Recording

Question 1

Recording system questions deal with this kind of hypo

Answer 1

Hypo where O is a double dealer who conveys the same piece of property to A, and then to B.

Question 2

Two bright line rules for recording statutes

Answer 2

1. If B is a bona fide purchaser, and we are in a notice jurisdiction, B wins, regardless of whether or not he records before A does.
2. If B is a bona fide purchaser and we are in a race-notice jurisdiction, B wins if he records properly before A does.

Question 3

Recording statutes exist to protect only these kinds of parties

Answer 3

bona fide purchasers and mortgagees (creditors).

Question 4

In order to be put into the recording system, B must prove he is this.

Answer 4

Grantee must prove he is a bona fide purchaser.

Question 5

Two elements for B to qualify as a bona fide purchaser

Answer 5

1. Must have purchased the land for value, and
2. Had no notice of the previous grantee at the time of his purchase.

Question 6

Element 1 for BFP- Purchase for value

Answer 6

• Value means substantial pecuniary consideration. Can be a low value, as long it was for money.
• If the B came to his claim to title through devise, descent, or gift, he will not be protected by the recording system.

Question 7

Element 2 for BFP- Lack of notice

Answer 7

• Buyer must have not noticed someone else got there first.
• 3 forms of notice: AIR
• Actual: Buyer actually and literally learns about the previous grantee
• Inquiry: Buyer’s routine inspection would have revealed the previous conveyance. Buyers have a duty to inspect before closing.
• Record: If the previous buyer properly records her deed before the current buyer, the previous buyer will always win.

Question 8

If the buyer is proven to be a BFP, he must turn to this to see if he is victorious over the other grantee.

Answer 8

The buyer must look at his jurisdiction’s recording statute.

Question 9

VA Law on Inquiry Notice

Answer 9

VA does not recignize the concept of inquiry notice.

Question 10

The three types of recording statutes

Answer 10

1. Notice Statute
2. Race-Notice Statute
3. Race Statute

Question 11

The notice statute

Answer 11

• About 1/2 of jurisdictions follow this statute
• In this statute, B wins, as long as he is the last bona fide purchaser to take.
• It does not matter if A is a BFP or even if they ultimately recorded first.
  
  • Though they must have recorded at the time B checked, because that would have given him notice and he’d no longer be a BFP
• It does not matter if B never records, as long as he is the last BFP to take.

Question 12

The Race-Notice Statute

Answer 12

• About half the states use this statute.
• B wins if he accomplishes 2 things:
  
  1. B must be a BFP, and
  2. B must win the race to record
• It is not enough for B to be the last BFP to take, he must also be the first to record properly.
• Example: O conveys to A, then to B, and B checks the records and sees no one. A subsequently records before B records. B loses.

Question 13

The race statute

Answer 13

• Only in a small minority of statues
• The first to record wins, regardless of whether they are a BFP or not.
• Notice doesn’t matter either.

Question 14

VA’s Recording Statute

Answer 14

• Language of VA recording statute is consistent with a notice jurisdiction bc it gives last BFP the win even if he doesn’t record.
• BUT, VA S. Ct. characterized VA as race-notice. So, a subsequent BFP will prevail only if she records before the prior grantee.

Question 15

• If A was a BFP who recorded before B purchased/checked for himself, B would not have notice and A would win.
• BUT, A must also do this.

Answer 15

• A must record properly within the chain of title

Question 16

VA law about recording deeds

Answer 16

To record a deed in VA, it must be acknowledhed by the grantor or proved by two witnesses. But, recording is not necessary to pass title.

Question 17

Definition of chain of title

Answer 17

• Sequence of recorded documents capable of giving record notice to later takers.
• In most states, it’s established through a title search of the grantor-grantee index.

Question 18

The two important chain of title problems

Answer 18

1. The Problem of the Wild Deed
2. The Problem of Estoppel by Deed

Question 19

Wild deed

Answer 19

• A deed that is in fact recorded, but recorded improperly.
• An improperly recorded deed cannot give record notice of its contents, because it is not hooked up to the chain of title and therefore will not be discovered by an interested title searcher.
  • e.g. O sells to A. A doesn’t record. A sells to B. B records the A>B deed. The A>B deed is a wild deed because it’s not connected to the chain of title. The O to A link is missing from the public records.
• A wild deed is incapable of giving record notice of its contents to anyone because it’s not in the chain of title and cannot be found in a search. It’s a nullity and like it was never recorded at all.
  
  • e.g. After B records the wild deed, O sells to C. C wins as long as he is a BFP because he had no notice of B’s existence since the deed wasn’t in the chain of title.
  • C wins in a notice statute because he’s the last BFP to take, and in a race-notice statute because he’s the last BFP to properly record.

Question 20

Estoppel by deed

Answer 20

• Applies when a grantor sells land before he actually owns it himself.
• If the grantor subsequently acquires the title, grantor is estopped from denying the validity of his earlier, pre-acquisition of title transfer to another, now that the grantor has succeeded in obtaining that title.
• Example:
  
  • 1950: O owns blackacre. Thinking about selling it to X, but decides not to.
  • 1950: X sells blackacre to A even though he doesn’t own it. A records.
  • 1960: O sells blackacre to X. X records
  • 1970: X sells to B. B records.
  • From 1960-1969, A owns blackacre even though X recorded because he previously promised it to A.
  • From 1970 on, B owns blackacre in a notice statute jurisdiction because he’s the last BFP to take. In a race-notice statute, B wins again because A’s initial recording was a nullity and a wild deed, since there was no chain from O to X.

Question 21

The Shelter Rule

Answer 21

• provides that one who takes from a bona fide purchaser will prevail against any entity that the transferor-bona fide purchaser would have prevailed against.
• In other words, the transferee “takes shelter” in the status of her transferor, and thereby steps into the shoes of the bona fide purchaser, even though she may otherwise fail to meet the requirements of bona fide purchaser status.
• Seeks to protect the BFP who then conveyed rightly purchased property.

Question 22

Creditor’s role in Blackacre

Answer 22

• Creditors extend value to debtor, taking Blackacre as collateral.
• Creditor can look to Blackacre for satisfaction on the debt if the debtor fails to pay.

Question 23

Creditor’s lien is evidenced by this.

Answer 23

A written insrument known as the mortgage deed or the note.

Question 24

How recording protects creditors’ interest

Answer 24

• So long as C properly recorded his mortgage instrument, his lien remains on the land.
• It doesn’t matter which recording statute is in effect, because Buyer has record notic of the lien.