TCA § 66-26-101 — Effect of instruments with or without registration

All of the instruments mentioned in § 66-24-101 shall have effect between the parties to the same, and their heirs and representatives, without registration; but as to other persons, not having actual notice of them, only from the noting thereof for registration on the books of the register, unless otherwise expressly provided. Code 1858, § 2072 (deriv. Acts 1831, ch. 90, §§ 6, 12; 1841-1842, ch. 12, § 2); Shan., § 3749; Code 1932, § 7665; T.C.A. (orig. ed.), § 64-2601. Cross-References. Requirement of registration of deed as to strangers, § 66-5-106 . Textbooks. Tennessee Jurisprudence, 1 Tenn. Juris., Acknowledgments, § 13; 12 Tenn. Juris., Executors and Administrators, § 43; 16 Tenn. Juris., Judgments and Decrees, §§ 32, 38; 20 Tenn. Juris., Notice, § 6; 21 Tenn. Juris., Recording Acts, §§ 2-5, 15; 22 Tenn. Juris., Specific Performance, § 11; 24 Tenn. Juris., Vendor and Purchaser, § 40. Law Reviews. Recent Decision, The Tennessee Court of Appeals Interprets the Tennessee Recording Statutes, Gregg v. Link, (1989), 56 Tenn. L. Rev. 777 (1989). NOTES TO DECISIONS 1. Construction. 2. Persons Entitled to Priority. 3. Instruments Comprehended. 4. —Assignment of Future Rents. 5. —Trust Deeds. 6. Registration as Constructive Notice. 7. —Deeds with Insufficient Description of Property. 8. Actual Notice — Facts Constituting — Effect. 9. Unregistered Conveyances — Extent of Validity. 10. Ejectment Under Unregistered Deed. 11. Uniform Commercial Code. 12. Priority of Mortgages. 13. Applicability. 1. Construction. Provisions of this section must be read and applied in connection with § 8-13-108 providing that it is the duty of the register to enter all deeds and other instruments left to be registered, noting in the first column the day and hour of reception, and the other particulars in the appropriate columns; and the time of reception which must be entered is the time when the deed is delivered to the register for registration and not the time when the register entered the instrument on his notation book. Chatten v. Knoxville Trust Co., 154 Tenn. 345, 289 S.W. 536, 1926 Tenn. LEXIS 132, 50 A.L.R. 537 (1926). 2. Persons Entitled to Priority. The statute refers to priority among parties claiming under written instruments. Roysdon v. Terry, 4 Tenn. App. 638, — S.W. —, 1927 Tenn. App. LEXIS 214 (Tenn. Ct. App. 1927). An attaching creditor who records a notice of lis pendens has priority over a bona fide conveyee whose deed is not recorded until after the registration of the lis pendens notice. W. & O. Constr. Co. v. IVS Corp., 688 S.W.2d 67, 1984 Tenn. App. LEXIS 3187 (Tenn. Ct. App. 1984). 3. Instruments Comprehended. The general designation “all of said instruments,” used in this section, means all of the instruments named in § 66-24-101 , and embraces deeds by husband and wife. Cox v. Keathley, 99 Tenn. 522, 42 S.W. 437, 1897 Tenn. LEXIS 62 (1897). 4. —Assignment of Future Rents. Right to future rents being an incident to an estate in the land, assignment thereof, including rents to accrue beyond a period of three years from its date is within the application of this section, and, as to persons other than the parties thereto, their heirs and representatives, and persons with actual notice, is effective only from the date of its registration. Schmid v. Baum's Home of Flowers, Inc., 162 Tenn. 439, 37 S.W.2d 105, 1930 Tenn. LEXIS 108, 75 A.L.R. 261 (1931). Since, under the registration laws, a lease, operating to convey the record owner's right to the use and income of land for a period of not more than three years, is valid without registration, his assignment of rent or income for a similar period is likewise unaffected by the registration laws, though such rent is payable under a registered lease for a term of over three years. Schmid v. Baum's Home of Flowers, Inc., 162 Tenn. 439, 37 S.W.2d 105, 1930 Tenn. LEXIS 108, 75 A.L.R. 261 (1931). 