32.3 Recording Acts, Title Assurance & Liens
Key Takeaways
- A notice statute protects a later purchaser for value who takes without notice, a race-notice statute also requires that purchaser to record first, and a pure race statute protects whoever records first regardless of notice.
- Purchasers are charged with actual notice, record notice from instruments properly recorded in the chain of title, and inquiry notice of what possession or suspicious references would reveal; donees, heirs, and devisees are not protected purchasers.
- A wild deed gives no record notice, and courts divide on whether deeds recorded before the grantor acquired title, deeds recorded late, and restrictions in a common grantor's deeds to neighboring lots are in the chain of title.
- Under estoppel by deed, a grantor who conveys by warranty deed land she does not own is bound when she later acquires it, and under the shelter rule a transferee from a protected purchaser receives that purchaser's protection.
- Title insurance protects only the insured against covered defects that exist on the policy date, subject to listed exceptions, while judgment liens attach to a debtor's land when docketed and property tax liens generally have priority over earlier private interests.
32.3 Recording Acts, Title Assurance & Liens
When two people claim the same land through the same grantor, begin with the common-law rule—first in time, first in right—and then ask whether the jurisdiction's recording act protects the later claimant.
Recording Statutes: Resolving Competing Grants
At early common law, competing claims to real property were resolved strictly by the priority rule: First in Time, First in Right. Today, every state has enacted a Recording Statute that modifies the common law to protect subsequent purchasers who rely on public land records.
COMPETING PROPERTY CLAIMS
│
Is subsequent claimant a BFP?
(Purchaser for value without notice)
│
┌──────────────────┴──────────────────┐
▼ ▼
NO YES
│ │
COMMON LAW APPLIES WHAT RECORDING ACT GOVERNS?
First in Time = Winner │
┌──────────────────────┼──────────────────────┐
▼ ▼ ▼
NOTICE STATUTE RACE-NOTICE ACT RACE STATUTE
BFP wins if no BFP wins ONLY if First to record
notice at purchase no notice AND wins; notice is
(Recording not req.) records first irrelevant
1. Bona Fide Purchaser (BFP) Status
To qualify as a Bona Fide Purchaser (BFP) entitled to statutory protection, a party must:
- Pay Valuable Consideration: Must pay substantial pecuniary value (more than nominal consideration like $1). Donees, heirs, and devisees are not protected purchasers. Judgment lien creditors are not protected under many recording acts, but some statutes expressly protect creditors.
- Take Without Notice: At the moment the purchase price is paid and the deed is delivered, the purchaser must have no notice of the prior unrecorded conveyance.
2. The Three Types of Notice
- Actual Notice: Literal personal knowledge of the prior unrecorded conveyance.
- Record (Constructive) Notice: Imparted by a properly recorded document appearing within the chain of title. A deed recorded outside the chain of title (a "wild deed") imparts no record notice.
- Inquiry Notice: What a reasonable physical inspection of the property would reveal (e.g., an adverse possessor or tenant in physical possession), or what a reasonable investigation of suspicious recitals in chain documents would disclose.
3. The Three Recording Acts Compared
┌────────────────────────────────────────────────────────────────────────────┐
│ STATUTORY LANGUAGE RECOGNITION GUIDE │
├────────────────────────────────────────────────────────────────────────────┤
│ NOTICE ACT: │
│ "No conveyance shall be valid against any subsequent purchaser for │
│ valuable consideration without notice, UNLESS the same be recorded." │
│ • Keywords: 'without notice' / 'in good faith'; NO mention of recording │
│ first! │
│ • Rule: The subsequent BFP prevails immediately upon purchase. │
├────────────────────────────────────────────────────────────────────────────┤
│ RACE-NOTICE ACT: │
│ "No conveyance shall be valid against any subsequent purchaser for │
│ valuable consideration without notice, WHOSE CONVEYANCE IS FIRST │
│ DULY RECORDED." │
│ • Keywords: 'without notice' / 'in good faith' PLUS 'first recorded'! │
│ • Rule: Subsequent BFP must (1) take without notice AND (2) record first. │
├────────────────────────────────────────────────────────────────────────────┤
│ RACE ACT: │
│ "No conveyance is valid until recorded, and the conveyance FIRST │
│ RECORDED shall have priority." │
│ • Keywords: Purely 'first recorded'; ZERO mention of notice or good faith!│
│ • Rule: First to record wins, even if they had actual knowledge of prior. │
└────────────────────────────────────────────────────────────────────────────┘
4. Chain of Title & The Shelter Rule
- The Wild Deed: A deed executed by a grantor who never recorded their own underlying deed is a wild deed. A wild deed does not impart constructive record notice to subsequent purchasers because it cannot be discovered by a diligent title examiner tracing the grantor-grantee index.
