CHAPTER 3 TITLE EXAMINATION OF FEE LANDS

• Jurisdiction: United States

Mineral Title Examination III
(Feb 1992)
CHAPTER 3
TITLE EXAMINATION OF FEE LANDS ^*
George A. Snell
Buckner, Lara, Swindell & Snell, L.L.P.
Amarillo, Texas

Contributing Friends

Omitted From Electronic Version

TABLE OF CONTENTS

SYNOPSIS

Page

INTRODUCTION

I. The Plan

A. The Common Law Background

B. The Statutory Purposes

C. The Statutory Definitions

II. The Pattern

A. Race

B. Notice

C. Race-Notice

III. The Procedure

A. Instruments not required to be Recorded

B. Constructive Notice

1. From proper recording

2. From improper recording?

3. From possession?

C. Actual Notice/Implied Notice-Duty to Inquire/Imputed Notice

D. How They Operate

E. Taking Notice to the Extreme in Texas (and your state too?)

1. The Duhig Rule—Ignoring Notice

2. Westland Oil—Pushing Duty to Inquire off the Page

IV. The Problems

Situation A—Deed from a Stranger to Record Title

[Page 3-v]

Situation B—Does a Purchaser have Notice of Easements Created by Instruments Covering Adjacent Lands that Affect his Land?

Situation C—Does a Purchaser have Actual Notice of an Instrument in his Chain of Title that is Unrecordable but which he or his Agent Personally Examines?

Situation D—Does a Purchaser have Notice of a Deed by his Grantor Executed before his Grantor Acquires Record Title?

Situation E—Multiple Conveyances by a Record Owner while he is a Record Owner

Situation F—Conveyance by a Grantor after he has already conveyed the Land to a Third Party

V. The Protestation

VI. The Practice

Arkansas

California

Colorado

Kansas

Louisiana

Michigan

Montana

New Mexico

North Dakota

Oklahoma

Texas

Utah

Wyoming

Exh. A. The Recording Statutes

Exh. B. The Smart Chart

[Page 3-vi]

Exh. C. Forms for Conducting Stand-up Examination Utilizing Tract Indices

Exh. D. Forms for Conducting Stand-up Examination Utilizing Grantor-Grantee Indices (preceded by Caveats and Comments about Stand-up Title Opinions in Texas Court-houses)

Footnotes 3-120

Bibliography

———————

[Page 3-1]

INTRODUCTION

This paper is the third on this subject. The first was authored by Thomas J. Nance entitled "Title Examination of Fee Lands Including Severed Mineral Interests" and was delivered at the first Mineral Title Examination Institute in Denver in November 1977. The second was prepared by Phillip Wm. Lear and Robert P. Hill entitled "Examination of Title to "Fee" Lands" and was delivered at the Institute on Mineral Title Examination II at Tucson, Arizona, in April of 1982. Both papers discussed the process or the procedural aspects of examining title to fee lands. The prior articles intentionally did not include a substantive discussion of the recording acts and recording laws. This author's challenge was to discuss the subject of "constructive notice" substantively and to provide practical information concerning the examination of fee land records in the Western United States.

The first part of the article (Parts I to V) contains the substantive discussion, which is intended to be a summary or review of the recording acts and how they function, and the second part (Part VI) contains the specific practical information. The practical information contained in the second half of the article is contributed by attorneys and landmen that I have met over the past seven years traveling to speak for AAPL's Certification Review courses. They are all identified supra and I encourage all readers of this article to contact these friends for any additional information concerning the records or practices in the individual states. The jurisdictions covered by this article are:

Arkansas

California

Colorado

Kansas

Louisiana

Michigan

Montana

New Mexico

North Dakota

Oklahoma

Texas

Wyoming, and

Utah

the major oil and gas producing states west of the Mississippi River.

