COA: Buyers had notice property was under lease

July 22, 2016

The Indiana Court of Appeals affirmed that because sellers of a Crawford County property had recorded their assignment of lease in the recorder’s office, buyers of the property had actual or constructive notice that the sellers didn’t own the land.

Richard and Hollie Wilson agreed to pay Charles and Bonnie Huff $237.50 a month for a lot in the Wildridge RV Resort until they paid off the selling price of $28,500.The language in the contract, drafted by Bonnie Huff, said “do hereby sell on contract … .” The Wilsons missed some payments, so the Huffs sued seeking to cancel the contract and evict the Wilsons from the property.

After being sued, Hollie Wilson did a title search on the property for the first time and discovered the Huffs didn’t own it but were assigned a 99-year lease from Willard and Wanda Skaggs, who themselves leased the property from The Nashville Co. Inc., which owned the lot. This led the Wilsons to counter sue alleging the Huffs committed fraud by misrepresenting themselves as owner of the property.

The trial court ruled in favor of the Huffs, finding that a search of records in the recorder’s office would have disclosed the Huffs’ interest was a leasehold interest. The property contract also does not represent that the Huffs own the fee simple title to the lot or that they will convey same.

The appeals court agreed with the trial court’s reasoning in Richard Wilson and Hollie Wilson v. Charles M. Huff and Bonnie M. Huff, 13A04-1512-PL-2119. A lease of more than three years must be recorded in the recorder’s office under statute, and when it is, it is considered “constructive notice” of its existence and a subsequent grantee is charged with “notice of all that is shown by record, including recitals in instruments so recorded,” Judge Edward Najam wrote.

“Moreover, actual notice may be inferred from the fact that a person who is charged with a duty of searching the records of a particular property had the means of knowledge that he did not use,” he continued. “And the evidence supports the trial court’s finding that the Wilsons would have discovered that the Huffs held a leasehold interest in the property if the Wilsons had searched the records in the county recorder’s office.”



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