Title Records: By investigating the state of title through title records, a potential purchaser can gain assurance at reasonable cost that he or she is acquiring what the seller claims to have for transfer. This promotes transferability

Recording/Registration law induces the independent publicity of contracts, which makes them verifiable, as a prerequisite for them to attain in rem effects-that is, to convey property rights and not mere contract rights. If they keep their claims private, right holders lose or might RISK losing in rem effects

A gives to B, then A later transfers to C. C gets nothing, has a claim against A, but A has probably either fled the jurisdiction or is judgment proof (action would be for fraud)

Difference between registration and recordation: registration resolves potential disputes about title ex ante, at the time of the transfer; recordation leaves disputes about title to be resolved ex post, once they arise

US has a registration system for cars, but NOT for Real Estate (recordation)
Registration confers in rem, in that the certificate of title is binding on third parties as well as on the parties of the transfer
Recordation by itself has no binding effect on third parties, it does no more than make available for public use inspection copies of in personam transactions (contracts, deeds, liens, etc.)

Nearly all localities in the US use recordation: it generates, as a matter of law, constructive notice to all subsequent purchasers in the chain of title

Thus, recording acts create a powerful incentive for purchasers to file their deeds (and mortagees their mortgages, etc), in order to block possible good faith purchaser claims by subsequent transferees (by giving them notice)
- Recording acts DO NOT require anything to be recorded, they just create incentives to record

There is usually a Recorder’s Office in every county in a state. They do little if any screening of the documents submitted for recordation.

PERFORMING A TITLE SEARCH

Every recording office has a Grantee and a Grantor index
Performing a title search involves tracing the series of transactions from one’s would be transferor back to a “root of title” and then tracing forward
- First, look in the grantee index for one’s transferor to find the deed by which he took from his predecessor. Then look for that name in the grantee index, and so on
- Once you have gone back far enough as state law requires, then you repeat the process going forward in time through the grantor index
- For each of the people on the chain, one must look in the grantor index between the date of execution of the deed to that person AND the date that the deed from that person to the next person was RECORDED
  - Anything outside of this period is said to be “outside the chain of title” and as to such matters the land records do not furnish constructive notice
    - If something is outside the chain of title, the good faith purchaser exception to nemo dat applies

Nemo Dat: one cannot give that which one does not have. Also related to the principle of “prior in time is prior in right”. This is the default rule absent a recording act

The Deed in the Trunk: Something was sold and someone put the deed in a trunk that was found years later (unrecorded)

Good Faith Purchaser for Title: You sell somebody something and they pay you in stolen cash, you do not have to give the cash back to the owner (just one example) [cash is negotiable[

Good Faith Purchaser for Value: Someone PURCHASES the property without actual or constructive notice of its prior inconsistent interest (must pay at least reasonable market value, otherwise the low price will have said to give you inquiry notice)

Inquiry Notice: Person has sufficient notice to propel them to make a further inquiry. THIS USUALLY ARISES WHEN SOMEONE IS IN POSSESSION OF THE LAND (inquiry notice doctrine assumes any prudent purchaser of land would inspect the land)

Constructive Notice: Recordation generates as a matter of law constructive notice to all subsequent purchasers in the chain of title

**The rule of prior in time prevails unless the recording act applies to protect a later claimant

Race: Subsequent purchaser of land will be protected from the claim ofaprior grantee if the subsequent purchaser:

(1) Acquires the land for value (no gifts); AND
(2) Records his/her deed before prior claim is recorded

This makes all relevant evidence on property rights available in the public records. From the point of view of the third parties, the record, in principle, is complete.
Other claims may not be recorded and may well be binding for the parties who conveyed them, but these hidden claims have no effect on third parties

**Policy: Don’t want to waste judicial resources solving land disputes. Only used in two states because recording statutes are supposed to be statutory estoppel rules, and estoppel is usually only warranted where necessary to protect the subsequent purchaser’s reasonable reliance. Hard to say any protection is deserved here where the subsequent purchaser knew or had reason to know of the prior claim.

Notice: A subsequent purchaser of land will be protected from the claim of a prior grantee if the subsequent purchaser acquires the land

(1) For value

(2) In good faith

(3) Without notice of prior title claim (actual, constructive, inquiry)

**Policy: X’s reliance on Y’s failure to record is reasonable so long as X has paid value in good faith and without knowledge or reason to know of Jagger’s unrecorded claim.

Race-Notice: A subsequent...

#11370 - Land Titles And Records - Long Merril & Smith Property Outline

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