A. The Recording System
i. Purpose: to protect bona fide purchasers from prior unrecorded interests ii. Background: Historically, no systematic way of documenting a deed. Now, state statutes provide for land title records to be recorded. iii. What does a title record include? Copies of documents filed w/ recorder and indexes to the copied documents iv. Functions: 1. Establishes system of public recordation of titles 2. Preserves in a secure place important docs which otherwise could be lost 3. Allows direct admission into evidence at judicial proceedings 4. Protects purchasers for value and lien creditors against prior unrecorded interests B. The Indexes i. Tract Index – indexed by parcel identification # assigned to particular tract; does not exist in most states. ii. Grantor-Grantee Index – organized by names of grantor/grantee; most common. 1. Search back from grantor’s name & go back to find previous grantors usually for 60 years 2. Recording acts will not pick up “wild deeds” a. Ex: O to A not recorded, then A to B who records, O to C who records, but C didn’t find that A had possession (A to B deed is not connected to chain of title (not properly recorded) thus is a Wild Deed (no good)). C. Types of Notice: i. Actual: Express notice of the fact ii. Constructive: Imparted by law; grantee should find in recorders office iii. Inquiry: Actual notice of circumstances sufficient to put a prudent man upon inquiry of a particular fact 1. Prudent man would inspect property 2. Circumstance about property may put on inquiry-then has duty to find out more D. Adverse Possession and Recording: AP will not re record in recording act i. Unless the AP’er has a quiet title action and recorded the outcome with the recorder’s office ii. BUT AP is not subject to the recording act iii. Recording act will not protect subsequent bona fide purchasers even when they did not have notice E. Recording Acts i. Race Statute: first to record wins, regardless of notice! (except in NC & LA) 1. Actual knowledge of a prior instrument by a subsequent purchaser is irrelevant b/c notice is irrelevant 2. Exist only in a few states ii. Notice Statute: protects a subsequent purchaser for value who takes w/out notice 1. Bona fide purchaser is protected as long as he is a BFP 2. Purchaser does not need to be the first to record 3. Prevails immediately upon closing 4. No need to even record to trump past persons iii. Race-Notice Statute: protects a subsequent BFP purchaser who takes w/out notice & who records first. 1. Majority of states are race-notice 2. Must be w/out notice and records first! 3. Protects the subsequent purchaser who record first 4. Requires a perfect chain of title-meaning that the prior conveyances in his chain are also recorded IV. Persons Protects by the Recording System 1. Donees & Devisees not protected, even in race jurisdictions a. In order for ct. to determine whether a person is a purchaser (protected) or a donee (not protected) have to look at what is valuable consideration b. Adverse Possession operates outside of recording acts F. Chain of Title – the period of time for which records must be searched & the docs that must be examined w/in that time period. i. Varies from jurisdictions. ii. Anything in a chain of title would give you constructive notice iii. Constructive Notice does not apply to: a. Void instruments b. Instruments that are so defective as to be inoperative c. Instruments that fail to meet recording prerequisites d. Instruments that are deemed to be outside of the recording statute iv. WILD DEED: deed outside the chain of title v. Deed outside of chain does not effect the buyer-only effects grantor-grantee index vi. Holder of Wild deed will lose title to bona fide purchaser that records vii. Any time a document is unrecorded all subsequent conveyances will be out of the chain of title….creates a hole. 1. Limits the effectiveness of the statutes but that’s why they created title insurance 2. Perfect chain of title: Can tract grantors deed back through the grantor-grantee index, unencumbered to the original grant from the state viii. Estoppel by Deed: When a party conveys a deed before they have the right to do so. 1. Ex: A knows his rich Uncle O is going to leave him X. A conveys X to B à so it looks like A à X before O à A a. Estoppel lets B get X as soon as A gets it from O-this way A cannot attempt to scam B from the property by claiming he did not have authority to bestow it. |
|