Recording Act & Chain of Title Problems

Title Covenants (Common Law)

(1) The promises made by the parties ended at the contract unless they were restated in the deed. (2) Doctrine of merger

Incorrect Property Description

A deed or other document that contain a materially defective property description does not give notice.

Covenant of further assurances

A promise that grantor will take all future steps reasonably necessary to cure title defects that existed at closing.

Covenant of quiet enjoyment

A promise that the grantee's possession of the property will not be disturbed by anyone holding superior title

Covenant of right to convey

A promise that the grantor has the right to convey title

Covenant of sesin

A promise that the grantor owns the estate he purports to convey

Covenant of warranty

A promise that the grantor will defend the grantee against any claim of superior title

Covenant against encumbrances

A promise that there are no encumbrances on the title other than those expressly listed on the deed

(3) S conveys to B, who does not record. S conveys to C, who does not record. S conveys to D, who does not record. C records. (Answer for first-in-time, race, notice, and race-notice jurisdiction)

B, C, and D all claim the property. (a) First-in-time: B owns Greenacre because she is first-in-time. (b) Race jurisdiction: C owns Greenacre because he was the first to record. (c) Notice jurisdiction: D owns Greenacre because he was a subsequent purchaser for value who took without notice of the previous two conveyances. (d) Race-notice jurisdiction: C owns Greenacre because he was a subsequent purchaser for value who took without notice of the deed to B and recorded his instrument first. D cannot gain priority over C because D did not record first.

Brown v Lober - Topic

Breach of Present and Future Covenants Constructive Eviction in Covenant of Quiet Enjoyment.

Standard Covenants (6)

Covenant of sesin Covenant of right to convey Covenant against encumbrances Covenant of warranty Covenant of quiet enjoyment Covenant of further assurances

Present Covenants (3)

Covenant of sesin Covenant of right to convey Covenant against encumbrances If breached, it is at moment deed is delivered.

Future Covenants

Covenant of warranty Covenant of quiet enjoyment Covenant of further assurances Breached when grantee is actually or constructively evicted by 3rd party holding superior title

Tract Index

Each parcel of land is assigned a unique identifier.

Grantor/Grantee Index

Every document is indexed in two places: the grantee index and grantor index

Of the types of Deeds recognized by Modern Law, which deed(s) provide(s) the most protection? which deed(s) is/are supplemented with covenants?

General - because before and after coverage General and Special

Types of Deeds (3) recognized by Modern Law

General Warranty Special Warranty Quitclaim Deed

What types of indexes (2) are there?

Grantor/Grantee Index Tract Index

How do you search title?

In order to determine the state of title, the searcher must do the following: (1) Locate the recorded documents (2) Evaluate the significance of the recorded documents

Recorded Documents that do not Provide Notice

Invalid Acknowledgment Incorrect Name Incorrect Property Description

Recorded Documents that Provide Notice (4) Requirements

It meets the formal requirements for recording It contain no technical defects It is recorded in the "chain of title" It is property indexed

The purposes (2) of the recording system

It protects existing owners from losing their property to later purchasers. It protects new buyers.

Luthi v Evans - Topic

Mother Hubbard Clause BFP due to inaccurate property description

Doctrine of Merger

Once the grantee accepted the deed all prior promises were extinguished; the contract merged into the deed

Luthi v Evans - Rationale

Owens' assignment to Tours: Both parties agreed that the language used in Owens' assignment to Tours was sufficient to affect a valid transfer of the Kufahl lease. As the court observed, the assignment "constituted a valid transfer of the Owens interest in the Kufahl lease to Tours as between the parties to that instrument." The court rules for Burris because the property subject to the Kufahl lease was not mentioned in the grantor-grantee index.

What constitutes a breach of quiet enjoyment?

The INTERFERENCE with the grantee's enjoyment. The mere existence of someone else's better title or pressure is not enough.

Brown v Lober - Rationale (Covenant of Quiet Enjoyment)

The court cited Scott and Moore for the rule that "the mere existence of paramount title does not constitute a breach of the covenant....There has been no assertion of the adverse title....Appellant could at any time have taken peaceable possession of it. He has in no way been prevented or hindered from enjoyment of the possession by any one having a better right." Until the holder of paramount title interfered in some way (e.g., by mining the coal), there was no constructive eviction and therefore no breach of the covenant of quiet enjoyment. Wasn't the forced modification of the Browns' agreement with Consolidated a form of constructive eviction? No. - It emphasized that a real interference with use and enjoyment was needed: superior title in another, without more, is not sufficient—the grantee needs to feel "its pressure upon him." Did the statute of limitations bar this claim? - No. The limitations period for breach of a future covenant begins to run only when the grantee is actually or constructively evicted from the property.