5. —Trust Deeds. Trust deeds are included within the terms of this section. In re Sparks, 1 F.2d 726, 1924 U.S. Dist. LEXIS 1040 (E.D. Tenn. 1924). It was an act of bankruptcy for an insolvent debtor to execute a deed of trust, with intent to prefer a creditor, more than four months before the filing of a petition in bankruptcy against him, in case the trust deed is not recorded until within the four months' period. In re Sparks, 1 F.2d 726, 1924 U.S. Dist. LEXIS 1040 (E.D. Tenn. 1924). The authority of a bankruptcy trustee, as a hypothetical judicial lien creditor, to take advantage of the strong arm clause, 11 U.S.C. § 544(a) , prevailed over the holder of an unregistered deed of trust. Walker v. Elman (In re Fowler), 201 B.R. 771, 1996 Bankr. LEXIS 1293 (Bankr. E.D. Tenn. 1996). 6. Registration as Constructive Notice. As between the contracting parties, the registration of the vendor's title papers does not constitute constructive notice to the purchaser as to the state of the title of the vendor. Registration is only constructive notice as to third parties; but the purchaser may, as between himself and his vendor, rely upon the representations of his vendor as to his title, and he will not be bound, as between himself and his vendor, by the registered title of which he has not actual notice. Napier v. Elam, 14 Tenn. 107, 14 Tenn. 108, 1834 Tenn. LEXIS 58 (Tenn. Mar. 1834); Topp v. White, 59 Tenn. 165, 1873 Tenn. LEXIS 43 (1873); Nichol v. Nichol, 63 Tenn. 145, 1874 Tenn. LEXIS 221 (1874); Frizzell v. Rundle & Co., 88 Tenn. 396, 12 S.W. 918, 1889 Tenn. LEXIS 61, 17 Am. St. R. 908 (1890); Embry v. Galbreath, 110 Tenn. 297, 75 S.W. 1016, 1903 Tenn. LEXIS 60 (1903). Registration is constructive notice to a prospective purchaser, and if he fails to search the records, he is guilty of gross negligence, and cannot rely upon the plea of innocent purchaser, as against other claimants of the property, whose rights are shown by a properly registered instrument. Parker v. Hall, 39 Tenn. 641, 1859 Tenn. LEXIS 294 (Tenn. Apr. 1859). Where a married woman, under a registered instrument, holds a part of the land mortgaged, but without actual knowledge of the existence of such paper, either by her or the mortgagee, and without intention of fraud on the part of herself or the mortgagee, she joins her husband in a mortgage of the land, joining also in the words of conveyance and of covenant, it was held that the registration of the instrument under which she claimed was notice not only to other persons, but also notice to her, and that, consequently, her interest as a thing legally known to her, but actually unknown, passed under the mortgage. Fogg v. Yeatman, 74 Tenn. 575, 1880 Tenn. LEXIS 295 (1880). The registration of a chattel mortgage does not operate as constructive notice to an auctioneer, broker, or factor, who, in the regular course of his business, receives and sells the mortgaged chattels for the mortgagor, on commission, and pays over to him the proceeds, without actual notice of the mortgage. Frizzell v. Rundle & Co., 88 Tenn. 396, 12 S.W. 918, 1889 Tenn. LEXIS 61, 17 Am. St. R. 908 (1890); Embry v. Galbreath, 110 Tenn. 297, 75 S.W. 1016, 1903 Tenn. LEXIS 60 (1903). 