California Real Estate SalespersonTransfer of PropertyHard
A dishonest seller sells the same parcel to two different buyers. Buyer A purchases first but does not record. Buyer B purchases later, has no actual or constructive notice of Buyer A's earlier purchase, and records immediately. Under California's recording statute, who generally prevails?
- AWhichever buyer paid the higher purchase price
- BThe seller retains title since two sales occurred
- CBuyer A, because they purchased first in time
- DBuyer B, because they recorded first and had no notice of the prior sale
Show answer & explanationAnswer & explanation
Correct answer: D. Buyer B, because they recorded first and had no notice of the prior sale
California is a race-notice state: a subsequent bona fide purchaser who takes without notice of a prior unrecorded interest and records first generally prevails over an earlier purchaser who failed to record. Since Buyer B had no notice of Buyer A's interest and recorded first, Buyer B has superior claim to title.
Why the other options are wrong
- A. Purchase price paid is irrelevant to priority determination under recording law.
- B. The seller no longer holds title after conveying it to Buyer A; ownership question is between the two buyers.
- C. Being first in time does not protect a buyer who fails to record and thus fails to give constructive notice.
Race-Notice Recording System
California follows a race-notice recording system: a subsequent bona fide purchaser without notice of a prior unrecorded interest who records first has priority over the earlier purchaser.
- Buyer must lack notice (actual, constructive, or inquiry) of the earlier interest
- Buyer must also record first to win priority
- Failing to record promptly exposes the first buyer to loss of priority
Memory trick: Win the race to the recorder's office—but only if you didn't know