Titles - Recording acts

Learning Outcomes

This article explains recording acts and title priority, including:

• The function of recording acts, how they modify the common-law “first in time” rule, and why legislatures adopted them.
• How to identify race, notice, and race-notice statutes from statutory language and predict which claimant prevails under each on exam hypotheticals.
• The elements of bona fide purchaser (BFP) status, which parties qualify or are excluded, and how “value” is tested on the MBE.
• How actual, record (constructive), and inquiry notice arise in typical fact patterns and how any form of notice destroys BFP protection.
• How chain-of-title issues, wild deeds, late or misindexed recordings, and unacknowledged instruments affect constructive notice and priority outcomes.
• How the shelter rule allows transferees to “step into the shoes” of a BFP and its limits, especially with void deeds.
• How recording acts apply to mortgages and other recordable interests, including priority disputes between competing mortgagees and between mortgages and deeds.
• Strategic steps for tackling recording-act questions, including identifying the statute type, testing each party’s BFP status, and applying the proper priority rule.

MBE Syllabus

For the MBE, you are required to understand the legal framework that governs the priority of competing claims to real property, with a focus on the following syllabus points:

• The function and rationale of recording acts and their relationship to the common-law “first in time, first in right” rule
• The three main types of recording statutes: race, notice, and race-notice
• The elements required for bona fide purchaser (BFP) status and who is not protected
• The operation of actual, record (constructive), and inquiry notice
• The effect of proper and improper recording, including chain-of-title and wild deed issues
• The shelter rule and how it allows transfer of BFP protection to later takers
• The application of recording acts to mortgages and other interests in land
• Limits of the recording system (interests arising by operation of law, forged deeds, and unacknowledged instruments)

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which of the following is NOT required for a person to qualify as a bona fide purchaser under a notice statute?
   1. Payment of value
   2. Lack of notice of prior interests
   3. Recording first
   4. Acquisition of an interest in land
2. Under a race-notice statute, who prevails if O conveys Blackacre to A (who does not record), then to B (who pays value, has no notice, and records before A)?
   1. A, because she was first in time
   2. B, because she recorded first and had no notice
   3. A, because she paid value
   4. B, because she paid more for the property
3. Which type of notice is imputed to a purchaser who would have discovered a prior interest by inspecting the property?
   1. Actual notice
   2. Record notice
   3. Inquiry notice
   4. Constructive notice
4. If a deed is recorded outside the chain of title, what is it called?
   1. Wild deed
   2. Bona fide deed
   3. Shelter deed
   4. Estoppel deed

Introduction

Recording acts are state statutes that determine whose claim to real property prevails when there are conflicting interests. They do not govern whether a deed is valid between grantor and grantee; a deed becomes effective on delivery, even if it is never recorded. Instead, recording acts decide which competing interest wins when a grantor wrongfully conveys the same land to multiple parties or grants overlapping interests such as mortgages and easements.

At common law, without any recording act, the rule was simple: first in time, first in right. The first grantee to receive a valid deed took the property, and later grantees got nothing—even if they were innocent and paid full value. Modern recording statutes modify this harsh result to protect certain subsequent good faith purchasers and to encourage everyone to record promptly.

Key Term: Recording Act
A state statute that governs the effect of recording (or failing to record) a deed, mortgage, or other instrument affecting title, and determines whose claim prevails when there are conflicting interests.

Key Term: First in Time, First in Right
The common-law rule that, absent a recording statute, the first grantee to receive a valid conveyance prevails over later grantees, regardless of notice or recording.

Scope of Recording Acts

Recording acts apply to most voluntary, written transfers of interests in land:

• Deeds (warranty, special warranty, quitclaim)
• Mortgages and deeds of trust
• Options, easements, covenants, and other recordable interests
• Contracts for sale or other instruments that create or affect title

They generally do not apply to interests that arise by operation of law, because there is no instrument to record (e.g., adverse possession, implied easements, dower rights).

Key Term: Purchaser for Value
A person who acquires an interest in land by a voluntary conveyance in exchange for value (usually money or equivalent consideration), such as a buyer or mortgagee.

Judgment lien creditors are usually not treated as purchasers for value for recording act purposes unless the statute expressly includes them. On the MBE, assume judgment creditors are not protected by recording acts unless the statute clearly says otherwise.

Types of Recording Statutes

There are three main types of recording statutes tested on the MBE:

1. Race Statute: The first party to record wins, regardless of notice.
2. Notice Statute: A subsequent bona fide purchaser (BFP) without notice of a prior interest prevails, even if the prior interest is recorded first or never recorded.
3. Race-Notice Statute: A subsequent BFP without notice prevails only if they record before the prior interest is recorded.

