Recording Acts Part 1

Question 1

3 recording acts:
1.
2.
3.

Answer 1

1. Race
2. Notice
3. Race- Notice

Question 2

Race Recording Act
you must:

Answer 2

win the race to record

Question 3

Most of the states do not have _____ _______ only one or two states are ______ states. Everybody else is evenly split between notice and race-notice state.

Answer 3

race statutes

race

Question 4

Notice Recording Act
you must:

Answer 4

pay value and take without notice

Question 5

_______ ________ _______ means that you have to ______ ________ ________ of a prior party’s interest.

Answer 5

taking without notice

take without notice

Question 6

Taking without notice means that you have to take without notice of a ______ _______ ________.

Answer 6

prior party’s interest

Question 7

“Hey Stevens did you know that I bought Pink Acre?”

Answer 7

Actual Notice

Question 8

Three kinds of Notice:
1.
2.
3.

Answer 8

1. Actual Notice
2. Record Notice
3. Inquiry Notice

Question 9

“Hey Stevens did you know that I bought Pink Acre?” that is _______ ________. Now Stevens actually knows that I bought Pink Acre.

Answer 9

actual notice

Question 10

If I go to the ______ ______ _____ and I record my deed to pink acre everybody has record notice because it is on the public record. Whether you took the time to check or not does not matter. The law presumes you know because it is on the public record.

Answer 10

public records office

Question 11

If I go to the public records office and I record my deed to pink acre everybody has ______ _______because it is on the public record. Whether you took the time to check or not does not matter. The law presumes you know because it is on the public record.

Answer 11

record notice

Question 12

If I go to the public records office and I record my deed to pink acre everybody has record notice because it is on the public record. Whether you took the _______ to______ or not does not matter. The law _______ ______ ______because it is on the public record.

Answer 12

time to check

presumes you know

Question 13

When we talk about recording acts you have to accept that O is a jerk and A is a goofball. A never records. O is a jerk because he is going to sell to A and A doesn’t record and then O sells to B. O is selling the same piece of property to two people and getting paid twice. The ________ ______- if followed will help to prevent that problem.

Answer 13

recording acts

Question 14

O sells to A who doesn’t record but A moves in and then O sells to B. Does B have notice of A’s interest? A did not record, B has not been actually told but A moved in right away. B does have _______ ________ because A moved in which means that B loses under the recording acts because B did not take without notice of a prior parties interest.

Answer 14

inquiry notice

Question 15

In a Race- Notice state, you have to do three things:
1.
2.
3.

Answer 15

1. Pay Value
2. Take without Notice
3. Record First

Question 16

O sells to A and A doesn’t record but A moves in. O sells to B, B records. The way that this works for B to win B has to do all three things under the recording act.
A didn’t record but A moved in. B did record.

A wins because B did not take without notice of A’s interest.
Because A moved in, so B has inquiry notice even though B recorded first.

B didn’t do all the things that B had to do as a subsequent purchaser to win under the recording acts to win.

Because B was missing the _____ _______ ______part, B loses under the recording act.

Answer 16

take without notice

Question 17

Shelter Rule

Answer 17

If you buy from a winner, you are a winner.

Question 18

If you buy from a winner, you are a winner.

Answer 18

Shelter Rule

Question 19

O sells to A and A doesn’t record O sells to B and B does all the things right under the recording act B wins under the recording act. B is about to sell to C but before B can finalize the sale to C A acts crazy and records.

So now C can’t claim to take without notice because A has just recorded.
That doesn’t screw stuff up because if you are buying from the person who won under the recording act then you are also going to win.

A’s intervening recordation of the deed does not screw up B’s ability to sell to C.

True or False.

Answer 19

True

Question 20

In a few places, like Minnesota, Hawaii, and Massachusetts, there’s an option to do a title search (resulting in an abstract of title or an Owner’s Policy of Title Insurance) or to utilize the _________ _________.

