2M E M O R A N D U MTO Supervising Attorney F.docx

2
M E M O R A N D U M
TO: Supervising Attorney
FROM: [Student name]
RE: LP Assignment
DATE:
FACTS: [Include the facts that are necessary to your answer. In
most memos, the facts are written in chronological order.]
QUESTION/ISSUE: [You may have more than one
QUESTION/ISSUE and ANSWER for an assignment.]
ANSWER: [Your answer should include one or more statements
of law with BlueBook citations, an application or analysis of the
law to the facts, and a conclusion. In other words, you are
following the Legal Writing pattern IRAC: I (Issue), R (Rule),
A (Application or Analysis), and C (Conclusion).]
*Use APA style formatting: 1-inch margins, Times New Roman
size 12 font, double-space.
*Use Bluebook citation.
LP6 Assignment: Who Owns What?
A woman named Bonnie walks into your firm one day
requesting help in a dispute over a property she purchased. The

circumstances of the property are as follows:
Ponch owned Easy Acres, an undeveloped parcel of land located
in Green. Ponch had always wanted to purchase a Tomahawk
motorcycle, but the ones that were available for sale were
always beyond his price range. But thanks to a significant
increase in the value of the Easy Acres parcel, Ponch finally
had the means to acquire his coveted motorcycle. Ponch gets a
loan from his friend Jon, securing the loan with a mortgage on
Easy Acres for $100,000. Jon forgets to record the mortgage.
Ponch subsequently sold Easy Acres to Grossman for $75,000 in
cash and rode off to Arizona to live out his life-long dream of
starring in television commercials as a mattress pitchman.
Grossman recorded the deed of sale and immediately built a
roller derby track on Easy Acres, which increased the value of
the land to over $500,000.
Grossman sold the facility to Bonnie, a roller derby impresario
and your client, for $600,000 in a duly recorded deed.
One day, Jon happened by Easy Acres and noticed the roller
derby facility. He was unable to contact Ponch but located
Bonnie, presented her with the mortgage documents, and
demanded that Bonnie pay him his $100,000.
Bonnie needs help with the action Jon is threatening to bring for
recovery of his $100,000. Your firm's partner asks you to help
her craft her response to Bonnie.
In a 2-page double-spaced APA Style memorandum, explain
what rights Grossman, and subsequently Bonnie, have with
respect to Easy Acres and why. What rights does Jon have, and
why?
NEEDS TO INCLUDE:
1) What rights did Grossman have with respect to the property,
and subsequently, what rights does Bonnie have with respect to
the property? Why?
2) What rights does Jon have with respect to the property?
Why?
3) Some place in your memo, please state whether Bonnie has to
pay Jon the $100,000.

HINT: The answers to these questions are found in Chapter 12,
but the answers are not found in the section on Recording
Statutes.
Criteria
1. Memorandum details the rights and interests of Bonnie in
the property, and why.
2. Memorandum details the rights and interests of Jon in the
property, and why.
3. Memorandum raises the issue of Bona Fide Purchaser for
Value (BFP).
4. Memorandum is clearly written, with few errors that
impede clarity.
5. Memorandum is 2 pages double-spaced in APA Style.
One of the main responsibilities of a real estate attorney or
paralegal is to make certain that a client has good title of
ownership to real property. A real estate attorney representing a
purchaser will insist that the seller produce satisfactory
evidence of good title before the purchase. A real estate
attorney representing a lender will insist that the borrower
produce satisfactory evidence of good title before the loan is
made. Typically, this evidence of good title of ownership is
provided by a title examination of the public real property
records and the issuance of title insurance.
The role of the paralegal in title examinations varies from state
to state and even among law firms within a given state. In some
law firms, a paralegal conducts the title examination. A real
estate closing paralegal usually does not conduct the
examination but is responsible for ordering the title
examination, reviewing it, and converting it into a title
insurance commitment, as discussed in Chapter 13. Regardless
of whether the paralegal is performing, ordering, or reviewing
the title examination, an understanding of the process and
procedures involved is essential so that the paralegal can carry

out his or her responsibilities.
BONA FIDE PURCHASER FOR VALUE RULE
Why examine the public records of real property to obtain proof
of ownership of property? Why record real estate documents?
Warranty deeds, contracts, leases, mortgages, and easements are
all enforceable without recording. Real estate attorneys and
paralegals, however, spend substantial time preparing these
documents and having them executed with the formality
required to place the documents on public record. Why? The
answer is the common law bona fide purchaser for value rule.
This rule states that anyone who purchases property in good
faith for valuable consideration and without notice of any claim
to or interest in the property by any other party is a bona fide
purchaser for value and takes the property free and clear of any
claims to or interest in the property by other parties.
For example, Sam Owner has pledged his farm to secure a debt
owed to Aunt Owner. Sam Owner has executed and delivered to
Aunt Owner a mortgage on the farm, but the mortgage was not
recorded. Sam Owner sells the farm to Catherine Purchaser. At
the time of the sale, Catherine Purchaser is unaware of the
unrecorded mortgage to Aunt Owner. Catherine Purchaser is a
bona fide purchaser for value and purchases the farm free and
clear of Aunt Owner’s mortgage. Aunt Owner’s mortgage is
unenforceable against the farm after the sale to Catherine
Purchaser.
A bona fide purchaser must pay something of value for the
property, although the consideration paid need not be equal to
the market value of the property. A person who takes title to
property by inheritance or as a recipient of a gift has not given
valuable consideration and therefore is not protected as a bona
fide purchaser. This means that a person who has inherited real
property takes the real property subject to all valid claims
against the real property, regardless of whether the person had
notice of the claims or whether the claims were recorded.
The bona fide purchaser status provides special protection not
only to the bona fide purchaser, but also to anyone purchasing