7. —Deeds with Insufficient Description of Property. Deeds with insufficient description of the property conveyed, though registered, leave the property exposed to execution in favor of grantor's creditors. They are invalid and not true conveyances. Phoenix Mut. Life Ins. Co. v. Kingston Bank & Trust Co., 172 Tenn. 335, 112 S.W.2d 381, 1937 Tenn. LEXIS 83 (1938). 8. Actual Notice — Facts Constituting — Effect. Where the holders of a certificate of convenience and necessity under the federal Motor Carrier Act mortgaged the certificate and subsequently sold it to a trucking company whose president was informed of the mortgage before the sale, the mortgage was good against the trucking company without registration. Brown v. Smith, 32 Tenn. App. 622, 225 S.W.2d 91, 1949 Tenn. App. LEXIS 112 (Tenn. Ct. App. 1949). When anything appears which would put a man of ordinary prudence upon inquiry, the law presumes that such inquiry was actually made and therefor fixes the notice upon him as to all legal consequences, and whatever is sufficient to put a person upon inquiry is notice of all the facts to which the inquiry will lead when prosecuted with reasonable diligence and in good faith. Texas Co. v. Aycock, 190 Tenn. 16, 227 S.W.2d 41, 1950 Tenn. LEXIS 413, 17 A.L.R.2d 322 (1950). Defendant who purchased property under a deed reciting that purchase was subject to a lease had actual notice of lease and its contents including option to buy at specified price even though lease was not recorded. Texas Co. v. Aycock, 190 Tenn. 16, 227 S.W.2d 41, 1950 Tenn. LEXIS 413, 17 A.L.R.2d 322 (1950). A reference in prior deeds conveying water lines stating that it is conveyed “together with” all interests which conveyors have in a contract or ordinance with a city, permitting the installation and maintenance of the system and regulating water flow, did not constitute actual notice or equivalent sufficient to impute knowledge to an otherwise bona fide purchaser or encumbrancer of the city's alleged water rights since it implies rights rather than burdens. Johnson City v. Milligan Utility Dist., 38 Tenn. App. 520, 276 S.W.2d 748, 1954 Tenn. App. LEXIS 138 (Tenn. Ct. App. 1954). “Owner's Consent to Pledge of Collateral” was null and void as to a new lender because it lacked actual notice of the agreement; the new lender did not have inquiry notice because nothing in a Georgia state-chartered bank's deed of trust indicated or suggested that further inquiry was necessary, and there was no proof that the bank ever referenced the Owner's Consent in any of its communications with the mortgagor and his brother prior to the closing of the new loan. Vinings Bank v. Homeland Cmty. Bank, — S.W.3d —, 2019 Tenn. App. LEXIS 327 (Tenn. Ct. App. June 28, 2019). 9. Unregistered Conveyances — Extent of Validity. Registration is only required as against the creditors of the grantor and bona fide purchasers for a valuable consideration, without notice. It is not necessary to the validity of the conveyance as between the parties, or as against the grantor, his heirs, and representatives. Grady v. Sharron, 14 Tenn. 320, 1834 Tenn. LEXIS 85 (Tenn. Mar. 1834); Hays v. McGuire, 16 Tenn. 92, 1835 Tenn. LEXIS 51 (1835); Baldwin v. Baldwin, 21 Tenn. 473, 1841 Tenn. LEXIS 49 (1841); Ocoee Bank v. Nelson, 41 Tenn. 186, 1860 Tenn. LEXIS 43 (1860); Green v. Goodall, 41 Tenn. 404, 1860 Tenn. LEXIS 83 (1860); Kinsey v. McDearmon, 45 Tenn. 392, 1868 Tenn. LEXIS 20 (1868); Allen v. Allen, 2 Cooper's Tenn. Ch. 28 (1874); Self v. Haun, 2 Shan. 