Possession of property is notice to the world that the possessor claims or has some title to the property. An owner in possession under a valid deed may be discovered to the actual knowledge of any one who goes to the property. However it is not always practicable for the owner to be actually in possession. He may own many buildings or the structure may be an office or factory building or vacant land. One might go to the premises many times and not find the owner. Some method of constructive notice of ownership had to be devised as a substitute for actual knowledge, for the protection of both the owner, to relieve him of the necessity of remaining constantly in possession, and of persons who, desiring to deal with the property, would wish to ascertain the real owner. Otherwise A, an owner might sell his land to B giving him a deed, and B not taking possession, A might turn about and sell it to C. Or he might give a mortgage to D to secure a loan after he had sold to B. To prevent such frauds, recording acts have been enacted in all States. These provide that all instruments affecting real property may, when properly proven, be recorded in a certain public office in the county where the property is located. All such instruments are copied on the records and indexed. When so recorded they are notice to the world with exactly the same effect as if the owner were actually in possession.

Constructive notice is just as good as actual notice. Consequently one dealing with real estate is bound by all recorded instruments. Suppose A sells a piece of land to B and B fails to record his deed, A then sells it again to C, who knows nothing of the prior sale to B and records his deed before B's deed is recorded. Under the theory of notice C's right to the property is ahead of that of B, for the reason that B was not in possession and the records at the time C bought the property showed title in A. B should have protected himself by recording his deed as soon as he received it. Constructive notice is however no better than actual knowledge. If C, in the case above, had known of B's purchase, he could not obtain any right superior to B by virtue of recording his deed first.