In the case of Deljoo v. SunTrust Mortgage, Inc., Mr. Daniel Deljoo received from S&F Construction Inc. a Deed to Secure Debt on a subdivision lot located in Land Lot 18 of the 16^th District, DeKalb County, Georgia.  The description was a standard “short legal” which referenced the Lot number, subdivision name, and a recorded plat.  Everything was correct except the Land Lot number, which was really Land Lot 28!

S&F sold to Vanguard Builders, Vanguard sold to Doris Milton, Milton got a loan from SunTrust, which took a Deed to Secure Debt for the loan.  When SunTrust found out about Deljoo’s claim, they sought the help of the courts to cancel Deljoo’s deed and quiet the title.  SunTrust argued that Deljoo’s deed did not constitute constructive notice and that the bank did not have actual notice.  (A little background here:  When a deed is properly filed for record and indexed correctly by the clerk’s office, it will constitute constructive notice of the deed to subsequent purchasers.  When a purchaser knows about a deed in his chain of title, whether or not it is properly recorded, it can constitute actual notice.)

Deljoo argued that because the plat was referenced in the deed, and the plat showed the correct land lot, that the deed description was “self – correcting,” and that the bank had constructive notice.  The trial court didn’t buy it, decided for SunTrust and the Court of Appeals agreed.

The Appeals court said that the rule that says “when a legal description incorporates a plat by reference, it has the same effect as if the plat were written out in the deed,” has been limited to situations involving the parties to the deed themselves and should NOT be extended to third party purchasers and lenders who have no constructive or actual notice of the deed. 

Practical consideration:  SunTrust was able to successfully argue that the small error in Deljoo’s Deed to Secure Debt was enough to kick his deed out of the chain of title, thus it could not constitute constructive notice.  This will not always be the case, and it makes me wonder if Deljoo’s attorney cross examined the title examiner.  Did the examiner just ignore the deed when the land lot number was different?  Was it close enough to examine further?  Most good title examiners operate on the theory of “when in doubt, set it out!”   A thorough and sifting cross examination might have proven that the examiner DID find the deed, but didn’t look beyond the index to see if the correct subdivision lot and plat were referenced on the deed itself.

Also, what if the situation was reversed and SunTrust’s deed had the error…would the court look the big bank in the corporate eyeball and say…”YOU LOSE!”