425 Soledad, Ltd. and 425 Loneliness, Ltd. v. Crvi Riverwalk Hospitality, LLC

Supreme Court of Texas
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No. 23-0344
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425 Soledad, Ltd. and 425 Loneliness, Ltd.,
Petitioners,

v.

CRVI Riverwalk Hospitality, LLC,
Respondent

═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Fourth District of Texas
═══════════════════════════════════════

Argued October 3, 2024

JUSTICE BLAND delivered the opinion of the Court.

In this appeal, we first decide whether an unrecorded parking
agreement is an easement that burdens property located in downtown
San Antonio. If so, then we decide whether a lender acquired its
mortgage on the property free of the easement, or alternatively, whether
the lender’s corporate affiliate, which purchased the property from a
receiver, is a bona fide purchaser that independently took it free of the
easement.
The trial court ruled that the parking agreement is an easement,
and it rejected the lender’s and its affiliate’s bona fide purchaser
defenses. The court of appeals reversed. It agreed that the parking
agreement is an easement but concluded that the lender took the loan
without notice of the easement and that the lender’s lack of notice
“sheltered” its affiliate from enforcement of the easement.
We agree with both courts that the parking agreement is an
easement. Contrary to the court of appeals, however, we conclude that
the trial court correctly enforced the easement against the affiliated
owner because both the lender and its affiliated owner had notice
sufficient to remove any bona fide purchaser protection. Accordingly, we
reverse the judgment of the court of appeals and remand the case to the
trial court for further proceedings.

I

A

This dispute concerns an office building, a hotel, and a parking
garage connected via underground tunnels. A common owner originally
held the three properties. Petitioner 425 Soledad, Ltd. acquired the
office building in 2005. As part of the sale, the parties executed a parking
agreement. The agreement dedicates garage space for the office
building, reserving up to 150 parking spaces on the fourth floor for
building occupants who execute a license agreement and pay an
annually adjusted fee.
Pertinent to this dispute, the parties resolved that the parking
agreement would “run with the land and inure to the benefit of, and be
binding upon, [the parties] and their respective successors and assigns

2
in title.” The agreement was terminable if the property converted to
non-parking use. Both parties signed the agreement, but neither
recorded it in the county’s real property records.
In 2006, HEI San Antonio Hotel, LP purchased the parking
garage and the hotel. HEI financed the purchase through a loan from
Merrill Lynch Mortgage Lending, Inc. The loan included a $33,000,000
A-Note and a $26,000,000 B-Note, secured by a mortgage on the garage
and hotel property. At that time, Merrill Lynch knew of the parking
agreement, as evidenced by its request that 425 Soledad attest that the
agreement remained “in full force and effect.”
In 2008, Cypress Real Estate Advisors purchased the B-Note from
Merrill Lynch through its special purpose entity, CRVI Crowne Plaza.
As part of the purchase, Merrill Lynch made “no representation or
warranty and assume[d] no responsibility with respect to any
statements, warranties or representations made in or in connection with
the [l]oan [d]ocuments,” except those made by Merrill Lynch. Merrill
Lynch represented that the “[l]oan [d]ocuments contain[ed] all of the
material agreements regarding the [p]roperty among [the] [b]orrower,
[l]ender, and [g]uarantor.” CRVI Crowne confirmed that it would
undertake its own duty of inquiry into “the [l]oan [a]greement, the [l]oan
[d]ocuments and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into [the note purchase].” To that end, a Cypress employee
reviewed Merrill Lynch’s materials, 1 including a market report and
0

1 Cypress purchases and holds real estate through special purpose
entities that have no internal management. The entities rely on Cypress

