Recording & Title — Real Property

A homeowner is abroad. A con artist forges her signature on a deed conveying her house to himself, and records it. He sells the house to a buyer who pays the full $310,000. The buyer searches the records, finds that deed properly recorded, and suspects nothing. He records and moves in. She comes home and sues. Who owns the house?

She does. The buyer owns nothing, and gets no refund from her either. Everything the recording system rewards, he did. He paid value. He searched. He acted in perfect good faith. None of it matters, because the deed in his chain was forged, and a forged deed is void. This episode is the machinery that decides who owns land, and where all of it stops working.

Here is the route. First, the common-law baseline and the three recording acts that change it. Then who the statutes actually protect, and what notice means. Then the shelter rule. Then how a title search really works, and the gaps it leaves. And finally the line between a void deed and a merely voidable one.

Start before the statutes. The common law had one blunt rule. First in time, first in right. Whoever got an interest first won, period, even against a later buyer who paid full value and had no way to discover the earlier deed. That protected early grantees and blindsided honest later buyers.

Recording acts change that in exactly one direction. They let a qualifying later purchaser leapfrog an earlier interest that was never recorded. They never work in reverse. So every priority problem starts the same way. Does the later party even qualify for the statute's protection? If not, you drop back to common law and the first in time wins.

Every state's act is one of three types, differing on a single axis. What must a later purchaser do to beat an earlier unrecorded interest? Classify them from the words, because the phrases without notice and first recorded are the tells.

A notice statute. Franklin's § 201 makes an unrecorded conveyance void as against a subsequent purchaser for value who takes without notice. The language stops there. No requirement to record. So a later bona fide purchaser, one who pays value and takes without notice, wins whether or not she ever records. Roughly half the states use this.

Work it. A farmer deeds an orchard to a neighbor in May, and the neighbor never records. In September the farmer sells the same orchard to an investor who pays the full $180,000 and knows nothing. In a notice state she owns it the moment she buys. Flip one fact. Had the neighbor recorded first, she would have record notice and he keeps the land. And the last innocent purchaser prevails, so even a winner should record promptly.

A race-notice statute. Columbia's § 88 adds three words. Without notice, and who records first. Two requirements now stack. Same facts, new result. Seller to A on March 1, unrecorded. Seller to B on April 1, who pays value with no notice. A wakes up and records April 5. B records April 10.

Who wins? A. Even though B was completely innocent when she bought, she lost the race. Had B recorded on April 2, B wins. That is the practical difference. In a notice state B already owned on April 1. In a race-notice state her victory is contingent on getting there first. About half the states use this one.

And a race statute, the coldest of the three. Olympia's § 14 says no conveyance is valid against a subsequent purchaser whose conveyance is first recorded. Notice appears nowhere. So a later buyer who actually knew about the earlier unrecorded deed still wins, as long as she records first. Only a handful of states tolerate that, but the type is fair game because the winner is counterintuitive.

So here is your fixed attack. One. Classify the statute. Without notice alone signals notice. Without notice plus first recorded signals race-notice. Recording language with no notice words signals race. Two. Test whether the later party qualifies. Did they pay value, and for the first two types, take without notice? Three. Apply the tie-breaker.

Who is protected? The universal requirement is a purchaser for value. Real consideration. Money paid, property exchanged, or a loan actually advanced. Not love and affection, not a token dollar, not the promise of a gift. And purchaser is broader than buyer. A lender who advances a real loan and takes a mortgage invokes the act just like a buyer.

Who is out? Donees, heirs, and devisees. No value, so they take subject to prior interests even if innocent and even if they record first. Judgment creditors are a split. One who merely dockets a money judgment usually gave no value for the land, so a statute protecting only purchasers for value does not shield her. But many statutes protect creditors too. Read the words.

Then the second half. Without notice, and timing is everything. The buyer must have no notice at the instant she gives value and receives her interest. Notice acquired afterward comes too late to hurt her. Notice before or while she pays destroys her protection. A buyer who learns of the prior deed after signing a contract but before paying is generally not protected.