from the bona fide purchaser. The protection is extended to the
subsequent purchaser whether or not the subsequent purchaser
has notice of any prior adverse claim or interest to the property.
The rationale for the extended protection is to permit the bona
fide purchaser to sell the property for full value.
A bona fide purchaser for value receives ownership to real
property subject to any and all claims of which the bona fide
purchaser has actual or constructive notice at the time the
property is acquired. Actual notice occurs when the purchaser
has direct knowledge or information about title matters. Actual
notice includes any facts that the purchaser can see with his or
her own eyes, any facts that the purchaser learns about the
property, and any information the circumstances of which
should give rise to a duty of the purchaser to conduct an
investigation that would lead to the finding of certain facts in
regard to the property.
Constructive notice is a presumption of law that charges a
purchaser with the responsibility of learning about all title
matters that would result from an inspection of the property or
an examination of the public real property records. Possession
of land is notice to the world of the possessor’s rights therein.
For possession to constitute notice, it must be open, notorious,
and exclusive. For example, a purchaser of a supposedly vacant
lot of real property visits the lot and finds an inhabited mobile
home on the lot. The purchaser is placed on notice to inquire
about the mobile home inhabitant’s rights to the property. If the
mobile home inhabitants have a 50-year unrecorded lease of the
property, the prospective purchaser would purchase the property
subject to the 50-year lease, and the inhabitants of the mobile
home would be permitted to remain on the property until the
lease terminated. A purchaser of real property has a duty to
inquire as to a party in possession’s rights to the property. If no
inquiries are made, the purchaser takes the property subject to
any rights the possessor may have. A prudent purchaser will
satisfy the constructive notice requirements of inspection by
either inspecting the property or obtaining a full survey of the

property by a registered land surveyor, or both.
The second form of constructive notice is in regard to matters
that an inspection of the public real property records would
reveal. All states maintain public real property records for the
purpose of recording real estate documents and establishing
ownership to real property. A prudent purchaser will satisfy the
constructive notice requirements by examining the public
records in which the documents are recorded.
Constructive notice is imparted to the purchaser only to the
extent that recorded instruments are in the chain of title. A
chain of title is the sequence of subsequent owners of a
particular parcel of property, beginning with the original owner
and moving through all successive grantors and grantees to the
current owner. The chain of title concept limits the number of
records imparting constructive notice and the number of records
that must be examined. Courts in the states of Massachusetts
and New York have pronounced views on the definition of chain
of title. The laws in other states follow either the Massachusetts
or the New York definition. Under the Massachusetts definition
of chain of title, a purchaser need only examine conveyances
from the point at which each owner received the property and
until that owner conveyed the property to another owner. All
other transactions are considered to be outside the chain of title
and are held not to provide constructive notice to a purchaser.
Under the New York definition of chain of title, the purchaser
must examine all instruments made by successive owners and
not merely the instruments made during the ownership.
Constructive notice also is imparted to unrecorded instruments
that are referred to in a recorded instrument. For example, a
recorded deed may make reference to an unrecorded mortgage.
The purchaser must exercise reasonable diligence and prudence
to ascertain the contents of the unrecorded mortgage because he
or she may be responsible to pay the debt secured by the
mortgage.
In summary, if a person obtains an interest in property by way
of being a purchaser, a lender under a security deed or

mortgage, the holder of an easement, and so on, then the only
way to protect this property interest against subsequent
purchasers is to record the deed, easement, mortgage, or
instrument in the proper records. The act of recording the
instrument in its proper place will place future purchasers on
constructive notice. These future purchasers will purchase the
property subject to the rights of the holder of the recorded
instrument.
Recording an instrument is essential to impart constructive
notice. The time and location for such recording normally are
expressed in what is known as a state’s recording statute. It is
not always clear when an instrument is deemed recorded so as
to impart constructive notice. Some courts have held that
merely depositing the instrument in the office of the recorder is
sufficient to impart constructive notice. Other courts have held
that to impart constructive notice, the instrument must actually
be transcribed in a permanent record book.
There also is a split of authority as to notice when an error has
occurred in transcribing the instrument into the permanent
record book. Some courts have imposed a duty on the person
recording the instrument to make sure that it is correctly
recorded, and such person bears full risk of the failure of the
registrar of deeds to correctly record the instrument. An
examination of the title records after the instrument has been
recorded is necessary to discharge the duty. The examination is
for the purpose of confirming that the recorded document has
been correctly recorded and is in the chain of title. Under this
view, the registrar of deeds is deemed to be the agent of the
recording party. According to this view, an incorrectly recorded
instrument does not impart constructive notice.
Other courts have held that when an instrument is filed,
constructive notice is given, regardless of whether the
instrument was correctly indexed or recorded, provided that the
party recording the instrument has complied with the state’s
recording statute and that the mistake was made by the clerk’s
or registrar’s office.

RECORDING STATUTES
The common law bona fide purchaser for value rule has been
modified in many states by recording statutes. Recording
statutes (a) give the community notice of the changes in
ownership of the property; (b) protect subsequent purchasers
and encumbrancers of property from the same common grantor
by giving them notice of information contained in the recorded
documents; and (c) determine priority among conflicting claims
to real property.
There are three types of recording statutes: race, notice, and
race-notice. The first type is used in the smallest number of
states. Under a race statute, priority between successive
grantees of the same land from a common grantor is determined
by who wins the race to the recording office. No notice is
imparted to a subsequent purchaser or encumbrancers until the
instrument is recorded in the prescribed manner. The first to
record an instrument has priority of title, irrespective of
whether he or she was a prior or subsequent purchaser.
Moreover, a purchaser with actual knowledge of a prior but
unrecorded instrument from a common grantor of the same
property will have priority if such subsequent purchaser is the
first to record his or her instrument. For example, Alice Owner
conveys her home to Aaron Purchaser by deed dated March 1.
Aaron Purchaser does not record the deed until March 4. Alice
Owner on March 2 conveys the same home to Bob Purchaser.
Bob receives the deed to the home on March 2 with full
knowledge that a deed had been given by Alice Owner on the
previous day to Aaron Purchaser. Bob Purchaser records the
deed to the home on March 3. Under a race recording statute,
Bob Purchaser would be the owner of the property because Bob
Purchaser recorded the deed to the property before the recording
of the deed by Aaron Purchaser.
The notice type of recording statute relies on the notice given
by the recording of the instrument or on the notice obtained
through means other than recording. Under the notice statute,
the grantee of a deed is not required to record the deed to obtain

