Sunday, October 3, 2010

Recording Acts

One area that has often caused confusion for my students when studying for the bar exam is the recording statutes in Real Property. This note will summarize the law in that regard as tested on the MBE.

First, there are three types of recording statutes with which you will need to be familiar: (1) race, (2) notice, and (3) race-notice. Let’s begin with race statutes. If the question calls for analysis based on a race statute, then whoever records first wins. A requirement of notice in such circumstances is irrelevant. Half the battle on the MBE is determining which statute is called for in a particular question. A race statute will look like the following: “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser whose conveyance is first recorded.”

Next, let’s examine a notice statute. A notice statute, unlike a race statute, brings into the equation a bona fide purchaser (“BFP”). A BFP is a person who pays value and has no notice of any prior instrument. Only a subsequent BFP can prevail under a notice statute, and the BFP will prevail over a prior grantee who failed to record. Be certain that the subsequent purchaser had no actual or constructive notice of any previous conveyance at the time of the subsequent conveyance. if the purchaser had either, then the purchaser is not a BFP, and cannot prevail over a previous purchaser when a notice statute is at issue. A notice statute will look like the following: “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, unless it is recorded.”

Finally, let’s look at a race-notice statute. Under a race-notice statute, a subsequent purchaser prevails over a previous purchaser, only if the subsequent purchaser takes without notice of any previous conveyance and records before the previous purchaser. This, in effect, combines the two requirements above. In other words, for a subsequent purchaser to prevail in a race-notice statute, that subsequent purchaser must be a BFP, and win the race to record. A race-notice statute will look like the following: “No conveyance or mortgage of an interest in land is valid against any subsequent purchaser for value without notice thereof, whose conveyance is first recorded.”


8 comments:

  1. what else does "race-notice" look like? I just did a problem that said it like this: "subsequent purchasers in good faith for valuable consid, whose convey shall be first duly recorded?" i didn't detect that that the "in good faith" part meant notice

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    1. "In good faith" is the equivalent of a lack of notice, because if you are on notice of another's interest in property you are not a bona fide purchaser ("bfp"), and only bfp's are protected by the recording statute.

      Sean

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    2. The minute a prior grantee records the deed, the subsequent purchaser will be on notice, correct? As long as there is recording, the BFP will have constructive notice. Am I right? or way off mark?! :S

      Also, reading your blog is refreshing all my concepts before the, THE DAY! Thanks a ton!!!

      Delete
  2. That's correct. In fact, that's the basis of recording, and the moment you record, you're protected against subsequent grantee's claiming lack of notice.

    Glad you find the blog helpful!

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  3. That's correct. In fact, that's the basis of recording, and the moment you record, you're protected against subsequent grantee's claiming lack of notice.

    Glad you find the blog helpful!

    ReplyDelete
  4. This explains the concepts MUCH better than my textbook! I'm only studying to become a paralegal, but this was extremely helpful. Thank you.

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  5. Great explanation!!

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