- The Shelter Rule: A person who takes title from a protected BFP inherits the BFP's protected status, even if that transferee had actual knowledge of a prior unrecorded grant or was a mere donee who paid no value. Equity permits the BFP to transfer their clear title freely. The main exception: a person who held the land earlier and was responsible for the unrecorded conveyance—such as a grantor who sold the same land twice—cannot reacquire the land from the protected purchaser and claim that purchaser's protection.
Estoppel by Deed (After-Acquired Title Doctrine)
If a grantor purports to convey an estate in land that they do not own by warranty deed, and the grantor subsequently acquires valid title to that land, that after-acquired title vests automatically in the grantee by operation of law. The grantor is equitably estopped from asserting that they had no title at the time of the initial conveyance.
- MBE Twist — Subsequent BFP: If the grantor, after acquiring valid title, conveys the land to a subsequent Bona Fide Purchaser (BFP) who records, many courts hold that the BFP prevails, although some courts require title searchers to look for deeds a grantor gave before acquiring title. The first grantee's deed was recorded outside the chain of title (before the grantor had record title) and thus does not provide constructive record notice to the BFP.
- Quitclaim deeds: Estoppel by deed generally does not apply to a quitclaim deed, which conveys only whatever interest the grantor then has, unless the deed purports to convey a particular estate.
Recording Acts in More Detail
What Recording Does
- Validity between the parties: An unrecorded deed is valid between the grantor and grantee. Recording protects the grantee against later purchasers and creditors.
- What is recorded: Deeds, mortgages, easements, long-term leases, options, land contracts, judgments, liens, and notices of pending lawsuits affecting title (lis pendens) may be recorded. Most states require an acknowledgment before a notary for an instrument to be recorded.
- Misindexed instruments: Courts divide on whether a properly delivered instrument that the recorder indexes incorrectly gives constructive notice.
- Limits: Recording acts do not protect purchasers against void deeds, such as forgeries, or against title acquired by adverse possession. Many states also do not apply them to easements created by implication or prescription.
Indexes and the Chain of Title
- Grantor-grantee indexes: A searcher traces the chain of title backward through the grantee index and then searches the grantor index under each owner's name for the period that owner held record title.
- Tract indexes: Some jurisdictions, and most title companies, index all instruments by parcel, which avoids many chain-of-title problems.
| Problem | Example | Result |
|---|---|---|
| Wild deed | O conveys to A, who does not record; A conveys to B, who records | B's deed gives later purchasers from O no record notice, because it cannot be found by searching under O's name |
| Deed recorded before the grantor acquired title | A, who owns nothing, conveys to B, who records; O later conveys to A; A conveys to C | Many courts treat B's deed as outside the chain of title and protect C (Sabo v. Horvath, Alaska 1976); some courts disagree |
| Late-recorded deed | O conveys to A, who does not record; O conveys to B, who is not protected; A then records; B conveys to C | Courts divide: some charge C with notice of A's deed because it was recorded before C bought (Morse v. Curtis, Mass. 1885), while others hold it is outside the chain |
| Restrictions in deeds to neighboring lots | A developer's deeds to other lots restrict the developer's retained lot, which it later sells | Courts divide on whether buyers must search the developer's deeds to other lots (Guillette v. Daly Dry Wall, Inc., Mass. 1975, requires it; Witter v. Taggart, N.Y. 1991, does not) |
Purchasers, Value, and Timing
- Value: A purchaser must pay more than nominal value but need not pay market value. A lender that advances new money in exchange for a mortgage is a purchaser for value; courts divide on a creditor that takes a mortgage only to secure an existing debt.
- Timing of notice: Notice is measured when the purchaser pays and receives the deed. Notice learned afterward does not matter.
- Installment buyers: A buyer who learns of an earlier interest after paying only part of the price may be protected only to the extent of the payments already made.
- Inquiry notice: A purchaser is charged with whatever a reasonable inquiry would reveal about someone in possession other than the seller, such as a tenant with an unrecorded lease or option, and about references in recorded documents to unrecorded interests.