Answer 20

Torrens System

Question 21

It is a system of title registration where:

A lawsuit establishes title in someone, subject to any mortgage, easement, or other interest the court finds to exist.

A Certificate of Title is issued by the government and is officially registered. When the property is sold, a new Certificate of Title is issued after a substantive review of what has happened to title since the last Certificate was issued.

An insurance indemnity fund is established to compensate those who lose interests due to registrar error.

Answer 21

Torrens System

Question 22

Deeds, mortgages, leases, option agreements, liens, wills, easements, and all additional instruments affecting land titles can be ___________________________________.

Answer 22

recorded at the public records office.

Question 23

Record things that are related to real property: examples
1.
2.

Answer 23

1. fixture filing
2. private restrictions

Question 24

A _______ is valid and good against the grantor without being recorded.

Answer 24

deed

Question 25

Winning under a recording act means that you are the person entitled to ___________ of the ___________.

Answer 25

possession of the property

Question 26

Why record documents?

Answer 26

It protects purchasers for value and lean creditors against prior unrecorded interests.

Question 27

It protects purchasers for value and lean creditors against prior unrecorded interests.

What does this refer to?

Answer 27

Why you should record documents

Question 28

1. The best chance at winning possession of the property.
2. Duly Diligent purchasers search the public record to be sure the seller owns it but if nobody had ever recorded we need to have people record so there is a public record
3. We record because we need a safe place to keep the deed.

These all refer to:

Answer 28

why we should record documents

Question 29

Example: O conveys BA to A who doesn’t record and then O conveys to B and A moves in. B pays value, B records first and B checks the public record and finds out that A has not recorded.

Who wins and why?

Answer 29

B does not win because he didn’t take without notice of a prior party’s interest and he has inquiry notice because A was in physical possession.

It doesn’t matter if B was out of state because the law presumes you knew.

Question 30

If someone has record notice, the law ________ _______ ________.

Answer 30

presumes you know.

Question 31

In order to do a _______ ______, you must look at an index at the public records office.

Answer 31

title search

Question 32

In order to do a title search, you must look at an _____ at the public records office.

Answer 32

index

Question 33

There are two types of indices currently used in the United States:
1.
2.

Answer 33

1. The Tract Index: Search by Property
2. The Grantor/ Grantee Index: Search by Name of Parties (Most commonly utilized index.)

Question 34

Which index do you search by property?

Answer 34

Tract Index

Question 35

Which index do you search by name of parties?

Answer 35

Grantor/Grantee Index

Question 36

What is the most commonly utilized index?

Answer 36

The Grantor/Grantee Index

Question 37

How is the grantor index organized?

Answer 37

Alphabetically and chronologically

Question 38

How is the grantee index organized?

Answer 38

alphabetically

Question 39

Which index is organized alphabetically?

Answer 39

grantee

Question 40

Which index is organized alphabetically and chronologically?

Answer 40

Grantor

Question 41

In the Grantor/ Grantee system, there is an index for _______ and an index for the _________.

Answer 41

grantors
grantees

Question 42

How do you search a title in the Grantor/Grantee System?

Begin by searching in the

Answer 42

grantee index

Question 43

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1. ?
2.
3.
4.
5.
6.
7.
8.

Answer 43

1. Look up in the grantee index, Oscar’s name and find the deed granting the property to him.

Oscar is the grantee on that deed

Question 44

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1.
2. ?
3.
4.
5.
6.
7.
8.

Answer 44

2. Once you find it you can discern the following: the name of Oscar’s grantor, assume his name is Pete, the property description, and any recorded restrictions on the deed. – look at the legal description and make sure that it is the same as what A is buying from O.

Question 45

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1.
2.
3. ?
4.
5.
6.
7.
8.

Answer 45

3) Next you look up Pete’s name in the grantee index and find the deed giving it to him, assume Quita was Pete’s grantor, and review this deed.