Key Term: Race Statute
A recording statute under which the party who records first has priority, even if that party had notice of a prior unrecorded interest.

Key Term: Notice Statute
A recording statute under which a subsequent purchaser for value without notice of a prior interest prevails over that prior interest, regardless of who records first.

Key Term: Race-Notice Statute
A recording statute under which a subsequent purchaser for value without notice of a prior interest prevails only if they record before the prior interest is recorded.

Key Term: Bona Fide Purchaser (BFP)
A person who acquires an interest in real property (1) as a purchaser for value, (2) in good faith, and (3) without notice of any prior unrecorded interest at the time of conveyance.

Recognizing the Statute Type by Language

• Notice statute: look for “purchaser for value without notice” or “in good faith” with no “first recorded” requirement.
• Race-notice statute: look for “purchaser for value without notice” or “in good faith” plus “who shall first record” or “whose conveyance is first recorded.”
• Race statute: look for “first recorded” or “first to record” without any mention of notice or good faith.

On the MBE most statutes are notice or race-notice; pure race statutes are rarely used.

Key Term: Constructive Notice
Notice that the law imputes to a purchaser based on properly recorded instruments and facts that a reasonable inspection would reveal, even if the purchaser lacks actual knowledge.

Notice: Actual, Record, and Inquiry

A purchaser is charged with three types of notice. In notice and race-notice jurisdictions, a purchaser who has any of these forms of notice of a prior interest cannot be a BFP.

Key Term: Actual Notice
Knowledge of a prior interest acquired directly—for example, being told about it, seeing an unrecorded deed, or otherwise actually knowing of it.

Key Term: Record Notice
Notice imputed to a purchaser based on a prior interest that has been properly recorded in the public records in the purchaser’s chain of title.

Key Term: Inquiry Notice
Notice imputed to a purchaser who is aware of facts that would prompt a reasonable person to investigate further and that investigation would reveal the prior interest.

1. Actual Notice
   If the purchaser actually knows of a prior interest before taking, they are not in good faith, regardless of what the records show. It does not matter how the information is obtained (conversation, letter, email, seeing the deed).

2. Record (Constructive) Notice
   A purchaser is charged with notice of all properly recorded instruments that would be found in a routine search of the chain of title. If a prior deed, mortgage, or easement is duly recorded in the proper place and under the proper grantor, later purchasers are deemed to know of it, even if they never search.

3. Inquiry Notice
   A purchaser must investigate when circumstances suggest someone else may have rights. Two situations are frequently tested:

   • Someone other than the record owner is in possession (“dude on the land”).
   • The purchaser’s deed or another deed in the chain refers to an unrecorded interest (for example, “subject to an easement in favor of Jones”).

If a reasonable investigation would reveal the prior interest, the purchaser is charged with inquiry notice and is not a BFP.

Key Term: Chain of Title
The sequence of recorded documents transferring title to a parcel of land, as they appear in the public records, from the sovereign or original owner to the current record owner.

Who Is Protected by Recording Acts

Only certain parties are protected by recording acts. Generally, only bona fide purchasers for value are protected. Donees, heirs, and devisees are not protected because they did not pay value.

• Purchasers (including buyers of partial interests, like a life estate)
• Mortgagees who lend money in exchange for a mortgage on the property
• In some jurisdictions, other creditors if expressly included by statute

Unprotected persons:

• Donees (grantees who receive the property as a gift)
• Heirs and devisees (those taking by intestacy or will)
• Judgment lien creditors (in most jurisdictions)

Key Term: Judgment Lien Creditor
A creditor who obtains a money judgment and then records a lien against the debtor’s real property; usually not treated as a purchaser for value under recording acts unless the statute expressly includes them.

Importantly, if a person does not qualify as a BFP, the recording act does not apply in their favor, and the common-law “first in time” rule controls.

Key Term: Shelter Rule
A rule providing that anyone who takes from a bona fide purchaser (by sale, gift, devise, or inheritance) takes shelter in the BFP’s status and is protected by the recording act, even if the transferee has notice of a prior interest.

Effect of Recording

Recording a deed or other instrument serves three main functions:

• It gives constructive notice (record notice) to the world.
• It protects the recorded interest against certain subsequent purchasers under the applicable statute.
• It creates rebuttable presumptions of valid delivery and authenticity.

However, recording does not cure fundamental defects.

