City of Rio Rancho v. Amrep SW, Inc.

In 1985, at the behest of the City of Rio Rancho, Amrep Southwest Inc. recorded a plat for the Vista Hills West Unit 1 (VHWU1) subdivision, granting the City a drainage easement over ten acres identified as 'Parcel F.' In 2004, Amrep sold Parcel F to the Mares Group in fee simple, subject to the drainage easement. Mares in turn sold it to Cloudview Estates in fee simple, subject to the same recorded drainage easement. Cloudview asked the City to vacate the drainage easement and subdivide the parcel into thirty lots. The City declined because it found that the City and Amrep had originally intended to perpetually dedicate Parcel F as open space, and as such, had a claim to the property's title. The issue before the Supreme Court was: even if the City and Amrep intended Parcel F to be open space, what effect did the recorded plat designating Parcel F as a drainage easement have on Cloudview's subsequent purchase of Parcel F? Upon review, the Supreme Court concluded that Cloudview was a good faith purchaser and the plat did not specifically designate Parcel F for public use. The recorded plat unambiguously granted the City an easement for the specific purpose of drainage, thereby extinguishing any unrecorded interests and relieving Cloudview from its duty to diligently investigate whether the City had other adverse claims to the property title. The Court ruled in favor of Cloudview.