Opinion
No. 36954-1-II.
April 7, 2009.
Appeal from a judgment of the Superior Court for Pierce County, No. 07-2-05602-1, Vicki L. Hogan, J., entered October 11, 2007.
Affirmed by unpublished opinion per Quinn-Brintnall, J., concurred in by Penoyar, A.C.J., and Armstrong, J.
David Hahn and Linda Grady negotiated a height restriction on property (Lot 1) neighboring their property (Lot 2). Tonya Woodard later purchased the encumbered lot and filed a quiet title action so she could build a new home above the height restriction. The trial court granted summary judgment to quiet title in favor of Woodard, finding that the height restriction was not properly recorded and that Woodard was a bona fide purchaser acting in good faith. Hahn and Grady appeal, arguing that the trial court erred when it found that Woodard did not have notice of the height restriction prior to her purchase of Lot 1. Specifically, Hahn and Grady argue that (1) the height restriction was properly recorded because it was included in the deed for Lot 2 and (2) Woodard received constructive notice of the height restriction because Hahn told Woodard's boyfriend, Scott Barker, about the height restriction prior to Woodard purchasing Lot 1. We affirm.
FACTS
In 1989, Carl and Thelma Forsbeck subdivided their property on Fox Island, Washington, into two separate parcels, Lot 1 and Lot 2 of short plat 8904270182. The Forsbecks built a new house on Lot 2 and, in September 1994, they sold Lot 2 to Hahn and Grady. As a condition of the sale, the Forsbecks agreed to place a height restriction on Lot 1 that limited new structures to the roof height of the Forsbecks' cabin, approximately 13 feet. The Forsbecks placed the height restriction in Hahn and Grady's statutory warranty deed and recorded the deed with the Pierce County Auditor on September 23, 1994. The Hahn and Grady deed incorrectly describes the burdened property as Lot 1, short plat 8904270192 rather than Lot 1, short plat 8904270182. The Forsbecks did not prepare or record a separate height covenant against Lot 1.
In 2004, the Forsbecks sold Lot 1 to Michael and Kimberly Diaz. In May 2005, the Diazes sold Lot 1 to Woodard. Before closing on Lot 1, Woodard's boyfriend, Barker, went to look at the property and Hahn and Grady approached him. The parties dispute what happened next. Hahn contends that he informed Barker about various issues with Lot 1, including the height restriction. Barker agrees that Hahn spoke about issues concerning Lot 1 but denies that Hahn informed him about the height restriction. Although Woodard and Barker lived together at the time of the purchase, Woodard obtained her own mortgage loan and bought Lot 1 as her separate property. Before finalizing the sale, Woodard ordered a title report that did not disclose any height restrictions. Woodard also reviewed the seller's "Form 17" disclosure that similarly did not mention any height restriction.
In February 2006, Woodard was at the property going over plans for a new home on Lot 1. Hahn approached Woodard and told her that there was a height restriction on the property. On March 8, 2006, Hahn and Grady wrote Woodard a letter formally advising her about the height restriction and included a copy of the Hahn/Grady deed.
On February 27, 2007, Woodard filed a complaint for quiet title and other relief. On April 23, 2007, Hahn and Grady filed an answer and third party complaint against the Forsbecks that alleged "the Forsbecks were negligent in failing to record the height restriction on Lot 1." Clerk's Papers (CP) at 10. Hahn also asserted an affirmative defense that "[Woodard] and/or her agents were advised of the height restriction prior to [Woodard's] purchase of Lot 1." CP at 9.
On June 19, 2007, Woodard filed a motion for summary judgment to quiet title. In her motion for summary judgment, Woodard accepted that there was a dispute as to whether Hahn mentioned the height restriction to Barker before she purchased the property. Woodard and Barker married sometime after filing the motion for summary judgment and before the September 13, 2007 hearing on the motion. On September 13, 2007, the trial court orally granted Woodard's motion for summary judgment to quiet title. On October 11, 2007, the trial court signed and filed its written order of summary judgment. Hahn and Grady timely appeal.
Although the record does not indicate the date of marriage, Woodard asserts in her brief that she married Barker on July 7, 2007. Hahn does not dispute this fact.