3
financial statements. Merrill Lynch also provided Cypress with the
closing documents for the loan agreement between Merrill Lynch and
HEI. Appendices to those documents included a “Parking Consultant’s
Consent and Subordination of Parking Services Agreement” in the loan
documents section and a “Parking Services Agreement” in the
miscellaneous documents section. The Cypress employee visited the
properties and spoke with management. He knew that “somebody was
running the garage”; that tunnels connected the office building, hotel,
and garage; and that the office building and garage had a similar
architectural style. Deed records reflected an easement granting tunnel
access and identified the office building as an owner of the garage at the
time it was recorded. Despite this information, the Cypress employee
did not ask either Merrill Lynch or HEI for the parking agreement. HEI
possessed a copy of the agreement in its files.
In 2010, Cypress anticipated that HEI would default on its note
and deliberated whether to acquire the hotel and garage. Anticipating a
possible change-in-control event, the loan servicer undertook an
appraisal for the properties. The same Cypress employee who conducted
diligence during the note purchase evaluated the appraisal. It referred
to a parking agreement in its description that “[a]pproximately 150
spaces in the Soledad Street garage are leased to the owner of a nearby
office building for $75 per space per month and [this] gives the office
building daytime access to the spaces.” The Cypress employee testified,

employees to conduct business. Thus, although CRVI Crowne held the B-Note,
Cypress personnel performed all purchase-related diligence efforts.

4
however, that he did not read beyond the appraisal’s first page and thus
personally was unaware of this information.
As HEI neared default, Cypress placed the properties into a
receivership through an action in state district court. Cypress then
formed Respondent CRVI Riverwalk Hospitality to buy the hotel and
garage from the receiver. Like CRVI Crowne when it purchased the
note, CRVI Riverwalk assumed a duty of inquiry in connection with the
property purchase, agreeing to rely “upon its own determination of the
value and condition of the [p]roperty and not on any information
provided by [the] [s]eller.” A different Cypress employee conducted
diligence for this deal.
This employee noticed monthly parking revenue in the financial
statements and he understood that users had monthly parking
arrangements. He did not ask, however, to see any parking agreements.
He did not familiarize himself with the past ownership of the three
properties and “didn’t think anything” of the similar architectural
design of the office building and parking garage. But he knew about a
recorded tunnel easement between the office building and garage.
By this time, Cypress had multiple appraisals, each describing a
parking agreement as encumbering the property. But the Cypress
employee “cherry picked” which materials to read, and the appraisals
were not among the documents he selected for review. The employee also
did not ask HEI, the property owner, for information. He instead looked
no further than the court-appointed receiver. He never spoke with the
other Cypress employee who had conducted diligence in connection with

5
the B-Note purchase from Merrill Lynch. When the diligence period
ended, CRVI Riverwalk bought the hotel and garage.
In 2016, an office building unit holder requested garage space for
its occupants. CRVI Riverwalk refused to accommodate the request, and
425 Soledad sued to enforce the parking agreement.

B

425 Soledad sought a declaratory judgment that the parking
agreement is an enforceable instrument that runs with ownership of the
garage. 2 In addition, it brought claims for breach of contract and
interference with its possessory rights. CRVI Riverwalk counterclaimed,
seeking a declaratory judgment that the parking agreement is not
binding against it. CRVI Riverwalk also claimed protection as a bona
fide purchaser of the property that took without notice of the agreement.
After a bench trial, the trial court concluded that the parking
agreement is an enforceable easement appurtenant. Though not
recorded, the court found that Merrill Lynch’s “knowledge of the
[p]arking [a]greement was imputed to CRVI Crowne through the
Assignment and Assumption Agreement by which CRVI Crowne
acquired the B-Note.” The closing documents for the original loan
reference a parking agreement in the miscellaneous documents section,
placing CRVI Crowne on notice such that “there was enough information
to trigger reasonable inquiry by a prudent purchaser . . . which inquiry
would have led to the discovery of the [p]arking [a]greement,” defeating

2 During this litigation, 425 Soledad sold the office building to an entity

called 425 Loneliness, which was joined as a party. For ease of reference, we
refer to these two entities collectively as “425 Soledad.”

