Implied and constructive notice: title search fallibility and the rigidity of the constructive notice doctrine

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Date: Apr. 2013
From: Florida Bar Journal(Vol. 87, Issue 4)
Publisher: Florida Bar
Document Type: Article
Length: 3,797 words
Lexile Measure: 1930L

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Prudent purchasers of real property conduct title searches to ensure that the property is unencumbered by, among other potential defects, mortgages, liens, or restrictions. A purchaser frequently employs the services of attorneys or title search companies to review the chain of title of a particular piece of real property. Likewise, a lienholder on real property may require a title search on the property for which the lien is held. In order to fully foreclose a lien, the lienholder must establish that its lien is superior in right or title to the property owners' rights, as well as the rights of other lienholders. (1)

Problems arise when it is difficult to determine which documents must be searched. Those persons or companies charged with review of title documents first have to procure the documents to review. The pertinent documents may be gleaned from the use of private databases, review of plat books, and review of clerks' offices' indexes relating to real property. However, it is possible for a clerk's office to fail to properly index conveyances, resulting in a situation in which a purchaser or lienholder cannot adequately search liens or defects in title. Further, when property is ineffectively described within a mortgage, questions may arise as to whether the mortgage encumbers the ill-described property.

Currently, the answer to whether a described or referenced document or property description will be within the ambit of a conveyance or mortgage turns on a distinction: Is the document or property description referenced in the mortgage, or is it instead a part of the mortgage? If it is a part of the mortgage, a separate, more automatic application of Florida's recording statute will occur than if it is merely referenced in the mortgage. In Regions Bank v. Deluca, 2012 Fla. App. LEXIS 13986 *9 (Fla. 2d DCA Aug. 22, 2012), the Second District Court of Appeal affirmed the different tracks that recording and notice questions can follow, while at the same time highlighting the problems caused by Florida's approach to constructive notice.

Conveyancing and the Types of Recording Statutes

Title review is important because Florida law relating to real property is premised in part upon the legitimacy of conveyances, meaning that there are documents or writings which, in and of themselves, establish the transfer of interests in real property from one person to another. (2) There also may be recorded documents establishing mortgages or liens on the real property to be purchased. Such documents, though merely liens, fall within Florida's laws on recordation of conveyances. (3) In order for conveyances to be effectual against creditors or subsequent purchasers for value, they must be recorded. (4)

Every state has a recording statute or act, and recording statutes typically fall within one of three categories: 1) race; 2) notice; or 3) race-notice. (5) The type of recording statute in a particular state may determine who will prevail in actions relating to mortgages. Under a "race" recording statute, a subsequent mortgagee will prevail against a prior mortgagee if the...

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Gale Document Number: GALE|A344047169