Volume 6 Number 3
Title Tips by Tute
Volume 6, Number 3
I recently completed a title examination that uncovered a double chain of title for the property. It was in a subdivision which has a history of difficult titles, and I had to run the chain back over 100 years to find the "fork" in the chain. I would have quit looking sooner, but the Commissioner of the Revenue maintains a set of paper tax parcel cards, which clearly stated the property was being double taxed. There was no such notation in the printout on the Treasurer's computer. Land records are entering the digital era. If the paper cards didn't exist, would the problem go away?
Sign me as,
Turned over one rock too many by the sea side.
Congratulation for your perseverance. I'm not sure the cards qualify as part of the land records, at least as defined in the standard ALTA policies. As such, they may not provide constructive notice to a purchaser. Even with the cards on file, or even if the note was contained on a terminal maintained by the Commissioner of the Revenue, this may qualify as a "hidden" defect and one of the traditional risks your title insurance underwriter will be happy to escape.
The ALTA policies define public records as "records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without knowledge." With respect to Section 1.a.iv. of the Exclusions From Coverage, "public records" shall also include environmental protection liens filed "in the records of the clerk of the United States district court for the district in which the land is located."
The records established under state statutes today for the purpose of imparting constructive notice are the deed books, the judgment docket books, and the Treasurer's records. While the Commissioner plays a critical role in assessments of real property, those records are not customarily examined
Virginia Code §§ 17.1-227 through 17.1-229 spell out those matters to be found in the deed books. Other books listed in this section of the code, most of which can be included within the generic classification of "deed" books, include the bond books (§17.1-230), the will books (§17.1-231), judgment dockets (§17.1-232), a "writings partially proved" book (§17.1-234), federal farm loan mortgages (§17.1-235), plat books (§17.1-236), state highway plat books (§17.1-238), and the land books (§17.1-243).
Where title passes through a judicial proceeding, the purchaser at the judicial sale may be found to have constructive notice of any defects in that proceeding, if they are "apparent on the face of the record to be discovered" before entry of the decree confirming the sale. Richardson v. Parris, 246 Va. 203, 435 S.E.2d 389 (1993). Thus, the examiner should review the court file when title passes through a judicial sale in order to determine if there are any defects in the court's ruling or a lack of jurisdiction.
Given the enormous volumes of material filed in the land records, it may come as a surprise to the title examiner to learn that a failure to index a recorded instrument does not eliminate the "constructive notice" of the recording. See Jones v. Folks, 149 Va. 140, 140 S.E. 126 (1927) and Williams v. Consolvo, 237 Va. 608, 379 S.E.2d 333 (1989).
Another set of records to be examined are the Uniform Commercial Code filings. While the UCC is generally applicable to "goods," and not to real estate; when the goods are affixed to the real estate, they become fixtures, and a part of the real estate. Security interests in these fixtures, whether attaching prior to, or after, their becoming part of the real estate, must also be reported. See generally Title 8.9A of the Code. The last set of records are in the Treasurer's Office, and deals with real estate taxes. As that lien has priority over all other liens and encumbrances, Virginia Code § 58.1-3340, and is a lien on the land (the Code says the name of the owner is for convenience in the collection of taxes), examiners must ascertain the status of this item.
Information in the Commissioner of the Revenue's office is used to prepare the assessments for real estate taxes. Since that office does not levy or collect the tax, their records do not appear to be "records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without knowledge" as required by the title policy.
Without your diligent pursuit of the property chain of title in your examination, and your efforts to find the reason for the notation you discovered, your proposed purchaser might have acquired title from a seller with color of title, but not a defensible title. Bravo!
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