Deeds

What are are three types of recording acts:

(1) race; (2) notice; and (3) notice-race. Some states use more than one type of recording act. Ohio has a "race" recording act for mortgages and oil and gas leases, but has a "notice" recording act for deeds, easements and other documents. Interesting!

It is January 1981. Back in 1977 JOHN tried to deed his farm to PAUL by quitclaim deed, but the deed was not signed by JOHN (and therefore was completely ineffective to transfer title). PAUL put the deed under his pillow. A year later, PAUL sold the farm to RINGO by a general warranty deed containing one covenant: the covenant of seisin. RINGO immediately recorded the deed. Thereafter, in 1979, PAUL discovered that JOHN never signed the 1977 deed, so he asked JOHN to execute and sign a new deed. JOHN in 1979 gave PAUL a signed and properly executed quitclaim deed, which PAUL immediately recorded. In December of 1980, PAUL, RINGO, GEORGE, and PETE BEST attended JOHN's funeral. PAUL and RINGO realize they both believe they own the farm. RINGO now seeks your advice. Advise RINGO.

(See paper to see how it is set up) RINGO can argue estoppel by deed because he received a General Warranty Deed (with the covenant of seisin) in 1978. PAUL is estopped - after receiving title in 1979 - from denying that his 1979 acquisition of title was to fulfill his 1978 promise to RINGO.

3. It is January 1981. Back in 1977 JOHN tried to deed his farm to PAUL by quitclaim deed, but the deed was not signed by JOHN (and therefore was completely ineffective to transfer title). PAUL put the deed under his pillow. A year later, PAUL sold the farm to RINGO by a general warranty deed containing one covenant: the covenant of seisin. RINGO immediately recorded the deed. Thereafter, in 1979, PAUL discovered that JOHN never signed the 1977 deed, so he asked JOHN to execute and sign a new deed. JOHN in 1979 gave PAUL a signed and properly executed quitclaim deed, which PAUL immediately recorded. In 1980, PAUL sold the land to PETE BEST by quitclaim deed, who immediately recorded the deed. In December of 1980, PAUL, RINGO, GEORGE, and PETE BEST attended JOHN's funeral. PETE BEST and RINGO realize they both believe they own the farm. RINGO now seeks your advice. Advise RINGO.

(See paper to see how it is set up) RINGO can argue estoppel by deed because he received a General Warranty Deed (with the covenant of seisin) in 1978. PAUL is therefore estopped - after receiving title in 1979 - from denying that his 1979 acquisition of title was to fulfill his 1978 promise to RINGO. So RINGO wins as against PAUL. But what about PETE BEST? Can PETE BEST "best" (trump) RINGO? PETE BEST is a BFP without actual or constructive notice of the 1978 PAUL-RINGO deed. In New Jersey, PETE BEST wins. In other states, however, even a BFP without notice cannot trump a person who gains title by estoppel by deed [see 3rd paragraph in Note #3 on page 541 of book]. The states that give victory to Pete Best do so because Ringo's 1979 title "arose by operation of law". In other words, Ringo is in the same position as Dora Mugaas, and Best is in the same situation as Delmar Smith. But there is a split on this issue.

1. It is January 1981. Back in 1977 JOHN tried to deed his farm to PAUL by quitclaim deed, but the deed was not signed by JOHN (and therefore was completely ineffective to transfer title). PAUL put the deed under his pillow. A year later, PAUL sold the farm to RINGO by a quitclaim deed. RINGO immediately recorded the deed. Thereafter, in 1979, PAUL discovered that JOHN never signed the 1977 deed, so he asked JOHN to execute and sign a new deed. JOHN in 1979 gave PAUL a signed and properly executed quitclaim deed, which PAUL immediately recorded. In December of 1980, PAUL, RINGO, GEORGE, and PETE BEST attended JOHN's funeral. PAUL and RINGO realize they both believe they own the farm. RINGO now seeks your advice. Advise RINGO.

(See paper to see how it is set up) RINGO cannot argue estoppel by deed because he received a Quitclaim Deed from PAUL in 1978. RINGO also cannot sue PAUL for breach of deed covenants because RINGO received a QCD in 1978 with no covenants.

BACK TO HYPO #1: Suppose Doug did not sue Ben prior to 1994. The failure to sue Ben prior to 1994 means Doug is barred by the statute of limitations from suing Ben for breach of the present covenants of seisin and encumbrances. And until Carl, Shaw, and Earl assert their respective property rights, the future covenant of quiet enjoyment has not yet been breached! Now let's fast forward to 1998: 1998: Carl wins a lawsuit against Doug, finally establishing Carl's ownership of the 1 acre that was acquired by adverse possession back in 1988. Dean Shaw in 1998 brings a lawsuit to foreclose (sell at auction) Doug's land to pay off the $4,000 judgment lien, and the court holds that the judgment lien is valid and orders an auction to be held in the future. Earl sues in 1998 and wins his lawsuit against Doug, establishing that Earl acquired an easement back in 1988 to drive across Doug's land.

** In light of the judicial confirmation of the acquisition of 1 acre by adverse possession, the judgment lien, and acquisition of an easement, the future covenant of quiet enjoyment has now been breached (three times!). Doug now has four years (from 1998 to 2002) to sue Ben for the 1 acre title problem, the judgment lien problem, and the easement problem.

Marketable title

...Contractual duty to provide marketable title (not assigned) The buyer can rescind the contract of sale due to the seller's failure to provide a marketable title. But if the buyer accepts the deed, the merger doctrine (p.517) waives the "marketable title" contractual remedy.

How to approach a recording act problem

1. Determine what type of recording act jurisdiction - race, notice, notice-race? 2. Can the subsequent grantee invoke the recording act? a. If the answer is no, the common law rule will apply and the subsequent grantee will lose under the "first in time" rule. 3. Can the second grantee win the recording act? (look from the vantage of the second grantee) Two situations where a subsequent grantee cannot 'invoke' the recording act: (1) the property right of the "first" person is a right that arose by operation of law; and/or (2) the subsequent grantee is not a "bona fide purchaser" (BFP)

1. RELATIONSHIP OF RECORDING ACTS AND GRANTEES WHO TAKE WITHOUT PAYING VALUE (DONEES AND HEIRS) a. Alex conveys land by deed to Bertha as a birthday gift. Bertha immediately records the deed. Alex then gets an offer for the same land, and conveys to Conrad by deed for valuable consideration. Conrad, who had no actual notice of Bertha, records. In a quiet title action between Bertha and Conrad, who should prevail? b. Spock conveys Vulcan lakefront property by deed to Sulu for valuable consideration and some earmuffs. Spock thereafter -- without a trace of emotion -- conveys the same land by deed to Uhuru as a gift. Uhuru, who had no notice of the deed to Sulu, records. Thereafter, Sulu records. Both Uhuru and Sulu claim ownership. Will Sulu lose if Sulu sues? [Note: every conveyance from now on is for consideration.]

1.a. Bertha. Conrad is a subsequent purchaser for value, but Conrad takes with constructive notice since Bertha recorded her deed. Bertha, as a donee, cannot rely on the recording acts to "trump" a prior grantee who failed to record. Bertha prevails for a different reason: she was first in time, and because she immediately recorded, Conrad has constructive notice and cannot "trump" her. 1.b. Sulu wins. Uhuru, the subsequent grantee, took without notice and recorded first, so she would win under all three types of recording acts if she can invoke the recording acts. But as a donee, she is not entitled to invoke the recording acts, and Sulu wins under the common law "first in time" rule.

10. Edward gives a twenty-year oil and gas lease to Bella, who sulks a lot, does not record, and does nothing with the lease. Edward then conveys the land to Jacob by a deed that says it is "subject to the lease held by Bella which is dated July 1, 1990." Jacob records. Jacob then conveys to Carlisle by a deed that makes no reference to Bella's lease. Carlisle records. In a race-notice state, does Carlisle take free of, or subject to, Bella's lease?

10. Carlisle likely will be held to have inquiry notice of Bella's unrecorded lease since it is referred to in the recorded deed from Edward to Jacob in her chain of title. He has a duty to read the contents of each document in the chain of title, and if they are specific enough, they will give inquiry notice as to matters referred to therein. So Carlisle takes free of the lease only if a court finds the referencetoBella'sleasetobetoovaguetoimpartinquirynotice. [Seebookatpages536footnote 11 and 552 note 4.]

1. Anakin hands a properly executed deed to Lando and says "give this deed to C3PO after the Legal Pro paper is due, unless I change my mind." Anakin did not change his mind, and Lando dutifully handed the deed to C3PO shortly after the Legal Pro papers were turned in. Does C3PO own the land in question? If so, at what point did he become owner?

10. When Anakin handed the deed to his "agent" Lando, this act was not a delivery of the deed since his statement "unless I change my mind" shows he had no present intent to make the deed operative. However, when Lando handed the deed to C3PO, Anakin's earlier future intent became a present intent, and at that point in time the delivery occurred.

11. Abbie acquires land via a patent deed from the United States. Abbie records. Abbie then conveys to Bonnie, who does not record. Bonnie conveys to Casper, who records. Abbie then conveys the same land to Dudley, who records. Dudley conveys to Evan, who records. The land was vacant during this period; however, Casper thereafter takes possession. Evan sues to eject Casper. Who shall prevail?

