Legal Definitions - race act

A race act (also known as a race statute) is a type of law found in some jurisdictions that determines who has legal priority when there are competing claims or interests in the same piece of real estate. Under a race act, the person who "wins the race" to the public records office and officially records their deed, mortgage, or other property interest *first* is considered to have the superior legal claim. The timing of the actual purchase or creation of the interest is less important than the timing of its recording.

• Example 1: Fraudulent Sale

  Imagine a scenario where a property owner, Mr. Davies, sells his undeveloped land to Ms. Chen. Ms. Chen receives her deed but, due to an oversight, delays recording it at the county clerk's office for several weeks. Unbeknownst to Ms. Chen, Mr. Davies then fraudulently sells the exact same parcel of land to Mr. Rodriguez, who immediately goes to the county clerk's office and records his deed the very next day. Under a race act, Mr. Rodriguez would be recognized as the legal owner of the land because he recorded his deed first, even though Ms. Chen was the first to purchase it.

• Example 2: Conflicting Easements

  Consider a situation where a homeowner grants an easement (a right to use part of their land for a specific purpose) to a local internet provider for running fiber optic cables across their backyard. The internet provider, however, is slow to record this easement. A week later, the same homeowner grants a different easement to a neighboring property owner, allowing them to build a shared fence that slightly encroaches on the same backyard area. The neighbor promptly records their easement. In a jurisdiction with a race act, the neighbor's easement for the fence would take priority over the internet provider's easement for cables, simply because the neighbor recorded their interest first.

• Example 3: Multiple Mortgages

  Suppose a small business owner takes out a loan from Bank A, securing it with a mortgage on their commercial building. The business owner receives the mortgage documents but doesn't record them immediately. A few days later, the same business owner takes out a second loan from Bank B, also secured by a mortgage on the same commercial building. Bank B's loan officer ensures the mortgage is recorded at the county office that very afternoon. If the jurisdiction operates under a race act, Bank B's mortgage would have priority over Bank A's. This means if the business defaults and the property is sold, Bank B would be paid back from the property's sale before Bank A, because Bank B was the first to record its interest.