does actual notice mean?
Prior to B's closing B learns of A.
What is the shelter rule trying to do?
Protect B the BFP by making it easier for B to successfully transfer title, without being weighed down by O.
B is O's heir, or devisee, or donee. In a recording statute question, what happens to B?
Recording statutes do not protect donees, heirs, or devisees unless the shelter rule applies. So B loses unless the shelter rule applies.
What are they protected from?
Secret interest previously created and provided a mechanism for "earlier" grantees to give notice through recordation
To give record notice to subsequent takers, the deed must be recorded properly, within the chain of title. What is the chain of title?
The chain of title is the sequence of recorded documents capable of giving record notice to subsequent takers.
In most states a purchases under an installment land K is protected only to what extent?
The extent of payment made.
Unlike mortgage lenders, who are the same as any other BFP, judgment creditors and lienors aren't usually protected by what?
The recording acts
At common law, if a grantor conveyed the same property twice, the grantee first in time generally prevailed, what changed this?
The recording acts changed that outcome in certan circumstances
Whether judgment creditors are protected by the recording statute against a prior unrecorded conveyance by the defendant depends on what?
The state statute.
Because they aren't covered by the recording act, what is irrelevant?
Their notice or lack of notice of prior claims
Does a recorded deed, recieved from a grantor who had no title when conveydd but who afterqards obtains titel, impart consutcive notice on subsquent urchases?
There is a split. Most courts say no - a BFP will win int he grounds that that the deed is not in his chain of title. The minority biew proetct the prior grantte over the BFP on an estoppel by deed theory/
Chris has now endeavored to assume possession of Blackacre, but to his surprise he finds Tiffany in possession. In the lawsuit brought by Chris against Tiffany, who prevails?
Tiffany. Chris is not a BFP b/c he has inquiry notice of Tiffany's claim. If he was. BFP than he would win.
What is a race notice statute?
To be protected under a race-notice statute, the subsequent purchaser must not have any notice of the prior grant and must record first.
What is a notice statute?
Under a notice statute, a subsequent purchaser who had no notice of a prior conveyance by the grantor will prevail over a prior grantee who failed to record.
What is a race statute?
Under a pure race statute, notice of a prior conveyance by the grantor doesn't matter. The first party to record wins. Only a few states have a pure race statute.
What is inquiry notice?
Whether he examines Blackacre prior to closing or not, B is on inquiry notice of whatever an examination of Blackacre would have revealed. The buyer of real estate has a duty to inspect the premises before transfer of title, to see, for example, whether anyone else is in possession.
In 1950, O owns Blackacre. He is thinking about selling it to X, but for now decides against it. In 1950, X, who does not own Blackacre, sells it anyway, to A. A records. In 1960, O finally sells Blackacre to X. X records. (HERE estoppel by deed comes to A's rescue - the 1960 O to X transfer shoots back in time to rebound to A;s benefit). As between X and A, who owned Blackacre from 1960-1969?
X is estopped so A owns under the rule of estoppel by deed.
B paid $50,000 cash for Blackacre, when its fair market value is estimated at $100,000. Is B a purchaser for value?
Yes - as long as B pays SUBSTANTIAL PECUNIARY value, he is a buyer for value, doesn't matter he is getting a bargain
If Jerry returns to the jurisdiction, may Chris sue Jerry for breach of the promises Jerry made when he delivered to Chris a statutory special warranty deed?
Yes - broke his promise to convey good title.
Inquiry notice also means that if a recorded instrument makes reference to an unrecorded transaction, then what?
grantee is on inquiry notice of whatever a reasonable follow-up would have revealed.
The subsequent purchaser under a notice statute prevails even if what?
if they don't record. As long as they had no notice of the prior conveyance, they win. But if they don't want the same thing to happen to them, they will have to record to put other subsequent purchasers on notice of their interest.
"Notice" only =
notice statute
An easy way to spot the different statutes is to look for the words "notice" and "first." "First" only =
race statute
"Notice" & "first" =
race-notice statute
How is the chain of title established in most states?
title search of the grantor-grantee index
