PastPaperHero | Titles - Recording acts

Learning Outcomes

After reading this article, you will be able to explain the purpose and operation of recording acts, distinguish the three main types of recording statutes, identify who qualifies as a bona fide purchaser, and apply the rules of actual, record, and inquiry notice to MBE-style problems. You will also be able to analyze priority disputes and recognize common exam pitfalls.

MBE Syllabus

For the MBE, you are required to understand the legal framework that governs the priority of competing claims to real property. This article covers:

The function and rationale of recording acts.
The three main types of recording statutes: race, notice, and race-notice.
The requirements for bona fide purchaser status.
The operation of actual, record, and inquiry notice.
The effect of recording and the shelter rule.
The impact of wild deeds and chain of title issues.
The application of recording acts to mortgages and other interests.

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.

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
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
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
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 statutes that determine the priority of competing claims to real property. They are designed to protect good faith purchasers for value and to encourage the prompt recording of interests. Understanding how these statutes operate is essential for resolving disputes between multiple claimants and for answering MBE questions accurately.

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

Types of Recording Statutes

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

Race Statute: The first party to record wins, regardless of notice.
Notice Statute: A subsequent bona fide purchaser (BFP) without notice of a prior interest prevails, even if the prior interest is recorded first.
Race-Notice Statute: A subsequent BFP without notice 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 for value and without notice of any prior unrecorded interest.

Notice: Actual, Record, and Inquiry

A purchaser is charged with three types of notice:

Actual Notice: The purchaser actually knows of the prior interest.
Record Notice: The prior interest appears in the public records in the chain of title.
Inquiry Notice: The purchaser is on notice of facts that would lead a reasonable person to investigate further.

Key Term: Actual Notice
Knowledge of a prior interest acquired directly, such as being told about it or seeing an unrecorded deed.

Key Term: Record Notice
Notice imputed to a purchaser based on properly recorded instruments in the chain of title, even if the purchaser did not actually search the records.

Key Term: Inquiry Notice
Notice imputed to a purchaser who would have discovered a prior interest by investigating suspicious facts, such as someone else in possession.

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.

Key Term: Shelter Rule
A person who takes from a bona fide purchaser is protected by the recording act, even if that person has notice of a prior interest.

Effect of Recording

Recording a deed or other instrument gives constructive notice to the world and protects the interest against subsequent purchasers. However, recording does not validate a forged or otherwise invalid deed.

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

Chain of Title and Wild Deeds

A deed must be properly recorded in the chain of title to give notice. If a deed is recorded before the grantor acquires title or after the grantor has conveyed to someone else, it is a wild deed and does not provide 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 the bona fide purchaser to transfer good title to others.

Mortgages and Recording Acts

Recording acts apply to mortgages as well as deeds. A subsequent mortgagee who qualifies as a bona fide purchaser and records first may take priority over a prior unrecorded mortgage.

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 recorded later.

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 bona fide purchaser without notice who records first has priority.

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 and does not provide record notice to B.

Exam Warning

Many MBE questions test whether a party is a bona fide purchaser. Always check if the party paid value and lacked notice at the time of conveyance. If the party is a donee or had notice, the recording act does not protect them.

Revision Tip

Memorize the statutory language that signals each type of recording act. Look for phrases like "first recorded" (race), "without notice" (notice), or "first recorded, without notice" (race-notice) in the statute.

Key Point Checklist

This article has covered the following key knowledge points:

Recording acts determine priority among competing claimants to real property.
There are three types of recording statutes: race, notice, and race-notice.
Only bona fide purchasers for value without notice are protected.
Notice can be actual, record, or inquiry.
Wild deeds do not give record notice.
The shelter rule allows a BFP to transfer good title to others.
Recording acts apply to mortgages as well as deeds.

Key Terms and Concepts

Recording Act
Bona Fide Purchaser (BFP)
Actual Notice
Record Notice
Inquiry Notice
Shelter Rule
Wild Deed

Titles - Recording acts