6
CRVI Riverwalk’s bona fide purchaser claim. The trial court awarded
declaratory relief and attorney’s fees to 425 Soledad.
The court of appeals agreed with the trial court’s conclusion that
the agreement is an easement appurtenant, but it held that 425 Soledad
could not enforce the unrecorded easement against CRVI Riverwalk. 3 2

The court relied on Property Code Section 13.001, which provides that
an unrecorded interest in real property “is void as to a creditor or to a
subsequent purchaser for a valuable consideration without notice.” 4 3

Accordingly, it concluded that the trial court erred in imputing Merrill
Lynch’s notice of the parking agreement to CRVI Crowne. Despite the
trial court’s finding that “there was enough information to trigger
reasonable inquiry,” the court of appeals accepted CRVI Riverwalk’s
argument that it should be “sheltered” from enforcement of the
easement as a successor in title to a creditor who purchased the note
without notice of the easement. The court reversed the attorney’s fees
awarded to 425 Soledad, and it remanded the case to the trial court for
further proceedings to determine attorney’s fees favoring CRVI
Riverwalk.
While the case was on appeal, CRVI Riverwalk sold the hotel and
garage to a third party, but CRVI Riverwalk retained the right to
continue this suit, including the right to recover its attorney’s fees. We
granted review.

3 691 S.W.3d 644, 649, 655 (Tex. App.—San Antonio 2022).

4 Tex. Prop. Code § 13.001(a).

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II

As a preliminary matter, 425 Soledad contends that CRVI
Riverwalk no longer has an interest in the outcome of this suit because
CRVI Riverwalk sold the garage property after filing its notice of appeal.
A plaintiff must have a justiciable interest in the outcome of a suit to
seek a judicial determination. 5 An interest is sufficient to confer
4

standing if “a real controversy between the parties, which . . . will be
actually determined by the judicial declaration sought,” exists. 6 Without
5

standing, a court lacks jurisdiction to resolve the asserted claims. 7 6

Standing is a question of law we review de novo. 8 7

CRVI Riverwalk continues to have a justiciable interest in this
controversy because it remains liable for the attorney’s fee award
against it. A dispute over attorney’s fees may constitute a live
controversy. 9 In this case, it is necessary to determine whether the
8

parking agreement is an enforceable easement, as that answer informs

5 In re H.S., 550 S.W.3d 151, 155 (Tex. 2018).

6 Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex.

1993) (internal quotation marks omitted); see Grassroots Leadership, Inc. v.
Tex. Dep’t of Fam. & Protective Servs., 646 S.W.3d 815, 820 (Tex. 2022)
(explaining that the alleged injury must be concrete, meaning “‘threatened or
actual’—not hypothetical” (quoting Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley,
598 S.W.3d 237, 241 (Tex. 2020))); Tex. Right to Life v. Van Stean, ___ S.W.3d
___, 2024 WL 4863170 at *2 (Tex. Nov. 22, 2024) (explaining that standing is
a prerequisite to subject-matter jurisdiction deriving from the Texas
Constitution’s provisions for separation of powers and open courts).
7 H.S., 550 S.W.3d at 155.

8 Id.

9 E.g., Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642–43 (Tex. 2005).

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the resolution of the parties’ competing claims for fees. 10 Thus, we
9

conclude that CRVI Riverwalk retains standing to pursue this suit.
Accordingly, we proceed to address the parties’ claims.

III

CRVI Riverwalk resists enforcement of the parking agreement on
three grounds. First, it contends that the parking agreement is not an
easement because it is terminable, does not use the word “easement,”
and violates the rule against perpetuities. Second, it contends that it is
“sheltered” from enforcement of the easement because CRVI Crowne
was a bona fide mortgagee under Section 13.001 and CRVI Crowne’s
property interest arose from the borrower’s default. Finally, it contends
that it is a bona fide purchaser in its own right. We address each
argument in turn.

A

A property owner may relinquish a portion of his right to exclude
others through granting an easement. 11 An easement is a nonpossessory
0

interest that authorizes its holder to use property for a particular

10 See id. at 643 (“The controversy is live because an affirmative answer

would necessitate a remand to the trial court to consider whether an award of
attorney’s fees is appropriate in light of the changed status of prevailing
parties. Accordingly, we will address the merits . . . .”). The agreement between
CRVI Riverwalk and the third-party purchaser confirms that CRVI Riverwalk
is the beneficiary of any potential fee award.
11 Marcus Cable Assocs., L.P. v. Krohn, 90 S.W.3d 697, 700 (Tex. 2002).

