13.12 Notice


In General

 In legal terms, notice is defined as information concerning a fact:

1.       actually communicated to a person by an authorized person (actual notice), or

2.       actually derived by a person from a proper source, or

3.       presumed by law to have been acquired by a person (constructive notice).  Constructive notice is regarded as equivalent in its legal effects to actual knowledge, and the law attributes the same consequences to both.


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

Constructive knowledge is described as notice that one is charged with by instrument of record.  To be effectively recorded, an instrument relating to real property must be recorded in the public records of the County in which a part of the property is located. (Tex. Property Code 11.001(a))  A conveyance of real property is void as to a subsequent purchase for value (bone fide purchase) unless the instrument has been acknowledged and filed for record.  (Tex. Property Code 13.001(a))  See City of Richland Hills v. Bertelsen, 724 SW2d 428, 1987.


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.


Imparting Constructive Notice

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.


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 Texas, 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.  Possession is a fact question but puts all persons on inquiry as to the nature of the occupant's claims.  (Townsend v. Seber, 264 SW211, 1924)

 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.


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 Commencement

In Texas, a notice of commencement may be recorded after a construction loan mortgage has been recorded.  This notice is prima facia evidence of the date construction commenced.

Notice of Completion

A notice of completion is recorded after completion of construction. Mechanics' liens must be filed within a specific period thereafter.  This notice is prima facia evidence of the date work ended.

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.  (generally not applicable to title insurance)

Lis Pendens (see Lis Pendens Sec. 11.24)

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 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.