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What is the Shelter Rule?

Bar Exam Prep Real Property Conveyances What is the Shelter Rule?

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🏠 Real Property • Conveyances PROP#196

Legal Definition

A person who takes from a bona fide purchaser ("BFP") "steps into their shoes" and will prevail against any interest the transferor-BFP would have prevailed against.

Plain English Explanation

When dealing with Recording Acts and trying to figure out who prevails over who when property has been given or sold to multiple parties, the law generally protects a bona fide purchaser ("BFP"). Likewise, when a BFP then transfers their interest to someone else, they "step into the shoes" of the BFP and get to enjoy whatever protections were available to the BFP.

Hypothetical

Hypo 1: On January 1, Oz conveys Blackacre to Amy. Amy does not record. On January 10, Oz sells Blackacre to Bob. Bob has no idea that Oz previously conveyed the land to Amy. On January 11, Bob sells Blackacre to Carl. On January 15, Amy records her deed. On January 16, Carl records his deed. Result: Who gets Blackacre? It depends which jurisdiction we are in. In a notice jurisdiction, Bob is a BFP who took Blackacre without notice of Amy's conveyance, which means Bob will always prevail over Amy, even if she records first. Thus, when Bob transferred his interest to Carl, Carl enjoys these same protections. Thus, in a notice jurisdiction, Carl prevails over Amy

However, in a race notice or race jurisdiction, Amy would prevail since she recorded first.
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