Notice comes in three forms, and any one disqualifies. Actual notice is real, subjective knowledge. Record notice is what the law imputes from the public records. A buyer is charged with everything a proper search of the chain would reveal, whether or not she searches. That is the engine of the system. Your recorded deed puts the world on notice, so nobody afterward qualifies as a purchaser without notice.

Which is why a couple who buy a lakefront lot on the seller's word alone, never searching, lose to a deed recorded months before they bought. I had no idea is not a defense. And the third form, inquiry notice, catches buyers who ignore red flags. Two triggers dominate.

First, possession. If someone other than the seller is in open, visible, exclusive possession, the buyer must investigate that person's rights. A tenant living openly in a duplex, under a lease with a purchase option, binds a buyer who relied on photographs and never visited. He is charged with what a visit would have shown.

Second, references in recorded documents. A recorded deed in the chain says subject to the easement granted to the water district. The buyer is now on inquiry notice of that easement, even though it was never itself recorded, and must chase down its terms. One thing that does not trigger inquiry, in most states, is a quitclaim deed standing alone.

Now the shelter rule, which produces one of the most satisfying results in property. Once a bona fide purchaser cuts off an earlier interest, she passes that protection down the line. Someone who takes from her is sheltered by her status and gets what she had. Free of the earlier interest, even if he paid nothing, even if he knew all about it.

Try it. A buyer defeats an earlier unrecorded deed, then gives the land to her son as a wedding gift. By then the son has heard all about that earlier deed. Does he take free of it? Yes. Sheltered. The point is not to reward him. It is to protect her, because if her buyers could not get clean title her protection would be worth nothing. One limit. Nobody can launder title by buying back an interest he was already bound by.

Now the plumbing, because its gaps are half the exam. Most jurisdictions use a grantor-grantee index. Two master indexes organized by people's names, not parcels. You work the grantee index backward, finding each owner and who conveyed to her, back to a root of title. Then run each owner forward through the grantor index, checking for any competing conveyance she made while she held title.

A minority of places, and virtually all title companies, use a tract index, gathering everything about one parcel on a single page. Assume grantor-grantee unless told otherwise. And keep the effect of recording straight. Recording is not what makes a deed valid. An unrecorded deed is fully effective between grantor and grantee. Recording gives constructive notice and establishes priority. Nothing more.

Two wrinkles before the gaps. To be entitled to recording, an instrument generally must be acknowledged, meaning signed before a notary. A deed recorded without one gives no constructive notice under the majority rule. And recorder's mistakes are a genuine split. Say a deed is properly filed but the clerk mis-indexes it, so a standard search never finds it.

The traditional rule says recording is complete on filing, so it gives notice anyway, and the loss falls on the searcher. The modern trend says a document a reasonable search could not find gives no notice, and the loss falls on the party who recorded and could have checked. Flag both.

Now the chain of title, and the single most useful sentence here. Recorded is not the same as inside the chain of title. Only an instrument a standard grantor-grantee search would actually find imputes record notice. Three gaps follow, and they all look like the document should count.

First, the wild deed. An owner conveys to A, who never records, and A conveys to B, who does record. B's deed is wild, because A never appears as a grantee in the record chain. A later purchaser buying from the owner searches his name, finds no conveyance out of him, and would hit that deed only by luck. Outside the chain, no notice.

Second, recorded too early. Under estoppel by deed, a grantor conveys land she does not yet own by a warranty deed, then actually acquires it, and the after-acquired title passes to her grantee. But that binds only those two. Her grantee recorded before she had any record title, so a searcher running her name for the period after she acquired it never sees it. Majority rule, a later bona fide purchaser prevails.

Third, recorded too late. An owner conveys to A, unrecorded, then conveys to B, a bona fide purchaser, who records. Only afterward does A record. A's deed appears under the owner's name, but for a date after he had already parted with title and dropped out of the chain. Nobody keeps searching a former owner. Outside the chain again.

Which brings us back to that house. The system assumes the deeds in the chain are genuine, and when that fails, none of it works. A forged deed is void. A legal nullity transferring no title at all. The true owner never conveyed, so nobody downstream acquires good title, however innocent. Recording acts resolve priority among valid conveyances. They cannot manufacture title from a void instrument.

