The Recording System
• Validly delivered deed is effective between grantor and
grantee, even if it is unrecorded, but to be effective vs.
“reliance” 3d parties, deed must be recorded
• Questions
– How do recording acts operate?
– How does the recording system facilitate the title search (title
investigation) process?
– What are the consequences of execution/recording errors?
• Recording acts are either (1) “pure race,” (2) “pure notice,” or (3)
“race-notice” in their operation
• Act specifies what action subsequent purchaser (SP) must take to
qualify for protection vs. prior purchaser (PP) from same grantor
Type of act
SP protected against PP if:
Pure Race
SP records before PP
Pure Notice
SP purchases w/out notice of PP
Race-Notice
SP purchases w/out notice of PP
and SP records before PP
Recording Act
• Each state has a recording act (a statutory estoppel rule that
displaces the “first-in-time” rule where a deed is unrecorded)
• E.g., O conveys to A, who fails to record; later O conveys
same land to B
– Under derivative title, A would prevail b/c following O’s deed to
A, O had no title to convey to B
– But, because A failed to record, the recording act may deem
A’s deed invalid vs. a subsequent purchaser like B
Applying the Recording Acts
• February 1: O conveys Blueacre to A, who does not record
• February 8: O purports to convey Blueacre to B, who pays
value (and who has no knowledge of A’s unrecorded deed),
but who does not record
• February 10: A records her deed to Blueacre
• February 12: B records his deed to Blueacre
• As between A and B, who has the superior claim?
Pure Notice Recording Statute
• As between A and B, A would have prevailed under “first in
time,” but A failed to record
• B then purchased Blueacre for value, and without notice of
A’s unrecorded claim
• Under a pure “notice” statute, A’s unrecorded deed is
ineffective vs. B; A is thus “estopped” to rely upon “first in
time” as basis for priority
– As a result, B now owns Blueacre
Race-Notice Statute
• A prevails over B under first-in-time, because B does not qualify
for protection of recording statute
• To be protected by race-notice recording statute, B must:
– (1) buy Blueacre for value (yes)
– (2) take Blueacre w/out notice of A’s deed (yes), and
– (3) record his deed before A records her deed (no!)
• Thus, recording statute does not displace “first in time”; A’s deed
is still valid vs. B under “first-in-time,” and thus A owns Blueacre
• What if B was lazy/imprudent and
failed to search the title records at the
time B purchased Blueacre?
Notice Statute
– B’s failure to search is irrelevant
– Buyer has no legal duty to search the title
records before buying land
– Buyer is deemed to have constructive notice
of what a search would have revealed
• If B had searched, B would not have
found A’s deed (which was unrecorded)
Pure Race Statute
• Likewise, under pure race statute, A prevails over B based on
first-in-time rule
• To be protected by recording act, B must
– (1) buy for value (yes), and
– (2) record his deed before A records her deed (no!)
• Which type of statute makes more sense: a pure notice
statute, a race-notice statute, or a pure race statute? Why?
Recording Statute Rationales
• Pure notice (Missouri): estoppel should protect reliance;
BFP’s reliance occurs at time of transfer
– If prior claimant hasn’t recorded, prior claimant should be
estopped from claiming title vs. BFP (without regard to
whether BFP has recorded)
• Race-notice/race
– “Reasonable” reliance requires BFP to also record in a timely
fashion, thereby promoting more complete title records
• “Every conveyance [of an
interest in real property] . . . is
void as against any subsequent
purchaser or mortgagee of the
same property, or any part
thereof, in good faith and for a
valuable consideration, whose
conveyance is first duly
recorded . . . .”
Problem 2(c):
What Type of
Recording Act?
• “A conveyance ... shall not be
valid as against any person,
except the grantor or lessor, his
heirs and devisees and persons
having actual notice of it, unless
it … is recorded in the registry of
deeds for the county or district in
which the land to which it relates
lies.”
Problem 2(b):
What Type of
Recording Act?
Problems 3(b), 3(c): Who Is Protected?
• 1) Henning conveys Blueacre to Wells, but Wells fails to
record her deed
• 2) Middleton (M) gets a judgment vs. Henning
• 3) Blueacre is sold at a sheriff’s sale to satisfy M’s
judgment; Lambert buys Blueacre at the execution sale
• Is Wells’s unrecorded deed valid against Middleton?
• Is Wells’s unrecorded deed valid against Lambert?
Recording Acts: Who Is Protected?
• Most recording acts protects only purchasers for value, i.e.,
buyers and mortgagees (note: “purchase” in this context
means to take by a voluntary transfer)
– Most do not protect a judgment lien creditor (no reliance on
the records) or a donee (no detrimental reliance); the rights of
these parties remain subject to derivative title principle
• By contrast, recording acts in a few states explicitly protect
either lien creditors (NC) and/or donees (CO)
Title Search: Grantor-Grantee Indexing
• In most jurisdictions, the recorder indexes
deeds alphabetically and chronologically in
a grantor index (by grantor’s last name)
and a grantee index (by grantee last name)
• If I’m planning to buy a home from Prof.