Question 46

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1.
2.
3.
4. ?
5.
6.
7.
8.

Answer 46

4) Then you look up Quita’s name in the grantee index and find the deed giving it to her, assume Roscoe was Quita’s grantor, and review this deed.

Question 47

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1.
2.
3.
4.
5. ?
6.
7.
8.

Answer 47

5) Goes far back as necessary, 60 years or less in some jurisdictions, back to the sovereign in others, to ensure good title.

Question 48

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1.
2.
3.
4.
5.
6. ?
7.
8.

Answer 48

6) So, you have found the following:
Roscoe  Quita
Quits  Pete
Pete  Oscar

Question 49

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1.
2.
3.
4.
5.
6.
7. ?
8.

Answer 49

7) Next switch to the grantor index (alphabetical and chronological.), start with Roscoe’s name, and confirm the chain of title from R Q, Q  P and P  O and make sure that there are no deviations from this chain (“breaks in the chain”) of title, duplicative conveyances to others, etc. You have to look under each person’s name for each consecutive year after they acquired the property until you find the next conveyance. In other words, if Roscoe was deeded the property by someone in 1970, you have to look under Roscoe’s name in 1971, 1972, 1973, etc. until you see his conveyance to Quita (or to someone else if Roscoe was misbehaving). You proceed through the chain until you reach Oscar.

Question 50

Imagine that you represent Anu, and she has entered into a purchase agreement with Oscar for the sale of Pink acre. Anu asks you to do a title search to make sure Oscar really owns Pink acre and has good title. (This conveyance will be O  A once the closing has occurred and the deed is delivered.) Here’s what you do:
1.
2.
3.
4.
5.
6.
7.
8. ?

Answer 50

8) It is important that you search based upon the date the deeds were executed (signed) NOT from the dates they were recorded. This is key because perhaps Quita acquired the property in 1973, but did not record until 1976. She owned the property during that time, and you want to be sure she did not convey or encumber it during the time in between execution and recordation. Be sure also to check the grantor index for Roscoe from 1973- 1976 because he was still the record owner, and, had Roscoe tried to misbehave and sell Pink acre to someone else between 1973 and 1976 after he conveyed it to Quita, but before she recorded, an innocent purchaser would not have known.

Question 51

The recording of an instrument which uses a _______ ________ _______ to describe the property conveyed, does not constitute constructive notice to a subsequent purchaser who has no actual knowledge of the prior assignment.

Answer 51

Mother Hubbard Clause

Question 52

When searching title you start with the Grantee index.
A. True
B. False

Answer 52

A. True

Question 53

Because the name that you have is the name of the seller. And on the deed from someone to the seller the seller is the__________. That is why you start with the _______- index.

Answer 53

grantee

grantee

Question 54

General Common Law Rule (regarding property ownership) is:

Answer 54

First in Time, First in Right.

Question 55

___________ ________ represent the exceptions to the general common law rule.

Answer 55

recording acts

Question 56

Under the ________ _______ a subsequent bona fide purchaser is protected against prior unrecorded interests.

Answer 56

recording acts

Question 57

Under the recording acts a ________ _______ ______ purchaser is protected against prior unrecorded interests.

Answer 57

subsequent bona fide

Question 58

Define bona fide

Answer 58

bona fide means made in good faith without fraud or deceit.

Question 59

The party that wins the race to record prevails.

Answer 59

Race Statute

Question 60

Whether a subsequent purchaser has knowledge of a prior purchaser’s claim is irrelevant.

Answer 60

Race State

Question 61

O  A (who does not record), then O  B (of same parcel) B knows of deed to A and B records. Under a race statute,

Who prevails?

Answer 61

B prevails over A.

Question 62

Exists in very few states, mainly in North Carolina and Louisiana today.

Answer 62

Race state

Question 63

1 thing to be successful in a race state and that one thing is

Answer 63

win the race to record

Question 64

Even though you are not required to record to prevail in a notice state, if you don’t record you will remain ___________ to _____________ _________ without notice.

