Chain of Title Problems

• Subsequent Purchasers • Wild Deeds • Legally Recorded • Common Grantors • Constructive Notice

Guillette v. Daly Dry Wall, Inc. 325 N.E.2d 572 (Mass. 1975) Casebook, p. 592

August 1967 May 1968 Gilmore (developer) conveys a lot Gilmore conveys lot to Guillette, by a deed referencing to the Walcotts, by a deed referencing plan w/o restrictions but the deed restricts the lot plan w/o restrictions but the deed to single-family use for the benefit of the other lots restricts that lot to single-family use AND restricts the rest of the lots then owned by Gilmore

June 1968 Gilmore conveys lot to Paraskivas, by a deed referencing plan w/o restrictions but the deed restricts that lot to single-family use

April 1972 August 1972 Gilmore conveys lot to Daly Daly learns of restrictions by a deed referencing plan w/o restrictions and and gets permit to build apts. the deed mentions no restrictions

1 Guillette v. Daly Dry Wall, Inc. Cont’d

Chain of Title Problems Cont’d • Common grantor • Restrictions • Notice

Chain of Title Problems, p. 597 2.a. • A conveys to B, who does not record. • O conveys to A, who does not record. • B conveys to C, who records. • A conveys to D, who records. (D is shown the deed from O to A.) • O conveys to E, who records.

Who prevails in a notice jurisdiction? Who prevails in a race-notice jurisdiction?

2 Chain of Title Problems, p. 597 2.b. • O conveys to A, who does not record. • O conveys to B, who knows of the deed from O to A and does not record. • O conveys to C, who does not record. • B conveys to D, who does not record. (D is shown the deed from O to B.) • A records. • B records. • D records. Who prevails in a notice jurisdiction? Who prevails in a race-notice jurisdiction?

Persons Protected by the Recording System

• Donees and Devisees? • When do you become a BFP/subsequent purchaser? • Consideration (conveyance v. contract) • Should the buyer who pays only part of the purchase price before receiving notice of an earlier claim be entitled only to restitution (Daniels) or the benefit of his bargain (Lewis)?

3 Daniels v. Anderson 642 N.E.2d 128 (Ill. 1994), Casebook, p. 598 Persons Protected by the Recording System • When do you become a BFP? • Preemptive option (right of first refusal) • Specific performance • Equitable conversion

Contiguous Parcel Lot 1 (optioned) Daniels Zografos

Daniels v. Anderson Cont’d Pro Tanto: Three Potential Remedies 1. Award the land to the earlier claimant upon reimbursement of the later purchaser’s money already paid. 2. Award the later purchaser a fractional interest equal to amount paid before notice. 3. Award land to later purchaser but require remaining payments be made to earlier claimant.

4 Lewis v. Superior Court 37 Cal. Rptr.2d 63 (1994), Casebook, p. 600

Feb. 1991 Feb. 24, 1991 Feb. 25, 1991 Lewises contract to buy house Fontana Films files a Lewises pay Shipley from Shipley for $2.3 million lis pendens $350,000 on the contract & open escrow against Shipley

Feb. 28, 1991 Feb. 29, 1991 March 1992 Closing: Lewises get deed, record, and Lis pendens is indexed Lewises paid note off give Shipley note for $1.95 million

March 1992 – Summer 1993 Sept. 1993 Lewises spend approx. $1.0 million Lewises served in Fontana’s lawsuit renovating property and learn of lis pendens

Lewis v. Superior Court Cont’d

Persons Protected by the Recording System • When do you become a BFP? • Recording statute? • When was the lis pendens recorded? • Index = Record?

5 Lewis v. Superior Court Cont’d

Persons Protected by the Recording System • Reconciling Davis v. Ward • Modern times • Actual v. constructive notice • Appropriate remedy available • Cash v. financing w/ 3d party