Recording Acts. All rights reserved. Provided for student use only. of H O U S T O N Professor Marcilynn A. Burke Copyright 2013 Marcilynn A.

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1 Recording Acts If an owner, O, purports to make two conveyances (first to A and then to B) of the same land, the earlier grantee, A (first in time, first in right) will prevail unless a recording act alters the result in favor of the subsequent grantee, B. B s behavior must qualify him for protection under the recording act.

2 Recording Acts That is, unless a recording act protects B, the subsequent grantee, the common law of first in time, first in right will govern and the earlier grantee, A, will prevail. If the recording act does not protect B, his only remedy is to sue O for fraud.

3 Recording Acts Purposes 1. Protect existing owners from losing property to later grantees 2. Protect new grantees (usually bona fide purchasers (BFPs)) without notice or knowledge of prior claims

4 Recording Acts Race Notice Race-Notice

5 Race As between two successive purchasers for value, the person who wins the race to record prevails.

6 Notice (Texas) An unrecorded instrument is invalid against a subsequent purchaser for value without notice. Thus, a subsequent purchaser without notice prevails (even if the subsequent purchaser does not record).

7 Texas Property Code Validity of Unrecorded Instrument a) A conveyance of real property or an interest in real property or a mortgage or deed of trust is void as to a creditor or to a subsequent purchaser for a valuable consideration without notice unless the instrument has been acknowledged, sworn to, or proved and filed for record as required by law. b) The unrecorded instrument is binding on a party to the instrument, on the party's heirs, and on a subsequent purchaser who does not pay a valuable consideration or who has notice of the instrument.

8 Race-Notice A subsequent purchaser for value is protected against prior unrecorded instruments only if the subsequent purchaser (1) is without notice of the prior instrument and (2) records before the prior instrument is recorded.

9 Recording Acts Cont d A Couple of Points To Remember Shelter Rule A person who takes from a BFP that is protected by the recording act has the same rights as her grantor. p. 668, n. 9 Zimmer Rule A race-notice statute protects the subsequent purchaser who first records his own conveyance only if all prior conveyances in his chain of title are also recorded.

10 Who Wins? Question 1+, p. 669 O A Receives through sale A does not record the deed H Receives through inheritance transfer shown in probate record H does not record the deed C Receives through sale B Receives through sale C records the deed B records the deed

11 Who Wins? Question 2, p. 669 o Conveys to A in 2008 A does not record A records in 2010 Conveys to B, a BFP, in 2009 B does not record Conveys to C, a BFP, in 2011 C does not record B records in 2012 C records in 2013

12 Mortgage Example Question 3, p O A (2000) $10,000 A does not record B (2001) $14,000 B records and knows about A C (2002) $5,000 C records and doesn t know about A Total Debt on Property = $29,000 Foreclosure Sale = $20,000

13 Mortgage Example Question 3, p O A (2000) $ 5,000 A does not record B (2001) $ 5,000 B records and knows about A C (2002) $5,000 C records and doesn t know about A Total Debt on Property = $29,000 Foreclosure Sale = $5,000

14 Messersmith v. Smith 60 N.W.2d 276 (N.D. 1953), Casebook, p. 670 Before May 7, 1946 Caroline & Frederick Messersmith are co-tenants w/ equal shares May 7, 1946 Caroline executes & delivers quit claim deed to Frederick April 23, 1951 Caroline executes mineral lease to Smith May 7, 1951 Caroline conveys 2 mineral deeds w/ warranty for undivided ½ interest in oil, gas, etc. to Smith May 9, 1951 Smith executes mineral deed and conveys interest to Seale May 14, 1951 Smith s mineral lease from Caroline is recorded May 26, 1951 mineral deed from Caroline to Smith and mineral deed from Smith to Seale are recorded July 9, 1951 Slow, yet steady Freddie finally records his deed from Caroline

15 Messersmith v. Smith Cont d Was the Deed Recorded? North Dakota s recording act Constructive notice Entitled to be recorded /legally recorded? Purpose of acknowledgement

16 Texas Property Code Instruments Concerning Property a) An instrument concerning real or personal property may be recorded if it has been acknowledged, sworn to with a proper jurat, or proved according to law. b) An instrument conveying real property may not be recorded unless it is signed and acknowledged or sworn to by the grantor in the presence of two or more credible subscribing witnesses or acknowledged or sworn to before and certified by an officer authorized to take acknowledgements or oaths, as applicable.

17 Board of Education of Minneapolis v. Hughes 136 N.W (Minn. 1912), Casebook, p. 677 Before May 16, 1906 The Hoergers own the property. May 17, 1906 The Hoergers execute & deliver deed w/ grantee blank to Hughes April 27, 1909 Duryea & Wilson (D&W) receive quit claim deed from Mrs. Hoerger(?) Nov. 19, 1909 D&W execute warranty deed to Board of Education Jan. 27, 1910 Board of Education records its deed Shortly before Dec. 16, 1910 Hughes makes his deed viable by filling in his name as grantee Dec. 16, 1910 Hughes records his deed Dec. 21, 1910 D&W record their deed

18 Board of Education v. Hughes Cont d In Fact Hoergers Hughes receives deed May 17, 1906 In Records Hoergers D&W receive deed Apr. 27, 1909 Bd. of Educ. records Jan. 27, 1910 Bd. of Educ. receives deed Nov. 19, 1909 Hughes makes deed viable shortly before Dec. 16, 1910 Hughes records Dec. 16, 1910 D&W record Dec. 21, 1910

19 Board of Education v. Hughes Cont d Chain of Title Problems Minnesota s recording act Did Hughes deed ever become operative? If so, was he a subsequent purchaser whose deed was duly recorded?