The Recording System
• Validly delivered deed is effective between
grantor and grantee, even if unrecorded, but
• To be effective against 3d parties, deed must
generally be recorded
• Questions
– How do recording acts operate?
– How does the recording system facilitate the
title search (title investigation) process?
Conflicting Claims/Priority
• [P. 205] Jan. 1: O deeds Lot 1 to A
• Jan. 2: O purports to deed Lot 1 to B
– B pays O $250,000 and does not know of O’s prior
deed to A
• Under “first-in-time,” A would prevail in a title
dispute with B (rationale: under derivative title
principle, O had no title left to convey to B)
Types of Recording Acts
Recording Act
• Requires A to record his deed to be able to
assert the “first-in-time” rule against a
subsequent buyer (like B)
– By recording, A gives “notice” to B (because
by searching records, B can now ascertain A’s
ownership claim)
– If A fails to record, recording act may deem
A’s deed invalid vs. a subsequent buyer like B
(statutory estoppel rule)
• Recording act is classified as either (1) “pure race,”
(2) “pure notice,” or (3) “race-notice”
• Specifies what action a subsequent purchaser (SP)
must take to qualify for protection (i.e., to be able to
raise an estoppel against prior purchaser (PP))
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 records before PP
1
Problem 6
• 1) Henning conveys to Ziegler (no recording)
• 2) Henning purports to convey same land to
Key (no recording)
• 3) Ziegler records
• 4) Ziegler then deeds land to Chambers (no
recording)
• 5) Key records
• 6) Chambers records
• As between Key and Chambers, who has
the superior claim to title to the land?
Notice Statute: Step 1
• As between Key and Ziegler, Key would
have prevailed
– Ziegler was “first in time,” but failed to record
– Key then purchased for value and without
notice of Ziegler’s unrecorded claim
– Thus, Ziegler would’ve been estopped to rely
upon “first-in-time”
“NOTICE”
Statute
ACTION
“RACENOTICE”
Statute
“RACE”
Statute
Henning º Ziegler
Z
Z
Z
Henning º Key
K
Z
Z
Ziegler records
K
Z
Z
Ziegler º Chambers
C
C
C
Key records
C
C
C
Chambers records
C
C
C
FINAL RESULT
C
C
C
Notice Statute: Step 2
• By the same reasoning, Key is estopped
from raising “first in time” vs. Chambers
– Key acquired her interest before Chambers
acquired his (was “first-in-time”), BUT
– Chambers paid value, w/out either actual or
constructive (record) notice of Key’s claim
– Thus, Key’s deed is deemed invalid as against
Chambers
2
• What if Chambers had
failed to search the title
records?
– Irrelevant; he has no legal
duty to search, but he has
constructive notice of what
search would have
revealed
Operation of
Notice Statute
• If he’d searched, what
would he have found?
[Not Key’s deed, b/c she
hadn’t recorded yet!]
Shelter Principle
• As between Key and Chambers, Chambers
prevails under the “shelter rule” (follows from
derivative title principle), even though he
technically didn’t record first
– Ziegler’s title claim >>> Key’s title claim (Key
didn’t get protection of recording act)
– By derivative title, Chambers gets Ziegler’s
status (thus, Chambers’ claim >>> Key’s claim)
– If not, Key’s late recording would “cloud”
Ziegler’s title, making it impossible to sell!
Race-Notice Statute: Step 1
• As between Ziegler and Key, Ziegler prevails
• To be protected by recording act, Key must:
– (1) buy for value (yes)
– (2) take w/out notice of Ziegler’s deed (yes), and
– (3) record her deed before Ziegler records his
deed (no!)
• Rationale: extra “record-first” requirement
encourages prompt recording of deeds
• “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.” [Notice]
Problem 2(b):
What Type of
Recording Act?
3
• “Every conveyance . . .
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 . . . .”
[Race-notice]
Problem 2(c):
What Type of
Recording Act?