the priority in title over some subsequent purchaser of the same
property. The notice statute provides that an unrecorded
instrument is valid to a subsequent purchaser if the purchaser
paid value with notice of the unrecorded instrument and is
invalid if the subsequent purchaser paid value without notice of
the unrecorded instrument. Therefore, actual knowledge by a
subsequent purchaser of the existence of a prior unrecorded
document serves as notice in the same manner as the proper
recording of the document. For example, Aaron Owner conveys
his property to Robert Purchaser by deed dated January 1.
Robert Purchaser neglects to record the deed promptly. On
February 1, Aaron conveys the same property to Cindy Buyer,
who has full knowledge of the deed to Robert. Cindy’s deed is
recorded on February 2. Thereafter, Robert on March 1 records
the deed from Aaron dated January 1. Robert has priority of
title even though Robert has the later recorded deed. This is so
because Cindy had actual knowledge of the conveyance from
Aaron to Robert at the time Cindy received Aaron’s deed from
Aaron.
The race-notice recording statute is the most common type. It
combines the theory and recording requirements of both the race
recording statute and the notice recording statute. Specifically,
the race-notice statute combines the notice principle that
knowledge of a prior unrecorded instrument serves as notice in
the same manner as the proper recording of the instrument with
the recording principle that the first party to record an
instrument has priority of title, regardless of whether that
person was a prior or subsequent purchaser. Thus, under a race-
notice statute, a subsequent purchaser has priority over the
holder of a prior but unrecorded instrument if such subsequent
purchaser makes the purchase without notice of the prior
unrecorded instrument and records the instrument before the
recording of the prior instrument. This type of recording statute
operates as a pure notice statute until a subsequent purchaser
takes title from the common grantor as a bona fide purchaser
without notice of the prior recorded instrument. On that

occurrence, the race-notice statute operates as a pure race
statute in determining priority solely on the basis of which party
records first. (Maxwell and Summers, 1978)
The following is an example of the effect of the various
recording statutes on the same factual course of events. Alice
Owner conveys her home to Ajax Purchaser on March 1. Ajax
Purchaser does not record the deed until March 3. On March 2,
Alice Owner conveys the same home to Beth Purchaser, who
purchases the home on March 2 with no knowledge of the March
1 deed from Alice Owner to Ajax Purchaser. Beth Purchaser
does not record her deed until March 4. Under a race-notice
statute, Ajax would have priority of title and would be the
owner of the home because Ajax purchased the home without
notice of any other claims and was the first to record the deed to
the home. Under a notice statute, Beth would have priority of
title and would be the owner of the home because Beth was a
purchaser without notice of the prior unrecorded deed to Ajax,
and the subsequent recording by Ajax does not divest the title
and ownership existing in Beth. Under a race statute, Ajax
would have priority and be the owner of the home because Ajax
was the first to record a deed. City of Richland Hills v.
Bertelsen discusses both the concept of bona fide purchaser for
value and the policy issues behind recording statutes.
PRACTICE TIPS FOR ORDERING A TITLE EXAMINATION
The primary purposes of a title examination, as discussed
previously, are to ensure that a seller has the ability to convey
good title to the purchaser at the time of the closing or that a
borrower has good title to the property being pledged as
security for a loan. The purchaser’s or lender’s attorney or
paralegal usually orders or conducts the title examination. It is
best to have the examination performed as early as possible to
allow time for dealing with unexpected complications. In
addition, a title “check down” or update usually is done
immediately before the closing of the sale or loan. This update
ensures that no adverse interest was recorded against the
property between the date of the preliminary title examination

and the closing of the transaction for which the examination
was made.
Information Needed to Do an Examination
A title examiner should have as much accurate information as
possible to perform the examination. The minimum information
required is (a) a legal description of the property to be
examined, (b) the name of the current owner, and (c) copies of
all deeds and surveys, or any prior title examinations or title
insurance policies that affect the property. If the examination is
being prepared in connection with a sale, the sales contract will
have a description of the property to be purchased. The seller of
the property should be the current owner. If the examination is
being prepared in connection with a mortgage loan, the loan
application usually contains a description of the property, and
the loan applicant, it is hoped, is the current owner of the
property or the purchaser under a contract to purchase the
property. The property owner should be contacted to see if he or
she has information, such as prior title examinations, surveys,
or deeds, concerning the property. It is a good idea to use a title
order form on which pertinent information may be written. An
example of a title order form is shown in Exhibit 12–1.
EXAMINING TITLE TO REAL PROPERTY
Where to Search
Title examinations usually are conducted in the courthouse of
the county in which the property is located. If the property is
located in more than one county, it may be necessary to conduct
the examination in each county to have a full title examination.
The public official who is responsible for keeping real property
records varies from state to state, but he or she usually is the
clerk of the court or a registrar of deeds. The real property
records typically are kept in a record room located within the
county courthouse.
Period of Examination
A title examination searches the owner’s chain of title by
starting at the present time and working backward to some
predetermined point. The examination establishes a source of

title for each owner in the chain. Title examinations are
classified as either full or limited searches. The length of time
for a full search differs from state to state but usually requires
that an owner’s chain of title be established for 50 or 60 years.
Most potential defects in title, both recorded and unrecorded,
will have no effect on the current ownership of the property
after 50 or 60 years.
A limited search title examination is for a period less than that
required for a full search. Limited searches often are performed
for loan assumptions and second mortgage closings. The theory
supporting a limited search in these situations is an assumption
that a full search was performed for the first security mortgage
holder and that all defects and objections were cured at that
time. A title examination beginning from the recording date of
the first mortgage should be sufficient to protect the interest of
the parties. A limited search may be possible when the property
is covered by a title insurance policy for which the full search
was performed or when the examiner can obtain a copy of a
previous full title examination. Most title insurance companies
issue title insurance based on a limited search from the date of
an earlier title insurance policy. The client must be informed of
the extent of the title examination in the title examiner’s title
opinion letter. The client also should be made aware that a
limited search does not qualify as a full legal search and does
not protect against title matters created before the starting date
of the limited search.
What to Search
A title examination involves searching through a grantee index
of the owner’s chain of title backward in time to some
predetermined point to establish a source of title for each owner
in the chain. Then, for each grantor in the chain of title, the
examiner searches the grantor’s index from the date the grantor
acquired title to the next grantor in the chain. Finally, the
examiner searches other indices to determine whether there are
any other recorded claims against the property, such as
judgment liens, mechanic’s liens, and tax liens.