11. Evan should win. If Evan searched the grantee index, starting with his grantor Dudley, he would see (1) Dudley got the land from Abbie; and (2) Abbie got the land from the United States. The Abbie-Bonnie deed is not recorded, and the Bonnie-Casper deed is outside Evan's chain of title: -305- Conveyances: USA to Abbie Abbie to Bonnie Bonnie to Casper Abbie to Dudley Dudley to Evan Record Title: USA to Abbie Bonnie to Casper Abbie to Dudley Dudley to Evan This is a "wild deed" situation. Generally, a subsequent purchaser (Evan) is not bound by constructive notice of a recorded instrument unless it is an essential link in the chain of title. On record, a grantor must appear to first be a grantee before she can be grantor. In our chain of title, Bonnie never appears on record as a grantee. On the other hand, Evan's chain on record is perfect (Evan - Dudley - Abbie - USA). In fact, since Dudley took without notice of Casper and recorded, Evan took whatever Dudley had, so Evan would win even if Evan had actual notice of Casper. Under the shelter rule, Dudley would prevail over Casper, and would "shelter" his grantee Evan. NOTE #1: if the recording acts were applied literally, Casper would win since Casper recorded before Dudley and Evan, thus causing Dudley and Evan to take with "notice." NOTE #2: at common law, Casper would also win because, after Abbie conveyed to Bonnie, Abbie had nothing to convey to Dudley. NOTE #3: if a tract index was in place, then Dudley and Evan would have had notice of Casper.

Ron unconditionally deposits his properly executed deed to Hermione in escrow, with instructions for delivery a month hence. A week later, Ron deeds the same property directly to Harry, who knows of the first deed. Harry brings a quiet title action against Hermione. Who should prevail?

11. The doctrine of relation back operates to give Hermione priority over Harry even though the actual delivery to her came after the deliver to Harry. [If Harry had been a bona fide purchaser without knowledge of the first deed, he might prevail under the recording acts.]

Just prior to class, Mao hands a properly executed deed to Fidel, who thanks him profusely. During class the next day, Fidel suddenly shouts: "I can't take it anymore. I cannot stand property. I want nothing to do with bundles of sticks and indefeasibly vested whatevers. And I don't want to be a capitalist landowner. Here is your deed back." Mao, after having the deed returned to him, quietly remarked that "he has gone over the edge," and ripped up the deed. Six years later Fidel sues to evict Mao from the land in question. Who wins?

12. Fidel. Once title passed to Fidel by delivery of properly executed deed, Fidel as grantee cannot abandon such title. Title will only pass from Fidel if he conveys or devises it, or if someone takes it by adverse possession. A delivered deed is simply a piece of paper, and cannot serve as the vehicle for reconveying the land back to Mao.

WHY IS TAYLOR'S DEED OUTSIDE OF DEL TUFO'S CHAIN OF TITLE? 1. DEEDS ARE RECORDED IN COURTHOUSE IN FOLLOWING ORDER: ASBURY-APPLEBY 1913 ASBURY-TAYLOR 1913 APPLEBY-ASBURY 1924 ASBURY-DEL TUFO 1966

2. DEL TUFO would check the 'grantee' index. Searching back from present (1966) under "AS" -- DEL TUFO would see that ASBURY was grantee in the conveyance from APPLEBY in 1924. Would then search back from 1924 under "AP" to see from whom APPLEBY got the land. 3. DEL TUFO will not see the AS-TA deed recorded in 1913. WHY? 4. Looking under "AP" - DEL TUFO would see APPLEBY got it from ASBURY in 1913. Could trace title back to United States. 5. Then DEL TUFO will go forward through the 'grantor' index. It will see the recorded "ASBURY to APPLEBY deed" in 1913. XII. KEY ISSUE: should the title searcher keep going forward after she sees the AS-AP deed recorded in 1913 to see if any other grants by AS are recorded? Or should she shift over to "AP" and look forward only under "AP" in the index files?

2. Sam conveys to Tom at noon and conveys the same land to Ursula at 3 p.m. Ursula took without notice of Tom. Tom records at 4 p.m. the same day and Ursula records an hour later at 5 p.m. Who prevails under the three types of recording acts?

2. Under a pure race act, Tom prevails because recorded first. In a pure notice state, Ursula wins because she took without notice of Tom, who had not yet recorded when Ursula got the land. The fact Tom subsequently recorded before Ursula is no help to Tom in pure notice state. In a race- notice state, Tom wins. Here, even though Ursula took without notice of Tom, that is not enough, she must also record before Tom. She did not, so Tom wins.

3. Dylan in 2000 conveyed his farm to Rod, who recorded the deed. Rod in 2002 conveyed the farm to Maggie. Rod in 2004 conveyed the farm to Stewart, who had actual notice of the Rod-Maggie transaction, but also recorded his deed. Maggie in 2009 recorded her deed. Stewart in 2012 conveyed to May, who took without actual notice of the Rod-Maggie transaction. May immediately recorded. Maggie recently started to possess the previously unoccupied land. In a race-notice state, who wins between Maggie and May?

3. May May evict Maggie? Yes, May may. If our court follows Palamarg Realty it will hold that it is May's farm. Why? This is the "case of the late recorded deed." The Rod-Maggie deed is not deemed to give notice to May if May will not discover it by a reasonable search. May would search up the grantee index until she found who granted the farm to Stewart, her grantor. Looking under "ST" she would see the recording of the Rod-Stewart deed. Then searching under "RO" in grantee indices, she would then see the Dylan-Rod deed. Then, starting with Dylan in the grantor index, she would first see the Dylan-Rod deed. Searching forward under "RO" she would then see the Rod-Stewart deed. Here comes the key issue: should we "expand our search" and keep searching the grantor index under "RO" (as well as under "ST") to see if Rod made multiple conveyances? If so, we will see the Rod-Maggie deed and will be charged with notice. The book says most states would require this (see page 540 at end of note 1). In Palamarg Realty, the court held that a reasonable searcher would stop at the Rod-Stewart deed, and "shift over" and continue the search in the grantor index only under "ST" -- not "RO" - and thus miss the Rod-Maggie deed. Under this view, May is without notice of Maggie's deed and May prevails in either a notice or race-notice state. [Note: since Palamarg Realty says the recording of the Rod-Maggie deed doesn't impart notice, it holds that May took without notice and recorded first, even though Maggie did previously record her deed.]

4. Jan dies in a bus accident, devising Plumwood Manor "to Greg and Marcia." Marcia immediately conveys "all of Plumwood Manor in fee simple absolute" to Bobby by general warranty deed with the "usual warranties." What covenants, if any, were breached?

4. Although purporting to convey an unfettered fee, Marcia only held a ½ interest as a tenant in common. Hence she breached the present covenants of seisin and right to convey. There is no breach of the future covenants of quiet enjoyment and warranty, however, until an "eviction" occurs; i.e., until Greg asserts his ½ undivided interest against Bobby.

4. Jerry conveys to George. Jerry then conveys to Kramer, who takes without notice of George and immediately records. Kramer conveys to Elaine, who takes with actual notice of the Jerry-George deed. Who prevails between George and Elaine?

4. Elaine wins. This is the "shelter rule" (see book at 489 n.12 and 503 note 1). Once Kramer, a bona fide purchaser, acquired good title (as Kramer did under all three recording acts since took without notice and recorded first), Kramer can pass that title to others even if -- as in the case of Elaine -- they have actual notice of George. Elaine is "sheltered" by Kramer.

5. Willie, who does not own the land in question, conveys it to Xerxes by warranty deed in 1949. Xerxes records in 1949. In 1950, Vernon, who is the true owner, conveys the land to Willie, who immediately records. Then, in 1960, Willie conveys by quitclaim deed to Yogi, who immediately records. Who wins in dispute between Xerxes and Yogi?

5. Most states (including New Jersey in Palamarg Realty) would hold for Yogi. When Vernon conveyed to Willie, title went immediately to Xerxes by the doctrine of estoppel by deed (which applies since Willie purported to convey the land in question in 1949 to Xerxes by warranty deed). But, as Yogi once said, "it ain't over until it's over." Most states will hold that Yogi has no notice of Xerxes. The Willie-Xerxes deed, recorded in 1949, is outside Yogi's chain of title. For Yogi to see it, he would have to check out each owner in the index during a period of time prior to the time the owner acquired record title. Most say Yogi must only check Willie from 1950 to 1960, so he is not charged with notice of the purported (and recorded) conveyance from Willie to Xerxes in 1949. A minority of states (apparently including Ohio) would hold that Xerxes wins because the estoppel by deed doctrine applies not only against the grantor Willie, but also against his successor (Yogi).

5. Cary grants property by general warranty deed with the "usual warranties" to Katherine for $15,000. Katherine then conveys to Spencer by quitclaim deed for $12,000. Spencer then conveys by general warranty deed with the "usual warranties" to Tracy for $20,000. Cary never had title, and the true owner (Dean Shaw) appears and evicts Tracy. At the time of the eviction the land is worth $24,000. Who can Tracy sue for breach of covenants? What damages can Tracy recover?

5. Tracy can sue Spencer for breach of the present covenants of seisin and right to convey and the future covenants of quiet enjoyment and warranty. The maximum amount a person can recover against a warrantor of title is the amount received by the warrantor. So Tracy can sue Spencer for $20,000, but cannot recover the present (appreciated) value of $24,000. Tracy can also sue Cary for breach of the future covenants of quiet enjoyment and warranty since these covenants "run with the land." [Tracy cannot sue Cary for breach of the present covenants of seisin and right to convey since (1) present covenants do not run with the land; and (2) in our jurisdiction, the cause of action held by Katherine for breach of these covenants by Cary cannot be expressly or impliedly assigned.] In a suit by Tracy against Cary, Tracy can seek damages of $15,000 -- the amount Cary received when he sold the property. [NOTE: Tracy cannot recover more than $20,000 in total from the two potential defendants Spencer and Cary; and Tracy cannot recover more than $15,000 from Cary.] Tracy cannot sue Katherine because Katherine conveyed by quitclaim deed and thus gave no covenants, present or future. [NOTE: if Tracy sues Spencer and recovers $20,000, Spencer can turn around and sue Cary. However, Spencer can only recover $15,000 from Cary.]

