VIRGINIA HIGHLAND CIVIC ASSOCIATION, INC. v. PACES PROPERTIES, INC. et al.
Virginia Highland Civic Association, Inc. (VHCA) sued Paces Properties, Inc. (Paces) and Ponce Partners, LLC (Ponce), for declaratory judgment and injunctive relief. Through a bid submitted by Paces, Ponce purchased acreage from the Georgia Department of Transportation (DOT) previously intended for use as a right-of-way for a project known as the “Presidential Parkway.” VHCA claims that under an agreement in settlement of litigation which arose from the project, Ponce must obtain its approval for development of the property. VHCA bases this argument on the fact that the agreement became the subject of a Georgia Senate resolution and City of Atlanta ordinance. The superior court disagreed with VHCA's argument and denied the relief sought. We affirm.
The Presidential Parkway project was a matter of great controversy in the City of Atlanta. In condemnation litigation arising from the project, the controversy was settled by agreement of the City of Atlanta, DOT, and CAUTION, Inc. (acting on behalf of itself and its constituent neighborhood organizations, which included VHCA). The settlement agreement, entered in 1992, set forth a plan for disposition of DOT-owned rights-of-way not needed for the construction project. It was agreed that various of the rights-of-way, including one consisting of approximately 4.4 acres on the north side of Ponce de Leon Avenue in the vicinity of Barnett Street (the Ponce/Barnett right-of-way), would be “disposed of by sale” and “used in a manner agreed to by the City and the [VHCA].”
Later in 1992, the City of Atlanta enacted an ordinance approving the settlement agreement and authorizing the mayor to execute it and the city attorney to implement it. The settlement agreement was attached as an exhibit to the ordinance. The ordinance was not codified.
In 1997, the Georgia Senate passed a resolution authorizing DOT to dispose of certain of the unused rights-of-way, including the Ponce/Barnett right-of-way, in accordance with a land use plan to be developed and agreed upon by the City, DOT, and CAUTION.1 Provisions of the settlement agreement, including those related to the Ponce/Barnett right-of-way, were recited in whereas clauses of the resolution.2
In 1998, the City, DOT, and CAUTION entered a consent agreement adopting a land use plan governing the DOT's disposition of its excess rights-of-way. The consent agreement's right-of-way disposition plan imposed no restrictions on the use of rights-of-way to be sold to third parties.
DOT later offered a portion of the Ponce/Barnett right-of-way for sale. Paces obtained a bid proposal package which provided information concerning the zoning of the property and certain minor restrictions on use. Paces submitted a $1,201,000 bid, which the DOT accepted. Paces verified the zoning status of the property and conducted a title search which did not reveal any encumbrances on the property other than those previously disclosed by DOT. After Paces' bid was accepted, Ponce purchased the property and recorded a quitclaim deed from DOT.
VHCA later brought this action, complaining that Ponce intends to construct a condominium building on the property; that the development plans have not been approved by VHCA; and that such plans will result in destruction of approximately 39 “mature, large, magnificent” hardwood trees on the property.
The superior court denied all relief sought by VHCA in its complaint. Among other things, the court determined that Ponce is not bound by the use restrictions contained in the settlement agreement because it is a bona fide purchaser for value without notice of the agreement.
To qualify as a bona fide purchaser for value without notice, a party must have neither actual nor constructive notice of the matter at issue.3 A purchaser of land is charged with constructive notice of the contents of a recorded instrument within its chain of title.4 Conversely, a purchaser is not charged with constructive notice of interests or encumbrances which have been recorded outside the chain of title.5 “[A] purchaser who takes a quitclaim deed without notice and for value is entitled to the protection which the law affords a bona fide purchaser for value and without notice.” 6
Although the use restrictions in the settlement agreement are functionally equivalent to those found in restrictive covenants contained in or incorporated into deeds, VHCA acknowledges that it did not record the settlement agreement within the property's chain of title. And it is undisputed that neither Ponce nor Paces obtained actual notice of the agreement until after Ponce purchased the property.
Perhaps for these reasons, VHCA in this appeal eschews reliance on the settlement agreement as such. Instead, VHCA argues that the City of Atlanta ordinance and Senate resolution secure its approval rights under the settlement agreement and that Ponce took the property subject to those rights because it is charged with notice of the law.7
We agree that Ponce is charged with notice of obligations which the law imposed on it and the DOT. But we conclude that the laws relied on by VHCA did not impose any obligations on either Ponce or the DOT which have been breached in this case. Through the ordinance, the Atlanta City Council merely approved the settlement agreement and authorized its execution and implementation by the named city officials. While the ordinance recognized the provisions of the settlement agreement, it did not purport to give them the force of law. Although the Senate resolution did require DOT to dispose of the Ponce/Barnett right-of-way in accordance with a land use plan developed after passage of the resolution, the land use plan as adopted does not restrict Ponce's use of the property. Ponce is not charged with notice of encumbrances upon its property contained in an agreement settling litigation to which it was not a party, merely because an uncodified municipal ordinance and state legislative resolution made reference to the agreement. To hold otherwise would place a burden on title examiners to alert themselves to information which there is no systematic way to discover.
The court did not err in denying VHCA's requests for declaratory and injunctive relief.
1. Ga. L.1997, pp. 1010, 1015-1016.
2. Id. at pp. 1011-1013.
3. See Anderson v. Streck, 190 Ga.App. 224, 225-226, 378 S.E.2d 526 (1989).
4. See OCGA § 44-2-6; Roth v. Connor, 235 Ga.App. 866, 871(3), 510 S.E.2d 550 (1998); compare Dept. of Transp. v. Brooks, 254 Ga. 303, 317-318(10), 328 S.E.2d 705 (1985) (involving actual notice of matters outside chain of title).
5. See Middle Ga. Realty v. IDS Homes, 231 Ga. 57, 58-59(1), 200 S.E.2d 141 (1973).
6. Archer v. Kelley, 194 Ga. 117, 122(1), 21 S.E.2d 51 (1942).
7. City Council of St. Mary's v. Crump, 251 Ga. 594, 595(2), 308 S.E.2d 180 (1983); see Walston & Assoc. v. City of Atlanta, 224 Ga.App. 482, 483(1), 480 S.E.2d 917 (1997).
BLACKBURN, C.J., and SMITH, P.J., concur. BARNES, J., not participating.