Under a no-grace-period recording statute, which statement is correct about a judgment creditor who has a judgment lien against property and there is an unrecorded transfer of the property?

• A. The creditor is never protected.
• B. The creditor is protected by the recording act, but only if treated as a purchaser for value.
• C. The creditor has priority by virtue of the judgment lien.
• D. The recording act requires a grace period for recording.

Answer: (B)

In a no-grace-period recording statute, protection against an unrecorded transfer depends on whether the holder can be treated as a purchaser for value under the recording act. A judgment creditor has a lien because of the judgment, which is value given to the debtor by extending credit. For the purposes of the recording act, that creditor’s interest can be treated as a purchaser for value, which can trigger the act’s protection even when the transfer to another party was not recorded promptly. If the creditor is treated as a purchaser for value, the recording act can shield the lien from being defeated by the unrecorded transfer. If that treatment doesn’t apply, the creditor wouldn’t be protected.

So the statement that the creditor is protected by the recording act, but only if treated as a purchaser for value, best fits how no-grace-period statutes interact with judgment liens and unrecorded transfers.