Volume 2 Number 2
Title Tips by Tute
Volume 2, Number 2
I recently examined a title that had two deeds of trust, three supplemental deeds of trust to each trust, a corrected and rerecorded deed of trust and a deed of release. The deed of release stated that the deeds of trust, referencing their deed books and pages and all supplementals were released. The release did not mention the corrected and rerecorded instrument. I did not report the deeds of trust or the supplementals since I thought the original lien was released. My very angry employer said I was wrong because the deed of release was done incorrectly. I felt that the lien was released since the noteholder signed the deed releasing the property from the lien. Who is correct?
On a separate file, I learned of a claim. A while back, I received a search request showing the current owners to be Susan Smith, widow. A death certificate was attached showing John Smith's date of death and that the information for the death certificate was given by Susan Smith, widow. In examining the title, I found the current deed to be in the name of John Smith and Susan Smith, husband and wife, as tenants by the entireties with the right of survivorship. John Smith did not have a will probated or a list of heirs of record. A claim was made on this file by the heirs of John Smith. Apparently, a final decree of divorce was entered two days prior to the death of John Smith. When the current owner was refinancing the examiner for the other title company found the decree. As a normal procedure, should I have checked the Chancery index?
It appears you had a bad week. Please accept my condolences.
Deed of Trust liens remind Tute of fish hooks. You might remember how each hook has a series of barbs right at the tip, in order to hold the fish as it struggles to escape. Lenders think a lot like fisherman. Each one of those deeds of trust, original, supplemental, corrected and rerecorded, is designed to increase the lenders leverage over the borrower, and better secure its lien against the property. In order to be totally free of the lender, each of the barbs needs to be removed. You did not mention specifically which deed of trust (an original or a supplemental) was corrected and rerecorded. Nor did you mention if the corrections were made on the original instrument, which was then carried back to the Clerk for recording, or on a new instrument.
Tute, like your employer, prefers to see every potential lien of the lender released in a deed of release or a certificate of satisfaction. Especially if the deed of trust is modified to increase the amount of the debt, both the original and modification should be referenced in the release. Tute has been known to approve of releases which only referenced the corrected deed of trust, especially if the correction instrument either referenced the instrument it was correcting, or was the same instrument rerecorded in the Clerk's Office. This is based on a theory that the instrument referred to in the release incorporates the original instrument by reference. Tute has also passed on releases referencing only the original deed of trust, when the Clerk was kind enough to note in the margin of the deed book a cross reference to the amendment or correction. Alas, in an age of microfilmed and/or computerized records, marginal notations are going the way of the attorney title examiner. In the event of a partial release of collateral, which was added by a supplemental deed of trust, Tute tries to exercise some discretion in these complicated financial arrangements by requiring only a release from the original deed of trust and the supplemental deed of trust which added the property as collateral (and any amendments, either before or after the supplemental, which increased the principal amount of the debt secured).
In your defense, I think the lender would have a hard time enforcing its lien against the property since both originals and all six supplementals were specifically mentioned in the deed of release. But you remember what happens when you assume something.
On your second question, that other title company just earned its search fee. As a normal procedure, you should examine the chancery indices for actions involving every owner in your chain of title. However, Tute realizes that in the real world, with another ten searches waiting to be done, with all ten due yesterday, normal business practices suggest that not every file justifies that level of care. The question of when to make the effort is answered by some senior examiners with a sort of Zen-mystic pseudo-psychic "I just felt something was wrong on this file" response. For those who want a list of something to do on every search, checking the chancery indices in the name of the current owner should be on that list. (And if you are examining title for a known deed of gift, run the law indices, too. Conveyances by gift are not valid against existing creditors if they are made for the purpose of avoiding or hindering collection. (Take a look at §§ 55-80 and 55-81)).
Tute is probably in the minority on this issue as well, but even with tenants by entireties property, Tute likes to see a will or list of heirs recorded for the deceased spouse. Generally, the death certificate is not of record, and the statements made to the doctor, other medical person, or mortician who completes the information and files the death certificate are not sworn to or verified by any independent entity. If Mr. Smith owned other property in his own name, the next title examiner will thank you for your thoroughness. (By the way, is the ten year IRS estate tax period expired? Or was the Smith estate small enough that you won't have to worry about that?)
Recently I found of record a Power of Attorney authorizing the attorney in fact to convey property, as well as perform other acts normally associated with said instruments. However, upon further review, this instrument recites the individuals address as "Correctional Field Unit #23, Highway 859, South Boston, Virginia. It would appear as though this fellow was in a prison camp. Would Tute have a problem with the deed being executed by an Attorney in fact for this incarcerated individual?
Tee Buster in Fred City
Dear Tee Buster:
You had best spend a little less time out on the links, knocking around little white balls with cute dimples, and turning small pieces of wood into even smaller pieces of wood, and a little more time in the office reading The Examiner. This issue was dealt with during the first two issues of this esteemed publication (Webmaster insert: Letter from M.F. in Vol. 1, #1; and Rebuttal from Competent in Vol. 1, #2), although that was in the context of deeds, rather than powers of attorney. But since the power of attorney must be recorded, Tute is convinced that it must meet all the same requirements as if it were a deed, which means that the signer must be competent and that writing needs to be acknowledged before a notary public. Code §8.01-2 specifically renders a convicted felon, during the period of incarceration, an incompetent.
Or, I suppose this person could be a guard, who got tired of living with parents and moved out to the job site on a full time basis.
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