Race to the Courthouse

Definition - What does Race to the Courthouse mean?

The term 'race to the courthouse' is the idea that all mortages, liens, and deeds of trust need to be filed with the County Register. The one that is registered first retains priority over all others. This is why there is a rush to be the first one to register a claim. This is especially important in bankrupty because priority claims get the most money paid back to them, potentially all of it, if there are assets. The remaining claimants have to split what is left between then proportionately with the second filed getting the second most repayment amount and so on.

Justipedia explains Race to the Courthouse

The term can also refer to a whistleblower action case in the sense that only the first person who files court papers will be successful with the action. The more common usage of this definition relates to bankruptcy and property law actions. In most cases, there will not be a close time proximity between various transactions. So, one will naturally predominate. However, in cases where a debtor tries to build up as many exempted debts as possible before filing bankruptcy, the tiimeframe for filing with the County Register can be close.

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