Daily Development for Thursday, December 18, 2003 by: Patrick A. Randolph, Jr. Elmer F. Pierson Professor of Law UMKC School of Law Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu RECORDING ACTS; CONSTRUCTIVE NOTICE; WHAT CONSTITUTES "RECORD:" Restrictions contained in statement of planned unit development (PUD) in county plan commission's office do not provide bona fide purchaser with reasonable notice of the unrecorded land use restrictions contained therein. Story Bed & Breakfast v. Brown County Area, 794 N.E.2d 519 (Ind.App. 2003). Landowner, Story Bed & Breakfast ("Story"), brought action for declaration that it was not bound by restrictions contained in the PUD and plan commission counterclaimed for declaration to the contrary. Adjacent property owner, Patricia N. March ("March"), intervened. The Indiana appeals court held that the land-use restrictions were not enforceable against Story as a bona fide purchaser due to lack of sufficient notice. March petitioned for rehearing and the Court held that (1) availability of PUD in plan commission's office did not provide Story with reasonable notice of land-use restrictions, and (2) Story's knowledge of PUD designation did not put it on inquiry notice so as to charge Story with actual notice of the land-use restrictions. The Court reasoned that Story was not required to search plan commission files for land use restrictions when the plan commission could have avoided the problem by recording the land-use restrictions. Since the land-use restrictions were not recorded, Story, as a bond fide purchaser, was not required to perform a potentially exhaustive search through the minutes of plan commission meetings for a land use restriction that may or may not have existed. Finally, the Court noted that the general assembly has not determined that PUD land-use restrictions should be maintained in the minutes of plan commission meetings rather than with the county recorder. If the general assembly were to change its requirements concerning the location of land-use restrictions, the Court observed, it enforce such a determination. But it reasoned that the solution to the problem at issue is the "simple and efficient" act of recording PUD land-use restrictions. Also see: Ioannou v. Southold Town Planning Bd., 758 N.Y.S.2d 358 (A.D. 2 Dept. 2003) (A restrictive covenant prohibiting the subdivision of property is not binding on a purchaser when such restrictive covenant is filed only in the office of the planning board.) The New York simply observed that the planning records were outside the normal chain of title. Comment 1: For what, in the editor's view, was an even harsher result, see Metropolitan Dade County v. Fountainbleau Gas & Wash, Inc., 570 So. 2d 1006 (Fla. App. 2001), where a bank obtained a "contract rezoning" with the city in exchange for a promise on the banks part to record a covenant restricting the property to bank use. No covenant was ever recorded. The zoning map indicated that the property had been rezoned to a business designation and gave the number and date of the rezoning resolution. The resolution contained the information about the covenant, but the map only indicated that a rezoning had occurred. Fifteen years and several owners later the current owners obtained title after checking the zoning map and obtained a building permit to build a gas station and car wash. When construction was almost complete, the City sued to enjoin the project based upon the alleged constructive notice of the covenant contained in the ordinance referred to in the zoning map. The court found there was such constructive notice and granted the injunction. Comment 2: For other cases to the same or similar effect, see: Ellingson v. Franklin County, 810 P. 2d 910( Wash. 1991) (recording of road easement in office of county engineer does not provide constructive notice even though statute designates office as "office of record." City of Lakewood v. Mavromatis, 817 P.2d 90 (Colo. 1991) (subsequent purchasers had no constructive notice of a city right of way claim when claim contained in a road petition delivered to the county clerk for entry in the "road book" but not recorded in grantor/grantee index.). But, compare: Pelfresne v. Village of Williams Bay, 917 F. 2d 1017 (7th Cir. 1990) (judgment docketed on a card used for only money judgments, described on the card as only a money judgment - but in fact the judgment also included an order to raze a building on the property owned by the judgment debtor. Subsequent purchaser of property owned by judgment debtor held to be on constructive notice of the raze order from this docketing.) 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