For more than a century it has been the law in California that a party does not have constructive notice of a recorded instrument until that document has been properly indexed so it can be located through a search of the public records. ( Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1243, 54 Cal.Rptr.3d 907;Watkins v. Wilhoit (1894) 104 Cal. 395, 399–400, 38 P. 53.) .Civil Code section 1213 reads: “Every conveyance of real property or an estate for years therein acknowledged or proved and certified and recorded as prescribed by law from the time it is filed with the recorder for record is constructive notice of the contents thereof to subsequent purchasers and mortgagees; and a certified copy of such a recorded conveyance may be recorded in any other county and when so recorded the record thereof shall have the same force and effect as though it was of the original conveyance and where the original conveyance has been recorded in any county wherein the property therein mentioned is not situated a certified copy of the recorded conveyance may be recorded in the county where such property is situated with the same force and effect as if the original conveyance had been recorded in that county.”
Constructive notice of an interest in real property is imparted by the recordation and proper indexing of an instrument in the public records. (§ 1213; Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1242-1245.) Simply put, a party must satisfy two requirements in order to obtain priority for its real property interest pursuant to sections 1107 and 1214: (1) it must acquire its interest as a BFP, that is, for valuable consideration and with neither actual knowledge nor constructive notice of the previously-created interest; and (2) its interest must be “first duly recorded” before the previously-created interest is recorded.
indexed so it can be located through a search of the public records. (Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1243, ; Watkins v. Wilhoit (1894) 104 Cal. 395, 399–400, .)Stated otherwise, constructive notice of an interest in real property is imparted by the recording and proper indexing of an instrument in the public records.
The reconveyance is "recorded" once the recorder has confirmed the document meets all recording requirements, created an entry for the document in the ERA (enterprise recording archive) system, calculated the required fees and confirmed payment of the correct amount and, finally, generated a lead sheet containing, among other things, a barcode, a permanent recording number and the words "Recorded/Filed in Official Records." Ricketts and Rosenberg also argue that construing this section to exclude indexing renders the statutory time limitation meaningless because California courts have consistently held a reconveyance will not constitute constructive notice of the transaction unless it is indexed and retrievable by interested third parties. (See, e.g., Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1243-1245 [ 54 Cal.Rptr.3d 907] [discussing cases].) But, as the trial court observed, these cases "do not conflate recording and indexing of documents."
Indeed, many states decline to impute constructive notice to subsequent purchasers when abstracting errors render futile a search of public records. See 14 Powell on Real Property § 82.03 n.29 (collecting cases); Dyer v. Martinez , 147 Cal.App.4th 1240, 54 Cal. Rptr. 3d 907, 910 (2007) ("[R]eal property purchasers ... cannot be charged with constructive notice of documents they cannot locate ... [T]he conclusive imputation of notice of recorded documents depends upon proper indexing because a subsequent purchaser should be charged only with notice of those documents which are locatable by a search of the proper indexes ." (internal quotation marks and citation omitted)).
A bona fide purchaser of real property has constructive notice of only those matters that could be located by a diligent title search. Dyer v. Martinez, 147 Cal.App.4th 1240, 1242, 54 Cal.Rptr.3d 907, 908 (2007).
Even when a recordation satisfies the formal requirements of the state statutes, courts in California may not allow that it provides constructive notice unless that document can be located by a title search. Dyer v. Martinez, 147 Cal.App.4th 1240, 1242, 54 Cal.Rptr.3d 907 (2007). As an example, California will not impute constructive notice to a subsequent purchaser if the real property title indexes are faulty.
) However, "a bona fide purchaser of real property has constructive notice of only those matters that could be located by a diligent title search." ( Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1242, 54 Cal.Rptr.3d 907 ["Because the lis pendens at issue was not indexed at the time defendants took their interests in the property, it could not have been located by a diligent search, and therefore did not provide constructive notice."]; accord, Hochstein, supra , 219 Cal.App.3d at p. 452, 268 Cal.Rptr. 202 ["The California courts have consistently reasoned that the conclusive imputation of notice of recorded documents depends upon proper indexing because a subsequent purchaser should be charged only with notice of those documents which are locatable by a search of the proper indexes."].
A BFP has constructive notice of "those matters that could be located by a diligent title search." (Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1243.) The trial court found that respondent paid value -- $200,000 for the note and deed of trust.
" ' "California has an 'index system of recording,' and . . . correct indexing is essential to proper recordation. [Citations.]" [Citations.]' [Citation.]" (Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1866; accord, Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1246; see also 5 Miller & Starr, Cal. Real Estate (3d ed. 2011) § 11:22, pp. 11-83 to 11-84, § 11:149, pp. 11-459 to 11-460.) There is no contention raised that the 1992 lis pendens was not properly indexed.