. Homer conveys lot #1 to Marge. The deed gives Marge an access easement over lot #2. Homer then conveys lot #2 to Bart, but the deed makes no mention of Marge's easement. Bart records. Does Bart take lot #2 free and clear, or subject to Marge's easement?

6. Some states say Bart takes subject to easement on the theory that Bart should study the contents of other deeds executed by his grantor Homer to see if they conveyed an interest in his lot. In other words, Bart must check out all the deeds from grantor Homer. Other states say Bart takes free of the easement on the theory that he should be charged only with notice of deeds in his chain of title.

6. Arnold enters into a contract to sell property to Sylvester for $10,000. Arnold is a scam artist and has no title at all, let alone marketable title. Sylvester foolishly accepts the deed. Sylvester then spends $60,000 to build a home. The true owner -- Professor Terzano -- rides up in his minivan, hops out, and evicts Sylvester. a. Assume that (as is typical) the sales contract did not specify that the contractual obligations incurred by the seller -- such as the obligation to provide marketable title -- survive the closing. Assume also that Arnold conveyed by quitclaim deed to Sylvester. What claims, if any, does Sylvester have? What damages, if any, can he recover? b. Assume that Sylvester, a former broker, made sure that the sales contract did specify that the contractual obligations incurred by the seller -- such as the obligation to provide marketable title -- survived the closing. Assume also that Sylvester insisted that Arnold convey by general warranty deed with the "usual warranties" to Sylvester. What claims, if any, does Sylvester have? What damages, if any, can he recover?

6. a. Sylvester is out of luck. He has no contract claim since the contractual obligations ended (merged) when he accepted the deed. He cannot sue on any breach of deed covenants since Arnold conveyed by quitclaim deed. b. Sylvester was sly, and can sue for breach of deed covenants and for breach of contract. Arnold is liable for breach of the present covenants of seisin and right to convey, and the future covenants of quiet enjoyment and warranty. Sylvester can recover $10,000 in damages for breach of these covenants. Arnold also breached the (surviving) contractual obligation to provide marketable title, and Sylvester can seek damages for breach of contract. Unless for some reason the doctrine of consequential damages restricts recovery, Sylvester can recover, as damages for breach of the contract, not only the $10,000 purchase price, but also the $60,000 expended on building his home. [Note: he can recover the $10,000 due to the deed covenant or the contract; but he cannot recover the sum "twice."]

7. Evander conveys Greenacre, for $150,000, to Mike by general warranty deed with the "usual warranties." The contractual obligation to provide marketable title merged upon Mike's acceptance of the deed. Mike is a nice person, but he is not a shrewd investor, and the land's value soon drops to $100,000. Mike has a job offer from a prestigious law firm, however, and goes forward and spends $110,000 to build a house. The true owner, Dean Shaw, appears and -- without a glimmer of pity -- evicts Mike. Mike is mad, and really gives Evander an earful. What damages, if any, can Mike recover from his former friend Evander?

7. Evander is liable for breach of the present covenants of seisin and right to convey and future covenants of quiet enjoyment and warranty. The maximum limit of Evander's liability is the amount of consideration received: $150,000. Most courts, however, would likely limit Evander's liability to the value of the land (minus the house) at the time of the breach: $100,000. [Note: some of these rules may be altered by state statute. Check your local listings.]

7. Floyd conveys the barbershop to Gomer, who goes into possession. Floyd then conveys the shop to Bea. Bea records. Gomer records. Who wins in a race-notice state, Gomer or Bea?

7. Most states hold that Bea will be charged with inquiry notice of Gomer based on his possession. Hence, although Bea recorded first, she did not take without notice. Gomer wins. [See book at page 552 note 5.]

8. Ken has no interest in Blackacre, but does not know that. He conveys to Barbie by quitclaim deed "all my interest in Blackacre that I presently own." Ken thereafter acquires Blackacre from the true owner. Who wins, Ken or Barbie?

8. Ken. Estoppel by deed does not apply because Ken only promised to convey "all interest in Blackacre that I presently own." Since Ken did in fact convey all his interest in Blackacre (nothing), he did not "falsely" convey, and therefore courts of equity would not find him estopped to protest a shifting of the after-acquired interest to Barbie.

1. Uma conveys by general warranty deed with the "usual warranties" to Denzel for $30,000. After accepting the deed, Denzel discovers there is (1) an underground sewer line easement running across his land that connects his neighbor's house to the main line; and (2) an easement for an existing overhead power line. Moreover, Uma failed to pay back taxes totaling $6000 (she claims she forgot). Antonio, who became an appraiser after dropping out of law school because it was boring, expertly estimates that the presence of the underground easement reduces the property's value by $1000, and the presence of the unsightly power line reduces the value of the land by $5000. What damages, if any, can Denzel recover from forgetful Uma?

8. Uma has breached the present covenant against encumbrances due to the presence of the undisclosed underground sewer line easement and the failure to pay off back taxes prior to closing. It is doubtful, however, that the presence of the power line easement is a breach of the covenant against encumbrances given its highly visible nature. Denzel can recover the cost of removing the monetary encumbrance ($6000 to pay off back taxes) and can also recover damages attributable to the diminution in value due to the non-monetary encumbrance ($1000, which is the amount the underground sewer line easement reduced the land's value.)

9. Same facts, except Ken conveyed "a fee simple absolute in Blackacre and warrants such title and covenants to defend against world."

9. Barbie owns as estoppel by deed applies. Since Ken promised to convey an interest that he did not have, Ken is estopped to protest the shifting of the (after-acquired) interest to Barbie.

Mariah borrows $10,000, secured by a recorded mortgage on Blackacre. Mariah then sells Blackacre to Beyonce for $10,000 by deed "with limited warranties," but without mention of the mortgage. Beyonce fails to do a title search and thus has no knowledge of the mortgage. Beyonce then sells the land (which she modestly renamed as "Beyonce-ville") to Celine by general warranty deed with the "usual warranties" for $9,000. After the closing, Beyonce left the country and is now reputed to own a donut store in Norway. Mariah also is nowhere to be found, and the mortgagee (none other than Katy Perry) threatens to foreclose. Celine has to pay $10,000 to prevent foreclosure. Can Celine prevail in a suit against Mariah or Beyonce for breach of the covenant against encumbrances? If she can, what would the damages be?

9. The covenant against encumbrances is a present covenant and does not run with the land. Moreover, our jurisdiction prevents causes of action from being assigned. Thus, Celine cannot sue Mariah (the remote grantor) for breach of the covenant. Celine can sue Beyonce -- if she can find her. Beyonce conveyed by a general warranty deed, which means that her covenants also covered predecessors in interest. Therefore, the fact that it was Mariah, not Beyonce, that caused the encumbrance makes no difference. [If Beyonce had conveyed by limited warranty deed, Celine would be out of luck.] NOTE: if causes of action were permitted to be expressly or impliedly assigned in our jurisdiction, Celine could sue Mariah. Mariah gave Beyonce a limited warranty deed. She breached the covenant against encumbrances because she personally caused an encumbrance. The statute of limitations was triggered at the Mariah-Beyonce closing. Assuming it has not expired, Celine could sue Mariah if our jurisdiction followed the minority view that Beyonce 's cause of action against Mariah should be deemed to have been impliedly assigned when Beyonce conveyed to Celine.  WHAT ABOUT DAMAGES?? In a suit by Celine against Beyonce (assuming availability), Celine could recover $9000. If Celine is deemed to have been assigned Elvis's cause of action and the statute of limitations has not expired, Celine can recover damages against Mariah; however, the amount of damages recoverable is unclear. As noted in the St. Paul Title case (page 517), states are split on whether Celine is entitled to recover $9000 (the consideration paid to Celine's immediate grantor -- Beyonce) or whether she may recover $10,000 (the consideration paid to the original grantor -- Mariah). Here: Celine had to pay $10,000 to remove the encumbrance, and since this was amount of original consideration received by Mariah - it seems Celine should get $10,000 from Mariah (assuming, again, she is entitled to recover damages from her at all). In any event, Celine insists that her heart will go on. IS NOTICE/KNOWLEDGE A DEFENSE? -- The Stoebuck hornbook discusses (at page 909) the issue of whether a grantee's knowledge (constructive or actual) of an encumbrance is a defense when the grantor is accused of breaching the covenant against encumbrances. The hornbook characterizes the cases as "badly divided."

Death escrow

A "death escrow" will work only if the grantor cannot recall the deed. If the grantor gives up the right of recall, the delivery to the escrow immediately (1) reserves a life estate in the grantor, and (2) gives the grantee a vested remainder in FSA.

DEED COVENANTS

A buyer who does not receive the title as promised may seek damages for breach of deed covenants (if included in the deed).

Should you record your document?

A deed, easement, mortgage, residential lease, oil & gas lease, etc. -- does not have to be recorded to be valid as between the parties involved. So why record? Answer: to be protected against other parties who may seek to challenge and "take free of" the transaction. If you don't record, you may lose your rights!

What is a title?

A legal concept. Describes the ownership rights,

When is the document outside the chain of title?

A recorded document is "outside the chain of title" and does not give notice if it is too hard (or impossible) to find. If it is in the chain of title - there is constructive notice.

