National Real Estate Exam (PSI)Transfer of TitleHard
A buyer records her deed on Monday. On Tuesday, a second buyer who had no knowledge of the first sale records a deed to the same property from the same seller. The jurisdiction follows a race-notice recording statute. Who has priority?
- AThe second buyer, because he had no actual knowledge of the first sale
- BNeither buyer, because a race-notice statute voids both transactions
- CThe first buyer, because she recorded first and thus gave constructive notice
- DThe second buyer, because recording statutes always favor the most recent purchaser
Show answer & explanationAnswer & explanation
Correct answer: C. The first buyer, because she recorded first and thus gave constructive notice
Under a race-notice statute, a subsequent purchaser is protected only if they buy without notice of a prior claim AND record first. Since the first buyer recorded first, she wins priority regardless of the second buyer's lack of actual notice, because recording gives constructive notice and establishes the 'race' outcome.
Why the other options are wrong
- A. Lack of notice alone is not enough under race-notice statutes; the buyer must also win the race to record.
- B. Race-notice statutes resolve priority disputes rather than voiding all transactions.
- D. Recording statutes protect priority based on rules, not simply recency of purchase.
Race-Notice Recording Statute
A recording statute under which a subsequent bona fide purchaser without notice of a prior claim is protected only if they also record before the earlier purchaser.
- Combines elements of 'race' (who records first) and 'notice' (no knowledge of prior claim)
- Most common type of recording statute in the U.S.
- Failing to record promptly can cost a buyer their priority
Memory trick: Race-notice = win the race to the recorder's office AND have clean hands (no notice).