The Connor Act: Pure Race Recording, Leases, and Notice

The Connor Act is North Carolina’s real property recording statute, codified at N.C. Gen. Stat. § 47-18, and it sets a simple rule with harsh consequences: whoever records an interest in land first at the county register of deeds wins priority, regardless of what any later buyer, lender, or tenant knew about competing claims.¹ The law has governed deeds, leases, and related interests in the state since 1885, and it still decides who holds enforceable rights when a property changes hands.

Pure Race: Why Knowledge Doesn’t Save You

North Carolina is one of a small number of states that uses a “pure race” recording system. In notice and race-notice states, a buyer who already knows about someone else’s unrecorded interest cannot leapfrog that claim by racing to the courthouse. In North Carolina, they can.

Under the Connor Act, actual knowledge of an unrecorded interest is irrelevant. A buyer who has been handed a copy of an unrecorded lease, or who has been explicitly told about a prior claim, still takes the property free of that interest if the prior claimant failed to record first. As North Carolina courts have put it, quoting longstanding precedent: “Actual knowledge, however full and formal, of a grantee in a registered deed of a prior unregistered deed or [long-term] lease will not defeat his title as a purchaser for value in the absence of fraud or matters creating estoppel.”²

The practical message is unambiguous. If you hold an interest in North Carolina real property, record it. Nothing else protects you.

What Interests Must Be Recorded

Section 47-18 explicitly covers six categories of real property interests:

Conveyances of land (deeds transferring ownership)
Contracts to convey
Options to purchase or convey
Leases for more than three years
Rights of first refusal
Rights of first offer

Commentary and case law also apply the Act’s logic to related interests, including deeds of trust, easements, and restrictive covenants.³ Instruments must be recorded in the county where the land sits; if the property crosses county lines, record in each county.¹

When two instruments are recorded at the same time, priority is set first by the earliest document number on the registered instrument and, failing that, by sequential book and page number. The presumption is rebuttable.¹

Leases Over Three Years and the Memorandum of Lease

Any lease with a term exceeding three years must be recorded to bind later purchasers of the property. Because most commercial leases run well past three years and typically include renewal options, this is where tenants most often get hurt.

Full leases rarely get recorded. They are long, often confidential, and landlords do not want their rent schedules sitting in the public record. North Carolina allows a shorter substitute: a memorandum of lease. Under N.C. Gen. Stat. § 47-118, the memorandum must identify the landlord and tenant, describe the leased property, state the term (including extensions, renewals, and options to purchase), and give a reference sufficient to identify the full agreement.⁴ All signatures must be notarized. When properly executed and recorded, the memorandum carries the same legal force as recording the full lease.⁵

If a lease is later amended to add renewal options or extend the term, the amendment must also be recorded through a new or updated memorandum. Recording the original lease alone does not protect rights created by a later amendment.²

Recorded memoranda also carry a built-in shelf life. Under § 47-120, conditions reflected in a memorandum are conclusively presumed to have expired 60 days after either the stated expiration date in the memorandum or the date when the conditions were required to be performed, whichever is earlier.⁵ If your recorded memorandum shows the lease ending on a date that has passed, a buyer can treat the lease as gone.

What Happens If You Don’t Record

Two recent appellate decisions show the Act doing exactly what it says.

Greaseoutlet.com v. MK South II (2023)

A tenant signed a five-year lease on an industrial property in Raleigh in 2016 and recorded a memorandum that August. Later the same year, the tenant and landlord signed an amendment adding two five-year renewal options. No memorandum of the amendment was ever recorded.⁶

In December 2019, the property sold. During due diligence, the new owner received copies of both the original lease and the amendment, so there was no dispute that the buyer knew about the renewal options. When the initial five-year term ended, the new owner refused to honor the renewals and demanded that the tenant vacate.

The North Carolina Court of Appeals affirmed dismissal of the tenant’s suit on August 1, 2023.² Because the recorded memorandum showed an expiration date of April 30, 2021, and said nothing about renewal options, it gave no record notice of the amendment. The new owner took the property free of the renewal rights, even though it had actually read the amendment before closing.

New Bar Partnership v. Martin (2012)

A tenant held a 1988 lease on a downtown Raleigh property that included a right of first refusal. A 1989 amendment required the parties to record a memorandum, but neither the lease nor any amendment was ever recorded over more than two decades. When the owners moved to sell, the tenant sued to enforce the right of first refusal.⁷

The Court of Appeals ruled against the tenant on two independent grounds. The 35-year right of first refusal violated the common-law Rule Against Perpetuities, and separately, the Connor Act rendered the unrecorded lease invalid against the purchaser for value. Third parties, the court said, may deal with the property as though no unrecorded contract exists.⁸

How to Protect Your Interest

If you hold or are about to sign an interest in North Carolina real property, a short checklist follows from the statute and the cases.

Record every lease that runs longer than three years. If you prefer to keep the lease itself private, record a memorandum that meets § 47-118’s requirements.
Make sure the memorandum states the full term, including every renewal option and any purchase option. Renewal rights left out of the memorandum are unprotected against a later buyer.
Record a new or updated memorandum whenever the lease is amended to extend the term or add renewal rights. The original memorandum will not carry forward later changes.
Watch the expiration date you put in the memorandum. Sixty days after that date, the conditions are conclusively presumed to have expired.⁵
Treat the right to record a memorandum as a lease term to negotiate up front. Landlords often resist recording because a memorandum can complicate refinancing or future sales, and an unrecorded lease can be a selling point to the next buyer.⁹
Do not rely on a buyer’s actual knowledge, on the landlord’s acknowledgment of the lease, or on contract language requiring a purchaser to “assume all lease obligations.” None of those substitutes for recording.³
Record deeds, deeds of trust, and any memorandum of a purchase contract promptly after signing. Any gap between execution and recording is a window in which a competing instrument can be filed first and take priority.

Possession as Constructive Notice

One qualification is worth knowing. Although actual knowledge of an unrecorded interest does not defeat a later recorded interest under the Connor Act, North Carolina still recognizes constructive notice from possession. A party in physical possession of property puts prospective buyers on notice of whatever rights that possession implies, and a prudent buyer is expected to inspect the property and inquire into the rights of anyone found in possession before closing.¹⁰ That doctrine runs alongside the Act rather than softening it, and it is a thin reed to rely on if your real protection is a document you never filed.

The Connor Act’s bright-line rule has one virtue: check the record, and the record tells you who has priority. The entire burden of protection sits on the party holding the interest, with no safety net for anyone who skipped the courthouse.

1
North Carolina General Assembly. N.C. Gen. Stat. § 47-18
2
Findlaw. Greaseoutlet.com LLC v. MK South II LLC
3
Smith Anderson. Winning the Race to Record – Protecting Rights in Real Estate
4
North Carolina General Assembly. N.C. Gen. Stat. Article 8 – Probate and Registration
5
North Carolina General Assembly. N.C. Gen. Stat. § 47-120
6
vLex. Greaseoutlet.com LLC v. MK S. II LLC, 892 S.E.2d 68
7
Findlaw. New Bar Partnership v. Martin
8
NC Lawyers Weekly. Landlord/Tenant – Commercial Lease – Right of First Refusal – Connor Act
9
Hughes Marino. The Connor Act – What Tenants Need to Know
10
United States Court of Appeals for the Fourth Circuit. Unpublished Opinion No. 95-2411