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RECORDING STATUTES – ESTABLISHING TITLE TO PROPERTY PURCHASED

 

Recording a document transferring title to property is a means of giving “constructive” notice of real property ownership.

States have adopted various statutes for recording transfers of real property interests.  There are three (3) types of recording statutes in use in the United States:

a.         Notice:  Under a notice statute, a subsequent bona fide purchaser prevails over an earlier purchaser who did not record, if the subsequent purchaser has no actual or constructive notice of the previous transfer at the time of his or her purchase.  That is to say, the second or subsequent bona fide purchaser will prevail over the prior purchaser whether the subsequent purchaser records his or her transferred documents.   As far as the subsequent purchaser is concerned, there is no benefit to racing to the recording office.  Priority is determined on the status of the purchaser at the time the deed/mortgage/transfer document, is acquired.

b.         Race:  Under a race statute, the first to record the conveyance document wins.  Priority is established solely by the order in which competing claimants record their transfer documents.  No conveyance or other transfer is valid as against purchasers for valuable consideration except after the time of recording.  The subsequent purchaser does not need to be bona fide and without notice since he or she will prevail if his or her document is recorded first.

c.         Race-Notice:  Under a race notice statute, subsequent purchasers who purchase without notice of a prior conveyance are protected against prior conveyances when the prior purchaser fails to record his or her conveyance documents, as long as the subsequent purchaser records his or her document first.  The race-notice statute combines the essential features of both the notice and race type recording statutes.  For a second or subsequent purchaser to prevail in a race-notice jurisdiction, he or she must be both a bona fide purchaser for value without notice of the prior conveyance, and be the first to record his or her conveyance documents.

Texas is a Notice state.  With respect to other states, laws of those states should be consulted to determine what statutory rules apply with respect to recording instruments and verifying that the conveyance is valid and establishes title.