HYPO #2: In this problem the period of adverse possession is 6 years; the period needed to acquire an easement by adverse use is 6 years; and the statute of limitations for suing on a breach of a title covenant is 4 years. 1988: Mick inherits land; but does not live on the land. 1990: Keith is deeded the land at issue from a woman who thinks she owns it, but in fact she does not. Keith moves onto the land and possesses all of it. 1996: Keith completes adverse possession and now owns the land. Keith moves to another state. 1998: Mick sells the land to Eric for $100,000. Mick uses a general warranty deed that contains three title covenants: seisin, encumbrances, and quiet enjoyment. Eric does not possess the property. 2000: Eric sells the land to Kanye for $110,000. Eric uses a general warranty deed that contains three title covenants: seisin, encumbrances, and quiet enjoyment. Kanye does not possess the property. 2002: Kanye sells the land to Whitney for $120,000. Kanye uses a general warranty deed that contains three title covenants: seisin, encumbrances, and quiet enjoyment. Whitney does not possess the property. 2004: Whitney sells the land to Celine for $135,000. Whitney uses a limited warranty deed that contains three title covenants: seisin, encumbrances, and quiet enjoyment. Celine does not possess the property. 2010: Whitney dies. 2013: Keith returns and files a quiet title action against Celine. The court holds that Keith owns the land (because none of the subsequent grantees possessed). 2014: Celine is mad. Because her immediate grantor Whitney is dead, Celine instead sues Kanye, Eric, and Mick for breach of title covenants and seeks damages. What result?

ANALYSIS Mick →Eric→Kanye→Whitney→Celine (But Keith got title by AP before Mick sold to Eric) Celine cannot sue Kanye for breach of his present covenants because in most states only Kanye's immediate grantee (Whitney) could have sued Kanye for breach of present covenants given by Kanye. In any event, the chance to sue Kanye for breach of his present covenants (given in 2002) expired in 2006. Celine, however, can sue Kanye for breach of the future covenant of quiet enjoyment, which was breached in 2013 when adverse possessor Keith sued and received judicial confirmation of his title. [Key point: future covenants "run with the land" - meaning that plaintiffs such as Celine can sue people (such as Kanye) who gave future covenants even though the defendant (Kanye) was not the plaintiff's grantor]. Damages, however, are limited to the money received by Kanye in exchange for the promises given. So Celine can only recover $120,000 from Kanye. [This will disappoint Celine if the land is currently worth more than $120,000.] Guess what? If Kanye does have to pay Celine $120,000, Kanye can turn around and sue Eric (since Eric also gave the quiet enjoyment future covenant that has now been breached), but Kanye can only recover $110,000 from Eric, since that is the amount of money Eric received in exchange for the promises he gave in his deed to Kanye. Guess what? If Eric has to pay $110,000, Eric can sue Mick (since Mick also gave the quiet enjoyment future covenant that has now been breached), but Eric can only recover $100,000 (the amount Mick received in exchange for the promises given by Mick). HYPO VARIATION #1: Suppose Whitney was alive. Could Celine recover damages from Whitney? No. Whitney gave a limited warranty of quiet enjoyment, and the problem (adverse possession) pre-dated Whitney's ownership, so Whitney did not breach her (limited) promise. HYPO VARIATION #2: Suppose Whitney, Kanye, and Mick are dead. Could Celine sue Eric? Yes, but Celine can only recover $100,000 from Eric, since that is the amount of money Eric received in exchange for the promises he gave.

What if SMITTY sues ANNA?

ANNA, by using a GWD, gave BEN covenants of seisin, encumbrances, and quiet enjoyment for her period of ownership and prior periods of ownership. But the problem arose after ANNA's ownership. SMITTY cannot recover from ANNA.

In 1962, MARK owned Lot 1, and ANNA owned the adjacent Lot 2, located just east of Lot 1. In 1970, ANNA conveyed Lot 2 to BEN by General Warranty Deed (GWD) for $100. In 1972, MARK put up a fence that encompassed half of Lot 2. MARK thus began in 1972 (unknowingly) to adversely possess half of Lot 2. In 1974, BEN conveyed Lot 2 to CARL by Limited Warranty Deed (LWD) for $150. In 1982, the 10-year adverse possession period ends. MARK met all elements. Fence is blown away in a windstorm and no signs of it remain. In 1984, CARL conveyed Lot 2 to DORA by Limited Warranty Deed (LWD) for $180. In 1995, DORA conveyed Lot 2 to ELVIRA by General Warranty Deed (GWD) for $200. In 2000, ELVIRA conveyed Lot 2 to FRED by Quitclaim Deed (QC) for $250. In 2003, FRED conveyed Lot 2 to SMITTY by Limited Warranty Deed (LWD) by $300. In 2004, MARK sues and successfully asserts his right to half of Lot 2 that MARK adversely possessed from 1972 to 1982. It is 2005. SMITTY has come to you for advice. He no longer owns the western half of Lot 2. He wants to sue anybody and everybody they can. Please advise. The General Warranty Deeds and the Limited Warranty Deeds in this problem both contain the following covenants: (1) seisin; (2) encumbrances; and (3) quiet enjoyment. The jurisdiction has a six-year statute of limitations for suing for a breach of a deed covenant. What result if SMITTY sues: 1. Fred? 2. Elvira? 3. Dora? 4. Carl? 5. Ben? 6. Anna?

ANSWER 1. FRED is not liable to SMITTY. FRED gave a LWD to SMITTY in 2003. The adverse possession title problem arose in 1982 - before Fred received his deed - so FRED is not liable. [Note: if FRED had used a general warranty deed, FRED would have been liable for breach of the present covenant of seisin (in 2003) and for breach of the future covenant of quiet enjoyment (in 2004) Covenants given in a GWD would be not only for his period of ownership, but also for prior periods of ownership.] 2. ELVIRA is not liable. She used a quitclaim deed. 3. DORA breached the present covenant of seisin given to ELVIRA in her GWD in 1995, and breached the future covenant of quiet enjoyment in 2004, when the court declared MARK the owner of the strip of land. SMITTY, however, cannot sue DORA on the present covenant given to ELVIRA because in most jurisdictions the only person who can sue on a present covenant is the immediate grantee (ELVIRA). Plus, in jurisdictions such as Iowa that allow an immediate grantee (ELVIRA) to assign this cause of action to subsequent grantees, the statute of limitations runs from 1996, so it is too late for SMITTY to sue on the breach of the present covenant of seisin. SMITTY can sue DORA on the future covenant of quiet enjoyment, which was breached in 2004. Damages would be limited to the half of the $200 that DORA got in return for promise. 4. CARL gave DORA a LWD in 1984 and thus promised DORA that there was no breach of seisin during CARL's ownership (1974-1984). But in fact there was: CARL lost FSA to MARK in 1982. So even though CARL used a LWD, CARL breached the present covenant of seisin when he delivered his deed in 1984 to DORA. There was also a breach of the future covenant of quiet enjoyment in 2004. SMITTY cannot sue CARL for breach of the present covenant (for reasons set forth in #3), but SMITTY can sue CARL on the future covenant of quiet enjoyment. Damages would be limited to the half of the $180 that CARL got in return for promise. [NOTE: I am assuming that SMITTY would sue CARL because DORA was dead, unavailable, or broke. SMITTY cannot sue both CARL and DORA and end up with a 'double' recovery. If SMITTY sues DORA, DORA could turn around and sue CARL.] 5. BEN, by using a LWD, promised CARL in 1974 there was no breach of seisin during BEN's ownership (1970-1974). I agree with states that hold that there was in fact no breach of seisin during BEN's ownership because MARK did not get FSA by adverse possession until 1982. I believe, however, some states hold that BEN did breach the present covenant of seisin because he promised CARL in 1974 that he owned FSA, but when he conveyed BEN owned FSA subject to a two year adverse possession claim by Mark. Is an ongoing (but not completed) AP claim a breach of seisin? I would argue it is not, since it can be easily stopped. Apparently there is a split on this issue. 6. ANNA, by using a GWD, gave BEN covenants of seisin, encumbrances, and quiet enjoyment for her period of ownership and prior periods of ownership. But the problem arose after ANNA's ownership. Result: SMITTY cannot sue ANNA. SMITTY's best bet is to sue DORA for $100. Otherwise, SMITTY should sue CARL for $90. Note that, in either case, SMITTY will not obtain full monetary recovery, since SMITTY paid $300 in 2003 (and ½ of $300 is $150.)

"NOTICE" RECORDING ACT

An unrecorded document (deed, mortgage, easement, lease) is invalid against a subsequent purchaser who takes without notice. Remember: if the first person records immediately, the second person will have (constructive) notice! ALWAYS PRACTICE PROMPT RECORDATION!

Otto conveys Blackacre to Anna. A day later, Otto conveys Blackacre to Ben. Common law rule Recording act

Anna wins under the common law rule. However, if Ben can use a recording act, he can possibly displace the common law rule & prevail over Anna!

QUESTION 1. A large tract of land was located in a jurisdiction that has adopted the following statute: No conveyance or mortgage of an interest in land is valid against a subsequent purchaser for value without notice thereof whose conveyance is first recorded. The man who owned the land owed money to a woman, and in satisfaction of this debt, the man conveyed the property to her. Although the woman intended to have the deed recorded, she mistakenly failed to do so. Two years later, the man borrowed money from a bank and, to secure the loan, executed a mortgage deed on the property. The bank promptly recorded this mortgage. Three months later, the man, just before he died, donated the property by general warranty to his son, who did not know about the prior events. The son recorded the deed and entered into a contract with his friend to sell him the property. The next month, the woman discovered that the deed in her safe was not recorded, and so, without notice of any of the prior transactions, the woman recorded the deed. A month after that, the friend paid the son full value for the property, and without actual knowledge of any of the other transactions regarding the property, the friend had the deed duly recorded. By the end of the next year, the friend had expended substantial sums of money on the property. However, when he put up the property as security for a loan from the bank, he learned for the first time of the woman's claim. In a suit between the friend and the woman, which of the following statements most accurately describes the probable outcome? A. The friend would prevail, because the money he paid for the property, along with the money expended since then, was far in excess of what the woman paid, and under equity, the friend would be deemed the owner; however, he would have to reimburse the woman for what she paid for the property. B. The friend would prevail, because under the doctrine of equitable conversion, his "right" to the property preceded the woman's recordation, and thus whatever right she may have had would have been terminated before she could record. C. The friend would prevail, because he purchased from the son, whose deed was recorded before the woman's deed. D. The woman would prevail, because she recorded first.

