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Energy & the Law

The Constructive Notice Doctrine in Action

Posted in Land Titles, Title Issues

speed limitToday’s “pay attention” edition begins with a quiz. What is the most important thing to read carefully:

a. Speed limit sign in small-town (insert name of Southern state).

b. Itinerary for that dream vacation, the one with multiple layovers of varying durations in airports and time zones far from your own.

c. Title documents to which you affix your John Hancock.

d. Prep instructions before the colonoscopy.

Scott v. Peters, et al. reminds us of the directive imposed by Oklahoma’s constructive notice doctrine:  Read and understand documents that you sign affecting your land. (Helpful hint: It’s no different in other states).

The events

  • 1997 – Warranty Deed filed with the county clerk, Scott conveys 120 acres to Peters; later says he only conveyed the surface.
  • 2000 – Warranty Deed filed, Scott conveys another 40 acres to Peters; retains no minerals
  • 2001 – Warranty Deed filed, Scott grants the same 120 acres to Russell; no reference to mineral reservation.
  • 2001 – Russell conveys the 120 acres to Wichert; no reference to mineral reservation.
  • 2002 – Peters discovers the Wichert deed; obtains a quitclaim from Wichert; leases the minerals under the entire 160 acres.
  • 2014 – Scott sues Peters to quiet title in the minerals under both tracts.

 The issue 

When did Oklahoma’s five-year statute of limitations for reformation of a deed begin to run? Resolved: When the document was filed of record, even if Scott didn’t understand what it said.

Scott argues: Limitations for reformation of the 1997 deed didn’t begin to accrue when the deed was filed. It did contain a mineral reservation, but the reservation was insufficient. A layman such as himself couldn’t be held to know the legal effect of such an insufficiency until the legal effect was questioned. He relied upon Oklahoma’s equitable 15-year limitation statute.

Peters responds: Constructive notice was imposed upon Scott by the filing of the deed in 1997; thus the suit was untimely.

Scott acknowledged that he was precluded from challenging the 2000 deed, but argued that the statute was tolled until he learned of an issue regarding the insufficiency of the reservation in the 1997 deed.

The court opines – Scott should have read his deed

Scott’s suit was untimely. He had an opportunity and obligation to read the 1997 deed and at least inquire as to what he was signing. He was required to be diligent in investigating the transaction. This, he did not do.

Even if the mineral reservation in the 1997 deed had been unartfully drafted and was insufficient, Scott attempted to convey the exact same property in 2001 with no reservation whatsoever. Thus, at least as of 2001 Scott was on notice as to what the deed expressed. Had he timely sought to reform the deed, his suit might have succeeded.

The statute began to accrue a least with Scott’s 2001 deed to Russell with no reservation. At that time Scott was on notice that he had no minerals.

Quiz answer

Its a trick question. All answers are correct sooner or later. In Mr. Scott’s case, it’s obvious.

A musical interlude for Mr. Scott.