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7. If the lender is unsuccessful, it will be because
The lender joined both the owner and the buyer in an appropriate action to foreclose the judgment lien against Blackacre.
The recording act has no provision for a grace period.
The two pertinent statutes in the jurisdiction provide the following: 1) any judgment properly filed shall, for 10 years from filing, be a lien on the real property then owned or subsequently acquired by any person against whom the judgment is rendered; and 2) no conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice unless the same be recorded according to law.
An owner conveyed Blackacre to a buyer by a warranty deed. The buyer recorded the deed four days later. After the conveyance but prior to the buyer's recording of the deed, a lender properly filed a judgment against the owner.
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The vast majority of states in the United States employ a system of recording legal instruments that affect the title of real estate as the exclusive means for publicly documenting land titles and interests. There are three major types of recording acts classified as notice, race-notice, and race statutes.
Under a notice statute, a subsequent BFP (i.e., a person who gives valuable consideration and has no notice of the prior instrument) prevails over a prior grantee who failed to record. The important fact under a notice statute is that the subsequent purchaser had no actual or constructive notice at the time of the conveyance.
Under a race-notice statute, a subsequent BFP is protected only if she records before the prior grantee. The operative words in a race-notice statute are «without notice» and «first recorded.»
Under a pure race statute, whoever records first wins. Actual notice is irrelevant.
A judgment lien is a court ruling that gives a creditor the right to take possession of a debtor's real property if the debtor fails to fulfill his or her contractual obligations. A judgment lien may be made against an individual or business and allows the creditor to access the debtor's business, personal property, and real estate, among other assets, to pay the judgment. A plaintiff who obtains a monetary judgment is described as a «judgment creditor,» while the defendant becomes a «judgment debtor.»
The majority rule states that a plaintiff who obtains a judgment lien under this kind of statute is not protected by any recording acts from a prior unrecorded conveyance made by the defendant. This is because a plaintiff is not a BFP because he did not pay value for the judgment, or the judgment attaches only to property owned by the defendant, and not the property the defendant has previously conveyed away, even if that conveyance was not recorded.
B is correct. The recording statute identified in the facts is a notice act. To prevail under a notice act, a party must be a BFP who had no actual or constructive knowledge of the prior conveyance. To be a BFP, a party must give value for their interest in the land. In this case, the lender's interest arises from a judgment lien against the owner rather than payment of valuable consideration. Therefore, the lender is not protected by the recording statute. Because the buyer is protected by the statute, the owner no longer holds an interest in Blackacre, and there is no property for the lien to attach to.
A is incorrect. Under a notice statute, the lender will prevail over the buyer, assuming the lender is a BFP (a purchaser for value) because the buyer is a grantee who failed to record before the judgment lien was properly filed.
C is incorrect. A judgment lien is a court ruling that gives a creditor the right to take possession of a debtor's real property if the debtor fails to fulfill his or her contractual obligations. A judgment lien may be made against an individual or business and allows the creditor to access the debtor's business, personal property, and real estate, among other assets, to pay the judgment. A deed is not always superior to a judgment lien.
D is incorrect. All recording acts require that the deed is promptly recorded. The definition of «prompt» does not necessarily mean that time is of the essence, however. This is a correct statement but is irrelevant to why the lender will be unsuccessful.