Answer to Question 1 - CORRECT ANSWER IS "D". The woman would prevail because she recorded her deed before the friend recorded his deed. The jurisdiction in this question has a race-notice statute, under which a subsequent bona fide purchaser is protected only if she records before the prior grantee. While the friend was a bona fide purchaser, he did not record his interest in the property before the woman did; thus the woman will prevail. "A" is incorrect because priority under a race-notice recording act, such as the one in this question, is determined by the subsequent purchaser's status as a bona fide purchaser and on the basis of who records first. Courts do not determine ownership by balancing the equities on the basis of who spent the most money. "B" is incorrect because the doctrine of equitable conversion, wherein equity regards the purchaser in a land sale contract as the owner of the real property, does not change the result under the recording statute. The woman will prevail because she recorded first. "C" is incorrect because the friend cannot rely on the son's recording of his deed; the woman recorded her interest before the friend recorded his. Furthermore, even if the issue were whether the friend had actual notice of the woman's interest, the friend could not rely on the "shelter rule" that protects transferees from a bona fide purchaser, because the son was not a purchaser for value and therefore not protected by the recording statute.

QUESTION 2. A landowner gratuitously conveyed his interest in land to a friend by quitclaim deed. The friend promptly and properly recorded her deed. Six months later, the landowner conveyed his interest in the same land to an investor for $50,000 by warranty deed, which was promptly and properly recorded. As between the friend and the investor, who has the superior right to title to the land? A. The friend, regardless of the type of recording statute. B. The friend, because she recorded prior to the investor's recording. C. The investor, regardless of the type of recording statute. D. The investor, because it took by warranty deed rather than quitclaim deed.

Answer to Question 2 - CORRECT ANSWER IS "A". Because the friend recorded prior to the subsequent conveyance, she has the superior right to title regardless of the type of recording statute. A conveyance that is recorded can never be divested by a subsequent conveyance through operation of the recording statutes. By recording, the grantee gives constructive (or "record") notice to everyone. Hence, proper recording prevents anyone from becoming a subsequent bona fide purchaser ("BFP"). Because the landowner's conveyance to the friend was recorded at the time of the landowner's conveyance to the investor, the investor cannot prevail. The investor will clearly lose under a pure race statute because the friend recorded first. The investor will also lose under notice and race-notice statutes because the conveyance to the friend was recorded at the time of the conveyance to the investor. The investor, therefore, had record notice and cannot claim the protection that these types of statutes provide for subsequent purchasers for value who take without notice. Thus, "A" is correct and "C" is incorrect. The fact that the friend is merely a donee rather than a BFP does not mean that her recording has no effect. It is only the subsequent taker who has to be a BFP rather than a donee to utilize the recording statute. The prior grantee, regardless of her status, protects her interest by recording because it prevents anyone from becoming a subsequent BFP. "B" is incorrect because, as noted above, the friend will prevail under any type of recording act, but not necessarily because she recorded prior to the investor's recording. If the jurisdiction has a notice statute, whether the friend recorded prior to the investor's recording is irrelevant. Rather, it is the fact that the friend recorded prior to the investor's purchase that gives the friend superior title in a notice jurisdiction, because the investor would have record notice of the conveyance and thus would not qualify as a BFP. "D" is incorrect because the quitclaim/warranty deed distinction does not affect who has title to the land; that status merely affects the parties' respective causes of action and ability to recover against the landowner.

QUESTION 3. A property owner conveyed commercial property in joint tenancy to his two daughters as a birthday present. The deed from the property owner to his daughters was never recorded. After a few years, the property owner no longer wished the daughters to control valuable commercial property, and so he demanded that they return the deed with which he conveyed the property to them. The daughters returned the deed, and the property owner destroyed it. The property owner then sold and conveyed the property to a third party. The jurisdiction's recording act states the following: "No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof whose conveyance is first recorded." If the third party brings a quiet title action and is successful, which of the following best explains this result? A. As owner of the property, the property owner was entitled to convey it to the third party. B. The daughters failed to record the deed they took from their father. C. The daughters failed to record their deed, and the third party was unaware of their interest when she paid the property owner market value for the property. D. The daughters failed to record their deed, the third party was unaware of their interest when she purchased the property, and the third party recorded her deed.

Answer to Question 3 - CORRECT ANSWER IS "D". The third party's success will be because the daughters failed to record their deed, the third party was unaware of their interest when she purchased the property, and the third party recorded her deed. The property owner had no interest in the property that he conveyed to the third party; thus, "A" is wrong. However, if the third party is a bona fide purchaser for value who records first, the deed to the daughters would not be good against the third party's deed. "B" and "C" are wrong because they do not contain every element necessary for the third party to prevail.

Shelter rule O deeds to A Deed is not recorded O deeds to B No notice of A's deed. Records. B sells to C C has actual notice of A's deed Kevin: in a lawsuit between C and A, who wins in "notice" state?

B took without notice so would win over A. B shelters C. C wins over A despite notice.

Who wins under notice recording act? May 10 O to A May 11 O to B. B had no notice of O to A deed May 15 A records the O to A deed May 22 B records the O to B deed

B wins if a "notice" act governs. Why? When B accepted the deed on May 11, B took without actual or constructive notice of the O to A deed.

Who wins under race recording act? O to A. A does not record. O to B. B knows about O to A. B records.

B wins if a race recording act governs the dispute.

May 10 O to A May 11 O to B. B had no notice of O to A deed May 15 A records the O to A deed May 22 B records the O to B deed. Who wins? Who wins under notice-race?

B wins in notice jurisdiction. But A wins in a notice-race jurisdiction. Why, says Kara? It is very simple Kara. B met his 1st requirement on May 11 (took without notice) but B did not meet his 2nd requirement (record first). ** If B had recorded on May 13, B wins!

Jamie Lee to Freddie ($$) Jamie Lee to Jason ($$) Jason records Freddie records Freddie vs. Jason if Jason paid?

BFP Jason wins

How to transfer title

COMMON LAW: you conduct the oral ceremony of "feoffment by livery of seisin" on the land [Supplement p.41] TODAY: title is transferred by a deed that is (1) properly executed and (2) delivered.

QUESTION 7. A recording act that provides: "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, unless the conveyance is recorded," is a __________. A. notice statute B. statute of frauds C. race-notice statute D. race statute

CORRECT ANSWER IS "A". A recording act that provides: "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, unless the conveyance is recorded," is a notice statute. Under a notice statute, a later purchaser of land will prevail over an earlier grantee if she takes without actual or constructive (e.g., record) notice of the earlier grant. The above language is not a race-notice statute. An example of a race-notice statute is: "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." Under a race-notice statute, a later purchaser will prevail over an earlier grantee only if she takes without actual or constructive (e.g., record) notice of the earlier grant and records before he does. The above language is not a pure race statute. An example of a pure race statute is: "Any conveyance of an interest in land, other than a lease for less than one year, shall not be valid against any subsequent purchaser whose conveyance is first recorded." Under a race statute, notice is irrelevant. The first party to record, regardless of the date of her conveyance, wins. The Statute of Frauds is not a recording act. Every conveyance of an interest in land with a duration long enough to bring into play a particular state's Statute of Frauds (typically one year) must be evidenced by a writing, signed by the party to be charged.

QUESTION 8. In order to prevail over a prior grantee under a race statute, when must a subsequent transferee record? A. Before the prior grantee records. B. As soon as she receives her deed. C. A subsequent transferee will prevail over a prior grantee under a race statute without recording. D. Before she learns of the prior grant.

CORRECT ANSWER IS "A". In order to prevail over a prior grantee under a race statute, a subsequent transferee must record before the prior grantee records. A pure race statute is a recording act that alters the common law rule of "first in time, first in right"—i.e., the first grantee prevails. Under this statute, the first party to record, wins. Thus, a later transferee can take title if she wins the race to record. Under a race statute, a subsequent transferee need not record before she learns of a prior grant. As explained above, the party who prevails is the party who wins the race to record. Thus, a later transferee can take title even if she knew of the prior grant. Also, a subsequent transferee need not record as soon as she receives her deed. Although it would be wise to record immediately, she must record only before the prior grantee records. As between those two parties, the first to record wins. A subsequent transferee will NOT prevail over a prior grantee under a race statute without recording. Under this statute, the first party to record, wins. Thus any party may prevail, regardless of the date of her conveyance, provided she is first to record. By contrast, under a notice statute, a subsequent bona fide purchaser will prevail regardless of whether he records.

QUESTION 6. In order to prevail over a prior grantee under a notice statute, when must a subsequent bona fide purchaser record? A. Before the grantor records. B. Before she learns of the prior grant. C. A bona fide purchaser will prevail over a prior grantee under a notice statute without ever recording. D. Before the prior grantee records.

CORRECT ANSWER IS "C". A bona fide purchaser will prevail over a prior grantee under a notice statute without ever recording. A notice statute is a recording act that alters the common law rule of "first in time, first in right" to protect a subsequent bona fide purchaser ("BFP")—i.e., one who gives valuable consideration and lacks notice of the prior conveyance. A notice statute requires only that the subsequent purchaser have no actual or constructive (i.e., record or inquiry) notice at the time of her conveyance. While a prior grantee can prevent the existence of a subsequent BFP by recording, a BFP will be protected even if she does not record. A subsequent BFP need not record before she learns of the prior grant. As is explained above, notice statutes protect subsequent BFPs regardless of whether they record. Additionally, the notice requirement of BFP status is measured from the time of the conveyance—not from the time of recording. Similarly, a subsequent BFP under a notice statute need not record before the grantor records. She will prevail simply because she took for value and lacked notice of the prior grant at the time of her conveyance. Also, a subsequent BFP need not record before the prior grantee records. This is the requirement only of race and race-notice statutes.