Is a forced modification of a contract enough for a constructive eviction?

The court noted that constructive eviction requires more than a contract modification based upon the discovery of paramount title in another.

In Brown v Lober, isn't having superior title to the mineral estate the equivalent of possession?

The court reasoned that because no one had undertaken to remove the coal (interference) or otherwise manifest a clear intent to exclusively possess the mineral estate, the subsurface estate was "vacant."

The searcher examines all entrees in the grantor index under each grantor's name from

The date he received his interest until The date the deed conveying his interest to a grantee was recorded.

(1) S conveys to B, who does not record. S conveys to C. C records. B records. (Answer for first-in-time, race, notice, and race-notice jurisdiction)

The dispute is between B and C. (a) First-in-time: B owns Greenacre because she is first-in-time. (b) Race jurisdiction: C owns Greenacre because he was the first to record. (c) Notice jurisdiction: C owns Greenacre because he was a subsequent purchaser for value who took without notice of the prior conveyance; B did not record. (d) Race-notice jurisdiction: C owns Greenacre as a subsequent purchaser for value who took without notice of the prior conveyance and recorded his conveyance first.

(2) S conveys to B, who does not record. S conveys to C as a gift. C records. B records. (Answer for first-in-time, race, notice, and race-notice jurisdiction)

The dispute is between B and C. (a) First-in-time: B owns Greenacre because she is first-in-time. (b) Race jurisdiction: In general, the first purchaser "for a valuable consideration" to record the conveyance wins; B owns Greenacre because C was not a purchaser for value. (But in Louisiana, the subsequent grantee need not pay value, so there C would win.) (c) Notice jurisdiction: B owns Greenacre because only a subsequent purchaser for value gains the protection of the recording act. C, a donee, was not a purchaser for value. (d) Race-notice jurisdiction: B owns Greenacre; as stated above, C was not a subsequent purchaser for value.

(4) S conveys to B, who does not record. S conveys to C, who does not record. B records. C records. (Answer for notice and race-notice jurisdiction)

The dispute is between B and C. (a) Notice statute: C owns Greenacre. C gets priority as a subsequent bona fide purchaser when C's deed is delivered, because C had no notice of the prior deed to B. (b) Race-notice statute: B owns Greenacre. Because C did not record before B, C does not gain the protection of the recording statute. B wins by virtue of being first-in-time.

(4) S conveys to B, who does not record. S conveys to C, who does not record. C conveys to D, who knows about the S-B deed. C records. B records. D records. (Answer for first-in-time, race, notice, and race-notice jurisdiction)

The dispute is between B and D. (a) First-in-time: B owns Greenacre because she is first-in-time. (b) Race jurisdiction: D owns Greenacre because of the shelter rule. Since C recorded first (before B), C gained priority over B. The shelter rule allows C to pass this priority to his grantee D. (c) Notice jurisdiction: D owns Greenacre because of the shelter rule. As a subsequent bona fide purchaser, C gains priority over B. Although D had actual notice of the S-B deed, D is sheltered by C's priority. (d) Race-notice jurisdiction: D owns Greenacre because of the shelter rule. C was a subsequent purchaser for value who took without notice of the S-B deed and recorded before B. C's priority is transferred to his later grantee D, even though D cannot qualify for protection in his own right.

(1) S conveys to B, who does not record. S conveys to C, who knows about the S-B deed. B records. C records. C conveys to D. D records. (Answer for notice and race-notice jurisdiction)

The dispute is between B and D. (a) Notice statute: B owns Greenacre because she is first-in-time. D is not a subsequent bona fide purchaser because B recorded her deed, giving D record notice. And D would not gain protection under the shelter rule because C had actual knowledge of the S-B deed and therefore was not himself a bona fide purchaser who gained priority over B. (b) Race-notice statute: Because D is not a subsequent bona fide purchaser, he does not meet the first element of a race-notice statute; and because B recorded first, D also fails to meet the second element.

(5) S conveys to B, who does not record. S conveys to C. C records. B records. C conveys to D, who knows about the S-B deed. D records. (Answer for notice and race-notice jurisdiction)

The dispute is between B and D. (a) Notice statute: D owns Greenacre by virtue of the shelter rule. C had no notice of the S-B deed when she obtained her interest, so she is a subsequent bona fide purchaser. Even though D knew about the S-B deed, C's priority over B transfers to D under the shelter rule. (b) Race-notice statute: D owns Greenacre for the same reason. C gains priority over B because C had no notice of the S-B deed and C recorded her deed before B did. C's priority is transferred to D under the shelter rule.

