## Facts

- Two bankruptcy-related disputes produced certified state-law questions concerning constructive notice under Rhode Island’s recording system.
- In one transaction, Michael J. Barnacle and Sally E. Lapides executed a promissory note to Greater Providence Deposit Corporation (GPDC) to finance a Providence property purchase.
- The related mortgage was intended to be executed by both Barnacle and Lapides, but Lapides did not sign due to inadvertence.
- The mortgage was nonetheless recorded in the Providence land evidence records.
- Barnacle and Lapides later filed a Chapter 7 bankruptcy petition; the trustee asserted bona fide purchaser status as of the petition date under 11 U.S.C. § 544(a)(3).
- In a separate transaction, American Investcorp and Development Company (AIDC) executed a promissory note to Rhode Island Central Credit Union (RICCU), secured by a mortgage intended to encumber a specific condominium unit (unit 100) in Providence.
- The recorded mortgage’s legal description did not identify the specific unit; it described the entire condominium project.
- AIDC later filed a Chapter 11 bankruptcy petition; the trustee likewise asserted bona fide purchaser status under § 544(a)(3).
- The bankruptcy court certified questions asking whether these defects prevented the recorded instruments from giving constructive notice to a later bona fide purchaser.

## Issues

1. Whether a recorded mortgage gives constructive notice when one of two joint mortgagors failed to execute the mortgage, despite the instrument’s recording in the proper land evidence records.
2. Whether a recorded mortgage gives constructive notice of an encumbrance on a specific condominium unit when the mortgage’s legal description instead describes the entire condominium project.

## Decision

- The Rhode Island Supreme Court answered both certified questions in favor of constructive notice.
- A recorded mortgage that identifies both mortgagors and is recorded in the proper records can provide constructive notice despite the absence of one mortgagor’s signature.
- A recorded mortgage with an overbroad condominium description can provide constructive notice of an encumbrance on a specific unit when a reasonable title search, including review of related recorded instruments in the chain of title, would lead to the correct unit.

## Legal Principles

- Constructive notice turns on whether the public record is sufficient to alert an ordinarily prudent purchaser or title examiner to a prior interest and to prompt further inquiry.
- Recorded instruments may impart constructive notice even if defectively executed or inaccurately described, so long as they reasonably signal a claim against the property.
- A diligent title search includes examining related recorded documents in the chain of title; purchasers cannot avoid notice by treating technical defects as eliminating record notice.
- In bankruptcy, a trustee’s bona fide purchaser status under 11 U.S.C. § 544(a)(3) is subject to constructive notice arising from the public land records.

## Conclusion

The court held that Rhode Island’s recording system can charge later purchasers (and bankruptcy trustees standing as such) with constructive notice from recorded mortgages notwithstanding execution defects or imperfect property descriptions when the record would lead a reasonable searcher to the prior interest.


In re Barnacle, 623 A.2d 445 (R.I. 1993)