Race-Notice Recording, Grantor Possession, and Mortgage Priority
In Idaho, Owen conveys Blackacre to Alice by warranty deed in January, but Alice does not record. In March, Owen conveys the same parcel to Bob, who pays $250,000, has no actual or inquiry notice of Alice, and records immediately. In April, Alice records. In May, Bob borrows $180,000 from First Bank, which records its mortgage. Owen remained in possession of Blackacre the entire time and told Bob he was the owner; Bob visited once and saw Owen there. Alice sues to quiet title. Idaho's recording statute is race-notice. Bob claims he is a bona fide purchaser. Alice claims Bob had constructive notice because Owen was in possession and because Alice's deed was recorded before Bob's mortgage. First Bank claims its mortgage has priority over Alice's deed.
1. Who owns Blackacre as between Alice and Bob?
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Conclusion: Bob owns Blackacre. Idaho is a race-notice jurisdiction. A later purchaser prevails over an earlier unrecorded conveyance only if the later purchaser takes without notice and records first. Bob paid $250,000, had no actual notice of Alice, and recorded in March. Alice did not record until April, after Bob. That sequence makes Bob a bona fide purchaser and defeats Alice's earlier deed. Alice's argument that she recorded before Bob's mortgage is irrelevant to the Alice-Bob contest; the mortgage came later and cannot retroactively give Alice priority over Bob. The key comparison is Bob's March recording versus Alice's April recording. Because Bob recorded first and lacked notice, Alice's unrecorded January deed is void as to Bob. Bob holds title.
2. Did Owen's continued possession give Bob inquiry notice of Alice's deed?
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Conclusion: no, on these facts Owen's possession did not give inquiry notice. Possession of land by someone other than the grantor can put a purchaser on inquiry notice of that possessor's claim. But possession by the grantor himself is different. Bob saw Owen on the property, and Owen said he was the owner. That is consistent with Owen's record title and does not suggest that Owen had already conveyed to Alice. A purchaser is not required to interrogate a grantor in possession about possible undisclosed conveyances when the grantor claims ownership. Alice would need facts showing that her possession, not Owen's, was open and notorious, or that Bob had some other reason to suspect a prior deed. Because Bob had no actual or inquiry notice and recorded first, he remains a bona fide purchaser.
3. Does First Bank's mortgage have priority over Alice's deed?
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Conclusion: yes, First Bank's mortgage has priority. Bob owned Blackacre when he mortgaged it in May. A mortgagee takes the interest the mortgagor can convey. Because Bob's title is superior to Alice's unrecorded deed, Bob could encumber the property, and First Bank's mortgage attaches to that superior title. Alice's April recording before the May mortgage does give the bank constructive notice of Alice's deed, but notice does not help Alice here: her deed was already void as to Bob under the race-notice statute. The bank stands in Bob's shoes and takes the benefit of Bob's bona fide purchaser status. Alice cannot use her later recording to leapfrog Bob's earlier recorded deed. First Bank's mortgage therefore has priority over Alice's claim.