QUESTION 4. Which of the following parties cannot be protected as a bona fide purchaser of land? A. A donee from a bona fide purchaser of the land. B. A purchaser from an heir to the land. C. A devisee of the land. D. A mortgagee of the land.

CORRECT ANSWER IS "C". A devisee of the land cannot be protected as a bona fide purchaser ("BFP") of land. Notice and race-notice recording acts protect BFPs from prior unrecorded conveyances of the same property. A BFP is a purchaser who takes land without notice of a prior instrument and pays valuable consideration. Donees, heirs, and devisees are not BFPs because they do not give value for their interests; i.e., they are not purchasers. A mortgagee of the land can be protected as a BFP of land. Mortgagees for value (but not those who receive a mortgage only as security for a preexisting debt) are treated as purchasers, either expressly by recording acts or by judicial classification. Thus, mortgagees for value who take without notice can be protected as BFPs. A purchaser from an heir to the land can be protected as a BFP of land. Donees, heirs, and devisees themselves are not purchasers and thus cannot be BFPs. However, one who buys land from such a party will be protected against a prior unrecorded conveyance from the record owner. A donee from a bona fide purchaser of the land can be protected as a BFP of land. Under the shelter rule, anyone who takes from a BFP will be treated like a BFP (i.e., will prevail against any interest her transferor would have prevailed against). This rule exists to protect the BFP by preserving his ability to convey property. It applies even when his transferee had actual knowledge of a prior unrecorded interest or did not take for substantial pecuniary value (i.e., was a donee). However, a non-BFP who previously had title cannot acquire BFP status by selling the land to a BFP and then repurchasing it.

QUESTION5. Inordertoprevailoverapriorgranteeunderarace-noticestatute,whenmustasubsequent bona fide purchaser record? A. Before she takes possession of the property. B. Before she learns of the prior grant. C. Before the prior grantee records. D. A bona fide purchaser will prevail over a prior grantee under a race-notice statute without recording.

CORRECT ANSWER IS "C". In order to prevail over a prior grantee under a race statute, a subsequent transferee must record before the prior grantee records. A pure race statute is a recording act that alters the common law rule of "first in time, first in right"—i.e., the first grantee prevails. Under this statute, the first party to record, wins. Thus, a later transferee can take title if she wins the race to record. Under a race statute, a subsequent transferee need not record before she learns of a prior grant. As explained above, the party who prevails is the party who wins the race to record. Thus, a later transferee can take title even if she knew of the prior grant. Also, a subsequent transferee need not record as soon as she receives her deed. Although it would be wise to record immediately, she must record only before the prior grantee records. As between those two parties, the first to record wins. A subsequent transferee will NOT prevail over a prior grantee under a race statute without recording. Under this statute, the first party to record, wins. Thus any party may prevail, regardless of the date of her conveyance, provided she is first to record. By contrast, under a notice statute, a subsequent bona fide purchaser will prevail regardless of whether he records.

Phil owned 40 acres, but Gloria got title to 4 of the acres by adverse possession. Phil then purported to sell all 40 acres to Claire, who had no notice of Gloria's ownership of 4 of the acres. Claire recorded the deed.

Claire can prevail over Gloria only if Claire can (1) invoke the recording act; and (2) win under the recording act. Suppose we have a notice recording act. Can Claire invoke (use) the recording act?

Phil sold 4 of his 40 acres to Gloria who did not record the deed. Phil then purported to sell 40 acres to Claire, who had no notice of the Phil-Gloria deed.

Claire can prevail over Gloria only if Claire can (1) invoke the recording act; and (2) win under the recording act. Suppose we have a notice recording act. Can Claire invoke (use) the recording act?

DAMAGES

Complete failure of title: damages are limited to the consideration received by the covenantor in exchange for promises given. Partial failure of title: same principle, except the damages are proportional to the loss Encumbrance violation: get cost of removal or diminution in value due to encumbrance

Limited Warranty Deed

Contains 1 to 6 of the deed covenants, but limits the scope of the promises [the promises only apply to defects arising during the grantor's ownership

General Warranty Deed

Contains 1 to 6 of the deed covenants, with no limits on the scope of the promises [covers defects arising before or during the grantor's ownership]

Quitclaim Deed

Contains no deed covenants

What result if SMITTY sued DORA?

DORA breached the covenant of seisin in 1995, but SMITTY cannot recover from DORA. In most jurisdictions only the immediate grantee (ELVIRA) can sue on a present covenant. Even if ELVIRA's claim was transferable, the 6 year limitations period ended in 2001.

BY DOCUMENT

Deeds, leases, express easements, mortgages, and other written documents that create or transfer rights

To transfer title, the deed must be (1) properly executed and (2) delivered

Delivery is a question of intent. Did the grantor intend that the deed effect a present transfer of a property interest?

BREACH OF COVENANTS -- WHEN?

Depends whether covenant is present covenant or future covenant

Future covenants of quiet enjoyment and warranty "The covenants of warranty and of quiet enjoyment (QE) are identical." Watson: "So why have both???"

Do not confuse: Landlord's covenant of quiet enjoyment Grantor's covenant of quiet enjoyment

ANNA hands a deed to CARL and says to give the deed to BEN when ANNA dies. ANNA reserves the right to revoke the escrow. ANNA then dies with a will leaving all to DOUG. CARL gives the deed to BEN. Who owns?

Doug. Escrow did not work.

FRED gave a LWD to SMITTY in 2003. The adverse possession title problem arose in 1982 before Fred transacted with ELVIRA in 2000. FRED is not liable. What result if SMITTY sues ELVIRA?

ELVIRA is not liable. She gave Fred a quitclaim deed that contained no deed covenants.

O conveyed Blackacre to A by warranty deed. A did not record her deed or occupy Blackacre. O subsequently died, leaving all his property to H, who then conveyed Blackacre to B by quit claim deed for good and valuable consideration. B knew nothing of the earlier conveyance to A, and did not record. Who owns Blackacre?

Event Courthouse O to A GWD --------- O to H devise --------- H to B QCD B is a BFP with no notice of A Race: A currently owns (under common law) because B has not recorded and thus has not trumped by winning the race. Notice: B is a BFP who took without notice. B wins. N/Race: B is a BFP who took without notice, but A currently owns (under common law) because B has not recorded and thus has not satisfied the requirements of the notice-race recording act

FRED to BARNEY by GWD for $10,000 BARNEY to MR. SLATE by LWD for $12,000 MR. SLATE to WILMA by QCD for $13,000 BETTY, who adversely possessed prior to FRED's arrival, sues and evicts WILMA. WILMA sues FRED. Result?

FRED breached seisin but WILMA cannot sue on present covenant. FRED breached QE/W when BETTY won lawsuit. Damages limited to what FRED received ($10,000).

Otto owns Blackacre. Grace conveys Blackacre to Gene by GWD. Gene conveys Blackacre to Will by QCD. Otto evicts Will. Will sues Gene. Result? What result if Will sues Grace?

Gene made no promises. Gene wins. Most say Will cannot sue remote grantor Grace on a present covenant. But the future covenants were breached when Will was evicted. Will can sue on them.

1. Grace conveys to Gene by general warranty deed with the "usual warranties." Grace had no title to convey, and Gene is evicted by the true owner. What covenants, if any, were breached?

Grace has breached the present covenants of seisin and right to convey, as well as the future covenants of quiet enjoyment and warranty.

SEISIN

Grantor owns (is seised of) the estate that the grantor purports to convey (she has what she says she has)

SEISIN and RIGHT TO CONVEY Could a grantor be found to have breached the "right to convey" covenant but not the covenant of seisin?

Grantor owns the 30 acres as he promised, but he cannot convey title because he is under age or lacks mental capacity.

Zack: Did Hatcher have constructive notice of the Whartenby-Hall lease? [Use columns to write down the transactions and then "do" the title search] USA→X deed X→Whartenby deed Whartenby→Hall lease Whartenby→Willard deed Willard→Hatcher deed ZACK: Is the lease in Hatcher's chain of title? Is there constructive notice? Did Hatcher have actual notice of the Whartenby-Hall lease? Hatcher did not look at records and was never told about it.

Held: Hatcher did not have constructive notice of the Whartenby-Hall lease! It is in the chain of title, but a defectively notarized document does not impart constructive notice.

ESTOPPEL BY DEED DOCTRINE

If a grantor gives the covenant of SEISIN and promises a title that she lacks, but thereafter acquires the title, the newly acquired title passes by operation of law to the original grantee! THEORY: The grantee relied on the promise, which now can be fulfilled, so the acquired title passes automatically.

Gimme Shelter!

Include the shelter rule in analysis: First: determine if #2 can win by herself under the recording act. Second: if not, look to see if #2's grantor would prevail under the recording act. This will 'shelter' #2.

RACE RECORDING ACT

It is a race to the courthouse! First to record wins, even if it is the 2nd grantee. It makes no difference if the 2nd person who first records knew of the prior conveyance. Fascinating!

Jamie Lee to Freddie ($$) Jamie Lee to Jason (gift) Jason records Freddie records Freddie vs. Jason?