[Page 3-2]

I. The Plan

A. The Common Law Background

Transferring title to real estate by written instrument was common in the Roman Empire. While that practice was adopted in Continental Europe upon Roman occupation, the practice did not immediately affect English land law. Instead, in England, possession of land was the only evidence of title, and proof of a transfer of title existed initially only in the memory of witnesses present at the time when the change of possession occurred. The title change resulted from a symbolic ceremony known as the "livery of seisin". This was a ceremony consisting of a symbolic delivery of the possession of the land by the grantor, or "feoffor," to the grantee, or "feoffee". The parties, with their witnesses, would go upon the land and the feoffor would give to the feoffee a handful of earth, a doorknob or some other symbolic object and deliver it to the feoffee. If the ceremony was conducted on the land itself, it was called a "livery in deed". If the ceremony was conducted at a location other than upon the land actually conveyed, usually when the parties were in sight of the land to be conveyed, the ceremony was called a "livery in law". No writing was necessary to give evidence to livery of seisin, although writings became customary in very early times. Later, livery of seisin was usually accompanied by a written deed which identified the limitations upon the estate granted. However, such a deed was only an evidence of title and not a conveyance itself. A writing was not required to convey title to land until statutes of frauds were adopted. Until that time, anyone in possession of the land could, by livery of seisin, convey the land.¹

As the common law developed, the distinction between legal title and equitable title or equitable right originated. Legal title was that title owned by the freehold owner. Equitable title was a right owned by a non-freehold owner and equitable right was the right of the owner to obtain an equitable title by obtaining the proper judgment. Prior to the creation of recording statutes, in general, transfers of the legal title to land ranked in priority, as between themselves, according to the maxim "prior in tempore potior est in jure" or "first in time is first in right", such as:

(time of conveyance)	1
o ------------------------------------------------------------------------------	-----------------------------------------------------------A
(time of recording)	UR
2
o ------------------------------------------------------------------------------	-----------------------------------------------------------B
UR

[Page 3-3]

Thus, a landowner (O) who conveys a legal estate to another person (A), but who subsequently attempts to convey the same legal estate (or less) to another person (B), necessarily conveys nothing because O has nothing left to convey.²

Also, prior to the recording statutes, a grantee who received a conveyance of the legal title, for value and without notice of a prior equity (a prior claim enforceable only in equity), took free of that equity. This concept was and still is called the "Equitable Doctrine of Bona Fide Purchaser" ("BFP"). But if the same person had notice of the prior equity, even though he paid value, he received the legal title subject to the prior equity.³ Examples of equitable interests, existing both at common law and at present, are:

1. Parties to a contract to sell;

2. Parties to resulting or constructive trusts, which would include purchase money vendor's liens;

3. Easements by prescription and easements by necessity;

4. Fraudulent deeds (usually to protect the grantor from creditors); and

5. Title by descent;

which claims (except for the first) are usually not evidenced by recorded instruments.

Conflicting legal and equitable claims were generally resolved on the following basis:

1. Legal claim v. legal claim — first in time wins, unless estopped;

2. Equitable claim v. equitable claim — first in time wins, unless estopped;

3. Legal claim v. equitable claim — legal claim wins if it is the first conveyance; and

4. Equitable claim v. legal claim — the legal claim wins where it is the second conveyance if the legal owner is a BFP.⁴

[Page 3-4]

The first recording act in England was the Statute of Enrollments (or Uses) (1536). Its purpose was to make a public record of all bargain and sale deeds conveying a freehold interest. In the late 1600's, statutes were adopted whose purpose was to prevent fraud in connection with conveyances. Unrecorded deeds were declared to be fraudulent and void against subsequent purchasers or mortgagees who paid a valuable consideration. The statutes were interpreted narrowly and they were not interpreted as providing "constructive notice" as we understand the concept.⁵

Concluding the discussion of the English common law, the most important rules concerning the priority of successive conveyances of title to the same land were:

1. The first in time was first in right; and

2. A grantor can transfer no more than he owns.

B. The Statutory Purposes

The present system of recording instruments affecting title to land was established during the colonial period of this country and it contained some new concepts. One of the first statutes that contained the elements of most modern recording statutes was adopted in 1640 by the State of Massachusetts and reads as follows:

"For avoyding all fraudulent conveyances, and that every man may know what estate or interest other men may have in any houses, lands or other hereditaments they are to deale in, it is therefore ordered, that after the end of this month, no mortgage, bargaine, sale, or graunt hereafter to be made of any houses, lands, rents or other hereditaments, shall bee of force against any other person except the grauntor and his heirs, unless the same be recorded as is hereafter expressed: And that no such bargaine, sale, or graunt already made in way of mortgage where the grauntor remaines in possession, shall be of force against any other but the grauntor or his heires, except the same shall bee entered as hereafter...