Key Term: Void Deed
A deed that is legally ineffective from the outset (for example, a forged deed or a deed to a nonexistent grantee); no one can take good title through a void deed, not even a BFP.

A forged deed or a deed that was never delivered is void; recording cannot validate it, and no subsequent purchaser can rely on it.

Key Term: Wild Deed
A recorded deed that is outside the chain of title and thus does not give constructive notice to subsequent purchasers who perform a reasonable title search.

Deeds must also satisfy statutory recording requirements—typically, acknowledgment before a notary. An unacknowledged deed that is nevertheless recorded usually does not give constructive notice because it did not qualify for recording. A later purchaser without other notice will typically prevail.

Chain of Title and Wild Deeds

The recording system is organized by grantor and grantee indexes. A standard title search traces:

• The seller’s name backward as a grantee to find how they acquired title
• Each prior owner’s name forward as a grantor to see what they conveyed

A deed gives record notice only if it appears where a reasonable searcher would look—within this chain.

A deed is a wild deed when it is recorded at a time or in a way that places it outside the chain. Common wild deed situations include:

• The deed is recorded before the grantor obtains title.
• The grantor conveys to someone else, and only then does the earlier grantee record.

Because no reasonable searcher would find a wild deed, it does not give record notice.

The Shelter Rule

A person who takes from a bona fide purchaser is protected by the recording act, even if that person has actual notice of a prior interest. This allows a BFP to transfer good title to others and promotes marketability of title.

The shelter rule does not turn a forged or void deed into a valid one; it only passes along the BFP’s priority under the recording act.

Mortgages and Recording Acts

Recording acts apply to mortgages as well as deeds. A mortgage is typically treated as a conveyance of an interest in land for recording purposes.

• A subsequent mortgagee who qualifies as a BFP and records first may take priority over a prior unrecorded mortgage (depending on the statute type).
• A later mortgage that complies with the recording act may even take priority over an earlier mortgage that was never recorded.

Key Term: Mortgagee
A lender or creditor who takes a security interest in real property (a mortgage) to secure repayment of a loan.

Key Term: Recording Act Exception for Mortgages
The principle that a later mortgagee who qualifies as a BFP under the recording statute can sometimes take priority over an earlier, unrecorded mortgage.

For example, if a bank holds an earlier but unrecorded mortgage, and a second bank later lends money, without notice of the first mortgage, and records its mortgage in a notice jurisdiction, the second bank will have priority over the first.

Worked Examples

Worked Example 1.1

O conveys Blackacre to A, who does not record. O then conveys Blackacre to B, who pays value, has no notice of A's deed, and records. The jurisdiction has a notice statute. Who owns Blackacre?

Answer:
B owns Blackacre. Under a notice statute, a subsequent bona fide purchaser without notice of a prior unrecorded interest prevails, even if the prior interest is later recorded. A took first in time, but failed to record. B paid value, had no notice at the time of conveyance, and thus is a BFP protected by the notice statute.

Worked Example 1.2

O conveys Greenacre to A, who does not record. O then conveys Greenacre to B, who pays value, has no notice of A's deed, and records before A. The jurisdiction has a race-notice statute. Who prevails?

Answer:
B prevails. Under a race-notice statute, a subsequent BFP must (1) take without notice of the prior interest at the time of conveyance, and (2) record first. B satisfies both requirements: B was without notice when taking, and B recorded before A. A’s earlier-in-time conveyance loses to B’s protected status and earlier recordation.

Worked Example 1.3

O conveys Blueacre to A, who records outside the chain of title. O then conveys Blueacre to B, who pays value and records. B does not find A's deed in the title search. Who has priority?

Answer:
B has priority. A's deed is a wild deed: it appears in the records but outside the chain of title. Because a reasonable title search would not uncover A’s deed, it does not give record notice. B, having paid value and lacking actual or inquiry notice, is a BFP and prevails under both notice and race-notice statutes.

Worked Example 1.4 – Shelter Rule and Donees

Owner donates land to a charity by quitclaim deed. The charity does not record. The next month, Owner sells the same land by warranty deed to W, who pays value, has no notice of the charity’s deed, and promptly records. One month later, the charity records. The following year, W gives the property to her son by quitclaim deed. The son learns of the charity’s recorded deed after the gift and then records his deed. The jurisdiction has a race-notice statute: “No unrecorded conveyance or mortgage of real property shall be good against subsequent purchasers for value without notice who shall first record.”

Who owns the land?