Jason, as a donee, cannot use the recording act to win

12. Beyonce conveys "Destiny-Acre" to Chris, who does not record. Beyonce then conveys the same land to Rihanna, who takes without notice of Chris and records. Chris learns of this second transaction and goes ballistic. He hires Usher as his attorney and hauls both Beyonce and Rihanna into court. The suit is widely publicized, and all parties involved are interviewed on television. Rihanna wants out, so she conveys to Lil Wayne, who watches TV and has actual knowledge of Beyonce-Chris-Rihanna dispute. Upon Usher's advice, Chris now sues Lil Wayne as well. Lil Wayne cannot afford top legal talent, so he hires Watson. Watson advises him that he is in big trouble since he had actual knowledge of the Beyonce-Chris deed when he was conveyed the property by Rihanna. Is this sound advice, or has Watson erred again?

Lil Wayne should get a new lawyer. Once Rihanna recorded without notice of Chris, Rihanna prevails as against Chris under all three recording acts. From that point on, all subsequent purchasers in Rihanna's chain of title are also protected, even if they had actual notice of the Beyonce-Chris deed. Watson has obviously forgotten about the "shelter rule." The rationale behind the "shelter rule" is this: a recording act must protect not only the bona fide purchaser's title, but also the BFP's ability to transfer equally good title to someone else. Otherwise, Chris could prevent Rihanna, who has good title, from conveying good title.

Suppose you want to buy land from Dennis Carlisle. Let's do a title search!

Look in the most recent GRANTEE INDEX book under "C" to see if "Carlisle, Dennis" is listed. Once you work back to the 1976 Grantee Index book, you will find that the deed to Dennis Carlisle from James & Cheryl Owen, dated June 6, 1976, was recorded on July 14, 1976. Make a note of the volume and page number. Now look in the 1976 grantee index book under "O" to see when James/Cheryl Owens got the land. You will see in the 1976 index book that a deed, dated 03-18-1976 from Albert Owen to James and Cheryl, was recorded on 03-08-1976. Now: keep looking in the grantee index books under "O" to see when Albert Owen got the land. What will you find? ABSOLUTELY NOTHING!

1799 USA-Boone 1799 GWD (FSA) 1966 Boone-Sanders 1966 GWD (FSA) 2010 Sanders-Pitino 2010 GWD (FSA) 2011 Sanders-Morris 1999 Easement 2015 Pitino-Calipari 2015 GWD (FSA) Last week Vinny Morris started walking across John Calipari's land. Calipari says he had no constructive notice of Morris' easement. Is that correct?

Maybe. It depends on type of title search required in Kentucky!

What if Hatcher had seen the lease?

Most states say that your are charged with actual notice of a defectively acknowledged document if you see it or learn about it. [P.551 n.3]

Can Claire invoke (use) the recording act?

No! Recording acts do not apply to property rights that arise by operation of law (Gloria has title, but no document to record). The recording act cannot help Claire here, so we must apply the "first in time" rule. Claire loses.

1799 USA-Boone 1799 GWD (FSA) 1966 Boone-Sanders 1966 GWD (FSA) 1999 Sanders-Cox 1999 Easement 2010 Sanders-Pitino 2010 GWD (FSA) 2015 Pitino-Calipari 2015 GWD (FSA) Last week Troy Cox started walking across John Calipari's land. Calipari says he had no constructive notice of Cox's easement. Is that correct?

No. Calipari has constructive notice.

Hands deed to escrow with right of recall? Hands deed to Keith? Threw deed in fire? Retrieves deed?

Nothing because no delivery Title transferred No effect whatsoever She burned her hand

What is this? A conveyance not recorded is void as against any person who subsequently purchases the same property in good faith for valuable consideration, from the same grantor, and whose conveyance is first duly recorded.

Notice-Race Statute

On Monday, O conveyed Blackacre to A. A never recorded his deed. On Tuesday, A conveyed Blackacre to B who recorded his deed immediately. On Wednesday, O conveyed Blackacre to C who recorded his deed immediately. Assuming that A, B, and C were bona fide purchasers for value, how is a court likely to decide C's quiet title action against B?

O to A ------ A to B A to B O to C O to C Race: C wins even though B recorded first because B's deed is a "wild deed" Notice: C wins even though B recorded first because B's deed is a "wild deed" so C has no notice of B N/Race: C wins even though B recorded first because B's deed is a "wild deed" so C has no notice of B

What is a properly executed deed?

PAGE 492 n.3: need (1) names of the parties; (2) an adequate description of the land; (3) a statement of intent to convey title; (4) the grantor's signature. Some states require (5) acknowledgement by an official such as a notary; and/or (6) attestation (signatures) of witnesses.

PRESENT: FUTURE:

PRESENT: SEISIN, RIGHT TO CONVEY, ENCUMBRANCES FUTURE: QUIET ENJOYMENT, WARRANTY, FURTHER ASSURANCES

How to prove intent to transfer?

Physically handing the deed to the grantee is strong evidence of intent to transfer title. However, it is not always dispositive, nor is it always necessary! Recordation is not required to validly transfer title.

Six title covenants

Present covenant of SEISIN Present covenant of RIGHT TO CONVEY Present covenant against ENCUMBRANCES Future covenant of WARRANTY Future covenant of QUIET ENJOYMENT Future covenant of FURTHER ASSURANCES

Types of deeds

Quitclaim Deed General Warranty Deed Limited Warranty Deed

Owner conveyed Blackacre to A on August 1 and A recorded on November 1. Owner also conveyed Blackacre to B on October 1. B recorded immediately. In that same year, B conveyed Blackacre to C on December 1. C recorded immediately. Neither B nor C had actual notice of Owner's conveyance to A. However, A had posted "No Trespass" notices (signed by A) on Blackacre promptly upon acquiring title from Owner. Assuming that all deeds were delivered for valuable consideration, how is a court likely to decide A's quiet title action against C?

Race: A recorded first and is in chain of title if do expansive search. But B is BFP who recorded before A so B would beat A on Oct 1. Whether trespass signs gave notice not important in race jurisdiction. B shelters C. C wins. Notice: Does C have constructive notice of O-A? Yes if do expansive search; but no if "shift over". Does C have inquiry notice of A? Yes. So C loses to A. But can B shelter C? No, because B had inquiry notice of A. N/Race: C loses because of notice problems (for C and B) described above.

A title search may go beyond the recorder's office Recorder's Office Auditor's Office Treasurer's Office Probate Court Common Pleas Ct. U.S. District Ct.

Recorder's Office- Deeds/mortgages/leases/liens Auditor's Office - Assessments/recent transfers Treasurer's Office - Current & delinquent taxes Probate Court - Estates/wills/guardianships Common Pleas Ct. - Judgment liens/pending cases U.S. District Ct. - Bankruptcy cases

What if SMITTY sues CARL for breach of seisin? CARL gave DORA a LWD in 1984 and thus promised DORA there was no breach of seisin during CARL's ownership (1974-1984). But CARL lost FSA to MARK in 1982. So CARL breached the (limited) present covenant of seisin in 1984.

SMITTY cannot sue remote grantor CARL for breach of a present covenant.

DORA breached the covenant of seisin in 1995, but SMITTY cannot recover from DORA. In most jurisdictions only the immediate grantee (ELVIRA) can sue on a present covenant. Even if ELVIRA's claim was transferable, the 6 year limitations period ended in 2001.

SMITTY is out ½ of the land promised, so damages are limited to ½ of the $200 that DORA received.

If shiftover ????? USA→AS - deed 2-18-13 AS→AP - deed 4-25-13 AS→TA - lease 1924 AP→AS - deed 1966 AS→DT - deed

Some say when you find AS→AP in grantor index, it is OK to "shift over" and search forward under AP. If so, you will miss the AS→TA deed!

IF EXPAND ????? USA→AS - deed 2-18-13 AS→AP - deed 4-25-13 AS→TA - lease 1924 AP→AS - deed 1966 AS→DT - deed

Some say when you see AS→AP in the grantor index, you must "expand the search" and look under AP and AS. If so, you will see the AS→TA deed! most states say you should expand the search

The information on pages 281-282 of the supplement is essential. We need to know (1) when the present covenants are breached (answer: if at all, at the conveyance); (2) when the future covenants are breached (answer: when the 'problem' is asserted and actually affects the landowner); (3) who can be sued (is it just the immediate grantee or also 'remote' grantees?); and (4) what damages, if any, can be recovered. HYPO #1 -- In this problem the period of adverse possession is 6 years; the period needed to acquire an easement by adverse use is 6 years; and the statute of limitations for suing on a breach of a title covenant is 4 years. 1978: Anna inherits 20 acres, FSA. 1980: Anna conveys the 20 acres to Ben, by a general warranty deed that contains three title covenants: seisin, encumbrances, and quiet enjoyment. Note: there is no breach of any covenant. Anna has 20 acres and conveys it to Ben. 1982: The adjacent landowner Carl begins to adversely possess 1 acre of the 20 acres. Another neighbor, Earl, begins driving his tractor across a portion of Ben's land without permission, thus beginning "adverse use" of Ben's land. 1985: Dean Shaw wins a tort judgment against Ben and files a judgment lien against Ben's land. 1988: Carl completes adverse possession of 1 acre and gets title to the 1 acre. Earl completes "adverse use" of Ben's land and gets a right of way easement over Ben's land. 1990: Ben, who now only owns 19 acres (subject to Earl's easement), purports to convey 20 acres to Doug. Ben gives Doug a general warranty deed that contains three title covenants: seisin, encumbrances, and quiet enjoyment. The deed promises that "there are no encumbrances other than the utility easement."