ANALYSIS
The issue we must decide on appeal is whether Hahn and Grady have demonstrated any genuine issue of material fact indicating that they may enforce the Hahn/Forsbeck height restriction agreement against Woodard. The statute of frauds requires that conveyances of real property be duly recorded in order to be enforceable against a subsequent purchaser in good faith and for valuable consideration. RCW 65.08.070. A conveyance of real property includes a written agreement restricting a landowner from building above a certain height on their property. RCW 65.08.060(3) ("The term 'conveyance' includes every written instrument . . . by which the title to any real property may be affected."). Thus, if there is any genuine issue of material fact (1) showing that Hahn and Grady properly recorded the height restriction or (2) showing Woodard was not a purchaser in good faith, then summary judgment was improper. Standard of Review
On review of an order for summary judgment, we perform the same inquiry as the trial court. Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004) (citing Kruse v. Hemp, 121 Wn.2d 715, 722, 853 P.2d 1373 (1993)). Summary judgment is appropriate only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56(c). A material fact is one upon which the outcome of the litigation depends. Wojcik v. Chrysler Corp., 50 Wn. App. 849, 853, 751 P.2d 854 (1988). All facts are considered in the light most favorable to the nonmoving party, here Hahn. Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wn.2d 16, 26, 109 P.3d 805 (2005) (citing Atherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 516, 799 P.2d 250 (1990)). Summary judgment is granted only if reasonable persons could reach but one conclusion from all the evidence. Vallandigham, 154 Wn.2d at 26 (citing Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982)). Recordation of the Height Restriction
First, Hahn and Grady contend that Woodard is subject to the height restriction because Hahn included the height restriction in the deed for Lot 2, which Hahn previously recorded with the Pierce County Auditor. Woodard responds that Hahn did not properly record the height restriction because Hahn did not record the height restriction within the chain of title for Lot 1, the burdened property. We agree with Woodard.
In order for Hahn and Grady to make their interest in Lot 1 binding on subsequent purchasers, they must comply with RCW 65.08.070, the recording statute. RCW 65.08.070 states:
A conveyance of real property, when acknowledged by the person executing the same (the acknowledgment being certified as required by law), may be recorded in the office of the recording officer of the county where the property is situated. Every such conveyance not so recorded is void as against any subsequent purchaser or mortgagee in good faith and for a valuable consideration from the same vendor, his heirs or devisees, of the same real property or any portion thereof whose conveyance is first duly recorded. An instrument is deemed recorded the minute it is filed for record.
The purpose of the recording statute is to "protect[] parties and their successors who agree to restrict the use of land from subsequent purchasers of the land who wish to escape the burden of the restrictions." Murphy v. City of Seattle, 32 Wn. App. 386, 392, 647 P.2d 540 (1982). When a party properly records an instrument asserting his or her interest in real property, the recorded instrument imparts notice to all the world of that interest. Strong v. Clark, 56 Wn.2d 230, 232, 352 P.2d 183 (1960). Strict compliance with RCW 65.08.070 is not required in order for a party with an interest in real property to impart notice to others of that interest. See RCW 65.08.030; In re Real Prop. of Smith, 93 Wn. App. 282, 288-89, 968 P.2d 904 (1998) (under RCW 65.08.030 a recorded document may impart notice to third persons even if the document is not properly executed and acknowledged), review denied, 137 Wn.2d 1033 (1999). Although RCW 65.08.030 allows a recorded instrument to give notice of an interest in property despite the instrument not strictly complying with the formalities of the recording statutes, the instrument must have the effect of giving constructive notice to third parties and must be recorded in the burdened property's chain of title.
RCW 65.08.030 states:
An instrument in writing purporting to convey or encumber real estate or any interest therein, which has been recorded in the auditor's office of the county in which the real estate is situated, although the instrument may not have been executed and acknowledged in accordance with the law in force at the time of its execution, shall impart the same notice to third persons, from the date of recording, as if the instrument had been executed, acknowledged, and recorded, in accordance with the laws regulating the execution, acknowledgment, and recording of the instrument then in force.
In Koch v. Swanson, 4 Wn. App. 456, 459, 481 P.2d 915 (1971), Division Three of this court stated, "[w]here existing property is described, the index and the recorded document imparts notice only as to matters within its chain of title." The Koch court further stated that "one searching the index has a right to rely upon what the index and recorded document discloses and is not bound to search the record outside the chain of title of the property presently being conveyed." 4 Wn. App. at 459. Similarly, in Dickson v. Kates, 132 Wn. App. 724, 737, 133 P.3d 498 (2006), we reaffirmed the Koch court's view that a party is "not bound to search the record outside the chain of title" (citing Koch, 4 Wn. App. at 459). In Dickson, we also recognized that "our recording statutes regard properties with a common grantor as having separate chains of title once they are segregated and have separate legal descriptions." 132 Wn. App. at 736. Thus, in order for parties to avail themselves of the protections afforded under the recording statutes, they must record their interest in real property within the chain of title to the burdened property.
