A notice statute is a type of recording act that gives priority of title to the party with the most recently obtained valid claim, but only if the party also lacked notice of an earlier claim. When a piece of property is sold to two different parties, the title to the property will be disputed. In notice statute states, the subsequent bona fide purchaser’s claim to the property will be successful provided they had no actual or constructive notice of the prior conveyance. An earlier recorded claim provides constructive notice to all possible purchasers.
Thus, if Person A sells a property to Person B, then Person A sells the same property to Person C a week later and Person C had no knowledge of the sale to Person B, Person C’s claim to the property will be recognized, even if Person B records before Person C. As a result, notice statutes incentivize purchasers to record their purchased property to avoid losing title to a subsequent purchaser.
A notice statute differs from the other types of recording acts which are race statute and race-notice statute, where being the first to record matters in determining the owner of the property.
[Last updated in July of 2023 by the Wex Definitions Team]