Answer practice exam question #18.

Ables claim to Greenacre

BFP

Able will claim that a subsequent purchaser for valuable consideration and taking without notice of a prior interest is a bona fide purchaser for value and will be protected by a recording act. Able will claim that in 1970 he became a subsequent purchaser and that $1,000, valuable consideration, was exchanged for Greenacre. Able will claim that he received a deed that contained all warranties of title and unknown to him Owen's grandfather was the true owner. Able will claim that the delivery of an apparently authentic deed and his lack of knowledge concerning true ownership means that he had no actual notice of the grandfather's interest.

Able will also contend that if he had done a reasonable search of the property he would not have been put on notice of the grandfather's interest because the property was unimproved mountain land.

Charlie and Owen will argue that Able did not execute a title examination before the purchase. State title searches were made in grantor and grantee indexes and if Able had conducted such a search Able would have discovered that Owen was not the true owner and that would have given him constructive notice of the grandfather's true and sole ownership. Able will contend that there are no facts stating that grandfather received the property by deed or other instrument or that the instrument if it existed, was actually ever recorded.

On balance Able will not be protected by the recording statute assuming that the grandfather's interest was on record and the state's statute only protects subsequent takers without notice.

Estoppel by Deed

If a grantor purports to convey an interest in property that he does not own at the time but then he subsequently acquires, title passes to the grantee under the earlier deed by operation of law. As stated in the facts, Able will claim that Owens purported to sell Greenacre in 1970, and in fact, Owen did not own the property. Able will claim that by Owen giving him a deed containing all warranties of title, he impliedly covenanted that he would obtain title from the true owner, his grandfather, and then would immediately convey the property to Able. Owen will contend that Able's argument may be valid but it is not accepted by the majority of jurisdictions. Owen will contend that when there is a recorded deed from a grantor who has no title but who obtains it afterward and then conveys it to a bona fide purchaser, estoppel by deed will not apply against the bona fide purchaser. Charlie will argue that he is a subsequent bona fide purchaser and his rights arose subsequent to Able's rights under estoppel by deed. On balance, Ables's rights may be defeated.

Warranties

Able will claim that a general warranty deed covers the covenants of seisen, the right to convey, the right against encumbrances, quiet enjoyment, warranty against lawful claims, and further assurances. Able will contend that Owen did not have title to Greenacre in 1970 and therefore breached the present covenants of seisen and the right to convey at the moment in 1970 and a cause of action is available. However, Owen will contend that the statute of limitations will have already run. Owen will also contend that the future covenants have not been breached until there is an actual or constructive eviction. The statute of limitations on those causes of action will not run until Able's possession is disturbed. Future covenants would be quiet enjoyment, warranty against lawful claims, and further assurances. Therefore Able has no present cause of action against Owen on any warranty theory.

If Charlie decides to oust Able, Able will have a cause of action for the purchase price of $1,000 under a breach of warranty of future covenants. Under a minority of jurisdictions, Able would be able to recover the value of the land at the time of eviction.

Adverse Possession

Able will make a claim to Greenacre by adverse possession. An adverse possessor must show an actual entry giving exclusive possession that is open and notorious, adverse and under a claim of right, and continuous for the statutory period. Able will claim that he immediately recorded the deed and took possession of Greenacre and obtained an unsecured loan to make improvements. Able will contend his actions were based on a good faith belief of his ownership and that his objective possession was without the grandfather's consent. This makes his possession hostile. Able will contend that he paid taxes and allowed Bank to place a sign on the lot and that the cabin and the sign were readily observable from 1970 forward. Able will contend that his use of Greenacre was open and notorious and that grandfather could have come to the property during the summer months to defend his rights and see the sign and cabin. Able will also contend that he lived in the cabin at least one month each summer and that would put other landowners and grandfather on reasonable notice that he was claiming actual possession of Greenacre.

Able will claim that the uninterrupted use of the land for vacations over the 20-year statutory period shows the continuous possession required.

Able will qualify as an adverse possessor of Greenacre and should go to court to get proper title.

Charlies rights to Greenacre

BFP

Charlie will contend that in 1998, he became a subsequent purchaser for value when

he convinced Owen to deed him the land in satisfaction for a $5,000 debt which was past due. Charlie will contend that an antecedent past-due debt in return for the deed will constitute valuable consideration. Charlie will argue that he had no actual notice of Able's claim and that Greenacre was inaccessible by road during the winter when the transaction occurred; it was impossible for him to inspect the property.

Able will argue that he recorded his deed in 1970 and built a vacation home on the property and that would create inquiry notice upon Charlie. Charlie will counter that the deed that Able recorded was outside the chain of title and that Able recorded before he came into actual possession of Greenacre. Charlie will contend that he would not have discovered the deed and would have no constructive notice of Able's claim. Able will rebut that a recording statute does not protect a subsequent purchaser without notice against prior interests that arise from the operation of law. The recording statute clearly states; any unrecorded conveyance is deemed void as against a subsequent taker for value and without notice. Able will contend that his claim of adverse possession is valid as against Charlie's interests because it arose by operation of law and not by conveyance. On balance Able will prevail on these arguments.

Priority

The common law rule of first in time, first in right applies when a recording statute does not.

Able's rights to Greenacre were perfected in 1997 when Owen's acquisition of the property by will was realized. Able's interest was first in time because Charlie's interest did not arise until 1998. Because the recording statute is inapplicable, Able will take Greenacre under the common law first in time rule.

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