13.12 Notice

13.12.1

In General

In legal terms, notice is defined as information concerning a fact actually communicated to a person by an authorized person, or actually derived by a person from a proper source, or else presumed by law to have been acquired by a person, which information is regarded as equivalent in is legal effects to full knowledge of the fact, and to which the law attributes the same consequences as would be imputed to knowledge.

13.12.2

Actual And Constructive Notice--Actual And Constructive Knowledge Actual Notice

Actual notice is that kind of notice which consists in express information of a fact. Such notice presumes actual knowledge. Actual notice is to be distinguished from constructive notice, which is notice imputed in law.

Constructive Notice

Constructive notice is that notice which is imputed by law. Under the recording acts, those recorded instruments which are entitled to be recorded give constructive notice of their contents. Some authorities equate constructive notice with implied notice.

Actual Knowledge

Actual knowledge is to be distinguished from constructive knowledge, but in the law of conveyance of real property, both types of knowledge generally effect the same results. A person may have constructive knowledge of the contents of a document or instrument without having actual knowledge of the instrument or its contents. To have actual knowledge, the person must have known of the existence of the instrument and its nature or contents. However, if the person has information of circumstances which would put a reasonably prudent person upon inquiry which if followed up would result in knowledge, the person will be presumed to have had constructive notice of such instrument and knowledge of its contents. Actual knowledge of an instrument generally may be established by proving actual examination of the recorded instrument in the office of the recorder or other custodian of recorded documents, even though the recording is so faulty that it does not give constructive notice of the contents of the instrument.

Constructive Knowledge

To defeat a bona fide purchaser status under the recording acts, in most jurisdictions it must be shown that the party claiming as such against an unrecorded conveyance had such information as would have put a reasonably prudent person upon inquiry, which if diligently pursued might have disclosed the prior equities of the holder of the unrecorded deed. It is sometimes said that such information amounts to actual notice of such instrument; while at other times it is said that such information amounts to constructive notice or knowledge of such prior equities or unrecorded deed. In any event, knowledge of such information precludes its possessor from claiming as a bona fide purchaser.

13.12.3

Doctrine Of Constructive Notice

The courts have construed that the proper recording of an instrument, in accordance with the recording act and any other applicable statutory provisions, is equivalent to notice to any subsequent purchaser, lender, or party in interest, of the existence and contents of the instrument irrespective of whether any of them has actually examined the records. By this doctrine of constructive notice the recording acts become but an application and extension of the equitable doctrine that a purchaser with notice of a prior right takes subject to such right. It is now settled by decisions or statutes that a purchaser of a title, legal or equitable, takes subject to a recorded instrument creating or transferring an equity.

Recording acts enable an intending purchaser, by examining the record, to determine whether the vendor has previously disposed of any interest in the land and to ascertain the person from whom the vendor obtained the land and whether this person disposed of any interest to a person other than the vendor, and so on back to the patent from the government. The names of the successive owners constitute the chain of title.

Since the recording acts are construed as charging a purchaser with notice of a recorded instrument on the theory that by exercising proper diligence in searching the records any recorded instrument would be discovered, a purchaser is not charged with notice when the failure to discover the recorded instrument is not due to lack of diligence. Hence, prospective purchasers are charged with notice, not of all instruments which appear on record, but of those only which constitute the chain of title of the property intended to be acquired. If there is another independent and recorded chain of title, a purchaser is not affected with notice of the instruments contained therein since there is no clue calling the purchaser's attention to them.

A purchaser is not charged with notice of a recorded conveyance made by person in the chain of title unless it was made after the time at which the records show the grantor to have obtained the title. The purchaser, consequently, is not bound to search the records to determine whether any particular person in the chain of title, prior to obtaining the title, had done any acts which would affect the title.

13.12.4

Imparting Constructive Notice

An instrument must be entitled to be recorded in order that its recording may constitute constructive notice to subsequent purchasers and encumbrancers. Local statutes define the instruments entitled to be recorded.

When an instrument is properly recorded, it imparts constructive notice of everything that may be learned by an actual examination of the records.

Nevertheless, if the instrument is not duly executed, properly acknowledged or certified, or is a forgery, the instrument does not impart constructive notice. However, in this case, actual notice of the existence of the instrument may be considered as sufficient to deprive any subsequent purchaser, holder, or encumbrancer any benefits from the bona fide purchaser shield of legitimate ignorance.

13.12.5

Forms Of Constructive Notice

Constructive Notice By Recordation

By recording instruments affecting real property in the manner provided by statute, constructive notice of the contents of such instruments is given to subsequent purchasers, mortgagees, and other parties in interest.

Constructive Notice By Recitals In Title Deeds

Purchasers, mortgagees, lessees, etc., of real property have constructive notice of all matters affecting their estates or interests which are set forth or suggested by way of recitals in any of the instruments in their respective chains of title.

Constructive Notice By Possession

In some states, actual, notorious, exclusive and hostile possession of land by a person other than the grantor or mortgagor is constructive notice to a purchaser or mortgagee of such rights in the land as the person in possession may have.

