Some Issues Raised by Alaska's Recording Act

• Publication year: 2010

§ 27 Alaska L. Rev. 195. SOME ISSUES RAISED BY ALASKA'S RECORDING ACT

Alaska Law Review
Volume 27, No. 2, December 2010
Cited: 27 Alaska L. Rev. 195

SOME ISSUES RAISED BY ALASKA'S RECORDING ACT

WILLIAM A. REPPY, JR. ^[*]

Abstract

This Article examines Alaska's Recording Act. It details how Alaska is a Race-Notice state and the implications of this compared to being a Notice state. The Article then describes how the Race-Notice recording act operates in practice. It then proceeds with a detailed account of the scope of title searches required under Alaska's recording act. It calls into question the Supreme Court's decision in Sabo v. Horvath and suggests a different outcome today. The Article asks whether the digitization of recorded instruments will cause the Alaska Supreme Court to expand the scope of the title search required under the Recording Act. Finally, this Article examines the potential applications of the Rule of Shelter in Alaska, allowing a transferee with notice of a prior grant of property to take free of that interest.

Introduction

This article examines some of the many issues raised by Alaska's Recording Act. The Supreme Court of Alaska has addressed very few of these issues, requiring some "educated guessing" as to what that tribunal's future decisions under the Recording Act will be. This Article takes a special look at Recording Act issues the court might address from a new perspective in light of the digitizing of most conveyance records, so that title searches now can be done online across the state through records dating back to 1971.

I. Alaska's First Recording Act

Every conveyance of real property within this State hereafter made, which shall not be recorded, as provided in this title, within five days thereafter, shall be void against any subsequent purchaser in good faith and for a valuable consideration of the same real property, or any portion thereof, whose conveyance shall be first duly recorded. ^[1]

So read the law pursuant to which, with Juneau Deed Book 1, beginning October 21, 1884, ^[2] Alaska initiated the systematic recordation of conveyance instruments. It was an Oregon statute that came to Alaska via the Alaska Organic Act of 1884, by which Congress made applicable in Alaska the "general laws" of Oregon, not inconsistent with Alaska-specific federal legislation. ^[3] The final clause - "whose conveyance shall be first duly recorded" - made this a Race-Notice type recording act, rather than the other common type, a pure Notice act. ^[4]

Congress enacted verbatim this statute for Alaska in 1900. ^[5] The core language of the present Recording Act, section 40.17.080(b) of the Alaska Statutes, is essentially the same and retains the phrase "whose conveyance is first recorded." ^[6] Alaska's method of indexing recorded conveyance documents has always been by use of grantor and grantee indices rather than by tract indices. ^[7]

II. How Race-Notice and Notice Statutes Operate Differently

Alaska's Recording Act is addressed to the claimant under the first-in-time among two (or more) instruments by which conflicting claims to real property are being made and lays out what conditions must be proved for the first-in-time instrument to be void as against claims made under a subsequent-in-time competing instrument.

If all grantees were to promptly record, Notice and Race-Notice statutes would not operate differently. But when both a prior grantee and subsequent grantee delay recording their instruments, the two types of statutes dictate significantly different results. Under a Notice-type statute, as soon as the second-in-time deed is delivered to a bona fide purchaser, the prior grantee who had yet to record is divested of his or her title that conflicts with the grant to the subsequent purchaser. ^[8] But under a Race-Notice statute, title remains in the first grantee until the subsequent bona fide purchaser records. Thus, the prior grantee is only divested if the subsequent purchaser actually records. As stated by the Supreme Court of Pennsylvania, the state that was one of the first to enact a Race-Notice statute, ^[9] among two unrecorded deeds, the first in time has priority. ^[10]

Therefore, in Alaska, where A has title and grants to B, who does not record, and A then grants the same land to a second grantee, bona fide purchaser C, who also does not record, the good-faith C enters the land as a trespasser. ^[11] If B wins the race to record, and C builds a structure on the property, B owns it and B cannot be divested of his now-more-valuable title. ^[12] If C, who paid full value and has no reason to think her title is not good, cuts and removes timber or mines and removes coal or other minerals, C does so as a good-faith trespasser and has to account to B for the profits. This is also true as to timber and minerals taken before C records and wins the race with B, as the race victory is not retroactive to the date when C took delivery of the deed to C. ^[13]