123 (1876); Sanders v. Everett, 3 Cooper's Tenn. Ch. 520 (1877); Worley v. State, 75 Tenn. 382, 1881 Tenn. LEXIS 130 (1881); Cowan, McClung & Co. v. Gill, 79 Tenn. 674, 1883 Tenn. LEXIS 125 (1883); Smith v. Taylor, 79 Tenn. 738, 1883 Tenn. LEXIS 132 (1883); Templeton v. Twitty, 88 Tenn. 595, 14 S.W. 435, 1889 Tenn. LEXIS 80 (Tenn. Dec. 1889); Woods v. Bonner, 89 Tenn. 411, 18 S.W. 67, 1890 Tenn. LEXIS 62 (1890); King v. Coleman, 98 Tenn. 561, 40 S.W. 1082, 1897 Tenn. LEXIS 145 (1897); Wilkins v. McCorkle, 112 Tenn. 688, 80 S.W. 834, 1904 Tenn. LEXIS 64 (1904); Hitt v. Caney Fork Gulf Coal Co., 124 Tenn. 334, 139 S.W. 693, 1910 Tenn. LEXIS 58 (1911); Smith v. Cross, 125 Tenn. 159, 140 S.W. 1060, 1911 Tenn. LEXIS 17 (1911); Campbell v. Home Ice & Coal Co., 126 Tenn. 524, 150 S.W. 427, 1912 Tenn. LEXIS 75 (1912). The joint deed of husband and wife, duly signed and acknowledged by both, is effective as between the parties thereto, without registration, and, if absolute, passes to the grantee the whole estate in the lands conveyed, and extinguishes the right of homestead therein. Cox v. Keathley, 99 Tenn. 522, 42 S.W. 437, 1897 Tenn. LEXIS 62 (1897). Unregistered mortgage, if made and held in good faith, is a valid security, as between the parties. Rogers v. Page, 140 F. 596, 1905 U.S. App. LEXIS 3947 (6th Cir. Nov. 1905). Those claiming under a decree of the chancery court ordering the sale of a grantor's land at the suit of his creditor had a better title than those claiming under a prior unregistered deed of the grantor. Stockton v. Hutchison, 182 Tenn. 616, 188 S.W.2d 607, 1945 Tenn. LEXIS 260 (1945). Where cotenants gave deeds to another cotenant, his possession constituted an ouster, and as between the parties became adverse so that deeds were effective although not registered. Jones v. Mosley, 29 Tenn. App. 559, 198 S.W.2d 652, 1946 Tenn. App. LEXIS 91 (Tenn. Ct. App. 1946). An unrecorded instrument is void only as to creditors or purchasers without notice. Brown v. Smith, 32 Tenn. App. 622, 225 S.W.2d 91, 1949 Tenn. App. LEXIS 112 (Tenn. Ct. App. 1949). Suit for specific performance of contract for sale of land would lie against administrator and heirs of deceased landowner even though contract was improperly authenticated for registration and consequently improperly registered. Brister v. Estate of Brubaker, 47 Tenn. App. 150, 336 S.W.2d 326, 1960 Tenn. App. LEXIS 76 (Tenn. Ct. App. 1960). A deed is effective between the parties thereto without acknowledgment or registration, but not effective as to other parties without notice. West v. United Am. Bank, 23 B.R. 48, 1982 Bankr. LEXIS 3505 (Bankr. E.D. Tenn. 1982); In re Gatlinburg Motel Enterprises, Ltd., 119 B.R. 955, 1990 Bankr. LEXIS 1998 (Bankr. E.D. Tenn. 1990). Property in which a debtor had an interest pursuant to an unregistered deed at the time the debtor commenced a bankruptcy case was property of the estate. Walker v. Elman (In re Fowler), 201 B.R. 771, 1996 Bankr. LEXIS 1293 (Bankr. E.D. Tenn. 1996). Trial court improperly granted summary judgment under Tenn. R. Civ. P. 56.04 to plaintiff in a suit in which it sought a declaratory judgment establishing the priority of its judgment lien because defendant had mistakenly released a prior deed of trust on the property in question and restoring the deed of trust to its priority position would not prejudice plaintiff's rights; although plaintiff's judgment lien was properly recorded under T.C.A. § 25-5-101 and became effective against later acquired interests under § 25-5-101 and T.C.A. § 66-24-119 , and