THE RECORDING STATUTE IN TEXAS (AND THE INNOCENT PURCHASER DOCTRINE) STEVEN C. HALEY Moorman Tate Haley Upchurch & Yates, LLP 207 East Main Street P.O. Box 1808 Brenham, Texas 77834 Telephone: 979-836-5664 Fax: 979-830-0913 shaley@moormantate.com www.moormantate.com State Bar of Texas 36 TH ANNUAL ADVANCED REAL ESTATE LAW COURSE July 10-12, 2014 San Antonio CHAPTER 13
TABLE OF CONTENTS I. INTRODUCTION... 1 A. Registration Generally Permissive... 1 B. Registration Generally Not Necessary to Effectiveness of Instrument... 1 1. Documents Which Release, Transfer, Assign, Etc. a Previously Recorded Document.... 1 2. Contractual Liens for Improvements Against Homestead... 1 3. Extensions of Liens... 1 4. Involuntary Mechanic s Liens (Constitutional)... 2 5. Involuntary Mechanic s Liens (Statutory)... 2 6. Bankruptcy Debtor-in-Possession... 2 7. Release of Tax Lien.... 2 8. Transfers of Tax Lien.... 2 C. The Common Law Rule Regarding Priority of Conveyances... 2 D. General Thrust and Intent of Recording Statute... 2 E. The Elements of the General Recording Statute... 3 F. Special Recording Statute for Court Orders and Judgments Affecting Title to Land... 3 G. Special Recording Statute for Extensions of Liens... 3 H. Special Recording Statute for Lis Pendens... 3 I. Special Recording Statute for Destroyed or Lost Public Records... 3 J. Special Recording Statute for Purchaser at Execution Sale... 4 K. Special Recording Statute for Involuntary Mechanics Liens... 4 L. Special Recording Statute for Partitions of Marital Real Property... 4 M. History of the General Recording Statute... 4 N. Construction of the General Recording Statute... 4 1. No Equitable Estoppel Exception to the Recording Statute. 4 O. The Innocent Purchaser Doctrine... 4 P. Construction of the Innocent Purchaser Doctrine... 5 II. CONVEYANCES SUBJECT TO RECORDING STATUTE... 5 A. Conveyance Required... 5 B. Liens... 5 C. Involuntary Mechanic s Liens... 5 D. Life Estates... 5 E. Timber Deeds... 5 F. Leases... 5 G. Mineral Interests... 5 H. Restrictive Covenants... 5 I. Easements... 5 1. Easements by Estoppel... 6 2. Easements Implied by Prior Use... 6 J. Wills and Estates... 6 1. Unrecorded Deed By Decedent... 6 K. Deeds by Minors... 6 L. Written Express Trusts... 6 M. Equitable Interests Are Not Subject to Recording Statute... 6 1. Resulting Trusts... 6 2. Constructive Trusts... 6 3. Parol Trusts... 7 4. Executory Contracts of Conveyance... 7 5. Equitable Right of Reformation... 7 6. Parol Partitions... 7 7. Equitable Liens... 7 8. Equitable Subrogation... 7 N. Equitable Interests Are Subject to the Innocent Purchaser Doctrine... 8 1. Resulting Trusts... 8 2. Constructive Trusts... 8 i
3. Executory Contracts of Conveyance... 8 4. Equitable Right of Reformation... 8 5. Parol Partitions... 8 6. Equitable Liens... 8 7. Equitable Subrogation... 9 8. Parol Dedication... 9 9. Parol Boundary Line Agreement... 9 10. Parol Gift... 9 11. Conditional Sale... 9 12. Parol Trust... 9 O. Limitations Title Not Subject to Recording Statute/Innocent Purchaser Doctrine... 9 1. Prescriptive Easements... 9 P. Governmental Units Are Subject to the Recording Statute... 9 1. Exception Ad Valorem Tax Liens.... 9 Q. Financing Statements... 9 III. VOID AS TO SUBSEQUENT CREDITOR OR PURCHASER... 9 A. Class of Persons Protected by the Recording Statute... 9 B. General Recording Statute... 9 1. Right of Redemption... 9 C. Innocent Purchaser Doctrine... 10 D. Unrecorded Judgments... 10 IV. LIEN CREDITORS... 10 A. Creditor Refers to Lien Creditor... 10 B. Creditor Not Limited to Subsequent Lien Creditor... 10 C. Creditor Refers to Lien Creditor Without Notice... 10 D. Lien Creditor Under the Recording Statute Need Not Pay Valuable Consideration... 10 E. Types of Lien Creditors Covered by Recording Statute... 10 1. Judgment Creditors Levying By Writ of Execution or Attachment... 10 2. Judgment Creditors Filing an Abstract of Judgment... 10 3. Trustee in Bankruptcy... 10 4. Bankruptcy Debtor-in-Possession... 11 5. Judicial Foreclosure... 11 6. Mechanic=s Liens... 11 7. Landlord=s Liens... 11 8. Tax Liens... 11 F. Creditor=s Lien Attaches To All Apparent Interest of Debtor... 11 1. When Lien Creditor Has Notice of a Prior Unrecorded Conveyance... 11 2. When No Apparent Title is in the Judgment Debtor... 11 G. Creditor=s Rights Under Recording Statute Are Fixed At Time Lien Attaches... 11 H. Lien Creditors Under the Innocent Purchaser Doctrine... 12 V. INNOCENT PURCHASER FOR VALUABLE CONSIDERATION... 13 A. Innocent Purchaser... 13 1. Innocent Purchaser Status a Legal Conclusion... 13 2. Purchase Required... 13 3. Good Faith Required... 13 4. AApparent Title@ Must be Acquired... 14 5. Must Apparent Title Be Legal Title?... 14 6. Innocent APurchaser@ Includes Mortgagees... 14 7. Mineral Interests... 14 8. Forged Deed... 15 9. Void Instrument... 15 10. Void Judgment/Voidable Judgment... 15 11. Deed Procured by Fraud/Fraudulent Conveyance... 15 12. Deed Executed by Accident or Mistake... 15 ii