Problem 4(b), (c)
• 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 an execution sale to satisfy
M’s judgment; Lambert buys Blueacre at the
execution sale
• Is Wells’s unrecorded deed valid (a) against
Middleton? (b) against Lambert?
• “No [conveyance] shall
be valid to pass any
property interest as
against lien creditors or
purchasers for a
valuable consideration
from the donor,
bargainor or lessor but
from the time of
registration thereof in
the county where the
land lies ….” [Race]
Problem 2(a):
What Type of
Recording Act?
Recording Acts: Who Is Protected?
• Most recording acts protects only
purchasers, i.e., buyers and mortgagees
(“purchase” in this context means to take
for value, by a voluntary transfer)
– In these states, it does not protect a judgment
lien creditor (no reliance) or a donee (no
detrimental reliance) [Problem 4(d)]
4
Recording Act: Who’s Protected?
• Problem 4(b): Wells’s unrecorded deed
was nevertheless valid vs. Middleton
– While Henning owned Blueacre, Middleton’s
judgment vs. Henning would have been = lien
against Blueacre
– But Henning no longer owned Blueacre at time
of Middleton’s judgment!
– Middleton is not a “purchaser” entitled to benefit
of recording act, so he had no valid judgment
lien vs. Blueacre
The Title Search Process:
Grantor-Grantee Indexing
• In most jurisdictions, the recorder indexes
deeds in a grantor index (all deeds listed
alphabetically by grantor last name) and a
grantee index (by grantee last name)
• If I’m planning to buy Prof. Whitman’s home
(Lot 221, Bluff Creek Estates), how do I
search the title to the home (to confirm Prof.
Whitman’s ownership)?
Problem 4(c): Execution Sale
• Because Wells never recorded her deed, the
court may order an execution sale, unaware that
Middleton’s claimed lien is not actually valid!
• If Lambert buys at execution sale, he takes free
of Wells’s unrecorded deed, if:
– He gives value, has no notice/knowledge of
Wells’s unrecorded deed, and
– He qualifies under recording act (e.g., by also
recording first, if act is “race-notice”)
Grantee Index: Building the
Chain of Title
• Step 1: beginning in the grantee index, find
the deed by which current owner obtained
that interest, to identify predecessor owner
– Current owner: Dale and Marjorie Whitman
Living Trust (quitclaim deed from Dale and
Marjorie Whitman), Dec. 17, 2007, recorded
Dec. 21, 2007, Book 3252, Page 128
5
• Step 2: still in the grantee index, you
would next find the deed by which the
predecessor obtained title (in order to
identify that person’s predecessor)
– E.g., index entry indicates Dale and
Marjorie Whitman obtained title by a
warranty deed from Edward and Kathleen
Sheridan, dated March 18, 1999
– Deed was recorded March 19, 1999, Book
1510, Page 367
Building the Chain of Title
• Search could go back to the original owner
(“root” of title)
• In reality, most searches would 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)
• Steps 3-4-5-etc.: still in the grantee index,
identify each prior deed in the chain of title
– E.g., Edward and Kathleen Sheridan acquired
the property by warranty deed from Donald L.
Schmidt, March 13, 1995, recorded March 14,
1995, Book 1140, Page 89
– Donald L. Schmidt obtained his interest by
general warranty deed from B & E Investments,
Inc., dated Sept. 15, 1994, recorded Sept. 15,
1994, Book 1108, Page 738
Grantor Index: Searching for
Adverse Conveyances
• After “building” the chain of title, the searcher
then works forward in time, in grantor index,
looking for adverse conveyances
– E.g., Did a prior grantor grant a mortgage that
hasn’t been released/satisfied?
– E.g., Did a prior grantor grant an easement or
create a covenant that would affect the land or
limit its use or marketability?
