Ch9. Real Property Recording System — Effect and Practice of Land Records

Significance of the Recording System

Recording (deed / instrument recording): The process of entering documents affecting real property rights into official public land records maintained by the county recorder, register of deeds, or clerk of court.

Functions of the recording system:

Constructive notice: Recording gives the world legal notice of the instrument’s contents
Evidence of title: Recorded documents are presumed authentic and create a chain of title
Priority determination: In disputes over competing interests, recording order (combined with notice rules) determines who prevails

Recording Act Principles

The Three Types of Recording Acts

Race Statute (few states):
"First to record wins" — regardless of knowledge of prior interests
→ Purely a race to the recorder's office

Notice Statute (majority of states):
A subsequent bona fide purchaser (BFP) without notice of a prior
unrecorded interest takes free of it — even if they never record
→ Focus: Did the buyer have actual or constructive notice?

Race-Notice Statute (common — California, New York, etc.):
A subsequent purchaser wins only if they:
  (1) took without notice of the prior unrecorded interest AND
  (2) recorded first
→ Must win both the notice test AND the race to record

Constructive Notice vs. Actual Notice

Constructive notice: Arises automatically from recording — you are deemed to know what is in the public record, even if you never checked. Actual notice: You personally knew of the prior interest (e.g., you inspected the property and found a tenant in possession).

Inquiry notice:
A purchaser who observes facts suggesting a prior interest
(e.g., someone in possession) must investigate further.
Failure to investigate = charged with what a reasonable
investigation would have revealed.

Structure of Land Records

Grantor-Grantee Index

The traditional search tool: Two alphabetical indexes — one sorted by grantor (seller/conveyor), one by grantee (buyer/recipient) — for all instruments recorded in the county.

Deed (Warranty or Grant Deed):
  Title: property address, legal description (metes and bounds
         or lot/block), acreage or square footage
  Vesting: How title is held (joint tenancy, tenants in common,
           community property, etc.)

Section A: Ownership and Encumbrances

What appears in the ownership chain:
- Deeds (warranty, grant, quitclaim, bargain-and-sale)
- Transfers by intestate succession or testate devise
- Tax deeds (after tax foreclosure)
- Sheriff's deeds (after judgment foreclosure)
- Lis pendens (notice of pending lawsuit affecting title)
- Attachments / judgment liens
- Notices of Pendency (lis pendens)
- Preliminary notices (notice of right to mechanic's lien)

Section B: Mortgages, Liens, and Encumbrances

Recorded encumbrances:
- Mortgages and deeds of trust
- Home equity lines of credit (HELOCs)
- Easements (appurtenant and in gross)
- CC&Rs (Covenants, Conditions & Restrictions)
- Ground leases
- Mechanic's liens
- Lease memoranda

Priority rule: Among competing recorded instruments, earlier recording date wins (first in time, first in right) — subject to the applicable recording act.

Key Instrument Types

Preliminary Notice / Notice of Right to Lien

An instrument recorded before a final lien, preserving the filer’s right to later record a mechanic’s lien or other claim.

Types:
① Preliminary 20-day notice (construction / mechanic's lien)
② Lis pendens (notice of lawsuit affecting title — equivalent of
   a "pending action" notice)

Effect of a preliminary notice:
- Preserves priority for a later-filed mechanic's lien
- Puts subsequent purchasers on constructive notice
- Does NOT itself transfer or encumber title (pre-lien filing only)

Effect of recording lis pendens: Any transfer made after the lis pendens is recorded is subject to the outcome of the litigation — a buyer who purchases after lis pendens takes title subject to whatever the court decides.

Release / Reconveyance

The instrument that removes a recorded lien or encumbrance from the title.

Common reasons for reconveyance / release:
- Mortgage paid in full → deed of reconveyance recorded
- Mechanic's lien bonded or paid → lien release recorded
- Easement extinguished by merger or abandonment
- Court order (judgment canceling a cloud on title)

Correction Deed / Scrivener’s Affidavit

An instrument that corrects an error in a previously recorded deed (wrong legal description, misspelled name, etc.).

Recording Practice

How Instruments Are Recorded

Recording procedure:
- Parties submit instrument to county recorder / register of deeds
- Recorder stamps the document with reception number, date,
  and time → creates public record entry
- Most counties: E-recording available (electronic submission)

Required attachments vary by state, but typically:
- The original signed and notarized instrument
- Preliminary change-of-ownership report (for transfers)
- Transfer tax payment (documentary transfer tax)
- Recording fee payment

Timing in a Real Estate Closing

Closing day = Recording day (in most escrow states)

Sequence:
Escrow confirms funds received
→ Escrow instructs title/recorder to record
→ Deed and deed of trust recorded simultaneously
→ Recording confirmed → escrow disburses funds to seller
→ Buyer receives title insurance policy

Recording is typically same-day or next-day in most US counties.

Key Concept Cards

The Three Recording Act Types ★★★★★ : Race = first to record wins. Notice = BFP without notice wins. Race-Notice = must be BFP without notice AND record first. Most US states use notice or race-notice. Memory hook: Race-Notice = must win BOTH the notice test and the race

Lis Pendens — Priority Preservation Effect ★★★★★ : Recording a lis pendens puts all subsequent purchasers on constructive notice of the pending lawsuit. Anyone who buys after lis pendens is recorded takes subject to the court’s ultimate ruling. Memory hook: Lis pendens = “lawsuit pending” — buyer beware

No “Sham Recording” Protection ★★★★☆ : Unlike some civil-law countries, the US recording system does not guarantee title accuracy — it only gives constructive notice of what is recorded. A forged deed, if recorded, does not transfer valid title (recording does not cure fraud). Memory hook: Recording = notice, not guarantee of clean title

Practice Quizzes

Q. A seller signed a deed conveying Blackacre to Buyer A in January but Buyer A never recorded it. In February, the same seller signed a second deed conveying Blackacre to Buyer B, who had no knowledge of Buyer A’s deed and recorded immediately. Who takes title under a race-notice statute?

Under a race-notice statute, Buyer B wins because: (1) Buyer B had no actual or constructive notice of Buyer A’s prior unrecorded deed, and (2) Buyer B recorded first. Buyer A loses despite having a prior deed — because Buyer A failed to record.

Q. Who must join in a request to release / reconvey a mortgage lien after the underlying debt is paid?

The lender (mortgagee or deed-of-trust beneficiary) must execute and deliver a Deed of Reconveyance (in deed-of-trust states) or a Release of Mortgage (in mortgage states). This document is then recorded by the borrower (or escrow) to remove the lien from the title. The borrower should confirm the release is properly recorded and appears in the title search.

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