13. Deed by Person Under Disability... 15 14. Deed by Unauthorized Person... 15 15. Deed by Fiduciary or Trustee... 16 16. Deed to Corporation Not Authorized to Act... 16 17. Deed Not Intended For Delivery... 16 18. Simulated Transaction Involving Homestead... 16 19. Deed By Person With Identical/Deceptively Similar Name... 16 20. Remote Purchasers (the AShelter Rule@)... 16 B. Valuable Consideration... 17 1. Consideration a Question of Law or Fact?... 17 2. Acceptable Proof of Valuable Consideration... 17 3. Sufficiency of Consideration... 17 4. Promissory Note as Valuable Consideration... 18 5. Surrender of Legal Right as Consideration... 19 6. Unlawful Consideration... 19 7. Consideration Must Be Paid Before Notice of Competing Claim... 19 8. Pro Tanto Protection of Innocent Purchasers... 19 9. Conveyances for Which Valuable Consideration Must Be Shown... 20 10. Valuable Consideration - Purchase at Execution Sale (Innocent Purchaser Doctrine)... 20 VI. WITHOUT NOTICE... 20 A. Generally... 20 1. Notice May Be Actual or Constructive... 20 2. Constructive Notice Generally a Question of Law... 20 3. Actual Notice Generally a Question of Fact... 20 4. Evidentiary Presumptions Regarding Notice... 21 5. Timing of Notice... 21 6. Notice Must Be Reliable?... 22 7. Notice Must Be Specific to Senior Title... 22 8. Notice to Agent... 22 9. Notice to Principal... 23 10. Notice to Title Company.... 23 11. Notice to Predecessor in Title... 23 12. Notice of Successor in Title... 23 13. Notice to Joint Purchaser/Mortgagee... 23 14. Notice to Partner... 23 15. Notice to Predecessor Entity... 23 16. Duty of Inquiry... 24 B. Actual Notice... 31 1. Claims in Litigation... 31 2. Boundary Lines... 31 3. Effect of Bankruptcy on Actual Notice... 31 C. Constructive Notice By Form/Timing of Conveyance... 32 1. Quitclaim Deeds... 32 2. Deeds of Limited Warranty... 32 D. Constructive Notice by Registration... 32 1. Buyer May Rely on the Truth of Each Recorded Instrument... 33 2. Buyer May Rely Upon Construction of Instrument According to Commonly Accepted Meanings 33 3. Class of Persons to Whom Registration is Notice... 33 4. Documents Authorized to be Recorded... 34 5. Records Not Giving Constructive Notice of Land Titles... 34 6. Instrument Must Be in Buyer=s Chain of Title... 35 7. Instrument Must Affect Buyer=s Title... 40 8. Extent of Constructive Notice Given By Instrument... 40 9. Notice Must Be of an Interest in Apparent Conflict with Purchaser=s Title... 44 10. Estoppel... 44 iii
E. Constructive Notice by Possession... 44 1. The General Rule... 45 2. Instances Where No Duty of Inquiry To Possessor Arises... 45 3. Duty of Inquiry Arises From Fact of Possession Not Purchaser=s Knowledge of Possession... 50 4. Extent of Duty of Inquiry... 50 5. Effect of Failure to Pursue Inquiry of Possessor... 50 6. Effect of Possession of Only Part of the Property... 51 7. Possession Through Tenant... 51 8. Possession by Agent... 52 9. Possession by Co-Tenant... 52 10. Possession by Affiliated Entity.... 52 F. Constructive Notice By Lis Pendens... 52 G. Constructive Notice By Physical Conditions on the Property... 52 1. Recent Construction... 52 2. Evidence of Mineral Production or Exploration... 53 3. Boundary Encroachments... 53 4. Easements... 53 5. Uniform Development As Notice of Deed Restrictions... 53 6. Signs on Property... 54 VII. AUTHENTICATION AND PROOF OF INSTRUMENTS... 54 A. Effect of Recordation of an Unproved Instrument... 54 1. Inadequately Proved Instrument - Actual Notice... 54 2. Inadequately Proved Instrument - Referenced by Another Instrument Which is Adequately Proved... 54 VIII. DUE RECORDATION... 54 A. Place of Recordation... 54 1. Effect of Subsequent Subdivision of the Property.... 54 2. Rerecording Instrument Originally Filed in Wrong County... 55 B. English Language... 55 C. Address of Grantee... 55 D. Duties of Clerk Upon Filing of Instrument... 55 1. Filing... 55 2. Recording... 56 3. Indexing... 56 4. Return of Instrument... 56 E. Documents Destroyed or Lost Before Recorded... 56 F. Recording of Judgments... 57 1. Recording a Judgment From Justice Court... 57 IX. ACTIONS INVOLVING THE RECORDING STATUTE... 57 A. Pleading... 57 B. Burden of Proof... 57 1. Recording Statute... 57 2. Innocent Purchaser Doctrine... 57 3. Recording Statute for Judgments and Orders... 57 C. Jury Issues... 57 iv