1. Explain the series of transactions in the same land.

2. Discuss the effect of constructive notice on the court’s decision.

3. What should buyers of property learn from this decision?

In January 1986, Norman and Mildred Dahl conveyed the disputed property (a 1.667 acre tract located in McKenzie County) to Harry and Linda Chornuk by warranty deed, but the deed was not recorded until June 24, 2010. On June 17, 2005, after Norman Dahl’s death, Mildred Dahl conveyed the same property by warranty deed to the Nelsons as part of the conveyance of approximately 44.5 acres. The deed was recorded on July 5, 2005.

In 2010, the Chornuks sued the Nelsons to quiet title to the property. The district court quieted title in favor of the Chornuks. The court found that the Chornuks’ actions were sufficient to put a prudent person on notice that someone else had an interest in the property and that the Nelsons were required to conduct further inquiry before purchasing the property from Mildred Dahl. The court found the Nelsons had constructive notice of the Chornuks’ interest and were not good-faith purchasers.

The Nelsons appealed.

JUDICIAL OPINION

CROTHERS, Justice … The Nelsons argue they acquired their interest in the property in good faith and for valuable consideration, the Chornuks did not record their deed until after the Nelsons purchased the property and recorded their deed, and therefore their interest is superior to the Chornuks’ interest under N.D.C.C. § 47–19–41. “An unrecorded instrument is valid as between the parties thereto and those who have notice thereof.” N.D.C.C. § 47–19–46. “Every conveyance of real estate not recorded shall be void as against any subsequent purchaser in good faith, and for a valuable consideration….” N.D.C.C. § 47–19–41 (2010) Although the Chornuks’ deed had not been recorded when the Nelsons purchased the property, the district court was required to decide whether the Nelsons were good-faith purchasers or had notice of the Chornuks’ interest in the property. Whether a party acted in good faith is a question of fact. Here, the district court found:

[The Chornuks] presented testimony that they had planted trees on the subject property and had various equipment parked there over the years. They had also cut the grass three or four times a year since 1986 and had installed drip systems for the trees along with flower boxes. In addition, their grandson had played on the property and picked weeds and watered the property. [The Chornuks] also submitted that they had spent money on planting the trees in a total amount of $2,830 and that the trees had been destroyed by the [Nelsons] in 2010. The court found the Nelsons drove by the property on a “near-daily” basis and the Chornuks’ acts of mowing the property three or four times per year, planting trees, installing a drip line for the trees, installing flower boxes on the property and performing other general maintenance placed the Nelsons on notice of the Chornuks’ interest in the property and the Nelsons were required to conduct further inquiry. The court concluded the Nelsons had constructive notice of the Chornuks’ interest and were not protected as good-faith purchasers. ……………….