In Notice states like Massachusetts and Missouri ^[14] C is not a trespasser, and B has no claims against C for cutting timber or mining coal. In these jurisdictions, B becomes a trespasser the moment the A-to-C deed is delivered. B will almost certainly know nothing about this event. If B starts building a house on the land B thinks he owns, it is C's house.

Note, too, that under a Race-Notice statute like Alaska's, if B is on the land at issue at the time, B will become "a trespasser" ^[15] when C records C's deed, something B will almost certainly not be aware of, because if B were a frequent visitor at the office of the recorder of deeds B would have recorded B's own prior deed from A and would have won the race. The problem of either C or B becoming an unknowing trespasser is inherent in any type of recording act.

Ill. Who Can Race?

Although most reported cases from Race-Notice jurisdictions have involved a race between two grantees (using the term broadly to include mortgagees) claiming under instruments executed by the same grantor, theoretically there can be a large number of racers.

The original owner, O, may execute more than two title instruments dealing with the same parcel of land that are unrecorded. O's grantee, A, may in turn execute more than two or more such instruments. The fact that the grantor A had not recorded O's deed to A is not a basis for holding that A's grantees, mortgagees, etc. lack the status of bona fide purchasers - at least it is not in the case of a grantee who is aware that A has an unrecorded deed that would hook A up to the chain of title. ^[16]

A grantee from one who has recorded but was not a race winner due to either having notice of a prior unrecorded grant or because the grantee was a donee rather than a purchaser can also enter the race. Suppose O has title and grants to A (who, as a first-in-time claimant can be a donee as well as a purchaser), who does not record. O then grants to B a larger parcel that includes some of the land granted to A, but B has notice of A's deed. B records. Title remains in A, but to a bona fide purchaser ^[17] who does a title search, B appears to be the owner of part of the land granted to A. ^[18]

IV. How Is The Race Won?

A. A Bona Fide Purchaser's First Recordation Does Not Always Win the Race

On the face of the statute, section 40.17.080(b), the race winner must satisfy three conditions: (1) be bona fide, i.e., without notice of the unrecorded claims of other racers; ^[19] (2) be a purchaser rather than done; ^[20] and (3) first record.

I predict that the courts will recognize that in one situation a grantee who technically satisfies all three requirements cannot win a race. Suppose O sells to A, who does not record, and then O sells to B, a bona fide purchaser, who also does not record. B sells to bona fide purchaser C by warranty deed, and C does not record. Now B records. My suggestion is that by selling to C, B turned over his status as a racer to C. Title must remain in A despite B's recording. If A were divested of title, at common law, it would pass to C by estoppel by deed (under the after-acquired-title doctrine ^[21]). But the statute bars recognizing C as having title, as C has not recorded. The race has not been won, and A and C remain in it.

If B had quitclaimed to C, B's recordation before recordation by A and C (i.e., before C records O-to-B as well as B-to-C in order to hook up to the chain of title) would vest title in B, and the race would be over. That is so because B's quitclaim to C would not be a basis for feeding the estoppel.

B. The Race Also Can Be Won By Filing a Lis Pendens

Although the Alaska Recording Act specifically refers to first-to-record status as a requirement that a grantee must satisfy to be a race winner, the Alaska Supreme Court very likely will recognize a substitute for such recording when due to acts of another person it is impossible for a racer to record in a manner that imparts constructive notice. Suppose O grants to A who does not record. O grants to B, who has notice of the deed to A, and B records. B now grants to C. It would seem that A and C ought to be in a race to get an indefeasible title. But A cannot effectively record because, as explained below, ^[22] a deed out of O recorded after the recording of the O-to-B deed is off the chain of title (the deed can be found only by doing a "search forward" in time). If A has no process available to win the...