Note: However, other states hold that as a matter of law that possession is not notice of interests claimed by the possessors.

Constructive Notice By Lis Pendens

A pending suit (lis pendens) relating to land affects purchasers, mortgagees and other parties, their rights being subject to the result of the litigation.

13.12.6

Specific Jurisdictional Forms Of Notice

Notice of Appeal

A notice of appeal is filed to indicate that a court decision will be appealed to a higher court.

Notice of Assessment

A notice of assessment is issued by the state or local taxing agency to the owner of real property specifying the assessed valuation of the property.

Notice of Cessation of Labor--Mechanic's Lien Law

In some states, a notice of cessation of labor must be filed for record by the owner of a work of improvement to start the running of the statute against the filing of claims for liens under a mechanic's lien law.

Notice of Commencement

In some states, a notice of commencement may be recorded after a construction loan mortgage has been recorded. All mechanic's liens relate to the date of recording of the notice, thereby enabling the mortgage to remain a first lien, not subordinated to any labor, supplier, or other claim for nonpayment of bills.

Notice of Completion

A notice of completion is recorded after completion of construction. Mechanic's liens must be filed within a specific period thereafter.

Notice of Default--Power of Sale--Mortgage--Deed of Trust

In some jurisdictions, a notice of default is a statutory notice required to be given a mortgagor or trustor after a breach of the obligation for which a mortgage or deed of trust is a security and before a sale under a power of sale in such mortgage or deed of trust may be exercised.

Notice of Default Addressed to a Defaulting Party That There has Been a Default.

The defaulting party is usually provided a grace period during which to cure the default. Notices of default are frequently provided for in contracts for deed and mortgages and are sometimes required by operation of law.

Notice of Dishonor

A notice of dishonor states that a bill or note has been dishonored by either nonacceptance or nonpayment.

Notice of Excavation

The giving of notice to an adjoining landowner of an intention to excavate is, in some instances, required or regulated by statute or ordinance.

Notice of Intention to Subdivide Land

In some jurisdictions, a notice of the intention of the owner to subdivide a piece of land for the purpose of sale or lease is required to be given to the real estate commissioner or other proper official.

Notice of Lien

A notice of lien is a specific written notice required in some states in an application for a mechanic's lien. Notice of lien must be filed in a court designated by statute of the judicial circuit in which the property is located. A copy of the notice must be served on the owner and on any other interested persons in the same manner as provided by law for the service of a summons. The notice is usually posted on the improvement and must set forth the amount of the claim, the labor or material furnished, a sufficient description of the property, the names of parties who contracted for the improvement, the names of the general contractor, the names of the owners of the property, and any other person or persons with an interest in the property.

Lis Pendens

A lis pendens is a recorded legal document which gives constructive notice that an action affecting a particular piece of property has been filed in either a state or federal court. Lis pendens is a Latin term which means "action pending" and is in the nature of a quasi lien. A person who subsequently acquires an interest in that property takes it subject to any judgment that may be entered; that is, a purchaser pendente lite is bound by the result of the lawsuit.

Notice of Mechanic's Lien

In many jurisdictions, a notice of mechanic's lien is required by statute to be given to the owner of property by one claiming a mechanic's lien thereon, not for work performed or materials furnished under a contract with the owner, but for work on the premises performed in the capacity of a subcontractor or mechanic or for materials furnished under a contract with the principal contractor. Mechanic's lien law is strictly statutory.

Notice of Protest--Negotiable Instruments

A notice of protest is a notary's act or series of acts in presenting an instrument for acceptance or payment, noting the fact of dishonor by nonacceptance or nonpayment, and then, making the formal notice of protest.

Notice of Nonrenewal of Lease

A notice of nonrenewal of lease is a notice which the tenant of leased premises must give to the landlord to prevent an automatic renewal of the lease.

In some states, the requirement of a notice of nonrenewal of lease in a residential lease is not valid unless the landlord first gives notice to the tenant that, on the tenant's failure to notify the landlord of the tenant's intention not to renew, the lease will be renewed.

Notice of Sale--Bulk Sale

Notice of a bulk sale is a notice of a sale that, under the provisions of the bulk sales acts generally adopted, is required to be given to the creditors of the bulk sale vendor.

Notice to Perform--Land Contract

A notice to perform a land contract is a method by which one party to a land contract may fix upon and assign a reasonable time for the completion, contact, and call upon the party in default to perform according to the conditions of the contract.

Notice to Quit

A notice to quit is a written notice given by a landlord to a tenant stating that the landlord intends to regain possession of the leased premises and that the tenant is required to quit. The notice to quit can stipulate that the tenant must quit either at the end of the lease term or immediately if there is a breach of lease or if the tenancy is at will or by sufferance. This term sometimes refers to the notice given by the tenant to the landlord announcing the intention to give up possession on a stated day.

Notice to Shore Up-Lateral Support

A notice to shore up lateral support is a notice to an adjoining landowner (required in most jurisdictions) to be given by the owner of land of the owners intention to make an excavation thereon so that the adjoining owner may take the necessary precautions to protect the buildings on the land.