Grantee and Grantor Indices
Most real property record rooms are indexed by the names of
the grantees and the grantors of real property and the interests
recorded therein. Each entry referenced in the grantee or grantor
index usually provides the following information:
●Name of grantor
●Name of grantee
●Date of instrument
●Date of recording of instrument
●Nature of instrument (e.g., deed, mortgage, easement)
●Brief description of the property covered
●Place where the instrument can be found so that it can be
examined and read (record book and page reference)
Grantee Index.
The grantee index is an alphabetical index by the last name of
all people who are grantees of any property interest during a
given year within the county. The index is maintained on a
year-by-year basis from the beginning of time that the county
maintained records. The grantee’s property interest consists of
purchasers, holders of mortgages and security deeds, easement
holders, tenants, holders of liens, and so on.
The grantee index enables an examiner to build a chain of title
from the present to the past. The first link in the chain of title is
the conveyance to the current owner of the property. To find
this first link, the examiner begins in the current year’s grantee
index and looks for the name of the current owner of the
property. The examiner continues to search in each year’s
grantee index until the examiner finds the name of the current
owner. Once this name is located, it is matched to the property
in question. The examiner then looks to see who gave the
property to the current owner (i.e., who was the grantor of the
deed to the current owner); this person then becomes the next
link in the chain of the title. The examiner searches the grantee
index until this person’s name is found. This process continues
for 50 or 60 years in the grantee index, at which time the
examiner should have a list of successive owners of the

property, the dates they acquired ownership, and the dates they
transferred ownership away for the 50- or 60-year history. Once
this is done, the examiner uses the grantor index.
Grantor Index.
A grantor index is an annual alphabetical index by last name of
all people who are grantors of a real property interest within the
county. Grantors of property are sellers, borrowers, mortgagors,
grantors of easements, and so on. The examiner begins with the
grantor index from the past and follows it to the present. The
examiner starts with the last grantee that was found in the
grantee index and then examines the grantor index until this
person’s name is found and there is a transfer of the property
from them. For example, if the examiner, at the conclusion of
the grantee index search, finds that in 1963 (50-year search
beginning in 2013) Mary T. Sneed was the owner of the
property, the examiner begins the grantor index searching for
the name of Mary T. Sneed. He or she will begin in the 1963
index. The examiner continues the search in 1963, 1964, 1965,
and so on until Mary T. Sneed’s name is located as the grantor
of a deed transferring ownership of the property. At this
juncture, the examiner searches for the name of the grantee of
the deed from Mary T. Sneed, and this person becomes the next
grantor to be located. The examiner follows this person’s
records until the point where he or she conveyed away the
property by deed. By reviewing the grantor index, the examiner
can discover any easements, mortgages, or other title exceptions
to the property.
Plat Index
Most counties maintain a plat or tract index and copies of all
plats that have been recorded within the county. The index to
the plats usually is based on one of the following criteria: (a)
land lot and district (location designation), (b) name of owner
designation, or (c) subdivision designation. For example, title is
being examined to property in the Pine Tree Subdivision, which
was developed by the Acme Realty Company and is located in
Land Lot 100 of the 17th District of Salem County, Virginia. An

index to a plat reference (a book and a page where a plat is
recorded) for the subdivision can be found in one of three ways.
First, there may be an entry under Land Lot 100 of the 17th
District for Pine Tree. Second, in the owner index there may be
a listing for Acme Realty Company and a list of all plats filed
by Acme Realty Company, with a book and a page where the
plats are located. Third, there may be a listing in the
subdivision index for Pine Tree Subdivision. Once the plat has
been found, it should be carefully examined. The plat contains a
legal description of the property, and it should match the
description being used for the examination. Any discrepancies
in the description should be noted. Plats often have restrictive
covenants printed on them that are binding on an owner of the
property. Plats also show building setback lines, easements, and
other details. Most courthouses have photocopy equipment to
enable the examiner to make a copy of the plat. It is advisable
to request that a copy be made for the paralegal and the client.
Reviewing the Various Instruments in the Chain of Title
A title examiner carefully examines each instrument’s property
description to make certain that it is the same as the property
that is being examined. Title examiners should note any errors
or discrepancies in the legal description. The legal description
may change over the course of time because a current parcel of
property may have been included within larger tracts in the past
history of the property. For example, a title examiner is
examining record title to a residential subdivision lot. The lot is
described by a plat book and page reference. The residential
subdivision lot in its past history was part of a farm that was
described by a metes and bounds legal description.
The examiner maps out each property conveyance, including the
property conveyed and the property excluded from the
conveyance, to determine that the property in question is being
transferred each time and that the current legal description is a
true description of the property vested in the current record
owner. Subtle differences in property description that go
undetected early can impair the validity of the title examination.

When reviewing deeds, easements, or mortgages, an examiner
usually does the following:
●Notes the identity of the parties to the instrument, the date the
instrument was signed, and the date it was filed
●Examines the signature and witnessing requirements
●Makes a notation of what estate was being conveyed (e.g., fee
simple, life estate)
●Pays particular attention to any covenants or other
requirements that may be set out in the instruments
Most title examiners make copies of all instruments in the chain
of title that currently affect the property and attach the copies
as exhibits to the title examination report.
Other Things to Examine
In addition to searching the grantee and grantor indices and
reviewing various documents contained therein, an examiner
must look for other potential title problems. These items may
change slightly from state to state but usually include the
following.
Judgments
A money debt resulting from a lawsuit is called a judgment. A
judgment may have been entered against an owner in the chain
of title. Once a judgment has been recorded in the public
records, it becomes a lien on all property of the judgment
debtor. A docket or index for judgments can be found in the real
property record room. The docket lists in alphabetical order the
names of all people within the county within a given year
against whom a judgment has been recorded. The index also
refers to a book and page of a judgment book in which a copy of
the judgment can be found. The index does not indicate the
amount of the judgment or whether the judgment has been paid
and satisfied. An examination of a copy of the judgment in the
judgment book reveals the amount and whether the judgment
has been satisfied. Most clerks print the word “Paid” or
“Satisfied” on a judgment when it has been paid. Judgments in
most states have only a 5- to 7-year lifetime, but they can be
renewed for an additional 5 to 7 years. Because judgments

