Documents Recorded Out of Order
Deeds and Conveyances
Out-of-order recordings sometimes make an examiner or conveyancer shudder. Deeds and mortgages are recorded out of order on occasion and it's important to know whether this fact justifies a rejection of the title or whether the reverse recordings can be ignored. It happens every once in a while that a mortgage from a borrower is recorded before the title deed is recorded. While one might be tempted to reject the mortgage title as bad, because the mortgage from the borrower was recorded before the title was vested in the borrower, this should not be the case. A mortgage contains "mortgage covenants," and these covenants are essentially the same as warranty covenants coupled with a defeasance clause. Compare, G.L.c. 183 §16 (warranty covenants) with G.L.c. §19 (mortgage covenants). Warranty covenants have been afforded a special place when it comes to conveyancing. They have the remarkable ability to create a condition known as "estoppel by deed," which was discussed in depth in the case of Ayer v. Philadelphia & Boston Face Brick Company, 159 Mass. 84, 34 N.E. 177 (1893), the case most frequently cited for the proposition. It is a theory, however, that was not new even to the Ayer court. In quoting Knight v. Thayer, 125 Mass. 25 (1878), Justice Holmes said in Ayer:
It has been the settled law of this commonwealth for nearly forty years, that, under a deed of covenants of warranty from one capable of executing it, a title afterwards acquired by the grantor inures by way of estoppel to the grantee, not only as against the grantor, but also as against one holding by descent or grant from him after acquiring the new title.
The theory, very simply put, means that, if a person gives a mortgage, and thereafter acquires the title to the property described in the mortgage, the title, once acquired, will spontaneously be "sucked up" under the mortgage and instantaneously vested in the mortgagee. The rule would apply where the title deed to the borrower is recorded after the mortgage granted by him (and also would apply even if there was a long delay between the recording of the two instruments).
The theory has been applied to quitclaim covenants in at least one decision, but the facts in that case were rather specific and might not be applicable generally. See Zayka v. Giambro, 32 Mass.App.Ct. 748, 594 N.E.2d 894 (1992). On the other hand, while perhaps not as well favored at common law or in historical conveyancing practice as warranty deeds, deeds with only quitclaim covenants have become the norm, at least in eastern Massachusetts, over the past 50 years or so, whereas "the warranty deed has become a rara avis." Thus, as the appeals court went on to observe in Zayka:
If estoppel by deed is a sound principle, no compelling logic or binding precedent proscribes its application to a quitclaim deed.
Though it seems that estoppel by deed is a "saving grace," the theory can backfire on occasion. Though it would be rare to find a title these days where a party gave a warranty deed (or mortgage) before acquiring title to the property described in the instrument, if such was the case and it was not discovered, a title acquired by the borrower later under a title deed would be "stripped" from him or her, leaving only the illusion that he or she had good title when in fact title would be vested in the grantee or mortgagee under the prior deed or mortgage.
Estoppel by deed can backfire in another way too. This can occur when a borrower gives successive mortgages on his or her property and one of the prior mortgages is foreclosed and the borrower thereafter reacquires the property. This is when "revival" occurs, and the previously junior mortgage or mortgages, which had been "wiped out" by the foreclosure, come back to life. A later conveyance from the re-acquiring borrower will carry with it the revived mortgage lien. Fortunately, the case of Huzzey v. Heffernan, 143 Mass. 232 (1887) ameliorated the result, holding the subsequent mortgages would not be revived if there was a statement in them that they were subject to the paramount mortgage.
Out-of-order recordings can occur in other instances as well, and the reverse order of recording can be ignored if it falls into the type of fact pattern discussed in King v. Stephens, 9 Mass.App.Ct.919, 404 N.E.2d 115 (1980). In King the record title, based on the order of recording, looked like this:
- Title began with William and Andrew holding as tenants in common.
- The deed recorded next was one from Andrew to William of a half interest.
- The deed recorded next was one from William to Andrew of all of William's title. (Note: This deed was dated prior to the #2 deed and was recorded immediately after it.)
- The next recorded deed was one from Andrew to William of Andrew's remaining half interest.
The net result of the deeds, as recorded, was that Andrew and William ended up owning half interests again. But the title disclosed that after the above deeds were recorded William alone conveyed the title out into the present chain. In an action brought by a present-day buyer for the return of the deposit, the trial judge had determined that the deeds had been recorded out of order (the execution of the deeds, according to their respective dates, was 1, 3, 2, and 4) and that the recording order, and not the order of the execution of the instruments, controlled. If the deeds, according to their respective dates, were laid upon a table in the order they were executed (1, 3, 2, and 4) the result would have been that William would have had the entire title to the property. The trial judge, however, ruled that the title emanating from William alone was defective and could be rejected as not good of record because Andrew had not joined in the conveyance and, according to the order of recording, he was a half owner. The Appeals Court disagreed:
The problem presented is not one of priority as between two conflicting, successive conveyances to bona fide purchasers, or persons claiming under them, of the same legal interest in land, and thus is not a problem to be resolved by application of the recording statute, G.L.c. 183, §4. The deeds . . . were valid between William and Andrew when delivered, and were valid as against all other persons when the deeds were recorded.
Other instances of out-of-order recordings, particularly in connection with out-of-sequence discharges and assignments of mortgages, may in many instances be ignored, although they might at first seem to justify the rejection of a title. These instances are set out in Massachusetts Conveyancers Association Title Standard No. 58. That title standard provides as follows:
A title is not defective by reason of:
- The recording of a discharge executed by a mortgagee who holds record title to the mortgage notwithstanding the subsequent recording of an assignment by the discharging mortgagee to a third party, regardless of whether the assignment was dated prior, or subsequent, to the discharge;
- The recording of a discharge executed by a mortgagee who did not hold record title to the mortgage at the time of the discharge, where the assignment(s) of mortgage to the discharging mortgagee, whether executed prior, or subsequent, to the recorded discharge, are subsequently recorded.
- The recording of an assignment of mortgage executed either prior, or subsequent, to foreclosure where said mortgage has been foreclosed, of record, by the assignee.