Bowman, how do I search the title to the
home to confirm Prof. Bowman’s
ownership?
• Problem 3(b): In most states, Wells’s unrecorded deed
was nevertheless valid vs. Middleton (who was only a
lien creditor and not a purchaser)
– Middleton’s judgment vs. Henning did not attach to the
land (title had passed to Wells)
– Middleton thus had no valid judgment lien vs. Blueacre
• Problem 3(c): When court ordered sheriff’s sale
(unaware of Wells’s unrecorded deed), and Lambert
bought at the sale, Lambert takes title free of Wells’s
unrecorded deed, if he qualifies under the recording act!
Grantee Index: Building the Chain of Title
• Step 1: begin with Grantee index, find the deed by which
Bowman obtained his interest, to identify his predecessor
(Bowman’s grantor)
• Step 2: After locating Bowman’s grantor, repeat Step 1, this
time finding the deed by which Bowman’s grantor obtained
her interest, to identify her predecessor
• Step 3: Repeat ....
• Step 4: Repeat ....
Building the Chain of Title
• Search could go back to the original owner (“root” of title)
• In reality, most searches go back only 40-60 years,
depending on local practice
– The search period will vary, depending upon (a) local title search
practices and (b) the provisions of the state’s marketable title
statute (if the state has one)
– Logic: if there is an adverse conveyance arising from an owner
more than 60 years back in the chain of title, it is unlikely to be valid
(e.g., adverse possession); cost of “deeper” search unmerited
• Accidents happen! Errors can
occur in the preparation, recording,
and indexing of deeds/mortgages
and other real estate instruments
• If these errors prevent the system
from giving effective notice, who
bears the risk of loss: the
recording party, or subsequent
purchasers relying on the
recording system?
Recording
System
Problems
Grantor Index: Adverse Conveyances
• After “building” the chain of title in the Grantee index, the
searcher then works forward in time, in the Grantor index,
looking for adverse conveyances (interests held by third
parties other than proposed Seller/Grantor)
– E.g., Did a prior grantor grant a mortgage that hasn’t been
released/satisfied? Become subject to unsatisfied judgment?
– E.g., Did a prior grantor grant an easement or covenant that
would affect the land? Limit its use or marketability?
• NPC gets judgment vs. Michael Bolan
– NPC files notice of the judgment lien,
but misspells Bolan’s name (recorded
notice spells his name “B-O-L-E-N”)
• Bolan later sold his home to Belmont,
who did not know that NPC had an
unsatisfied judgment vs. Bolan
• Q: Is NPC’s judgment lien still
enforceable against the home, or did
Belmont take free of that lien?
Problem 6
NPC v. Belmont (Ohio 1988)
Tract Indexes
• Certification of judgment, while accepted for recording,
wasn’t properly “recorded” due to misspelling by
judgment creditor, so it was not effective vs. the buyers
• A few recording offices maintain tract indexes [p. 244]
• In this situation, NPC (judgment creditor/filer) is arguably the
“cheaper cost avoider” (could’ve spelled name correctly)
• Tract indexing is superior; why don’t recording offices
create tract indexes?
– Problem: searcher would only find the certification if he/she
searched under “sound-alike” names (idem sonans)
– Court: too great of a burden to anticipate/guess alternate spellings;
searcher should be able to search under CORRECT legal name
• Chris Jackson borrows $500K from First
Bank, and grants First Bank a mortgage
on Blueacre; First Bank records
• Later, Jackson changes his name to
Mahmoud Abdul-Rauf
• Still later, he deeds Blueacre to Buyers,
by a deed that identifies him as
Mahmoud Abdul-Rauf
– Buyers don’t know that Bank holds an
unsatisfied mortgage on Blueacre
• Is Bank’s mortgage valid, or did Buyers
take free of it under the recording act?
Problem 7:
Name
Changes
– Recorder establishes a separate index page for each parcel of
land in the county; all instruments affecting title to that parcel
are entered on that page of the index, in chronological order
– In Problem 6, misspelled certification of judgment would still
appear on tract index page for the parcel!
• First Bank’s mortgage was properly recorded and gave
constructive notice to Buyers, who took subject to it
• After taking/recording its mortgage, First Bank was not
obligated to “correct” its mortgage to reflect name change
• Why does this result make sense?
– Buyers from “Mahmoud Abdul-Rauf” should’ve been
suspicious; they would have found no entry in grantee index
for any deed conveying the land to “Mahmoud Abdul-Rauf”
– Inquiry for proof of his title would’ve revealed his former name
(Chris Jackson), and a search under that name would’ve
revealed First Bank’s mortgage
• Chad Johnson (owner of Blueacre)
changes his name to Chad Ochocinco
– He takes out a mortgage loan on Blueacre
from Bank, and signs the mortgage as
“Chad Ochocinco”; Bank records
– Later, he changes his name back to “Chad
Johnson”
Problem 8:
Name
Changes
• As “Chad Johnson,” he sells Blueacre to
Buyers, who search under “Chad
Johnson,” don’t discover Bank’s mortgage,
and complete purchase of Blueacre
• Is Bank’s mortgage valid vs. Buyers (or did
Buyers take free of that mortgage)?