attach at the time of recordation to all property then owned by
the judgment debtor or to any property thereafter acquired by
the judgment debtor, it is necessary for the examiner to examine
the judgment index for the names of all people who have owned
the property during the lifetime of a judgment (5 to 7 years).
For example, Bryan Thompson, Martha Farris, and the Winston
Company, Inc., have by the grantee-grantor search been found
to be owners at one time or another of the property during the
past seven years. All these names should be searched in the
judgment index.
Federal and State Tax Liens
The federal and state governments have the right to file a lien
against the property of any delinquent taxpayer. A federal tax
lien, once filed, becomes a lien on all property owned by the
taxpayer at the time of filing as well as all future property
acquired by the taxpayer until the lien has been paid in full.
Most record rooms maintain a separate index for federal tax
liens and a separate book in which the federal tax liens can be
examined. The same considerations and procedures for
examining judgments apply to federal tax liens, except that a
federal tax lien has a 10-year lifetime unless renewed. A state
tax lien has its own statute of limitations for enforcement.
Delinquent Taxes
All property is taxed by county or city governments and may be
separately assessed for sanitary, sewer, or other services. These
tax liabilities and other assessments are liens on the property.
Liens for assessments may be found in a tax assessor’s or tax
collector’s office, which may be separate and apart from the
real property record room. In many localities, there are
specialized tax services that examine tax and assessment
records for a reasonable price. Most title examiners and law
firms use these services where they are available to determine
the tax obligations of a particular piece of property.
Uniform Commercial Code
Many real estate transactions involve both real and personal
property. When personal property is involved, it is necessary for

the examiner to search the Uniform Commercial Code (UCC)
financing statement index to determine if any of the personal
property has been pledged as security for a loan. This index is
an alphabetical listing of the last names of all debtors who have
pledged personal property as security for a loan. In states that
have central filing of UCC financing statements with the
secretary of state’s office, a state search must be conducted as
well as a local search.
Lis Pendens
A lawsuit affecting title to real estate that has not been resolved
and is still pending is not a cloud on the title to the property
unless a lis pendens is filed in the real property records. Lis
pendens is a combination of two Latin words: “lis,” which
means an action, suit, or controversy, and “pendens,” which
means something that is continuing or pending. A lis pendens
notice is a notice of a pending lawsuit. A lis pendens puts third
parties on notice that an action is pending against certain
property and that if they purchase the property or acquire a loan
on the property, they will be bound by the subsequent judgment
in the lawsuit. Both real and personal property are subject to a
lis pendens. A lis pendens is inapplicable in a suit for a
personal or money judgment. Lis pendens is applicable only in
an action that directly affects title to property. For example, a
lis pendens would be applicable to any suit that challenges the
current ownership of the property. In addition, a lis pendens
would be applicable in a suit for breach of contract against a
current owner if the suit were asking for specific performance
of the contract. An action for divorce does not ordinarily invoke
a lis pendens, except when specific property is sought for either
an alimony purpose or a property settlement.
A lis pendens usually is a simple document that gives notice
that a lawsuit has been filed as well as information concerning
the lawsuit, such as the court in which the lawsuit was filed, the
parties involved, a civil action file number, and a brief
description of the nature of the lawsuit. If a lis pendens is filed,
the property in the lis pendens is subject to the outcome of the

lawsuit, and the lis pendens is considered to be a cloud on the
title. Most counties maintain a separate record for the lis
pendens. The record index is maintained alphabetically in the
name of the property owner.
Civil Suits
Technically, a pending civil suit, regardless of its nature, does
not have any effect on title to real property unless a lis pendens
notice has been recorded. Many title examiners, however,
examine the civil dockets for informational purposes. For
example, if a client is in the process of purchasing property
from a seller and the examiner finds on the civil docket a
number of lawsuits against the seller for breach of contract, the
client should be advised to be cautious.
Probate Court Records
Property may pass through probate and estate proceedings
because of the death of one of the owners. It may be necessary
for the examiner to examine the probate court records to make
sure that the will was properly probated and that the property
has been distributed to the devisees under the will or the heirs
at law, in the case of intestate succession. In addition, if the
property has been sold by the executor of an estate, the title
examiner needs to search the probate or estate records to
ascertain if the proper authority for the sale had been obtained
by the executor.
Mechanic’s Liens
A mechanic’s lien or lien given to a contractor, laborer, or
material supplier who has contributed to the construction of
improvements on real property may be found in the grantor
index or in a separate index.
Preliminary Title Report
Once a title examination is completed, the examiner reports in
writing the conclusion of the examination. If title insurance is
being obtained, the examiner certifies title to the title insurance
company, and an insurance commitment or binder is issued
before the closing.
At a minimum, the title report should reveal the following: (a)

the name of the current record title holder; (b) legal description
of captioned property; (c) existing unpaid loans or mortgages;
(d) other lien holders; (e) status of taxes; (f) listing of all
easements, covenants, and other restrictions; (g) any objections
to marketability; (h) other matters that affect title; and (i)
requirements for vesting marketable title in the purchaser. The
title examination should be reviewed as soon as it is received.
Defects that may take time to cure should be addressed
promptly to avoid a delay in closing.
Explanation of Title Notes
To prepare the title notes in Example 12–1, the title
examination would have proceeded as follows:
1. The examiner goes to the Fulton County Courthouse with a
description of the property and the current owner’s name, John
Samson.
2. The examiner first examines the subdivision plat of Pines
Subdivision. It is not necessary to use a plat index to locate the
plat because a plat book and page number for the plat are part of
the legal description. If the plat book or page number for the
plat were not provided, it could have been obtained by looking
in the subdivision name index under the Pines Subdivision.
3. The plat shows the dimensions of Lot 3. The examiner notes
any restrictive covenants, easements, or setback lines that affect
Lot 3. The examiner makes a copy of the plat and attaches it to
the title report.
4. The examiner is now ready to start searching in the grantee
index. The examiner looks in the current year’s index under the
S’s for Samson. Because John Samson may be a common name
in the county, the examiner may find many entries for John
Samson, but the examiner is only interested in the entry for
John Samson that affects Lot 3, Block A, Pines Subdivision.
According to the title notes, the examiner does not find any
entries in the current year or any year until 2010. In the 2010
book, the examiner finds an entry dated March 1, 2010, to John

