Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Revisiting Inquiry Notice

By D. Albert Daspin
July 28, 2006

A recent Illinois Appellate Court decision should lead to increased underwriting and due diligence inquiries by purchasers (and title insurers) of shopping center outparcels (that is smaller parcels at the center's perimeter that the shopping center owner intends to sell or lease for high-traffic uses) and may redefine appropriate inquiry notice throughout the retail industry. In Murray's Discount Auto Stores, Inc. v. USRP Texas, L.P. and First American Bank, Case No. 1-02-3434, the Appel-late Court of Illinois, First Judicial District, held that the purchaser of a shopping center outparcel had knowledge of facts sufficient to put it on inquiry notice as to the existence of a no-build restriction contained in an unrecorded lease at adjacent shopping center property. In so doing, the appellate court sent a loud and clear message that shopping center easement rights and restrictions will be exalted at the expense of buyers who fail to take additional due diligence inquires that may be warranted under the circumstances.

In Murray's Discount Auto, plaintiff Murray's Discount Auto Stores, Inc. ('Murray's'), succeeded to the interest of Trak Auto Corporation, as tenant, pursuant to a lease agreement dated November 1995 (the 'Lease') between the original shopping center developer and Trak Auto Corporation, a memorandum of which was recorded against the shopping center property in June 1996. A lease assignment and assumption was executed in connection with the bankruptcy of Trak Auto Corporation and was approved by the bankruptcy court in January 2002. The Lease included a so-called no-build restriction pursuant to which 'no buildings, kiosks or building type structures' were to be constructed within the designated 'Protected Area.' Subsequent to the initial demise of the leased premises, the shopping center property was conveyed on two separate occasions, the last of which occurred in 1999. Sandwiched between the separate sale transactions, the shopping center owner conveyed an outparcel to American Chartered Bank and, as part of such outparcel sale transaction, the parties entered into a reciprocal easement agreement pursuant to which certain reciprocal easement grants and rights were established. In July 2001, American Chartered Bank conveyed the outparcel to First American Bank, and as part of such transaction, the parties amended the original reciprocal easement agreement.

The outparcel was located at the corner of the shopping center adjacent to the leased premises. Shortly after Murray's took possession of the leased premises, First American Bank commenced construction of a branch banking facility on the outparcel. Murray's filed suit to enjoin construction based upon interference with the easement rights in the common areas demised pursuant to the Lease, specifically claiming that First American Bank constructed a retaining wall that entered a portion of the Protected Area in violation of the Lease and that First American Bank intentionally interfered with Murray's easement rights.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Legal Possession: What Does It Mean? Image

Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.

The Anti-Assignment Override Provisions Image

UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?