Title Assurance
Title Insurance
- Owner's policy: An owner's policy indemnifies the insured owner, up to the policy amount, against loss from covered title defects that exist on the policy date, and the insurer must defend covered claims. It does not run with the land to later buyers, although standard policies continue to protect the insured against liability on warranties given when the insured sells.
- Lender's policy: A lender's policy protects the mortgage lender, up to the loan amount, and passes with an assignment of the loan.
- Exceptions and exclusions: Policies list exceptions for specific recorded matters found in the search and often include standard exceptions for matters that a survey or inspection would reveal and for rights of parties in possession. Common exclusions cover zoning and other government regulations and defects that the insured created or knew about but did not disclose.
- Subrogation: A title insurer that pays a claim may pursue the insured's rights against others, such as a grantor who breached a warranty deed's covenants.
Other Forms of Title Assurance
- Abstracts and attorney opinions: A title abstracter or attorney who searches negligently may be liable to the client and, in some states, to others who foreseeably rely on the work.
- Marketable title acts: Many states provide that a person with an unbroken record chain of title for a set period, often 30 or 40 years, holds title free of older interests that were not re-recorded, with exceptions such as easements in visible use and government interests.
- Torrens registration: Under a Torrens system, a court proceeding registers title, and the certificate of title is conclusive with few exceptions. Few jurisdictions still use it.
Liens Against Land
- Judgment liens: Docketing or recording a money judgment usually creates a lien on the debtor's real property in that county, including property acquired later, for a statutory period and subject to homestead exemptions.
- Property tax liens: Property tax liens generally have priority over earlier mortgages and other private liens. A government that sells land for unpaid taxes may not keep surplus value beyond the tax debt without compensation (Tyler v. Hennepin County, 2023; see Section 11.1).
- Federal tax liens: Until notice is filed, a federal tax lien is not valid against purchasers, holders of security interests, mechanic's lienors, or judgment lien creditors.
- Mechanic's liens: Contractors, subcontractors, and suppliers who improve land may record liens within a statutory period, and their priority often relates back to the start of work (see Section 31.2).
- Lis pendens: A recorded notice of a pending lawsuit affecting title binds later purchasers to the outcome of the suit.
A landowner owned Blackacre. On June 1, the landowner conveyed Blackacre to Buyer A for $100,000. Buyer A did not record the deed. On June 15, the landowner conveyed Blackacre to Buyer B, who paid $110,000 and had no actual knowledge of the prior conveyance to Buyer A. Buyer B did not record the deed. On July 1, Buyer A recorded his deed. On July 15, Buyer B recorded her deed. On August 1, Buyer B executed a deed gifting Blackacre to her nephew. The nephew had actual knowledge of Buyer A's prior deed and recordation before receiving the gift. The jurisdiction has a recording statute that provides: 'No conveyance of real property shall be valid against any subsequent purchaser for valuable consideration without notice thereof, unless the same be recorded according to law.' Between Buyer A and the nephew, who holds legal title to Blackacre?
On March 1, an owner sold Redacre to Ana, who paid value but did not record her deed. On March 10, the owner sold Redacre to Ben, who paid value and had no notice of Ana's deed. Ana recorded her deed on March 15, and Ben recorded his deed on March 20. The jurisdiction's statute provides: 'No conveyance of real property is valid against a subsequent purchaser for value without notice whose conveyance is first duly recorded.' Who owns Redacre?
In 2018, Carla, who did not own Greenacre, conveyed it to Dev by a general warranty deed, and Dev immediately recorded. In 2020, Carla bought Greenacre from its true owner and recorded that deed. In 2021, Carla sold Greenacre to Eli, who paid value, searched the grantor index under Carla's name from 2020 forward, found nothing, and recorded his deed. The jurisdiction has a race-notice statute, and its courts hold that a title searcher need not look for deeds given by a grantor before the grantor acquired record title. As between Dev and Eli, who owns Greenacre?
A buyer purchased a house and obtained an owner's title insurance policy, which listed an exception for 'easements shown on the recorded subdivision plat.' Three years later, the buyer sold the house to a second buyer by a general warranty deed, and the second buyer did not obtain title insurance. The second buyer then discovered that a neighbor held a valid, recorded right-of-way easement across the backyard that was not shown on the plat and that the title insurer's search had missed. The second buyer sued the title insurer. What is the likely result?