Volume 10 Number 1

 

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Title Tips by Tute

Volume 10, Number 1

 

Dear Tute:

        Husband and wife own property as tenants by the entirety.  Husband and wife are in the midst of a divorce.  Wife was awarded spousal support and a pendente lite decree was entered per 20-60.3.  Husband and wife are selling real estate.  A hearing on the final decree is not yet scheduled.

        Wife tells the settlement agent that unpaid support under the pendente lite decree totals $6,900.  Wife's attorney tells the settlement agent the pendente lite decree will be docketed in the judgment lien books prior to the deed (not difficult since deeds are encountering a three to six months delay in acceptance for recording).

        Will the judgment be a lien against the real estate?  Are there other title issues for me to worry about?  What about settlement issues?  Is there anything in CRESPA which might have a bearing?  There are going to be about $50,000 in net proceeds.  Who gets them, and in what proportions?  Should the settlement agent interplead the proceeds?  Issue a joint check?  Require the parties to reach agreement prior to settlement so the wife can release the judgment?

        Why don't I know the answer to this question?  I feel dumb as dirt.

                                                            - Dirt Lawyer in Tidewater

 

Dear Dirt:

             I am humbled that a discreet and competent counselor at law would admit to not knowing everything, especially in correspondence to a mere title examiner.  In the same spirit of open and honest candor, I must admit that your questions exceed my expertise, but are darn good questions. 

             To answer the first question you asked, the support decree against the husband in favor of the wife should not be a lien against the real estate owned by them as tenants by the entirety.  As long as they remain married, and your facts indicated that the hearing for the final decree of divorce had not yet been scheduled, a judgment against one tenant by the entirety should not attach to the real estate.  The recent U. S. Supreme Court ruling in United States v. Craft, 535 U.S. 274; 122 S. Ct. 1414; 152 L. Ed. 2d 437 (2002) has certainly raised questions about this long standing rule, but except where the federal government is involved, the rule should remain intact.

            While domestic relations litigation is not an area in which Tute has or claims any experience or expertise, it appears from 20-79.1 and 20-79.2 that the legislature contemplated that enforcement of support awards would be accomplished (primarily?) through employer withholding from wages.  Does the decree contain a direction of the Court that it be docketed?  A quick reading of 8.01-460 suggests the court needs to direct docketing of a pendente lite support award, and that the decree specify the arrearages (facts not mentioned in your question) before the wife would be entitled to docket the decree and claim a lien.

 

         Tute would also point out recent amendments to 55-96 which require recording offices to date stamp a deed upon delivery to the courthouse.  A legislative solution to the delays in recording was not offered, but the legislature did attempt to "level" the playing field so that delays in recording deeds would not adversely impact purchasers of real estate.  Absent a rejection of the recording, the "race to the courthouse" may still result in the judgment being docketed after the deed.

 

            To further muddy the water, should this issue rise to the level of discussion at the settlement table, the purchaser may not qualify as a bona fide purchaser "without notice" of the claimed lien.  The recording statute does not protect a party with actual notice of the claim.  Just to reduce this discussion to a level of impenetrable murkiness, the wife, as a grantor of the deed, presumably will join in the general warranty of title.  Her warranty of title should preclude her from attempting to enforce her claim against the purchaser.

 

            The most plausible application of CRESPA to this discussion is merely to remind non-lawyers that the regulatory body for CRESPA is the Virginia State Bar, and it has warned settlement agents against the unauthorized practice of law.  A settlement agent, not also a licensed attorney, who suggests "the answer" runs a more severe risk than the usual economic penalty of an unhappy customer.  There are some issues the lay settlement agent must avoid, and this question points out the valuable assistance a licensed attorney can bring to the closing process.

 

            A joint check certainly has the benefit of transferring the combatants from the settlement conference room to the bank lobby.  It doesn't answer the question, but it leaves its resolution to another venue.  (Your banker may not agree with the appropriateness of this solution.)  This would be appropriate if husband and wife made other agreements between themselves as to the division of the proceeds.  For example, a property settlement agreement dividing all the marital assets may allocate 100% of the real estate proceeds to party A in exchange for 100% of some other asset going to party B.  The joint check approach allows them to honor that agreement, and document their compliance.  The facts you gave don't suggest the parties intend to act with that level of honorable decorum, but one can always hope others will act in accordance with our highest expectations of them.

            Tute wonders if wife's attorney is contemplating other enforcement efforts to collect these arrearages.  While it doesn't happen often, a garnishment or levy on husband's proceeds still in the hands of the settlement agent (or the settlement agent's bank) would certainly throw a monkey wrench into this discussion.  From the title examiner's point of view, that would be an admirable approach, as it leaves the title to the real estate unaffected.  From the settlement agent's point of view, it would impair their duty under the Wet Settlement Act (6.1-2.13) to disburse within two business days following closing.  Especially if the checks are already distributed, there is also a risk of the levy seizing funds belonging to another closing.  If wife's attorney were to pursue that route, interpleader has more appeal.  Depositing the net proceeds with the court and asking the judges to make the division (and excuse the settlement agent from its duty to disburse according the settlement statement within 2 days of closing and reimburse the settlement agent for the expense of "stop payment" orders at the bank, and its costs and attorneys fees) has a certain appeal, but has the result of benefiting only the litigators.  Nor do I know of any settlement agents with "fill in the blank" interpleader petitions, so they could attempt to comply with their obligation to disburse within two days by filing the suit.  This is a risky approach, since the funds are not "held" by the settlement agent for very long, but wife and wife's attorney seem involved in the closing process and probably have a good idea of the date on which the funds will be in the settlement agent's hands.  Especially if husband were leaving the state after closing, the wife's attorney may consider the funds at risk, and any damage to the couple's continued relationship would be a minor impediment to collecting the balance due.

