Opinion ID: 1122560
Heading Depth: 3
Heading Rank: 2

Heading: Transfer Certificate of Title

Text: Kinkai also argues that because the height restriction is not noted on the 1988 TCT issued to it for Lot 48, WMH is unable to enforce the restrictive covenant. We agree and hold that even if WMH, through Aina Luana and the Toms, still possessed an interest in Lot 269, the benefitted parcel of the covenant appurtenant, or even if the covenant was in gross, WMH would be unable to enforce the covenant because it was not noted on the 1988 TCT. Hawaii's statutory law governing Land Court registration provides that encumbrances be noted on the TCT. Every applicant receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value and in good faith, hold the same free from all encumbrances except those noted on the certificate in the order of priority of recordation[.] HRS § 501-82 (1985) (emphasis added). In the present case, there is no dispute that the restrictive covenant is not noted on the 1988 TCT as an encumbrance. Instead, the Consent document was noted on the TCT under encumbrances as follows: Document # Class In Favor of/Terms 1555821 Consent By Outrigger Hotels Hawaii, to the construction of Bldg, in access [sic] of height restriction contained in Doc 1148199 The question presented for our review is whether this reference to the consent constitutes a notation of the height restriction under HRS § 501-82. We first acknowledge WMH's opposing argument that, [t]he TCT which Kinkai put before the court ... mentions the height restriction and sets forth the number of the filed document which contains it. This reference is an adequate notation of the height restriction. Moreover, the very Deed by which Kinkai acquired the property specifically states that the conveyance and grant were subject to the restriction. However, Kinkai's admission to having knowledge of the height restriction is of no consequence because such knowledge was not obtained from the information contained on the TCT. [6] [K]nowledge of an unregistered encumbrance does not disqualify the holder of a certificate of title from the protection afforded him by the title registration statute. Honolulu Memorial Park, Inc. v. City and County of Honolulu, 50 Haw. 189, 192, 436 P.2d 207, 209 (1967). Significantly, we have stated: If, as we hold, a certificate of title is unimpeachable and conclusive except as otherwise provided by law, it would be illogical to say that it may be impeached if the purchaser for value had knowledge of an existing unregistered encumbrance. To do so would be to rob a certificate of title of its conclusive and unimpeachable character and place it in the same category as the ordinary record in the bureau of conveyances. If the intent and purpose of the law pertaining to the registration of land titles is to be preserved, the integrity of certificates of title must be scrupulously observed and every subsequent purchaser of registered land who takes a certificate of title for value, except in cases of fraud to which he is a party, is entitled under the provisions of [Revised Laws of Hawaii 1935] section 5401 [(predecessor of HRS § 501-82)] to hold the same free from all encumbrances except those noted on the certificate and the statutory encumbrances enumerated. In re App'n of Bishop Trust, 35 Haw. 816, 825 (1941). The fundamental intent of HRS § 501-82 is to preserve the integrity of titles. We believe that knowledge of an unregistered encumbrance from an inference or obscure reference on a TCT is inadequate and serves only to frustrate the intent of HRS § 501-82. In order to provide the holder of the transfer certificate of title full notice of the encumbrance from the face of the TCT, such encumbrance must be separately and clearly noted therein. [T]o allow the assertion of unregistered rights, be they legal or equitable, would be to subvert the obvious intent and purpose of the title registration system. The integrity of titles can only be preserved if anyone dealing with registered property is assured that the only rights or claims of which he need take notice are those which are registered in the prescribed manner. If for that reason alone, the provisions of the title registration statute must be allowed to prevail over any contravening doctrine of the common law. Honolulu Memorial Park, 50 Haw. at 193-94, 436 P.2d at 210. In the case before us, we deem the reference to the height restriction on the TCT within the document identified as a Consent to be an insufficient notation of an encumbrance under HRS § 501-82. The notation of the Consent document does not specifically indicate the forty-five foot height restriction. Because such restriction was never explicitly and separately noted on the 1988 TCT, we hold that Kinkai is entitled to hold Lot 48 free from such restriction. See Packaging Products Co., Ltd. v. Teruya Bros., Ltd., 58 Haw. 580, 585-86, 574 P.2d 524, 528-29 (1978).