Samson from Sarah T. Davis, a warranty deed affecting the
property and recorded at Deed Book 604, Page 91. The
examiner at this stage stops indexing and goes to Deed Book
604, Page 91, and looks at the deed to make sure that it is in
fact the same parcel of property being examined. Once assured
that it is the same parcel of property, the examiner returns to
the grantee index for further indexing.
5. The next person the examiner looks for in the grantee index
is Sarah T. Davis. The examiner looks in the 2010 book for
Davis because she may have acquired the property the day
before she sold it to Samson. The examiner does not find Davis
in the 2010 book and looks in the 2009, 2008, 2007, 2006, 2005,
and 2004 books. In the 2004 book, the examiner finds an entry
to Sarah T. Davis from George Farris, a warranty deed for the
same property. Once this deed has been discovered, George
Farris becomes the next person to look for in the grantee index.
The examiner stays in the same period, 2004, and searches the
F’s for George Farris. The examiner then looks in the indices
for 2003, 2002, 2001, 2000, 1999, 1998, and 1997. In the 1997
grantee index, the examiner finds an entry to George Farris
from the ABC Co. for this property. ABC Co. then becomes the
next grantee, and the examiner searches the indices for ABC Co.
all the way back to 1993, where the examiner finds an entry to
ABC Co. from Fred Smith.
6. Because the search is limited, this is the end of the grantee
indexing. The grantee search gives the following information:
ABC Co. owned the property from 11-4-1993 to 2-7-1997;
George Farris owned the property from 2-7-1997 to 6-9-2004;
Sarah T. Davis owned the property from 6-9-2004 to 3-1-2010;
and John Samson bought the property on 3-1-2010 from Sarah
T. Davis. The examiner does not know if John Samson is still
the owner of the property. This information cannot be
determined from the grantee index except by performing a
needle-in-the-haystack type of search. This information is more
readily available in the grantor index.
7. The examiner starts searching in the grantor index from the

past to present. The examiner starts in the grantor index for
1993 with the name Fred Smith and finds an entry from Fred
Smith to ABC Co. on 11-4-1993. The next grantor, then, is ABC
Co., and the examiner stays with the name in the 1993 book.
The examiner finds an entry on the same day to the First Bank.
It is a DSD, which is an abbreviation for deed to secure debt.
The examiner stays with ABC Co. They have not transferred
property but have only pledged the property as security for a
loan to First Bank. The examiner runs the 1993, 1994, and 1995
books for ABC Co. In the 1995 grantor index, the examiner
finds an entry from ABC Co. to Georgia Power, something
called an EASE, which is an abbreviation for easement. (Many
counties abbreviate all the identification of the instruments, and
it may take a few days to learn all the abbreviations.) This entry
to Georgia Power still does not divest ABC Co. of title of the
property, and ABC Co. remains grantor. The examiner searches
the 1995, 1996, and 1997 books and finds in the 1997 index for
ABC Co. an entry of a warranty deed to George Farris. This
entry does divest ABC Co. of title, and George Farris then
becomes the next grantor. The examiner then switches in the
1997 index to look under the F’s and finds an entry from George
Farris to the Savings & Loan of Tucker. It is another deed to
secure debt, which means that George Farris has pledged the
property as security for a loan. The examiner stays with George
Farris and looks in the 1997, 1998, 1999, 2000, 2001, 2002,
2003, and 2004 grantor index books for George Farris. In the
2004 grantor index, the examiner finds an entry from George
Farris to Sarah T. Davis. It is a warranty deed entry, and Sarah
T. Davis now becomes the next grantor. The examiner searches
Davis in the 2004, 2005, 2006, 2007, 2008, 2009, and 2010
books. In the 2010 book, there is an entry from Davis to John
Samson, a warranty deed. John Samson becomes the next
grantor. The examiner searches for John Samson in the 2010,
2011, 2012, and 2013 books. In the 2011 book, there is an entry
from John Samson to Acme Finance, another deed to secure
debt. The property has been pledged another time as security for

a loan. The examiner continues to search John Samson forward
to the most current date of the examination. Every attempt
should be made to examine up to the date of the examination.
However, some record rooms may be behind in indexing, and
the search can only go as far as the record day. Most clerks post
each day the “record date” of the system.
8. Once both the grantee and the grantor search are finished, the
examiner can determine from the title notes the following: (a)
John Samson owns the property and (b) the property is subject
to (i) a deed to secure debt from ABC Co. to First Bank, (ii) an
easement from ABC Co. to Georgia Power, (iii) a deed to secure
debt from George Farris to Savings & Loan of Tucker, and (iv)
a deed to secure debt from John Samson to Acme Finance.
9. It is now necessary for the examiner to review each and every
document, including every deed in the chain of title. These
documents are found by going to the deed book and pages that
were discovered during the indexing. Satisfactions of deeds to
secure debts or mortgages often are stamped in the book and are
difficult to find through the indexing process.
10. Once all the deeds, security deeds, easements, and so on
have been examined, the examiner does the other searches
regarding judgments, tax liens, lis pendens, and so on.
TITLE DEFECTS AND PROBLEMS
A real estate paralegal should be familiar with common title
defects and basic procedures for curing them. Space does not
permit more than a short summary of title objections that can
arise from a title examination. The exact procedure to be
followed in resolving these objections varies from state to state.
The course of corrective action also depends on the nature and
severity of the defect and the purpose for which the property is
being purchased.
A sale or loan closing cannot be completed until title defects
and objections have been removed.
Record Title Holder
The owner of the real property as shown in the deed records is
known as the record title holder. In most cases, the seller named

in the sales contract or the borrower who is applying for the
loan is the holder of the record title. If the title examination
reveals that someone else is the record title holder, there is a
problem. Sometimes the problem is simple, as when a husband
signs the sales contract but record title is in the wife’s name.
The closing paralegal can easily verify with the real estate agent
if the wife is the real seller. At other times, the problem is not
so simple, as when an heir signs the sales contract but the
record title holder is the deceased. In this case, a probate
proceeding may be necessary.
Another situation arises when the seller is not the record title
holder but has been in possession of the captioned property for
more than the statutory adverse possession period. The closing
should not take place until a judicial proceeding, known as a
suit to quiet title, is brought to establish the seller as the record
title holder. Another solution is to obtain quitclaim deeds from
all parties with a possible interest in the property.
Breaks in the Chain of Title
A chain of title is composed of consecutive links of the grantors
and grantees of the captioned property: A to b, b to c, c to d,
with d holding current record title. Occasionally, there is a
missing link: a to b, d to e. The record title does not reveal how
b was divested of title or how d acquired title. A break in the
chain of title can be caused by any number of factors, such as
an unrecorded deed, a name change, an unadministered estate,
or a foreign divorce decree. Unless the missing link can be
reconstructed by verifiable sources outside the record, the
defect is a serious cloud on the title.
The link must be established before it can be determined what is
necessary to protect the record. Often all that can be done is to
advise the parties of the problem and require them to establish
the missing link. If the current owner and the predecessors in
title have satisfied the statutory requirements for adverse
possession, a quiet title action brought by d against b and his
heirs would resolve the problem, assuming that b or his heirs do
not have a valid defense.