9
purpose. 12 Easements may be express or implied. 13 An easement
2

appurtenant requires a dominant estate, which is granted an access
right, and a servient estate, which is burdened by that right. 14 3

Easements appurtenant may attach to, and run with, the property. 15 4

The executed parking agreement expressly identifies two
properties: the parking garage and the office building. It gives the owner
of the office building a limited right to possess and use dedicated spaces
in the garage for the building’s occupants. The right runs with the
garage property and binds future owners. These terms satisfy the
requirements to create an easement appurtenant.
CRVI Riverwalk’s arguments to the contrary are unpersuasive. It
observes that the agreement terminates if the property is no longer used
as a parking garage and therefore it cannot be a true easement. We have
recognized, however, that parties may create easements with contingent
terminating language. 16 CRVI Riverwalk next points out that the
5

parties did not use the word “easement,” but this ignores that an
easement may be implied, belying a requirement of magic words to

12 Id.

13 See Drye v. Eagle Rock Ranch, Inc., 364 S.W.2d 196, 205 (Tex. 1962)

(discussing both express and implied easements).
14 Id. at 207.

15 Id. at 203, 207.

16 See, e.g., Scott v. Walden, 165 S.W.2d 449, 451 (Tex. [Comm’n Op.]

1942) (interpreting a determinable easement that terminated based on
necessity for ingress and egress).

10
create an express one. 17 Use of “easement” in creating a possessory right
6

is clarifying but not essential if the granting terms function as an
easement and run with the land. 18 7

Finally, CRVI Riverwalk invokes the rule against perpetuities,
which invalidates the transfer of a property interest uncertain to vest
“within twenty-one years after the death of some life or lives in being at
the time of the conveyance.” 19 The rule does not apply to interests that
8

vest at their creation. 20 The parking agreement vested immediately
9

upon signing, making the rule against perpetuities inapplicable. We
hold that the parking agreement is an easement appurtenant.

B

Next, we examine whether CRVI Crowne’s purchase of the
B-Note from Merrill Lynch protects it from enforcement of the easement
under Property Code Section 13.001. 21 The protection is an affirmative
20

17 See Drye, 364 S.W.2d at 205 (“[E]asements are sometimes necessarily

implied.”).
18 See Minihan v. O’Neill, No. 04-18-00847-CV, 2020 WL 444381, at *3

(Tex. App.—San Antonio Jan. 29, 2020, no pet.) (“It is not necessary to use the
term ‘easement,’ or any other particular words, to create an express
easement.”); Hubert v. Davis, 170 S.W.3d 706, 711 (Tex. App.—Tyler 2005, no
pet.) (“Generally, any language that clearly shows an intention to grant an
easement is sufficient for the purpose; no special form or particular words need
be employed.”).
19 BP Am. Prod. Co. v. Laddex, Ltd., 513 S.W.3d 476, 479 (Tex. 2017)

(quoting Peveto v. Starkey, 645 S.W.2d 770, 772 (Tex. 1982)).
20 Id. at 480.

21 See Tex. Prop. Code § 13.001(a) (“A conveyance of real property or an

interest in real property or a mortgage or deed of trust is void as to a creditor
or to a subsequent purchaser for a valuable consideration without notice unless

11
defense that voids an unrecorded interest as to a creditor who takes
without notice of that interest—thus extending some bona fide
protections to mortgagees. 22 2

CRVI Riverwalk did not foreclose on the mortgage that CRVI
Crowne (a separate legal entity) purchased from Merrill Lynch; instead,
CRVI Riverwalk purchased the property from HEI through the receiver.
Despite the lack of a foreclosure, CRVI Riverwalk argues that the
statute protects a subsequent purchaser of the property—even one who
takes with notice of an unrecorded interest—if the purchase essentially
liquidated the loan and the lender lacked notice of the interest. Thus,
CRVI Riverwalk claims, CRVI Crowne’s bona fide mortgagee status
should “shelter” CRVI Riverwalk from enforcement of the easement,
even if CRVI Riverwalk cannot independently establish it was a bona
fide purchaser.

