I’m sometimes asked by clients and new associates about the idea of “constructive notice” in the context of real estate litigation generally and commercial foreclosures specifically. The concept of constructive notice is a recurring theme on my blog. Indeed the doctrine is important to many things in the real estate world, including:
• The enforceability and priority of mortgages
• Lis pendens law
• The bona fide purchaser doctrine
• The enforceability and priority of judgment liens
• Quiet title and deed-related actions
• Title insurance
A recent opinion by the Indiana Court of Appeals discussed the issue, and I thought it might be worthwhile to quote the Court as a reminder of the rule:
A “purchaser of real estate is presumed to have examined the records of such deeds as constitute the chain of title thereto under which he claims, and is charged with notice, actual or constructive, of all facts recited in such records showing encumbrances, or the non-payment of purchase-money.” Crown Coin Meter v. Park P, LLC, 934 N.E.2d 142, 147 (Ind. Ct. App. 2010). The recording of an instrument in its proper book is fundamental to the scheme of providing constructive notice through the records. Id. Constructive notice is provided when a valid instrument is properly acknowledged and placed on the record as required by statute. Id.
Gregory v. Koltz 204 N.E.3d 256 (Ind. Ct. App. 2023)
The mention of the “record” in the above quote refers to the index maintained in each county recorder’s office. (I wrote about “chain of title” here.) In Gregory, the Court found that the recording of a default judgment to quiet title to the subject property “served as constructive notice to the world” and “bound all successors in interest, regardless of whether the successor was a party to the litigation.” The judgment was recorded within the chain of title, which is key.
Constructive notice is tantamount to actual notice in the eyes of the law. Stated differently, even if you didn’t know about the recorded interest, you should have.
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I represent parties involved in real estate and loan-related disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@dinsmore.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.