Quote:
Originally posted by Lawdog
Let's use a scenario here. You live in a state where race or race-notice is the law. You buy a piece of land and the house it sits on from someone who, unbeknownst to you, is not the most honest person in the world. Whether intentionally or unintentionally, you never record your deed.
The guy who sold you the land learns a few months later that you never recorded your deed. Feeling like double dipping, he sells the property a second time to a new buyer. The new buyer had no notice that you previously bought the land, both because you never recorded the deed, and no one ever told them about the previous sale of the property. The second buyer records their deed.
Guess what? They are now the rightful owner of the land, and if you refuse to vacate, they can use the sheriff or other legal processes to have you removed forcibly. You might be able to nail the guy who sold you the land for fraud, if you can find him. Chances are someone who pulled a stunt like this would not stick around.
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Thank you Lawdog for illustrating my point. The problem arises, however, that the contract to sell to the second buyer is fraudulent. As we know, such contracts are a nullity. If a contract is a nullity from its inception, it is impossible for it to become legitimate merely by recordation.
Recordation statutes only apply to entities, the same way they do for vehicle registration. By registering your property with the corporate agents they will certify the title, effectively insuring it. Who does this benefit? Surely not the second buyer because his claim is against the seller. But the bank is indemnified for the "funds" it loaned by being able to write the whole thing off. That is what these statutes are all about, money.
The lawful owners rights are still intact simply because a nullity cannot take precedence over substance. Registration of a contract does not confer right to tiltle, the contract itself does.
By entering the statutory world, the law affords us the right of limited liability, that is what recordation does, among other things.
gldskr