Recording Acts Part 1 Flashcards by D Acorn

3 recording acts:
1.
2.
3.

Race
Notice
Race- Notice

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Race Recording Act
you must:

win the race to record

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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.

race statutes

race

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Notice Recording Act
you must:

pay value and take without notice

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

taking without notice

take without notice

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

prior party’s interest

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

Actual Notice

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Three kinds of Notice:
1.
2.
3.

Actual Notice
Record Notice
Inquiry Notice

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

actual notice

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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.

public records office

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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.

record notice

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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.

time to check

presumes you know

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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.

recording acts

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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.

inquiry notice

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

Pay Value
Take without Notice
Record First

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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.

take without notice

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Shelter Rule

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

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

Shelter Rule

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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.

True

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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 _________ _________.

Torrens System

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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.

Torrens System

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

recorded at the public records office.

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

fixture filing
private restrictions

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

deed

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

possession of the property

Why record documents?

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

It protects purchasers for value and lean creditors against prior unrecorded interests. What does this refer to?

Why you should record documents

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:

why we should record documents

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?

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.

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

presumes you know.

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

title search

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

index

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

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

Which index do you search by property?

Tract Index

Which index do you search by name of parties?

Grantor/Grantee Index

What is the most commonly utilized index?

The Grantor/Grantee Index

How is the grantor index organized?

Alphabetically and chronologically

How is the grantee index organized?

alphabetically

Which index is organized alphabetically?

grantee

Which index is organized alphabetically and chronologically?

Grantor

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

grantors grantees

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

grantee index

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.

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

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.

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.

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.

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

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

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.

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.

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.

Mother Hubbard Clause

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

A. True

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.

grantee grantee

General Common Law Rule (regarding property ownership) is:

First in Time, First in Right.

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

recording acts

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

recording acts

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

subsequent bona fide

Define bona fide

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

The party that wins the race to record prevails.

Race Statute

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

Race State

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?

B prevails over A.

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

Race state

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

win the race to record

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.

vulnerable subsequent purchasers

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.

record

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?

actual notice

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

record notice

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

inquiry notice

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.

True

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.

Notice Statute

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

Notice Statute

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?

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

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

True

Record

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 ________ _________.

public record

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.

incentivizing

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

Race Notice Statute

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?

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.

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

True

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.

Shelter Rule

Applies only in a notice or race-notice jurisdiction.

Shelter Rule

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?

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.

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

Shelter Rule

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

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.

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?

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.

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

Answer: True.

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 _______.

forgery

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

Chain of Title

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

Title passes

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

Answer: A. True

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.

wild deed

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

wild deeds

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.

True

Who is protected under the recording statues?

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

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.

grantee purchaser

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.

grantee is a purchaser