Recording Acts
Definition
Recording acts are state statutes that determine priority among competing claimants to real property interests. At common law, a prior conveyance always prevailed over a subsequent one (first in time, first in right). Recording acts modify this rule by protecting subsequent purchasers who comply with the statute’s requirements.
Three Types of Recording Statutes
1. Race Statute
- First to record wins, regardless of notice.
- Prior grantee loses if subsequent grantee records first, even if subsequent grantee had actual knowledge of the prior conveyance.
- Minority rule (North Carolina, Louisiana).
2. Notice Statute
- A subsequent bona fide purchaser (BFP) for value without notice prevails over a prior unrecorded instrument.
- BFP prevails even if BFP does not record.
- Key: BFP must take without notice at the time of the conveyance to BFP.
3. Race-Notice Statute (majority)
- A subsequent BFP wins only if:
- (a) BFP takes without notice of the prior instrument, AND
- (b) BFP records first.
- Both conditions must be satisfied.
Elements of BFP Status
To qualify as a bona fide purchaser for value:
- For value: Must pay valuable consideration (a donee/heir/devisee is not a BFP and takes subject to prior claims).
- Without notice: Must lack:
- Actual notice: Personal knowledge of the prior claim;
- Constructive (record) notice: Prior instrument is properly recorded in the chain of title;
- Inquiry notice: Facts that would lead a reasonable person to inquire further (visible possession, references in deeds).
- Takes before the prior instrument is recorded (under notice and race-notice statutes).
Shelter Rule
A person who takes from a BFP acquires the BFP’s protected status, even if the subsequent purchaser had notice. The shelter rule allows BFPs to convey marketable title to subsequent purchasers.
Key Concepts
- Chain of title: Sequence of recorded instruments establishing ownership. Wild deeds (recorded outside the chain of title) do not provide constructive notice.
- Index systems: Grantor-grantee index vs. tract index; searcher must check all instruments in the chain.
- Marketable title acts: Some states limit how far back a title search must go.
Policy / Rationale
- Encourages recording to give public notice of property interests.
- Protects purchasers who rely on the record title.
- Promotes transferability of property and certainty of title.
- Race-notice statutes balance these goals by requiring both absence of notice and actual recording.