Under a contract to purchase, the purchaser cannot force the
current owner to prosecute a suit to quiet title. Legally, the
purchaser can only reject title until the defect is corrected or
seek damages in a suit for breach of contract.
Errors in Prior Recorded Deeds
Errors in a prior recorded deed in the chain of title, such as an
erroneous legal description, misspelled name, or improper
execution, must be cured before the title is acceptable. When
possible, such errors may be cured by a corrective deed from
the grantor to the grantee of the defective deed. A corrective
deed has the same format as the original deed, with the error
corrected and a clause inserted:
This deed is given to correct [describe error] contained in a
prior deed between the parties dated ___, 20___, recorded ___,
20 ___, in the Clerk’s Office, Circuit Court of __ County,
Virginia, at deed book ___, page ___.
No consideration is required for a corrective deed.
The corrective deed must be recorded. A corrective deed may
not be used to change a greater estate to a lesser estate (i.e., fee
simple to life estate), nor can it be used to change the identity
of a grantor altogether, although it may correct misspellings. It
is the responsibility of the current owner to locate the parties
and obtain the corrective deed.
An error in a prior recorded mortgage or deed of trust is of no
consequence so long as the mortgage or deed of trust is paid and
released before closing.
Name Variances
A name variance, as distinguished from a simple misspelling, is
a variation between the name by which a record title holder
acquired title to the property and a name by which the holder
conveyed the title. If variances in the name of a previous record
title holder exist, the current owner should be asked to provide
an affidavit from the prior owner that the person whose name
appears in the two documents are one and the same person. If
the variances are in the name of the current owner, a clause in
the deed explaining the variance is sufficient. For example:

Grantor named herein is one and the same person as John D.
Adams, the grantee named in a prior deed dated ___ day, 20___,
and recorded ___ day, 20___, in the Clerk’s Office, Circuit
Court of ___ County, Colorado, in deed book ___, page ___.
Corporations, limited liability companies, and partnerships can
present a similar problem. In the case of the corporation or
limited liability company, a certified copy of an amendment
changing the name should be obtained from the clerk of the
State Corporation Commission. In the case of a general
partnership, affidavits from each partner may be required to
verify a name change, merger, or death of a partner. When one
general partner has power of attorney to act on behalf of the
others, a single affidavit may be sufficient. Similarly, in the
case of a limited partnership, a single affidavit from the general
partner normally is sufficient.
Improper or Missing Power of Attorney
When a deed in the owner’s chain of title was signed for the
owner by an attorney-in-fact, a properly executed power of
attorney should have been recorded with the deed. If it was not,
the effect is the same as if the deed itself was not signed. The
defect may be cured by having the current owner obtain and
record a corrective deed or quitclaim deed signed by the prior
owner.
Sales Contracts, Options, and Leases
If the title examination reveals that the property is subject to a
contract or an option to sell or lease, the owner should provide
proof by affidavit or other means that the contract or option has
expired. If the contract or option has not expired, the seller
should be required to obtain a quitclaim deed from the
purchaser or optionee named in the contract. The quitclaim deed
should be recorded if the contract or option was recorded.
If the property is subject to a lease or if a lease is discovered
during the title examination, all parties should be advised to
make inquiry as to possession. Depending on the purchaser’s
purpose in acquiring the property, the lease may or may not
constitute a defect. A lender also should be advised of the

outstanding possessory rights of any person other than a
purchaser or borrower.
Because leases often are unrecorded or not in writing, the
purchaser or lender should always be advised to physically
inspect the property well in advance of closing. A discovery
that the premises are occupied by someone other than or in
addition to the current owner indicates a possible possessory
interest in a third party.
Unsatisfied or Unreleased Mortgages
If an existing mortgage or deed of trust is to be assumed by the
purchaser, it will be necessary to obtain an assumption package
from the lender. If the debt is to be satisfied at closing, it is
necessary to obtain a payoff amount from the lender and make
certain that the debt is in fact satisfied from the sale proceeds.
Sometimes a mortgage or deed of trust in the owner’s chain of
title will have been satisfied but never released of record. In
this situation, the owner should obtain a release from the lender
or an affidavit of repayment.
Mortgages and deeds of trust commonly are satisfied by one of
two forms of release: (a) a marginal release entered in the
margin of the deed book in which the mortgage or deed of trust
is recorded or (b) a certificate of satisfaction from the lender to
the record title holder recorded in the office in which the
mortgage or deed of trust is recorded. Mortgages also may be
partially released when more than one parcel of property is
secured by a single mortgage or deed of trust. When dealing
with a series of parcel releases, it is important to make sure that
they constitute a complete release of record of the property in
question.
Notice of Lis Pendens
As discussed above, a notice of lis pendens is a recorded notice
that there is a pending suit or lien of attachment that may affect
the title to the property. Such a notice must be released of
record before the property can be sold or pledged as security for
a loan. This usually requires that the suit itself for which the lis
pendens serves as notice be settled or dismissed with prejudice.