            Does your office have a contingency plan for this?  Perhaps, as a service to the VLTA, you could prepare a template petition for use by the members

                                                                        Tute 

 

Dear Readers:

             Tute was procrastinating and putting off the preparation of this column.  As I was cleaning out the "spam" in my computer's inbox, the New Year arrived, NASA's Mars Rovers were approaching John Carter's "Barsoom" (did you know that Edgar Rice Burrough's hero was a Virginian?) and my thoughts were wandering into the future of title examination and title insurance in the coming decades.  

            When, what to my wondering eye should appear . . . oops, leftover Christmas poetry . . . was the following offer:

 

Moon Land For Sale! Unbelievable but true.

       

Now For A Limited Time...

You Can Buy Land On The Moon!
There Are Over 1.1 Million Lunar Land Owners from 176 Countries Already!

 

 

 

            With a minimum of internet browsing Tute learned that not only was land on the moon for sale, but plots were being offered on Mars and Venus as well.  For those who need a little more elbow room, galixiesrus.com was offering "freehold" certificates entitling the purchaser to the title of Galactic Lord and Master/Mistress (stated to be a hereditary title).  Eureka!  The future of title insurance was assured!  But how is a relatively unknown title examiner to make a living?  For that matter, where is the examiner to earn that living?  Should I consider relocating to Florida (launch site) or Texas (mission control)?  Not that I would object to either state, as both have promulgated title insurance premiums, but, as reality's chill starts to sink in, does this internet marketer have good title?  There's no point calling the movers if there's no valid claim of title to sell.  Further review of the internet advertisements reveal a clear conflict in claims of title between lunarembassy.com and lunarrepublic.com, both of which maintain their own proprietary registry.  Further, a CNN article notes a claim by a German national, who claims Frederick the Great bestowed the moon on his family in the 18th century.  http://www.cnn.com/2000/TECH/space/11/20/lunar.land/index.html.

             Alas, a quick review of the international treaties to which the United States is a party reveals The Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies of 1967, Article II of which explicitly forbids any government from claiming title to a celestial resource such as the Moon or a planet.  Absent government intervention (for example, a court system to uphold a claim of title), how does one prove a claim and have it upheld?  One of the vendors notes that the treaty does not prohibit individuals or corporations from claiming title.  That oversight was addressed in the proposed Agreement Governing the Activities of States on the Moon and Other Celestial Bodies (the Moon Treaty of 1984, paragraph 3, Article II), which has not been ratified by any of the space faring nations.  The provisions of Article VI of the 1967 Moon Treaty make the claim of even non-governmental entities suspect:  

The activities of non-governmental entities in outer space, including the moon and other celestial bodies, shall require authorization and continuing supervision by the appropriate State Party to the Treaty. 

This vendor filed papers regarding its claim with a US claims registry.  The vendor also has reserved space on the Trailblazer moon mission (possibly scheduled for 2004 by TransOrbital, Inc. - the first "private" US space mission) to transport a cargo which includes its registry of deeds.  http://www.cnn.com/2002/TECH/space/09/13/moon.venture/index.html.  They also have plans to create the ultimate "offshore" bank in New Hope City (a yet to be populated city with over 27 million addresses) and issue lunar corporate charters (how can you serve a registered agent who is literally located "out of this world"?).  Perhaps these will be enough to overcome the barrier that a lack of a grant (or possession for the statutory period) typically creates to insuring a title.  There is some precedent; after all, the English monarchs who chartered the Virginia Company didn't have a grant and hadn't been in possession (I believe my underwriter's annual report still contains a notation about the possibility of a complete failure of title by reason of claims of the full time inhabitants prior to the arrival of the Europeans).  Perhaps the deeds aren't worth the paper they're printed on.

 

acre of the moon

 

The ALTA title policy forms will probably need to be rewritten as well.  Let's start with the insuring provision governing access.  Since there are no roads on the moon, none of these properties abut a public right of way.  Perhaps one of our Texas underwriters, in conjunction with the engineers in Houston, can craft an access provision that would incorporate the features of those vehicles capable of reaching the land.  Perhaps access is an anachronistic concept when land can be reached using vertical take off and landing craft.  While Texas may have the edge in that area, it was suggested to your correspondent that a California based company might be the first to market any new policy . . . possibly as "The Eagle Has Landed" very extended coverage policy form.

An exclusion needs to be added for the rights of NASA (and other national space programs) to "explore," a right specifically reserved to the governments in the 1967 treaty.  The underwriting manuals will need to be amended to note that "air rights" will no longer be an insurable interest.  Since the federal government won't admit who landed at Roswell in '50s, we may also need to insert an exclusion for claims of title by the entire gamut of extraterrestrial beings.  Should further exploration reveal a tall black impenetrable tower, I hope our title records aren't maintained on a computer named HAL.

             Tute is considering forming Lunar Land Title Agency, a lunar limited liability company specializing in extraterrestrial titles.  If you have a vision for the future that includes galactic possibilities, and are willing to wait a while for a return on your investment, drop me a line at theunknowntitleexaminer@mail.com.    Our company motto will be "To infinity and beyond!"

                                                                         Tute

 ps  Tute is indebted to several reputable underwriting counsel who did not laugh (too hard) at the questions and seriously addressed the question of what issues might need to be addressed by a galactic title agency.

 

 

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