Stop and assess the situation. The moment Ben transacted in 1990 with Doug (1) the present covenant of seisin was breached because Ben only conveyed 19 acres instead of 20; and (2) the present covenant against encumbrances was breached because of Dean Shaw's undisclosed tort judgment lien (which is neither visible nor beneficial to Doug); and (3) the present covenant against encumbrances was breached because Doug received land subject to Earl's easement, yet Ben never mentioned Earl's easement. So Ben has breached the present covenant of season and the present covenant against encumbrances (twice). Did Ben also breach the future covenant of quiet enjoyment? Not at the time of the 1990 transaction. The future covenant of quiet enjoyment is not breached unless and until (1) Carl asserts his ownership of the 1 acre; (2) Dean Shaw asserts (acts to foreclose) her judgment lien; or (3) Earl asserts (uses) his easement. With respect to the breach of the present covenants of seisin and encumbrances, the 4 year statute of limitations begins to run immediately. Doug has until 1994 to sue Ben. DAMAGES -- Suppose Doug sues Ben in 1993 for breach of the present covenant of seisin and also sues Ben in 1993 for the two breaches of the present covenant against encumbrances. What are the damages? Start with the 1 acre issue. Doug paid Ben money thinking he got 20 acres, when in fact Doug only got 19 acres. What was the value of the 19 acres actually conveyed? If the value of the 19 acres actually conveyed was $80,000, and Doug paid Ben $87,000, then the damages for breach of the present covenant of seisin are $7,000. What about judgment lien issue? If the lien secures a judgment of $4,000, it will take $4,000 to remove the lien, so the damages are $4,000. What about the easement issue? If the land actually conveyed is worth $80,000, what is the same land worth if it is subject to a right of way easement? If the easement reduces the land's value by $9,000 to $71,000, then the damages are $9,000.

Ohio transfer on death affidavits

TOD affidavits are similar to wills (because transfer occurs at death), but there is no probate. Must be recorded prior to death. Key: can be revoked prior to death.

Before we discuss the 3 types of recording acts, remember that the common law "default" rule will apply if the statutory recording act cannot be "invoked."

The common law default rule: the person who is "first in time" wins!

3. Thelma conveys to Louise by deed with "limited warranties." Thelma had mortgaged the property, and Louise was evicted when Thelma's mortgagee foreclosed. What covenants, if any, were breached?

The present covenant of encumbrance and the future covenant of warranty. [Note: these are the two covenants incorporated by reference into a limited warranty deed by the statute set forth on the first page.] If the land had been mortgaged by someone who owned prior to Thelma, then Thelma would not have breached any covenants, since the covenants incorporated into a limited warranty deed are limited in scope insofar as they are personal to Thelma.

2. Grace conveys to Gene by general warranty deed with the "usual warranties." Grace had mortgaged the property, and Gene was evicted when Grace's mortgagee foreclosed. What covenants, if any, were breached?

The present covenant of encumbrance and the future covenants of quiet enjoyment and warranty.

What if SMITTY sues CARL for breach of Quiet Enjoyment?

There was a breach of quiet enjoyment in 2004 when Mark won his lawsuit. SMITTY can sue CARL on the future covenant of quiet enjoyment. Damages would be limited to half of the $180 that CARL received.

Warranty / QE / Assurances

These three "future covenants" can be asserted by the grantee or by successors of the grantee.

OPERATION OF LAW

Title by adverse possession Prescriptive easements; easements implied from pre-existing use; and easements of necessity Dower Rights

Otto mortgages his land to Bank One. A day later, Otto mortgages his land to Bank Two. Common law rule Recording act rule

Under the common law rule: Bank One has priority in a foreclosure lawsuit. Under the common law rule: Bank One has priority in a foreclosure lawsuit. However, if Bank Two can use a recording act, it may possibly displace the common law rule and get priority over Bank One in a foreclosure lawsuit!

NOTICE-RACE (OR RACE-NOTICE)

Unrecorded documents (deed, mortgage, easement, lease) are invalid against a subsequent purchaser if the purchaser takes without notice and records first. There are two requirements for the subsequent purchaser: (1) take without notice and (2) be first to record

Some of the steps in the sale of property

Use a broker? Was commission earned? Sign a sales contract. What if breached? Financing? Promissory note & mortgage. Inspection. Title search. Any problems? Preparation of the deed to transfer title. Closing: payment made; deed delivered. Recordation of deed & mortgage. Why?

One Way to Do a Title Search How are documents indexed?

Use an index to find the pages and volumes for the copies of the documents. Then "pull" the documents. Most use a name index (grantor & grantee indices). Some use a tract index (indexed by land's location)

FRED to BARNEY by GWD for $10,000 BARNEY to MR. SLATE by LWD for $12,000 MR. SLATE to WILMA by QCD for $13,000 BETTY, who adversely possessed prior to FRED's arrival, sues and evicts WILMA. WILMA sues BARNEY. Result?

WILMA loses. BARNEY gave limited covenants and the defect (loss of title by AP) preceded his ownership.

FRED to BARNEY by GWD for $10,000 BARNEY to MR. SLATE by LWD for $12,000 MR. SLATE to WILMA by QCD for $13,000 BETTY, who adversely possessed prior to FRED's arrival, sues and evicts WILMA. WILMA sues MR. SLATE. Result?

WILMA loses. MR. SLATE used a quit claim deed and therefore gave no covenants (made no promises to WILMA).

What if SMITTY sues BEN?

Was there was a breach of seisin during BEN's ownership? The adverse possession started in 1972 and was over in 1982. Many states would hold there was no breach of seisin during BEN's ownership. Some states equate transfer of title subject to an ongoing AP claim to be a breach of seisin. If so, SMITTY can sue BEN for breach of a QE future covenant.

Possession as inquiry notice Floyd sells his barbershop to Gomer, who possesses but does not record. Floyd then sells the same land to Aunt Bea who records. Who wins under a ... 'Race' act, Courtney? 'Notice' act, Ashlyn? 'Notice-race' act, Amy?

Who wins under a ... 'Race' act, Courtney? Aunt Bea recorded first 'Notice' act, Ashlyn? Gomer. Bea had notice 'Notice-race' act, Amy? Gomer. Bea had notice

COURTHOUSE ????? USA→AS - deed 2-18-13 AS→AP - deed 4-25-13 AS→TA - lease 1924 AP→AS - deed 1966 AS→DT - deed Will DT find the AS→TA deed? There is a split between requiring (1) a "shift-over search" or (2) an "expand the search"

Will DT find the AS→TA deed? There is a split between requiring (1) a "shift-over search" or (2) an "expand the search"

Can Claire invoke (use) the recording act?

Yes! Recording acts apply to deeds such as the Phil-Gloria deed. Moreover, Claire is a "bona fide purchaser" (discussed below) because she paid money. But can Claire win under the notice recording act? Yes! Claire took without actual or constructive notice of the Phil-Gloria deed, and that is all that is needed in a notice jurisdiction. What if Gloria had immediately recorded?

BREACH OF FUTURE COVENANTS (future covenants "RUN WITH LAND")

a. breach of quiet Enjoyment/warranty covenants occurs when the grantee in possession suffers "eviction" - actual or constructive. c. the covenant of further assurances is breached only when the grantor refuses to supply documents needed to perfect title. d. Since future covenants run with land -- "remote" grantees can sue

FURTHER ASSURANCES

grantor promises to do what is necessary to protect or perfect the grantee's title (e.g., produce documents)

(Outline) - Common Chain of Title Problems: o Late Recorded Deed: o Early Recorded Deed: o Wild Deed: o Misindexed Deed:

o Late Recorded Deed: the grantee waits to record, and someone else records first. o Early Recorded Deed: the grantee records a deed from a grantor who subsequently acquires title (estoppel by deed issue) o Wild Deed: a grantee records a deed that is unconnected to the chain of title o Misindexed Deed: The Anna-Ben deed is misread as Hanna-Ben and indexed under "H"

HYPO: Otto conveys to A. Otto then conveys to Ben, who takes without notice of Anna. Neither A nor B has recorded. Who has better title in (1) pure race; (2) race-notice; or (3) pure notice?

pure race -the first to record will prevail race- notice - the first to record will also prevail since the purchaser must take without notice and record first Pure - notice - Ben prevails over Anna since Ben took without notice. (As between Anna and Ben, it makes no difference here if Anna is first to record, if Ben took without notice)

RIGHT TO CONVEY

the grantor entitled to convey (similar in most respects to the covenant of seisin).

QUIET ENJOYMENT

the grantor promises the grantee shall be able to enjoy the property; i.e., the grantor promises against any assertion of paramount title ("eviction") or encumbrances (such as liens or easements).

WARRANTY

the grantor promises to warrant and defend the grantee's title against lawful and reasonable claims of third parties. [Basically same as the covenant of quiet enjoyment]

AGAINST ENCUMBRANCES

the grantor says there are no encumbrances (easements, mortgages, leases, etc.) other than those accepted by the grantee. a. some states will except VISIBLE AND/OR BENEFICIAL easements. b. some states will exclude encumbrances known to grantee. Other states do not equate knowledge with acceptance. c. if the deed says the grant is subject to an encumbrance, then covenant does not extend to that encumbrance.

BREACH OF A PRESENT COVENANT

these covenants are breached, if at all, at time of conveyance. The statute of limitations for suing on a present covenant is thus triggered at time of conveyance. a. MAJORITY RULE: only the immediate grantee can sue on present covenants. b. MINORITY RULE: a remote grantee can sue on a present covenant on the theory that the immediate grantee assigned his cause of action to the remote grantee (IOWA). [note: since remote grantee is using the immediate grantee's cause of action, the statute of limitations was triggered when the immediate grantee received the property....]

♣ Common Chain of Title Problems:

• Late Recorded Deed • Early Recorded Deed • Wild Deed • Misindexed Deed

o Three Types of Notice:

♣ Actual ♣ Inquiry ♣ Constructive