Easements
An easement may be created in property by grant, prescription,
implication, or necessity. A full discussion of easements is set
forth in Chapter 5. Many title examiners routinely object to all
recorded easements as defects in the title. As a practical matter,
only those easements that in some way restrict the use of the
property by the owner are of any consequence. It is important to
note that not all easements that may restrict the owner’s use
may be recorded. Easements that are not recorded include
prescriptive easements, easements of necessity, and implied
easements. Nonrestrictive easements, such as those routinely
granted to utility companies to allow a reasonable ingress and
egress for the purpose of maintaining utility service, usually do
not require further action. When a utility easement has been
granted a general description (blanket easement), it is wise to
ascertain the manner in which the easement has been exercised
in the past to make sure that the exercise will not interfere with
the owner’s use. It is possible to obtain from many utility
companies a containment agreement in which the utility
company agrees that its easement rights are limited to the actual
location of its lines and an area reasonably surrounding such
location to provide for maintenance access to the lines.
Easements that do restrict the owner’s use in a serious manner
or that would prevent certain additions or improvements from
being made on the property are serious title defects that do need
to be resolved before the closing of the sale or loan.
Restrictive Covenants and Conditions
All unexpired restrictive covenants and conditions should be
reported to the parties. These normally are of little significance
unless restrictions interfere with the owner’s use of the property
or unless the covenant contains a reversion or forfeiture clause.
A reversion or forfeiture clause provides that on violation of the
condition, title reverts to the grantor or is otherwise forfeited by
the violation. If such a clause is found, the seller should provide
proof by affidavit or other means that there has been no
violation. Minor violations of covenants or conditions not

subject to reversion or forfeiture may be released or waived by
the owners of the property benefited by the restrictions. For
example, if the house on the property is shown as violating a
private building line, it is possible to obtain a waiver from all
other owners in the subdivision that such building line violation
is acceptable.
Recorded restrictions may be found in the individual deeds of
conveyance, noted on the recorded subdivision plat, or both.
Subdivision restrictions or regulations may not be recorded on
every deed; however, restrictions may attach by implication to
each parcel conveyed from a common developer if there is
evidence of a general plan or scheme of development. This
general plan or scheme operates as constructive notice of the
possible existence of restrictions on use.
Restrictive covenants and conditions often are limited in
duration by their terms. Subdivision regulations also may be
limited in duration but may be renewed by the action or lack of
action of a majority of the affected landowners. When
restrictions are not limited in duration, changing conditions
over the years may make them unreasonable and therefore
unenforceable. It also is possible to have restrictions on use
waived by the owners of the benefited property before any
violation, thereby removing an objection that might otherwise
be a serious title defect.
Mechanic’s and Materialmen’s Liens
Recorded mechanic’s and materialmen’s liens must be treated
as adverse claims against the property. A full discussion of
mechanic’s and materialmen’s liens is set forth in Chapter 4.
The owner of the property should be required to pay the liens
and satisfy them of record or discharge them by filing a proper
bond before or at the sale or loan of the property. If the liens
are to be satisfied at the closing of a sale, contact must be made
with the holders of the lien to obtain the amount of the lien and
to arrange for payment. If the owner objects to paying the lien,
the owner should be required to post a bond that, in most states,
will release the property from the lien. Unperfected liens also

are of concern to the purchaser because the purchaser will take
property subject to all mechanic’s and materialmen’s liens for
work or material furnished within the past 60 to 100 days,
regardless of whether a claim of lien has been filed. For this
reason, a seller should be required to provide an affidavit that
no improvements have been made or materials supplied within
the necessary statutory period before the date of the sale or loan
on the property.
UCC Financing Statements
If an examination of the UCC index reveals a financing
statement describing personal property or fixtures that are
considered part of the realty being transferred or pledged as
security for the loan, the owner should be required to terminate
the security interest.
Judgment Liens
Final judgments for money damages constitute liens against all
real property that the defendant owns or subsequently acquires.
A title examiner will report such judgments as objections when
there is a possibility that the current owner is the named
defendant.
When the judgment is known to be or is admitted to be against
the current owner, the owner must be required to satisfy the lien
before or at closing. The judgment lien holder should be
contacted to obtain the amount of balance due, and care should
be taken to make sure the judgment is in fact satisfied from the
sale or loan proceeds.
If it is not certain that the judgment is against the owner and the
owner denies that he or she is the defendant named in the
judgment, an affidavit to this effect may be sufficient to protect
the title to the property. An example of the language used in the
affidavit is as follows.
Affiant does state under oath that he is not one and the same
person as John D. Adams named as defendant in the judgment
dated ___, 20___, recorded ___, 20___ in the Clerk’s Office,
Circuit Court of ___ County, Indiana, in judgment docket ___,
page ___ for ___ dollars in favor of Acme Loan Company,

Plaintiff.
A judgment against prior owners of the captioned property may
remain as a valid lien against the property despite the fact that
the property has been subsequently conveyed. If judgments are
found against the prior owners that do affect the property, the
current seller is required to satisfy these judgments of record.
Tax Liens
Unpaid county or city property taxes should be paid before or at
closing, except for the current year’s taxes that are not yet due
and payable. It is necessary to obtain payoff figures from the
appropriate tax officials and to supervise that the taxes are in
fact paid from the sale or loan proceeds. Federal tax liens and
state income tax liens of many states, when recorded, are liens
against all the real property owned or subsequently acquired by
the delinquent taxpayer. Tax liens should be handled in the
same manner as judgments, except that payoff figures are
obtained from the Internal Revenue Service or the state’s
Revenue Commission. The Internal Revenue Service will
provide a certificate of release or discharge when the lien has
been satisfied or may, in certain circumstances, provide a
partial release as to the parcel of property being sold or pledged
for a loan. In situations when the owner of the property has a
name similar to that of a delinquent taxpayer and it can be
verified that the owner is not the same person as the delinquent
taxpayer, the Internal Revenue Service will issue certificates of
nonattachment that release the owner’s property from the effect
of the tax lien.
Title through Estates
The title examination may reveal that the property has been
conveyed by the heirs or representatives of a deceased record
title holder. In this situation, the fee title may now be unified in
a single record title holder, or it may be fragmented into
separate shares owned by the grantees of the various heirs or
representatives. To be certain that the current owners in fact
hold title in fee simple to the property in question, it may be
necessary to account for all possible fragments of interest. In

most cases, a list of heirs recorded in the county clerk’s office
or a probate office allows the title examiner to follow and
document these conveyances. If, for some reason, no list of
heirs has been filed, it may be necessary to obtain an affidavit
of descent from a person with personal knowledge of the
decedent and his or her family.
Hinkel, Daniel F.. Practical Real Estate Law (Page 393). Delmar
Cengage Learning. Kindle Edition.

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