Answer:
The son owns the land. W was a BFP: she paid value, had no notice of the charity’s prior deed, and recorded before the charity. Under the race-notice statute, W takes priority over the charity. Although the son is a donee (not a purchaser for value) and thus not personally a BFP, he takes under the shelter rule. Because his grantor, W, was protected, the son “steps into her shoes” and has the same superior title as W, even though he later learned of the charity’s deed.

Worked Example 1.5 – Inquiry Notice: “Dude on the Land”

O owns Redacre and is the record owner. O contracts to sell Redacre to A, delivers a deed, and A moves onto the property but forgets to record. Later, O wrongfully sells Redacre to B, who pays full value and promptly records. When B inspected the property before closing, A was openly living there, but B assumed A was a tenant and did not investigate. The jurisdiction follows a notice statute. Who prevails?

Answer:
A prevails. B had inquiry notice because someone other than the record owner (A, not O) was in actual possession. A reasonable purchaser would inquire into A’s rights; this would have revealed A’s deed. Inquiry notice prevents B from being a BFP. Since B is not protected by the recording act, the common-law “first in time” rule applies, and A’s earlier deed controls.

Worked Example 1.6 – Competing Mortgages

O owns Whiteacre. On January 1, O grants Bank1 a mortgage for $100,000, but Bank1 fails to record. On February 1, O grants Bank2 a mortgage for$50,000. Bank2 has no knowledge of Bank1’s mortgage, gives value, and records immediately. The jurisdiction has a notice statute. Whose mortgage has priority?

Answer:
Bank2’s mortgage has priority. Bank2 is a mortgagee for value, had no actual or inquiry notice of Bank1’s prior unrecorded mortgage, and recorded. Under the notice statute, a subsequent BFP (including a mortgagee) without notice prevails over a prior unrecorded interest. Bank1’s failure to record cost it priority.

Exam Warning

Many MBE questions test whether a party is a bona fide purchaser. For every claimant, ask:

• Did this party acquire an interest in land as a purchaser or mortgagee (not as a donee, heir, or devisee)?
• Did they pay value (more than nominal consideration)?
• At the moment of conveyance, did they lack actual, record, and inquiry notice of the prior interest?

If any element fails, the recording act does not protect them and the common-law “first in time” rule governs.

Watch for decoy facts: details about the type of deed (quitclaim vs warranty), whether the earlier grantee later records, or who is in possession may be irrelevant unless they affect notice or BFP status.

Revision Tip

Memorize the statutory language that signals each type of recording act. Look for phrases like “first recorded” (race), “without notice” or “in good faith” (notice), or “without notice, who shall first record” (race-notice). Then, in a priority dispute, identify:

• The applicable statute type
• Whether the later taker is a BFP
• The timing and effect of recording and notice

Key Point Checklist

This article has covered the following key knowledge points:

• At common law, the first valid conveyance in time prevails unless displaced by a recording act.
• Recording acts are designed to protect subsequent good faith purchasers for value and to discourage secret conveyances.
• There are three types of recording statutes—race, notice, and race-notice—distinguished by their language about notice and recording first.
• Only bona fide purchasers for value (including mortgagees) are protected; donees, heirs, devisees, and judgment lien creditors generally are not.
• BFP status requires taking for value, as a purchaser or mortgagee, without actual, record, or inquiry notice of the prior interest at the time of conveyance.
• Notice can be actual, record (constructive), or inquiry; inquiry notice frequently arises from someone else’s possession or from references in deeds.
• Recording provides constructive notice and can give priority under the recording act, but it does not validate void deeds such as forged or undelivered deeds.
• A deed recorded outside the chain of title is a wild deed and does not give record notice to subsequent purchasers.
• The shelter rule allows a BFP to pass their protected status to later transferees, even donees with notice, promoting the marketability of title.
• Recording acts apply to mortgages as well as deeds; a subsequent mortgagee who is a BFP may defeat an earlier unrecorded mortgage under the applicable statute.
• Recording statutes do not protect against rights arising purely by operation of law (such as adverse possession or some implied easements); in those situations, common-law priority rules apply.

Key Terms and Concepts

• Recording Act
• First in Time, First in Right
• Race Statute
• Notice Statute
• Race-Notice Statute
• Bona Fide Purchaser (BFP)
• Purchaser for Value
• Constructive Notice
• Actual Notice
• Record Notice
• Inquiry Notice
• Chain of Title
• Wild Deed
• Void Deed
• Judgment Lien Creditor
• Shelter Rule
• Mortgagee
• Recording Act Exception for Mortgages