notwithstanding the fact that the mistaken release resulted in an equitable lien subject to the recording and notice provisions under T.C.A. § 66-26-101 and T.C.A. § 66-26-103 , plaintiff was still entitled to seek the equitable remedy of cancellation of the release. Holiday Hospitality Franchising, Inc. v. States Res., Inc., 232 S.W.3d 41, 2006 Tenn. App. LEXIS 787 (Tenn. Ct. App. Dec. 14, 2006), appeal denied, Holiday Hospitality Franchising v. States Res., Inc., — S.W.3d —, 2007 Tenn. LEXIS 445 (Tenn. Apr. 30, 2007). Despite the church's failure to record their deed, the conveyance was binding on the seller, a bank, and the bank no longer owned the disputed property after the sale. Thus, the bank retained no interest in the property that the church was required to quiet and the law of champerty was inapplicable. Milledgeville United Methodist Church v. Melton, 388 S.W.3d 280, 2012 Tenn. App. LEXIS 638 (Tenn. Ct. App. Sept. 14, 2012). It was proper to dismiss a property owner's complaint alleging the county register's office failed to exercise reasonable care in allowing a forged deed to be filed because it was time-barred by the one-year statute of limitations of the Tennessee Governmental Tort Liability Act; despite the alleged refusal of the register's office to record the deed, the conveyance remained binding because an unregistered instrument affecting an interest in real property was effective as between the parties. Patton v. Shelby County Gov't, — S.W.3d —, 2017 Tenn. App. LEXIS 121 (Tenn. Ct. App. Feb. 23, 2017). 10. Ejectment Under Unregistered Deed. One may maintain ejectment on an unregistered deed, but if not registered it must be proven. Williams v. Williams, 25 Tenn. App. 290, 156 S.W.2d 363, 1941 Tenn. App. LEXIS 108 (Tenn. Ct. App. 1941). 11. Uniform Commercial Code. Since the adoption of U.C.C. Article 9, compiled in title 47, ch. 9, a creditor who takes a security interest in crops should be able to determine and control the priority of the security interest against other contractual liens and against judgment liens by checking the UCC filings and by filing a financing statement. The creditor should not have to check the real estate records. In re Hill, 83 B.R. 522, 1988 Bankr. LEXIS 269 (Bankr. E.D. Tenn. 1988), superseded by statute as stated in, Wilhite Pure Oil Truck Stop, Inc. v. McCutchen, 115 B.R. 126, 1990 Bankr. LEXIS 1216 (Bankr. W.D. Tenn. 1990). 12. Priority of Mortgages. First mortgage had priority over a second mortgage because, although the second mortgage was executed before the first mortgage was registered, the first mortgage was registered before the second mortgage was registered, and one did not become a bona fide purchaser under T.C.A. § 66-26-103 until he or she registered the instrument. Equity Mortg. Funding, Inc. v. Haynes, — S.W.3d —, 2012 Tenn. App. LEXIS 182 (Tenn. Ct. App. Mar. 20, 2012), rehearing denied, — S.W.3d —, 2012 Tenn. App. LEXIS 285 (Tenn. Ct. App. Apr. 25, 2012), appeal denied, — S.W.3d —, 2012 Tenn. LEXIS 590 (Tenn. Aug. 15, 2012). 13. Applicability. Statute which provided that even unregistered instruments were enforceable was not applicable because the deed at issue did not list a grantee and only provided that the property was deeded for the purpose of erecting a Nazarene Church. Housewright v. McCormack, — S.W.3d —, 2016 Tenn. App. LEXIS 894 (Tenn. Ct. App. Nov. 29, 2016). Collateral References. Recorded real property instrument as charging third party with constructive notice of provisions of extrinsic instrument referred to therein. 89 A.L.R.3d 901.