Problem 10
• 2010: Pratt deeded Blueacre to Ziegler
– Although the deed identified the parties
correctly, the Recorder of Deeds indexed the
deed under the name “Bratt,” not “Pratt”
• 2015: Pratt deeded Blueacre to Key (who paid
value and did not know of the prior deed to
Ziegler); Key recorded her deed promptly
• Is Key protected by the recording act?
• Problem: Bank may have recorded its mortgage, but the
mortgage is a “wild deed” (i.e., it is not recorded within the
“chain of title” and thus is not REALLY “recorded”)
– He acquired the land as “Chad Johnson” and is now selling it as
“Chad Johnson”
– A searcher looking for “Chad Johnson” (the record owner) in grantor
index won’t find Bank’s mortgage (indexed under “Chad Ochocinco”)
or a record of name change in land records
– Bank thus did not give constructive notice of its mortgage to Buyers
(who took free of the mortgage!)
– Bank should’ve “connected the chain” (i.e., before taking mortgage, it
should’ve required Chad Johnson to record a document noting his
name change, thus providing the “missing link” in chain of title)
Misindexing
• Traditional view (weight of authority): Ziegler’s misindexed
deed still provides constructive notice of his ownership to Key
(even though she can’t discover it in title search)
– Under this view, Ziegler prevails over Key (who isn’t a BFP
protected by the recording act)
– Rationale: Ziegler did what he was supposed to do, and
shouldn’t be punished for the recorder’s mistake
• Is this a sensible result?
Misindexing: The Counterview
• As between Ziegler (the grantee of the misindexed deed)
and Key (the later purchaser relying upon the index),
Ziegler is the “cheaper cost avoider”
– Ziegler knew he had attempted to record, so he could have
“double-checked” to confirm his deed had been properly
indexed (and thus was findable)
– Key couldn’t do anything to avoid this risk (though she could
buy title insurance)
• In the U.S., title certification
has become universal for
automobiles (cars are subject
to “certificate of title” statutes
in all 50 states)
• Given the amount of money
invested in land, why don’t
more states issue title
certificates for land?
Question 1
Torrens System (Title Certificates)
• A few counties (but not in MO) have implemented the
Torrens system of title registration
• Following a quiet title action, a county official issues a title
certificate for a parcel
– Original certificate is kept on file in recording office
– Certificate “certifies” the owner of the parcel
• To be valid, any interests must be entered onto the original
certificate
• Under notice and race-notice
recording acts statutes, a later
purchaser with “notice” of a prior
unrecorded claim is not protected
by the recording act
• Should “notice” be limited to the
record alone, or can a later
purchaser be deemed to have
“notice” of an unrecorded interest
based on off-record information?
Inquiry or “OffRecord” Notice
Inquiry Notice from Possession
• 2010: Henning deeds Key to Blueacre; Key does not record,
but takes possession
• 2014: Henning deeds Blueacre to Ziegler
• Should Key’s possession of Blueacre provide Ziegler with
“notice” (and thus prevent Ziegler from being protected by
the recording act)?
– Rationale: A reasonable buyer in Ziegler’s position would inspect the
land, and would have found it suspicious that Key (not the record owner)
was in possession; inquiry of Key would have revealed her claim
• General rule: Buyer takes title subject to rights of tenants in
possession under their leases (even if those leases are
unrecorded)
• Problem for Peters: oral modification of leases by Wells was
enforceable (assuming leases were one year or less in
duration, and thus not covered by Statute of Frauds)
• As a result, by paying $400/mo. for March, tenants have met
the agreed rent for March, and are not in default (thus,
Peters cannot evict them!)
• What should Peters have done differently?
Inquiry Notice: Hypo
• Wells sells 100-unit apartment building to Peters for $2MM
– Prior to buying the building, Peters reviewed a packet
containing all of the original tenant leases (rent =
$500/month) as part of his “due diligence” investigation
– Closing occurs Feb. 20
• On March 1, tenants pay only $400 for rent
– Secretly, Wells made an oral agreement with each T, on
February 2, to reduce their rent to $400/month
• Can Peters evict the tenants if they don’t pay $500/mo?
What Should Peters Have Done?
• Peters could have gotten an estoppel letter from each
Tenant, before buying the building
– Estoppel letter is a letter from Tenant to Buyer (i.e., Peters)
confirming that the terms of original lease are valid, lease has
not been modified or amended, no default exists under the
lease, T has no defense to payment of rent, etc.
– T signing estoppel letter would be estopped from later raising
oral modification against Peters
Estoppel Certificates
• In buying an apartment building, a buyer like Peters
might decide not to bother obtaining estoppel certificates
from the existing tenants
• In buying an office building or shopping center, a buyer
like Peters would NOT complete the purchase without
getting estoppel certificates from every tenant
• Can you explain the difference?