(2) S conveys to B, who does not record. S conveys to C, who knows about the S-B deed. C records. B records. C conveys to D. D records. (Answer for notice and race-notice jurisdiction)

The dispute is between B and D. (a) Notice statute: D owns Greenacre in many jurisdictions When a title searcher searches the grantor-grantee index forward to the present, he will stop searching under S's name when he sees the recordation of the S-C deed. He will then continue his search looking under C's name from the time of delivery of the S-C deed to the present. He could not discover the S-B deed, which was recorded at a point when the title searcher would no longer be searching under S's name. The problem is that the S-B deed is a late recorded deed. Since B's recording is late, it is not deemed a "proper" recording, and therefore D gains priority as a subsequent purchaser without notice of B's interest. However, in jurisdictions which require a more expansive search, D would lose. The searcher must look under each grantor's name from the time the grantor received title until the present. In this case, the searcher would see the S-B deed. D would have constructive notice of B's interest and therefore could not be a subsequent bona fide purchaser. B wins as first-in-time. (b) Race-notice statute: In an "efficient" recording system, D owns Greenacre. D is a subsequent bona fide purchaser because B's deed was recorded late. In addition, B's recording is deemed not to be "proper," and thus D is the first to record. However, in jurisdictions requiring an "extended search," D is neither a subsequent bona fide purchaser nor does he record first. B wins as first-in-time.

(3) S conveys to B, who does not record. B conveys to C. C records. S conveys to D. D records. B records. (Answer for notice and race-notice jurisdiction)

The dispute is between C and D. (a) Notice statute: D owns Greenacre. Because the S-B deed was not recorded, there is no way for a title searcher to discover the B-C deed. It is a wild deed. When the searcher searches forward under S's name, she would not locate any instrument that gives notice of any prior interest. D is a subsequent bona fide purchaser, and therefore gains priority over C. (b) Race-notice statute: D owns Greenacre. As noted above, D is a subsequent bona fide purchaser. C's recording is wild and not "proper." Therefore, D's recording is first-in-time and D meets both requirements of the race-notice statute.

Brown v Lober - Key take aways

The existence of superior title is not enough to constitute constructive eviction. Breach of present covenants happens at delivery Breach of future covenants happens when a person is constructively evicted.

Quitclaim Deed

The grantor makes no warranties about title, so the grantee receives only what grantor has, if anything.

What is the concept of a title covenant?

The grantor promises in the deed that she has good title to convey. These turn on the type of deed received and the scope of promises made in the deed

Special Warranty Deed

The grantor warrants title against all defects that arose after he obtained title

General Warranty Deed

The grantor warrants title against all defects, whether they arose before or after he obtained title

Together, the present covenants provide much of the same assurance as

The implied covenant of marketable title

What is the difference between implied covenant of marketable title and title covenants?

The implied covenant of marketable title applies to defects BEFORE closing. Title covenants applies to defects discovered AFTER the closing.

Luthi v Evans - Key Takeaways

The vagueness/"catch-all" wording in the conveyance that granted interest was not enough property description to constructively notice a buyer in the index. The description must be accurate so that a title searcher could both find the recorded document and determine that it concerned the land in question.

Brown v Lober - Rationale (Covenant of Seisin)

Was the covenant of seisin breached at that time? Yes. The Bosts used a general warranty deed to convey title to the Browns. They purported to convey fee simple absolute in the 80-acre parcel, but in fact they did not own two-thirds of the mineral rights. So the Browns could have immediately sued the Bosts. - The problem for the Browns is that the 10-year statute of limitations began to run on their claim in 1957. "[T]he covenant of seisin is a covenant in praesenti and, therefore, if broken at all, is broken at the time of delivery of the deed." Claim is barred because 9 years over

Luthi v Evans - Issue/Holding

Whether the "mother hubbard" clause in the conveyance to Tours provided sufficient notice to Burris. Supreme Court held in favor of Burris, because the deed was not sufficiently clear enough to give him constructive notice.

Brown v Lober - Issue/Holding

Whether the claim for breach of the covenant of seisin was barred by the statute of limitations Whether the plaintiffs had a viable claim for breach of the covenant of quiet enjoyment. Covenant was broken. But barred by statute. No they didn't, no constructive eviction.

When do title covenants apply?

to defects discovered AFTER the closing.