Answer 64

vulnerable

subsequent purchasers

Question 65

Even though you are not required to _________ to prevail in a notice state, if you don’t record you will remain vulnerable to subsequent purchasers without notice.

Answer 65

record

Question 66

hey, Colton did you know I just bought black acre. He would actually know because he heard it from the horse’s mouth.

What type of notice?

Answer 66

actual notice

Question 67

But if I recorded my deed to black acre – Colton would also know that is a type of constructive notice.

What type of notice?

Answer 67

record notice

Question 68

Where O conveys to A and A doesn’t record but A moves in. If A moves in then B has constructive notice of A’s interest in the property because A is physically occupying it and that type of constructive notice, we call

Answer 68

inquiry notice

Question 69

Actual Notice, Record Notice and Inquiry Notice. If you have any of those notices then you are going to lose in a notice or race notice state. True or False.

Answer 69

True

Question 70

The prevailing party does not have to record to win (but will remain vulnerable to subsequent purchasers without notice if he/she does not) but must take without notice and must pay value.

Answer 70

Notice Statute

Question 71

If the subsequent purchaser has actual or constructive notice of an earlier conveyance of the property, he/she will not prevail.

Answer 71

Notice Statute

Question 72

O to A (who does not record), then O  B (of the same parcel) who does not have notice or knowledge of A’s deed. Under a notice statue,

Who prevails?

Answer 72

B prevails over A, even though B does not record the deed from O  B.

Question 73

About half of the states have Notice statues, examples of these states are: Illinois, Massachusetts, Texas, Florida, and Virginia. True or False.

Answer 73

True

Question 74

O was a jerk because he conveyed to A and the same thing to B. He could continue to be a jerk and convey to C who pays value and takes without notice and in a notice state now C is the winner. What could you do to stop O from being a jerk?

Answer 74

Record

Question 75

O was a jerk because he conveyed to A and the same thing to B. He could continue to be a jerk and convey to C who pays value and takes without notice and in a notice state now C is the winner. What could you do to stop O from being a jerk? Record.

Once you record nobody in line is going to be successful because they will take with notice of your interest in the property because they will have record notice of you on the property because it is on the ________ _________.

Answer 75

public record

Question 76

Recording acts give O the power to keep being a jerk. They are _____________ you to report and if you don’t record somebody can take your land from you.

Answer 76

incentivizing

Question 77

The prevailing party must pay value, take without notice (actual or constructive), and record before the prior purchaser.

Answer 77

Race Notice Statute

Question 78

O to A (who does not record), then O  B (of the same parcel) who does not have notice or knowledge of A’s deed. Then A records. Then B records. Under a Race-Notice statute,

Who prevails?

Answer 78

A prevails over B because, even though B had no notice, B did not record before A.

Requires you to do all of the things.
You have to do all three things to win under race-notice, and b only did 2 out of 3 here. So, he will not win.

Question 79

About half of the states have Race-Notice statutes, examples of these states are: Georgia, Michigan, New Jersey, and New York. True or False.

Answer 79

True

Question 80

A person who takes from a bona fide purchaser protected by the recording statute has the same rights as his grantor, even if the subsequent purchaser had notice.

Answer 80

Shelter Rule

Question 81

Applies only in a notice or race-notice jurisdiction.

Answer 81

Shelter Rule

Question 82

O to A (who does not record), then O to B (Who pays fair value and is without notice of A’s deed – a BFP). Then B records. Then A records. Then B to C.

Who wins?

Answer 82

C wins because of the shelter rule. It is alright that C knows of A.

No matter where we are B is a winner. Pay value, took without notice and recorded first.
B is going to win no matter which jurisdiction.
When B sells to C we are going to have a problem because you are not supposed to know about somebody else’s interest when you buy.

