The Colorado Recording Act, Part Ii: Notice Under the Recording Act
| Jurisdiction | Colorado,United States |
| Citation | Vol. 24 No. 7 Pg. 1573 |
| Pages | 1573 |
| Publication year | 1995 |
1995, July, Pg. 1573. The Colorado Recording Act, Part II: Notice Under the Recording Act
This is the second part of a three-part article on notice and priority under the Colorado recording act. Part I, which was published in the June issue, set out the history of the recording act and presented an analysis of both the 1927 recording act and the 1984 recording act. This Part II discusses notice under the recording act and the effect of such notice. Part III, to be published in the September issue, will discuss priority of recording under the recording act and the effect of such priority.
In determining whether a person is protected by the Colorado recording act, it is necessary to consider (1) whether he has notice of the unrecorded instrument against which he seeks protection, and (2) whether he "first records." The notice may be actual or constructive.(fn1) Inquiry notice is a form of constructive notice.(fn2)
In Colorado, recording an instrument has two results: (1) it provides constructive notice of the instrument, and (2) it validates the instrument as against those persons as to whom by statute, while unrecorded, it was invalid. The various versions of the Colorado recording act merely mention notice, leaving the definition and scope of constructive notice to the courts. Therefore, although the 1927 amendment of the recording act enlarged the class of persons protected as against an unrecorded instrument, it did not expand the extent of constructive notice.(fn3) The present discussion relates only to the effect of recording as notice. The effect of recording on priority will be discussed in Part III of this article.
Courts are fond of saying things like, "[i]f a document is properly recorded, the whole world is deemed to have constructive notice."(fn4) Notwithstanding such extravagant statements, the scope of constructive notice is not so broad.(fn5) Constructive notice is the equivalent of actual notice only to certain persons and under certain conditions.(fn6) The Colorado Supreme Court has held:
A deed duly recorded is constructive notice of its existence, and of its contents, to all persons claiming what is thereby conveyed under the same grantor by subsequent purchase or mortgage, but not to other persons.(fn7)
The "line of which the recorded deed belongs" refers to what is now customarily called the chain of title. A particular instrument may fall outside the chain of title, and therefore not provide constructive notice, if (1) the grantor is outside the chain of title, (2) the property is outside the chain of title or (3) the transaction is outside the chain of title. These limitations on constructive notice are illustrated by the following examples;(fn8)
1) X (who has no record interest in Blackacre) conveys Blackacre to Y.
2) Y records.
3) A conveys Blackacre to B.
4) B records.
Question: Does B take Blackacre with constructive notice of the conveyance from X to Y?
Answer: No. Constructive notice is based on the assumption that a chain of title can be constructed by use of the grantor and grantee indices maintained by the clerk and recorder.(fn9) (It should be noted that an instrument filed for record with the clerk and recorder is constructive notice even though not properly recorded or indexed.(fn10)) In the example, X has no record interest in Blackacre. Therefore, the deed from X to Y is not in A's (or, indeed, anyone's except X's and Y's) chain of title to Blackacre.(fn11) Even if B should have actual notice of the deed from X to Y, she may ignore it, as it is a wild deed, which creates no duty of inquiry.(fn12)
1) A conveys Whiteacre to B by a deed containing covenants regarding Blackacre.
2) B records.
3) A conveys Blackacre to C by a deed that does not mention the covenants in the deed from A to B.
4) C records.
Question: Does C take Blackacre with constructive notice of the covenants in the deed from A to B?
Answer: No. The deed from A to B, while it is in A's chain of title to Whiteacre, is in neither A's nor C's chain of title to Blackacre, and therefore C is not charged with constructive notice of the existence or contents of that deed.(fn13)
1) A grants B a revocable option to purchase Blackacre.
2) B records the option.
3) A conveys Blackacre to C.
4) C records.
5) A conveys Blackacre to B.
6) B records the conveyance.
Question: Does B take the conveyance of Blackacre with constructive notice of the conveyance to C (and, arguably, of the revocation of the option)?
Answer: No. A recorded instrument is constructive notice only to persons who subsequently acquire an interest in the real property. One who already has an interest in real property is not charged with constructive notice of an instrument recorded after the date of the instrument under which he or she claims.(fn14)
It has been stated, as a general rule, that "the period of notice ... extends as to a particular owner from the date he acquires title (not the date at which the transfer is recorded) to the date of the recording of a conveyance by him."(fn15) Various aspects of this rule are illustrated by the following examples:
1) A mortgages Blackacre to B.
2) B records.
3) A conveys Blackacre to C.
4) C records.
Question: Does C take title to Blackacre with constructive notice of the mortgage to B?
Answer: Yes. A purchaser of real estate is charged with constructive notice through the recording statute.(fn16)
1) A conveys Blackacre to B.
2) B mortgages Blackacre to C.
3) C records.
4) B records.
5) B conveys Blackacre to D.
6) D records.
Question: Does D take title to Blackacre with constructive notice of the mortgage to C?
Answer: Yes. The period of notice commences with the date of the conveyance from A to B, not with the date on which that conveyance was recorded.(fn17) Since the mortgage from B to C was recorded during the period of notice, it is immaterial that it was recorded before the conveyance from A to B was recorded. A different commencement date applies as to instruments such as judgment liens,(fn18) which attach to after-acquired property.
1) X mortgages Blackacre to B.
2) B records.
3) A conveys Blackacre to X.
4) X records.
5) X conveys Blackacre to C.
6) C records.
Question: Does C take title to Blackacre with constructive notice of the mortgage to B?
Answer: No. The record of the mortgage to B is outside the period of notice.(fn19) The rule is otherwise in states where there is an official tract index.(fn20) In at least one state, C's title is subject to the mortgage to B, even though C has no notice of the mortgage.(fn21)
1) X mortgages Blackacre to B.
2) A conveys Blackacre to X.
3) X records.
4) B records.
5) X conveys Blackacre to C.
6) C records.
Question: Does C take title to Blackacre with constructive notice of the mortgage to B?
Answer: Probably yes. The mortgage from X to B was recorded during the period of notice. Therefore, it would seem to be immaterial that it was granted before the date of the conveyance from A to X.(fn22) Patton impliedly takes this position, as he recommends that, in a fact situation such as the one in Example 12, B should rerecord her mortgage after the date of the conveyance to X.(fn23) Williams takes the position that since a reasonable search would have provided the title searcher with actual notice of the document, he or she should be deemed to have constructive notice of it; otherwise, the rule would reward the prospective purchaser who fails to search the record.(fn24)
Taking the opposite position is Olds, who states that a title examiner finding a deed executed outside the period of notice may ignore it, even though it is recorded within the period of notice.(fn25) In agreement with Olds is Philbrick, who takes the position that in a fact situation such as Example 13, the mortgage to B is a nullity which cannot provide notice, even after the recording of the conveyance from A to X.(fn26)
In Colorado, liens are not separately indexed, but are indexed in the general grantor-grantee index. The question then is presented as to whether, under the position taken by Williams, an estoppel deed recorded before the commencement of the usual period of notice (that is, the fact situation of Example 12), but during the period that...
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