the instrument has been acknowledged, sworn to, or proved and filed for record
as required by law.”); id. § 13.001(b) (“The unrecorded instrument is binding
on a party to the instrument, on the party’s heirs, and on a subsequent
purchaser who does not pay a valuable consideration or who has notice of the
instrument.”); Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001) (“To receive
this special [bona fide purchaser] protection, one must acquire property in good
faith, for value, and without notice of any third-party claim or interest.”); Hous.
Oil Co. of Tex. v. Hayden, 135 S.W. 1149, 1152 (Tex. 1911) (“To constitute [an
innocent purchaser], three elements were essential: Valuable consideration,
absence of notice, and good faith.”).
22 Tex. Prop. Code § 13.001(a); Madison, 39 S.W.3d at 606; see Reverse

Mortg. Funding, LLC v. Robertson, 599 S.W.3d 52, 55 (Tex. App.—Texarkana
2020, no pet.) (“Under section 13.001 . . . a lender can be a bona fide mortgagee,
if the lender takes a lien in good faith, for valuable consideration, and without
actual or constructive notice of outstanding claims. A bona fide mortgagee is
entitled to the same protections as a bona fide purchaser.” (citation omitted)
(quoting Noble Mortg. & Invs., LLC v. D & M Vision Invs., LLC, 340 S.W.3d
65, 76 (Tex. App.—Houston [1st Dist.] 2011, no pet.))).

12
Of the three statutory requirements for bona fide mortgagee
status, only notice is at issue in this case. For property interests, notice
has two forms: actual and constructive. 23 Actual notice is personal
22

knowledge or “those things which a reasonably diligent inquiry and
exercise of the means of information at hand would have disclosed.” 24 23

When a duty to inquire exists, “negligent ignorance has the same effect
in law as actual knowledge.” 2524

A recorded interest provides constructive notice, and a purchaser
takes property subject to the recorded interest regardless of whether the
purchaser had actual notice. 26 But the easement in this case was
25

unrecorded when CRVI Crowne purchased the B-Note. Thus, it had no
constructive notice of the easement. The question presented is whether
it had actual notice.
Merrill Lynch, HEI’s original creditor, possessed actual notice of
the parking agreement. It requested 425 Soledad to confirm in writing
that the agreement remained “in full force and effect,” ratifying the
agreement’s existence as a source of income to support the loan. CRVI

23 Flack v. First Nat’l Bank of Dalhart, 226 S.W.2d 628, 631 (Tex. 1950).

24 Id. at 632.

25 Id.

26 See Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908

(Tex. 1982) (“[A] purchaser is bound by every recital, reference and reservation
contained in or fairly disclosed by any instrument which forms an essential
link of the chain of title under which he claims.” (quoting Wessels v. Rio Bravo
Oil Co., 250 S.W.2d 668, 680 (Tex. App.—Eastland 1952, writ ref’d))); Stable
Energy, L.P. v. Newberry, 999 S.W.2d 538, 551 (Tex. App.—Austin 1999, pet.
denied) (holding that a party was on constructive notice of provisions
mentioned in a recorded assignment).

13
Crowne, however, argues that it lacked actual notice and thus obtained
Section 13.001 protection when it purchased the B-Note from Merrill
Lynch. 27
26

CRVI Crowne undertook a duty of inquiry. Based on the materials
available, reasonable exercise of its inquiry obligation would have
revealed the parking agreement. The closing binder from Merrill Lynch
referred to a parking services agreement. The recorded tunnel access
easement identified the garage as belonging to the bank (now the office
building). HEI’s files contained a copy of the agreement. The trial court
imputed Merrill Lynch’s notice to CRVI Crowne, as CRVI Crowne
succeeded to Merrill Lynch’s obligations under the note. Even without
such imputation, the record establishes that CRVI Crowne possessed
adequate information to cause a reasonable acquirer of a note charged
with its own diligence to inquire further. CRVI Crowne is held to the
knowledge such an inquiry would have revealed. 28 27

