Content area
Full Text
When it comes to real estate transactions, an inquiring mind is a responsible mind. So much of a property's character and quality is readily revealed from available documents surrounding a transaction, while other nuggets of information might be hidden away in the peculiar knowledge of the seller or in more obscure locations. All real estate attorneys know that their job always includes evaluating title and asking questions when necessary as part of one's regular due diligence. At times, though, the law requires a purchaser of property to take some extra steps to satisfy the duties of "inquiry notice."
Inquiry notice imposes a special kind of investigatory charge, and the consequences for the failure to properly inquire can be severe. This article provides an overview of inquiry notice and then samples cases presenting interesting fact patterns that bear on one type of inquiry notice: that stemming from statements and affirmations of fact contained in recorded deeds and other recorded instruments. Cases involving issues of inquiry notice are diverse, and inquiry notice determinations by a court are highly fact-specific. Our aim is to assist in developing a better understanding of the demands imposed by the doctrine of "inquiry notice" as applied to titlebased concerns.
Inquiry Notice Basics
The law places reasonable and appropriate burdens on purchasers before they are entitled to bona fide purchaser protection. Inquiry notice is part of the process for identifying and fairly allocating responsibilities between all parties to real estate transactions.
Rules must be established to resolve competing claims to the same piece of property and to define priorities when multiple persons own compatible interests in the same property. Today, all states have some type of recording act. Very few states use pure race rules, while the remainder are about equally mixed between notice and race-notice rules-each of which really is, as their names imply, dependent on determinations regarding notice. And notice is principally concerned with identifying who qualifies as a bona fide purchaser.
Notice itself is a broad concept falling into several categories-actual, record, constructive, and inquiry notice-but each having the same essential effect of defeating bona fide purchaser status if notice of an adverse interest is present. In some jurisdictions, inquiry notice (or what is sometimes called "implied actual notice") is...