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Constructive Notice: A Multi-State Perspective

George A. Snell III, Nuts and Bolts of Mineral Title Examination

II. The Pattern (Types of Recording Statutes)

The first English and American recording acts provided that the sole test of priority between competing purchasers was: who recorded first. The purpose of these acts was to simplify the resolution of competing interests by eliminating the equitable doctrine of bona fide purchase. However, the equity courts soon began to hold that a purchaser with notice of a prior conveyance committed a fraud against a first purchaser and thus the subsequent purchaser, who may have acquired legal title, was held to be a constructive trustee holding title for the first purchaser. Over time, the certainty of determining priority based upon date of recording was replaced by the uncertainty of permitting the introduction of parol evidence into the resolution process. The English Courts argued that they would not permit a statute intended to prevent fraud to be used itself as a means for committing fraud. Patton, supra, § 7.

Recording statutes have evolved into three different types or classifications, the differences being a different emphasis placed upon the concept of “notice”. A summary of these classifications are:

1. “Race” - Gives priority to the first grantee to record;

2. “Notice” - Gives priority to the grantee who acquires an interest without notice of a prior transfer; and

3. “Race-Notice” - Gives