27 See Tex. Prop. Code § 13.001(a).

28 See Paris Grocer Co. v. Burks, 105 S.W. 174, 175 (Tex. 1907) (“Having

such opportunities, of which prudence dictates that he shall avail himself, one
who has omitted to do so will not be heard to deny that he had notice of a fact
of the existence of which he was thus put upon inquiry.”); Wethered’s Adm’r v.
Boon, 17 Tex. 143, 150 (1856) (“The general doctrine is, that whatever puts a
party upon an inquiry amounts, in judgment of law, to notice, provided the
inquiry becomes a duty, as in the case of purchasers and creditors, and would
lead to the knowledge of the requisite fact, by the exercise of ordinary diligence
and understanding.” (quoting 4 James Kent, Commentaries on American Law
179 (6th ed. 1848))); Flack, 226 S.W.2d at 632 (explaining that whatever fairly
puts a person upon inquiry provides actual notice of the facts which would have
been discovered by reasonable use of the means at hand); Thompson v. Six
Shooter Enters., LLC, 633 S.W.3d 107, 115 (Tex. App.—El Paso 2021, no pet.)
(“And, in a more comprehensive sense, the term ‘notice’ also embraces
knowledge of all those facts which reasonable inquiry would have disclosed.”).

14
Because we resolve this case on the notice element, we need not
reach whether the statute could shelter a subsequent property
purchaser by relying on a lender’s Section 13.001 protection. We note,
however, that a receiver does not transfer greater rights than the owner
of the property possesses. 29 Rather, purchasers from a receiver “step into
28

the shoes” of the debtor, subject to the receiver’s rights. 30 HEI, the owner
29

of the property purchased through the receiver’s sale, had actual notice
of the parking agreement and a copy of the agreement in its files.

C

Finally, CRVI Riverwalk asserts that it lacked notice of the
easement, making it a bona fide purchaser with no need for shelter
through CRVI Crowne. The trial court found otherwise. When reviewing
the legal sufficiency of evidence, we consider “whether the evidence at
trial would enable reasonable and fair-minded people to reach the
verdict under review.” 31 We credit favorable evidence if a reasonable
30

factfinder could and disregard contrary evidence unless a reasonable
factfinder could not. 32
3

29 See Durham v. Scrivener, 259 S.W. 606, 611 (Tex. App.—Austin 1923)

(“A receiver has no title, but only temporary possession . . . .”), aff’d, 270 S.W.
161 (Tex. Comm’n App. 1925, judgm’t adopted); see also Ex parte Britton, 92
S.W.2d 224, 226 (Tex. 1936) (noting that a receiver is an arm of the court,
appointed to receive and preserve property involved in the suit).
30 Neel v. Fuller, 557 S.W.2d 73, 76 (Tex. 1977); see Keith v. Seymour,

335 S.W.2d 862, 867 (Tex. App.—Houston 1960, writ ref’d n.r.e.) (“As a general
rule, the purchaser from a receiver takes the property with the same rights
and burdens it carried when it was held by the debtor and the receiver.”).
31 City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).

32 Id.

15
CRVI Riverwalk contractually undertook a duty to inquire into
the materials concerning the property before purchasing it. And the
same materials that would have revealed the parking agreement
through CRVI Crowne’s diligence before it purchased the B-Note were
available to CRVI Riverwalk. What is more, CRVI Riverwalk had
received multiple appraisals describing the parking agreement, and
HEI possessed a copy of it that CRVI Riverwalk never requested. We
hold that the evidence is sufficient to support the trial court’s finding
that CRVI Riverwalk was on inquiry notice and that a reasonable
inquiry would have revealed the agreement. An employee conducting
diligence may not ignore readily available facts to insulate his employer
through a Section 13.001 defense. 33 32

* * *

We hold that the parking agreement is an easement appurtenant
to the garage property. Because it was unrecorded, a subsequent
purchaser or mortgagee without notice of the easement would take free
of it. CRVI Crowne, however, had a duty to inquire into encumbrances
before it purchased the note. The facts available to CRVI Crowne were
such that the exercise of reasonable diligence would have revealed the
easement. CRVI Crowne thus took the B-Note with notice of it. For the
same reason, CRVI Riverwalk is not a bona fide purchaser of the
property from HEI, through a receiver. Accordingly, we reverse the
judgment of the court of appeals and remand the case to the trial court

33 Flack, 226 S.W.2d at 632.

16
for entry of judgment and further proceedings consistent with this
opinion.

Jane N. Bland
Justice

OPINION DELIVERED: December 31, 2024

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