A has recorded after B has won under the recording acts but before B has sold to C. Since B has prevailed under the RA B should be able to freely alienate the property. B should be able to sell whenever B wants to and that person that B sells it to should have the best rights.

That is what the shelter rule says. The shelter rule says: It is okay that C knows about A and it is okay that A snuck in and recorded and messed everything up. If you buy from a winner, you are a winner B was a winner under the recording acts and C wins because B won.

Question 83

If you buy from a winner, you are a winner.

Answer 83

Shelter Rule

Question 84

1) O  A (wo does not record), then O dies. O leaves H as an heir. H  B (who records). B purchases for value and without notice of A’s deed. H has not yet received

Answer 84

B is the winner. Because the recording acts allow O to have the power to convey to B because A didn’t record. H inherited O’s power. Recording acts give O the power to be a jerk. The reason they allow that is because on the public record it looks like O owns it. Duly diligent they only find O’s interest because A didn’t record. Incentivizing people to record and we want them to record because we want a complete system that includes all of the titles and when you go and search everybody’s deed is there, and we can see who owns what and if the title is clear.

B wins because the recording acts allow O to have the power to convey to B since A has not recorded and H inherited that power.

Question 85

2) O  A (who does not record), then O  B. B purchases for value and without notice of A’s deed, but does not record. A then records and A  C. C purchases in good faith for valuable consideration. B records, then C records. Who prevails under a notice statute? A race-notice statute?

Answer 85

Notice state & Race notice.
C is going to win but for different reasons.

In a notice state B beats out A as a bona fide purchaser where A failed to record and then C beats out B as a bona fide purchaser where his purchase was made before B recorded.

Race notice A prevails over B because A records first and because of the shelter rule A can convey good title to C even if C has notice of B’s claim C would prevail over B in a race notice state because of the shelter rule.

Question 86

The Shelter Rule means that “if you buy from a winner, you are a winner” under the recording acts.
A. True
B. False

Answer 86

Answer: True.

Question 87

Since the acknowledgement was defective in the deed from C  Smith, the deed cannot be treated as recorded. Since all of the deeds in Seale’s chain of title were not recorded, Seale was not a subsequent purchaser in good faith who first records. Every deed in Seale’s chain of title must be recoded in order to defeat a prior purchaser. The purpose of the acknowledgement provision is to prevent _______.

Answer 87

forgery

Question 88

________ _______ _________ is the recorded sequence of transactions by which title passes.

Answer 88

Chain of Title

Question 89

Chain of Title is the recorded sequence of transactions by which ________ _______.

Answer 89

Title passes

Question 90

You will likely not win in a contest with another grantee if you have a wild deed.
A. True
B. False

Answer 90

Answer: A. True

Question 91

Be sure that you verify that grantor’s deed has been recorded in the chain of title. Even if you have recorded it is a __________ _______ and you will likely lose your interest in the property.

Answer 91

wild deed

Question 92

Public policy – courts do not like _______ ________, and they are not going to further their existence.

Answer 92

wild deeds

Question 93

Tract is too logical because it uses street addresses or tax parcel id #’s, things which are easily searchable. if we had a tract index in this jurisdiction, we would have a different decision. If Hughes would have searched in a Tract index, he would have seen that the BOE recorded and that would have put Hughes in inquiry notice. Important to know which jurisdiction you are in because wild deeds are not as big of a deal in a tract. But grantor/ grantee is the majority.

True or False.

Answer 93

True

Question 94

Who is protected under the recording statues?

Answer 94

Usually Purchasers are Protected, but Donees and Devisees are not Protected.
Protect people who have paid for the property.

Question 95

How much must a ________ pay to be a _________?
o Usually more than a nominal amount;
o Substantial amount is adequate;
o Amount must not be grossly inadequate.

Answer 95

grantee

purchaser

Question 96

If it says for some small sum of money and other good and valuable consideration a presumption arises that the ________ is a ________ for good and valuable consideration.

Answer 96

grantee is a purchaser