Here, Hahn and Grady do not contend that the height restriction was included in the chain of title to Lot 1, the burdened property. Instead, Hahn and Grady argue that, by recording the height restriction in the chain of title to Lot 2, they complied with the requirements under RCW 65.08.070. But Lot 2 and Lot 1 are separate legal parcels with separate legal descriptions. Thus, they did not properly record their interest in Lot 1. Accordingly, Woodard had a right to rely on a title search of Lot 1, which did not disclose any encumbrances as to that property. Purchaser in Good Faith
Hahn and Grady also argue that Woodard was not a bona fide purchaser in good faith because she had constructive notice of the height restriction. Specifically, Hahn and Grady argue that Barker was Woodard's agent and, therefore, notice to Barker of the height restriction was notice to Woodard. Hahn and Grady further argue that, upon receiving notice, Woodard could have made a reasonable inquiry revealing the height restriction. We disagree. Even assuming that Barker informed Woodard about the alleged height restriction, a diligent inquiry would not have revealed any defect in Lot 1's title.
"'A bona fide purchaser for value is one who without notice of another's claim of right to, or equity in, the property prior to [her] acquisition of title, has paid the vendor a valuable consideration.'" Miebach v. Colasurdo, 102 Wn.2d 170, 175, 685 P.2d 1074 (1984) (quoting Glaser v. Holdorf, 56 Wn.2d 204, 209, 352 P.2d 212 (1960). To show that Woodard was not a bona fide purchaser in good faith, Hahn and Grady must demonstrate that she (1) had "'knowledge or information of facts which are sufficient to put an ordinarily prudent [person] upon inquiry'" and (2) "'the inquiry, if followed with reasonable diligence, would lead to the discovery of defects in the title or of equitable rights of others affecting the property in question.'" Levien v. Fiala, 79 Wn. App. 294, 298-99, 902 P.2d 170 (1995) (quoting Miebach, 102 Wn.2d at 175-76).
We do not address the first prong of the bona fide purchaser test, whether Woodard had notice of the height restriction, because the record reveals that Woodard engaged in a diligent inquiry regarding any encumbrances on Lot 1 and her inquiry did not reveal the alleged height restriction because the restriction was recorded on Lot 2, a separate legal parcel; thus, Hahn and Grady fail to demonstrate that Woodard was not a bona fide purchaser in good faith.
It is a well-settled rule that where a purchaser has knowledge or information of facts which are sufficient to put an ordinarily prudent man upon inquiry, and the inquiry, if followed with reasonable diligence, would lead to the discovery of defects in the title or of equitable rights of others affecting the property in question, the purchaser will be held chargeable with knowledge thereof and will not be heard to say that he did not actually know of them. In other words, knowledge of facts sufficient to excite inquiry is constructive notice of all that the inquiry would have disclosed.
Miebach, 102 Wn.2d at 175-76 (internal quotation marks omitted) (quoting Peterson v. Weist, 48 Wash. 339, 341, 93 P. 519 (1908)).
"A circumstance that would lead a person to inquire, however, is only notice of what reasonable inquiry would reveal." Levien, 79 Wn. App. at 299.
To support their contention that Woodard did not make a reasonable inquiry, Hahn and Grady describe how she could have discovered the height restriction contained in the deed to Lot 2. Specifically, Hahn and Grady state that Woodard could have discovered the height restriction by (1) searching the recording index against the name of the seller of Lot 1, Michael Diaz; (2) the previous search would have returned the name of Carl Forsbeck; (3) Woodard could then use the Pierce County Auditor's website or records search using the term "Forsbeck, Carl"; (4) Woodard could examine the 41 matches that are linked with "Forsbeck, Carl" to find that the Forsbecks purchased property in 1987 and sold Lot 1 in November 2004 to Michael Diaz; (5) the previous step would put Woodard on notice to search all documents under Carl Forsbeck's name that arose from the search within those years; (6) reviewing those documents, Woodard would have come across a match with an instrument number 940920773; and (7) finally, Woodard could review that document, which is the Hahn/Grady deed containing the height restriction.
Although Hahn and Grady demonstrate how a thorough search directed to the ends of finding the height restriction contained in the Hahn and Grady deed might have been accomplished, this scenario is clearly beyond the requirements of a reasonable inquiry. As stated in Koch, "one searching the index has a right to rely upon what the index and recorded document discloses and is not bound to search the record outside the chain of title of the property presently being conveyed." 4 Wn. App. at 459. And here, Woodard ordered a professional title search that revealed no restrictions on Lot 1. Additionally, she asked the Diazes if there were any restrictions on the property and reviewed the Diazes' "Form 17" that similarly did not disclose any restriction on Lot 1. Moreover, even if Woodard engaged in the rigorous search proposed by Hahn and Grady, the Hahn/Grady deed incorrectly references short plat 8904270192 rather than short plat 8904270182, which is the correct plat number for the Page 11 Woodard property. Accordingly, we affirm the trial court's grant of summary judgment to quiet title in favor of Woodard.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
ARMSTRONG, J. and PENOYAR, A.C.J., concur.