Same for a deed never delivered. A signed deed locked in a desk drawer, taken and recorded by someone else, is void. So is a deed forged by an impostor, and one procured by fraud in the factum, where the grantor is deceived about the very nature of what she is signing.

Contrast a voidable deed, which does pass title but leaves the grantor a power to rescind. The line is fraud in the factum against fraud in the inducement. The grantor knew she was signing a deed but was lied to about the surrounding facts. Or she was pressured by duress or undue influence. Or she is a minor. All voidable, and the bona fide purchaser doctrine does its normal work.

A con artist tricks an owner into deeding her house to him by lying about how the proceeds will be used. She knew she was signing a deed, so it is voidable. Before she discovers the fraud he sells to a buyer who pays value with no notice. That buyer keeps the house, and she is left to chase the con artist. Forge the signature instead, and the buyer gets nothing.

A word on authorities. This episode named no cases, and that is deliberate. NextGen questions drop you into a two- or three-party fight over the same parcel and ask who owns it. They will not ask you for case names. What they may well hand you is a recording statute you have never seen, which is why classifying one from its operative words is a skill worth drilling.

If you keep only three things, keep these. The classification reflex, notice against race-notice against race. The bona fide purchaser test, value plus no notice, measured at the instant value passes. And the void line, because a forged deed defeats every buyer who ever relied on the record.

Now the traps, straight from the examiners' favorites. One. Applying a notice statute's no-need-to-record logic in a race-notice state, where the later buyer must also record first. Two. Treating a donee, heir, or devisee as a protected purchaser. Only a taker for value qualifies.

Three. Forgetting inquiry notice, from possession or from a reference in a recorded document. Four. Assuming a recorded document always gives notice, when it may be a wild deed, recorded too early, recorded too late, or never entitled to recording at all.

Five. Letting a bona fide purchaser defeat a forged, void deed. Six. Ignoring the shelter rule, which lets even a donee with actual knowledge win if he took from a bona fide purchaser. And this topic is starred, so the three statute types, the notice forms, and the void line all have to be automatic.

Time for the quick check, and this one comes straight from the BARGO question bank. An owner conveys a parcel to a first grantee, who never records. That grantee conveys to a second party, who does record. Later the owner, still the record owner, sells the same parcel to a purchaser for value. She searches the grantor index under his name, finds no conveyance out of him to anyone, and records.

Notice statute. The second party says his recorded deed gave her record notice. Is she charged with it? Option one. Yes, because a recorded deed always imparts constructive notice. Option two. No, because the second party paid nothing. Option three. No, because the deed is a wild deed, outside the chain of title. Pause here if you want a moment.

The answer is option three. A deed is only as good as its findability. Because the owner-to-first-grantee link was never recorded, the second party's deed is wild. His grantor never appears as a grantee in the record chain, so a searcher would never come across it. Outside the chain, no notice, and the purchaser takes free of it.

Option one is the intuitive error. Only instruments within the chain of title impart notice. Option two reaches the right result for the wrong reason. Even with full value paid, the deed would still be wild. There are thirty plus more questions on this topic alone, each explained.

Five things to take away. One. Classify the statute first, from its words, then ask whether the later party even qualifies. If not, common law controls and the first in time wins. Two. Protection runs only to a purchaser for value without notice, which rules out donees, heirs, and devisees, and includes a lender who advanced real money.

Three. Three forms of notice, and any one disqualifies. Actual, record, and inquiry, with possession and recorded references as the inquiry triggers. Four. Recorded is not the same as inside the chain of title. A wild deed, one recorded too early, and one recorded too late all charge nobody with anything.

Five. The shelter rule passes a bona fide purchaser's protection to whoever takes from her, value or knowledge notwithstanding.

And above all, the void line. Which is why our homeowner walked back into her own house. Forged, undelivered, or fraud in the factum, and no buyer takes title however clean the record looked. That is the last stop in Real Property.

Practice this topic with more than 2,900 exam-style questions, free to start, at nextgenbargo.com. This episode is for education and exam preparation only, not legal advice, and we are not affiliated with or endorsed by the NCBE or any bar examining authority.