6
Grantor Index: Searching for
Adverse Conveyances
• B & E Investments placed declaration of
restrictions on all lots in Bluff Creek Estates
– Recorded October 14, 1992, Book 933, Page
307 and 323
• These covenants bind Lot 221, so any
would-be buyer would need to review them
(to see whether or not they would limit
intended use or affect marketability of title)
Sheridans: Adverse Conveyances
• Edward and Kathleen Sheridan granted 3
mortgages or deeds of trust to Boone County
National Bank, but all have been released by
virtue of recorded releases
– 3/14/1995 ($270,000), released 9/20/1995
– 9/19/1995 ($203,150), released 4/5/1999
– 9/19/1995 ($45,843), released 4/5/1999
• There are no other recorded adverse
conveyances by the Sheridans, before they
deeded the land to the Whitmans
Grantor Index: Searching for
Adverse Conveyances
• Donald L. Schmidt granted a mortgage to
Boone County National Bank, dated Sept. 15,
1994, recorded Sept. 16, 1994, Book 1108,
Page 739
– Mortgage indicated that it secured a debt in the
original amount of $38,000
– But, this mortgage was released by a deed of
release dated March 23, 1995, recorded March
24, 1995, Book 1141, Page 580
Recording System Problems
• Errors can sometimes occur in the
preparation, recording, and indexing of
deeds/mortgages and other real estate
instruments
• If these errors defeat the ability of the
recording system to give notice, who bears
the risk of loss: the recording party, or
subsequent searchers?
7
• NPC gets judgment vs.
Bolan
– NPC files notice of the
judgment lien, but
misspelled Bolan’s name
(“B-O-L-E-N”)
Problem 7
• Bolan land later sold their
land to M/M Belmont
• Q: Is NPC’s judgment lien
still enforceable against the
land?
– Buyers do not know that Bank
holds an unsatisfied mortgage
on Blueacre
• Is Bank’s mortgage valid, or
are Buyers protected by the
recording act?
• Certification of judgment, while accepted for
recording, wasn’t properly “recorded,” so it was
not effective vs. the buyers
• Q: would buyers find it in a title search?
– Only if they searched the grantor index under
“sound-alike” names (idem sonans); the court
refused to require this of searchers
– Concern: too great a burden to
anticipate/guess alternate spellings
– Belmonts didn’t know of
NPC’s judgment lien
• Chris Jackson grants Bank a
mortgage on Blueacre; Bank
records
• After converting to Islam,
Jackson changes his name to
Mahmoud Abdul-Rauf
• He later deeds Blueacre to
Buyers, by deed identifying
him as Mahmoud Abdul-Rauf
NPC v. Belmont (Ohio 1988)
Problem 8:
Name
Changes
• Bank is not obligated to “correct” its mortgage
to reflect name change
• Bank’s mortgage remains valid against the
land, and Buyers took subject to it
– Buyers from “Mahmoud Abdul-Rauf” should’ve
been suspicious, as they would find no entry in
the grantee index for any deed conveying the
land to “Mahmoud Abdul-Rauf”
– Inquiry for proof of his title would’ve revealed
former name (Chris Jackson), and a search
under that name would’ve revealed Bank’s
mortgage
8
• Chad Johnson (owner of
Blueacre) changes his name to
Chad Ochocinco
– He gets mortgage on Blueacre
from Bank, which he records
(indexed under “Ochocinco”)
– He later resumes using the
name “Chad Johnson”
• As “Chad Johnson,” he sells
Blueacre to Buyers (who don’t
know of Bank’s mortgage)
• Is the mortgage valid vs. the
Buyers (are Buyers protected
by the recording act)?
Problem 9:
Name
Changes
• Problem: Bank’s mortgage is “wild,” as it is
not recorded in the “chain of title” (p. 227)
– Searcher looking for “Chad Johnson” (the
record owner) in grantor index won’t find
Bank’s mortgage (indexed as “Ochocinco”)
– Bank’s mortgage is thus not “recorded” and
does not give constructive notice of the
mortgage to Buyers (who prevail under the
recording act)
– Bank should’ve “connected the chain” (i.e.,
before taking mortgage, require Chad Johnson
to record a document noting his name change,
thus providing “missing link” in chain of title)
9