Legal Memorandum: Priority of Recorded Liens in NJ

Issue: What is the priority of recorded liens?

Area of Law: Real Estate Law
Keywords: Recorded liens; Priority; Mortgage
Jurisdiction: New Jersey
Cited Cases: None
Cited Statutes: N.J.S.A. § 46:21–1
Date: 10/01/2007

The basic principle of the recording statutes is that a recorded instrument, such as a mortgage or an assignment, gives later interested persons notice of the lien, and by law the lien has priority.  See N.J.S.A. § 46:21–1.  This basic principle gives rise to legal presumption of validity. 

An historical study of the [Recording] Act, as well as an analysis of the cases interpreting it, leads to the conclusion that it was designed to compel the recording of instruments affecting title, for the ultimate purpose of permitting purchasers to rely upon the record title and to purchase and hold title to lands within this state with confidence.  The means by which the compulsion to record is accomplished is by favoring a recording purchaser, both empowering him to divest a former nonrecording title owner and by preventing a subsequent purchaser from divesting him of title.  This ability to deprive a prior and bona fide purchaser for value of his property shows a genuine favoritism toward a recording purchaser. It is a clear mandate that the recording purchaser be given every consideration permitted by the law, including all favorable presumptions of law and fact.  It is likewise a clear expression that a purchaser be able to rely upon the record title. 

[Donald B. Jones, The New Jersey Recording Act—A Study of Its Policy, 12 Rutgers L. Rev. 328, 329-30 (1958) (emphasis added), quoted in N.J. Bank v. Azco Realty Co., 148 N.J. Super. 159, 166-67 (App. Div.), […]

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