Know Before You Buy: Real Estate Notices


Ever dream of buying your perfect property, only to discover later that someone else has rights to a part of it? This scenario, while unfortunate, highlights the importance of “notice” in real estate transactions. Notice refers to a buyer’s awareness of any existing claims or interests affecting the property they intend to purchase.

There are three main ways you might receive notice:

  • Actual Notice: The seller or your broker might have told you about another party’s interest in the property.
  • “Constructive” Notice:: When a deed, mortgage, lease, memorandum of lease, or other interest in real estate has been recorded with the local county recorder, you have “constructive” notice of their contents. That means a judgy will treat you as having actual notice of whatever has been recorded..
  • “Inquiry” Notice: You have a duty to inspect property before you buy it. If you see signs of another party’s presence on the property, you have a duty to ask them about their right to be there. A judge will treat you as having actual notice of what you would have learned by inquiring about their right to be on the property..

Why Does Notice Matter?

The type of notice you receive can significantly impact your rights and obligations after buying the property. In general, you’re assumed to know what a reasonable inspection and conversation with the occupants would reveal. For example, if a physical inspection reveals a tenant on the property, you might be bound by the terms of their existing lease agreement.

Understanding Notice and Different Types

The billboard industry, for instance, often uses memorandums of lease (MOLs) instead of recording the full lease agreement. This protects confidential details from competitors. However, an MOL should still provide enough information to alert you of the lease’s existence. This includes:

  • A clear description of the leased area
  • The parties involved (landlord and tenant)
  • The lease term, including the start date and any renewal options
  • People will not have constructive notice of anything that is not included in the MOL.
  • People will be on inquiry notice of what they would have learned by asking the billboard operator about the basis for their presence.

While an MOL provides a basic framework, it’s not a substitute for further inquiry. Our very own Marnie Cody, California real estate attorney, pointed out in a recent Billboard Insider article, “The buyer is responsible for the knowledge that a reasonable inquiry would uncover.” This means you have a responsibility to follow up with the lessor (landlord) or lessee (tenant) to understand the full scope of the lease and any rights or obligations it creates.

Protecting Yourself: The Importance of Due Diligence

By understanding notice and its different forms, you can protect yourself in real estate transactions. Here’s how:

  • Review Public Records: Deeds, mortgages, and memorandums of lease can reveal existing claims on the property.
  • Conduct a Thorough Inspection: Look for signs of other parties using the property.
  • Ask Questions: Don’t hesitate to ask the seller, current occupants, or anyone else with potential claims about the property.
  • Order a Preliminary Title Report and read it. Read the recorded documents identified in the Report.

The Takeaway: Protect Yourself With Due Diligence

Don’t hesitate to ask questions and investigate any potential claims before finalizing a purchase. Remember, a little due diligence can go a long way in ensuring a smooth and successful real estate transaction. By understanding real estate notice, you can avoid unpleasant surprises after purchasing a property. 

Whatever you’re trying to accomplish with real estate — we can help. Contact Hamlin | Cody at 310-216-2165.