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Nov. 28 Property: Recording Statutes

                Now for the next exciting property topic: recording statutes. The nonstatutory rule is first in time, first in right. That means the first one to record gets the property. That doesn’t mean that a deed isn’t valid, just that if you record it second, you lose your right to the property. Recording statutes, however, govern how things work in America. There are three kinds of statutes: race, notice, race-notice. A race statute is just what it sounds like; you record first, you get the property just like the nonstatutory rule. On the other end of the spectrum we have notice statutes. In a jurisdiction with a notice statute, it’s immaterial who wins the race to record. A second grantee who takes without notice of a previous grant will prevail. A nice hybrid of the two is the race-notice statute. In such a jurisdiction, the second grantee has to record before the first grantee and purchase without notice of the first grantee in order to prevail over the first grantee.

                In the cases we read, the moral of the story was to check the chain of title. In Jefferson County v. Mosley Dillard conveyed a right of way (ROW) to the county, but the conveyance wasn’t recorded. The deed that Dillard conveyed to Mosley had an exception that the property was subject to public rights of way. Mosley then conveyed the property to two other people. A road had been built on only part of the ROW. The question was if Mosley was an innocent purchaser without notice. The court held that the exception in the lease was enough to lead Mosley to at least ask. If a second purchaser with notice acquired title from a first purchaser who didn’t have notice, he succeeds to all the rights of the immediate grantor. In this case, however, Mosley, the first purchaser, didn’t have the right to convey the property without the ROW.

                You can check the chain of title, but there are cases where a title search won’t reveal everything. In Sabo v. Horvath Lowery conveyed land to Horvath before he received the patent for the land from the government. After he received the patent, he conveyed the property to Sabo. The court held that the deed to Horvath was valid, but it only gave him the interest Lowery had in the land at the time. Because of this, the deed was a “wild deed” outside the chain of title. Wild deeds don’t give constructive notice, and because Sabo recorded first, Sabo gets the land. Horvath should have rerecorded right when Lowery got the patent.

                So title searches may not reveal everything, but if you do your best (usually a search back 60 years is enough) and there’s no notice, you’re okay.

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November 28, 2006 - Posted by | Property

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