Summary
The Utah Supreme Court considered competing deeds to the same water right held by Sandy City and the Haik parties. The court held that a recorded agreement of sale gave the Haik parties record notice of Sandy City's equitable interest, but that the Haik parties nevertheless acquired the water right in good faith because the agreement was ambiguous, Sandy City delayed recording its deed, and the chain of title supported the Haik parties' ownership. The court affirmed summary judgment quieting title in favor of the Haik parties.
Topics
Practice areas
Questions Presented
- Whether the recorded 1977 Agreement of Sale imparted constructive record notice that Sandy City held a deed to the disputed water right.
- Whether the Haik Parties purchased the water right in good faith under Utah's race-notice recording statutes despite record notice of Sandy City's equitable interest under the Agreement of Sale.
- Whether the district court properly granted summary judgment and quieted title in favor of the Haik Parties.
Holdings
- The Agreement of Sale did not put the Haik Parties on constructive record notice that Sandy City had a deed to the water right because the agreement was ambiguous as to whether it had been fully performed or remained executory. For purposes of record notice, an agreement whose degree of performance is ambiguous is treated as executory.
- Although the Agreement of Sale gave the Haik Parties record notice that Sandy City had an equitable interest in the water right, the circumstances did not defeat the Haik Parties' status as good-faith purchasers.
- The Haik Parties prevailed because they purchased for value in good faith and recorded their deed before Sandy City recorded its deed.
Key quotations
“We conclude that the Agreement of Sale put the Haik Parties on record notice that Sandy City had an equitable interest in the water right.” (¶ 2)
“Where a party has record notice of a contract but the degree to which the contract has been performed is ambiguous, we will treat that contract as executory.” (¶ 20)
“We hold that under the facts presented in this case, the Haik Parties were the first to record their deed to the disputed water right in good faith.” (¶ 28)
Factual background
Sandy City entered an Agreement of Sale for a water right in 1977 and recorded the agreement, but it did not record the deed conveying the water right until 2004. The water right passed through subsequent conveyances to the Haik Parties, whose predecessors maintained the right and filed a change application without Sandy City asserting ownership. The Haik Parties recorded their deed in December 2003 after a title search that did not locate the 1977 Agreement of Sale.
Procedural history
Sandy City and the Haik Parties claimed competing ownership of the same water right. The Haik Parties filed an action to quiet title after recording their deed before Sandy City recorded its deed. The district court quieted title in favor of the Haik Parties, concluding that they recorded first and purchased in good faith. Sandy City appealed.