Brief Fact Summary. The Defendant, Waldorff Insurance and Bonding (Defendant), took physical possession of a condominium unit it had contracted to purchase. Subsequent to this physical possession, the owner of the condominium complex mortgaged Defendant’s unit to the Plaintiff, Eglin National Bank (Plaintiff). Plaintiff sued to foreclose on Defendant’s unit.
Synopsis of Rule of Law. Physical possession is constructive notice to all the world and anyone having knowledge of said possession. When possession is open, visible and exclusive, it will put upon an inquiry responsibility to those wishing to acquire interest in the property.
Such possession, when open, visible and exclusive, will put upon inquiry those acquiring any title to or a lien upon the land so occupied to ascertain the nature of the rights the occupants really have in the premises.View Full Point of Law
Issue. Whether Plaintiff had constructive notice of Defendant’s interest in the unit when it agreed to each separate mortgage when Defendant was in physical possession of the unit.
Held. Reversed and Remanded. Plaintiff had a duty to inquire because Defendant by physically occupying the premises was constructive notice of Defendant’s interest.
Actual possession is constructive notice to all the world, or anyone having knowledge of said possession. When possession is open, visible and exclusive, it will put upon an inquiry responsibility to those wishing to acquire interest in the property.
Discussion. The court discussed that it is difficult for a purchaser or lien holder to inquire about every unit in a complex, but it must do so if it would like to effectively protect its interest. Further, once a purchaser is in actual possession, it is a fact that becomes legally operative as constructive notice.