Pa.Stat.Ann. tit. 21, § 356 (Purdon 1955). A Pennsylvania case which decided issues similar to those before us is enlightening. Finley v. Glenn, 303 Pa. 131, 154 A. 299 (1931). In Finley the plaintiff sought an "injunction requiring defendants to observe certain restrictions created by the predecessor in title of both of the parties as to the kind of buildings to be erected on their property."
Hancock v. Gumm (Ga.) 107 S.E. 872; Buffalo Academy of Sacred Heart v. Boehm Bros., (N.Y.), 196 N.E. 42, 45. On the other hand, the decision in the New York case was qualified, the Court saying that its holding was: "* * * in the absence of exceptional circumstances, the consideration of which we may well leave until they arise." The Court may have been thinking of the Pennsylvania case of Finley v. Glenn, 154 A. 299, where the action was to enjoin violation of building restrictions and the Court held that restrictions referred to in deeds from the same grantor of other lots gave constructive notice to the purchaser. This Court has agreed with the Pennsylvania Court. Lowes v. Carter, 124 Md. 678.
Because of the facts involved, the Phillips Case is not controlling in the present controversy. Attention is also directed by counsel to Finley v. Glenn, 303 Pa. 131 ( 154 A 299). There the conveyance involved required that the grantors should impose the building restrictions recited therein upon all their other lots or pieces of ground fronting on a designated street. The deed also recited that "it is mutually understood that the above restrictions are not to apply to or bind any other land of the said grantors excepting the above mentioned lots."
When a real estate contract or deed imposes obligations on the purchaser to act or refrain from acting, those terms do not bind later owners in the purchaser's chain of title unless the obligation runs with the land. See, e.g., Estate of Hoffman v. Gould, 714 A.2d 1071 (Pa.Super. 1998); Goldberg v. Nicola, 319 Pa. 183, 178 A. 809 (1935); Finley v. Glenn, 303 Pa. 131, 154 A. 299 (1931). To bind subsequent purchasers, the instrument that creates the obligation must conform to additional standards.
The covenant was not personal to the parties to plaintiff's deed, but ran with the land. The court quoted at length and with approval from Finley v. Glenn, 303 Pa. 131, 154 A. 299 (1931). There the parties also shared common grantors, who had covenanted to impose restrictions generally on their other properties adjoining that first conveyed to plaintiff.
I start with the proposition that restrictive covenants in prior conveyances are binding only against future lessees with actual or constructive notice before the lease is signed. See Finley v. Glenn, 154 A. 299, 301 (Pa. 1931); see generally 3 M. Friedman, Friedman on Leases Section(s) 28.601 (3d ed. 1990). J.C. Penney's lease agreement thus will not support the district court's injunction in the absence of actual or constructive notice to Giant Eagle.
Importantly, however, a property owner must have actual or constructive notice of an encumbrance on property in order for an encumbrance to be enforced against him. See Franklin Mills Assocs., 836 F.Supp.2d at 245 (citing Walsh v. E. Pikeland Twp., 829 A.2d 1219, 1223 (Pa. Commw. Ct. 2003)); In re Oxford Royal Mushroom Prods., Inc. v. Kelton Realty, Inc., 39 B.R. 948, 950 (Bankr. E.D. Pa. 1984) (explaining that Finley v. Glenn, 154 A. 299 (Pa. 1931), “implicitly holds that actual or constructive notice is necessary to bind a party to covenants which run with the land,” so the covenant at issue had to be recorded in order for it to bind the trustee). Here, Drnovsek admits that the Road Agreement was not recorded, so she cannot argue that she was, through recording, given constructive notice of the agreement, and that it is therefore enforceable against her as an encumbrance on the Property, nor does she claim to have had actual notice of the agreement.
However, a property owner must have actual or constructive notice of an encumbrance on property in order for an encumbrance to be enforced against him. See Franklin Mills Assocs., 836 F.Supp.2d at 245 (citing Walsh v. E. Pikeland Twp., 829 A.2d 1219, 1223 (Pa. Commw. Ct. 2003)); In re Oxford Royal Mushroom Prods., Inc. v. Kelton Realty, Inc., 39 B.R. 948, 950 (Bankr. E.D. Pa. 1984) (explaining that Finley v. Glenn, 154 A. 299 (Pa. 1931), “implicitly holds that actual or constructive notice is necessary to bind a party to covenants which run with the land,” so the covenant at issue had to be recorded to bind the trustee).
Although Karl asserts that he was unaware of the lease on the 46 acres until sometime in 2010, by operation of Pennsylvania law he was on notice by the end of 2005. It is undisputed that defendants recorded the lease on November 7, 2005, and “[t]he recording of any such lease constitute[s] constructive notice to subsequent purchasers ... of the lessor of the making and of the provisions of such lease....” 21 P.S. § 407 (“Effect of recording lease, sublease, agreement or memorandum”). Karl was one such subsequent purchaser when Beverly transferred her interest in the 46 acres to him on November 30, 2005, and he was under an obligation to protect his own interests by inspecting the records. See generally Finley v. Glenn, 303 Pa. 131, 135–36, 154 A. 299, 301 (1931). He neglected to do so, but is nevertheless credited with having purchased on notice of the lease—“otherwise the purpose of the recording acts would be frustrated.”
Finally, the document was not recorded, suggesting an absence of intent that it run with the land. See Finley v. Glenn, 154 A. 299, 201-02 (Pa. 1931) (noting that the test of whether an equitable easement exists on land looks, in part, at record of deed). CBS argues that the law is clear that "[n]ot all easements need be written and recorded to be effective."