Vaolume 8 Number 1



Title Tips by Tute

Volume 8, Number 1

Dear Readers: 

    I am tired, how about you? It's a good sort of tired, the sort (I am told) you have when you have trained and trained and all that training pays off by completing a marathon, bearing a child or some such other significant event. The present economy continues to astonish and astound. Yet, once again, our Tute faces deadline pressure with no time available to deeply research (Be quiet out there in the peanut gallery . . . please) one of those exciting topics that only title examiners can enjoy. So, even though there is a great version on the Internet, I continue to be deeply indebted to LandAmerica Financial Group for providing me with a copy of SingleSourceTM v. 1.2, portions of which contributed greatly to the preparation of this edition's column, in which we go back to Title Examination 201. 

    As noted in a previous issue, some of the key attributes of a good searcher include accuracy, comprehension, and the ability to efficiently gather information in the least amount of time necessary. Also critical, as discussed in the last issue, is the ability to relate the information you find during the search to the upcoming transaction. In today's stroll through the halls of academe, we'll run through the basic procedures and records the searcher should encounter on a regular basis. 

    The sequence of activities that follow has worked for Tute in the past. It may not work for you in exactly the order presented, but that is okay, as long as you've got your own pattern or system, and don't leave anything out. First things first, identify the property to be searched. This is the most fundamental step in the searching process. You must know the correct property (and type of ownership interest) to search so that your title products can be issued correctly.

    You would think this would be easy, but just today Tute received further evidence than not all persons, even those working at title insurance companies, think through this issue. Tute received an urgent request for title work from a state better known for a political family dynasty than for title insurance companies . . . property owned by XYZ Company at the address of 123 West Any Street. Check the tax computer in the borrower's name . . . it isn't there . . . okay, the order said refinance, but we'll check on that later. Try the address . . . it isn't there either. Maybe, says our enterprising author, it isn't West Any Street; maybe it is over on the East Side . . . there is such an address, but it doesn't otherwise fit the order . . . a little donut shop does not carry a $3 million loan. At this point, it is back to the customer saying . . . let's try again . . . 

    We closed out the last issue (Webmaster insert:  Two issues ago, Boss, last issue you were swimming with the sharks . . . time really flies when you're having fun!)  by suggesting you ask yourself the following questions:

A.     Does the information the customer gave me match what I'm finding in the records?

(1)     Is the name of the owner that the customer gave the same as the one I'm finding in the records?

(2)     Do I have all of the owners?

(3)     Is the ownership interest fee simple or something else?

B.     Do the legal description and the property address match?

(1)     Do I have all the property to be included in this transaction?

(2)     Does the owner own contiguous property? If so, should this be included? 

(3)     Does the owner own contiguous interests in property? If the property does not appear to front on a publicly maintained street, is there an appurtenant easement to be examined?

(Also ask yourself, "Is this a good legal, and does it adequately describe the subject property?" Early identification of problems is essential to providing good service.)

    Most searchers, including Tute love to assemble any maps, plats or surveys affecting their property. We all justify this by saying "a picture is worth a thousand words," so I guess we're all frustrated authors. Maps, in their various forms, contain valuable information. Maps may give clues that the property may be known by more than one type of legal description. A parcel of land in a section, township, and range may have a metes and bounds description, as well as being known as a parcel in a recorded survey. Maps are essential in reading out legal descriptions and identifying the property. Filed subdivision maps may disclose easements, restrictions, limitations on the use of the land, assessment districts, or any number of other matters. Recorded surveys can disclose problems with the legal description, encroachments, easements, or other matters.

A.     Confirm that the legal description from the current deed and the map match.

B.     Clearly mark the subject property on your work map.

C.     Note any matters imposing limitation on the property.

    Once the property description is firmly in our mind, the next step is to establish the chain of title. This is a fascinating experience, in part because the description you have just so painstakingly established may not be used again during the balance of your search. Establishing the chain of title is the process we first think of when we talk about searching. Only by knowing whom the successive owners of the property were and what interests they held, conveyed, or created, can we begin to discover those matters affecting the insurance we offer. We often focus on matters "affecting the property." Let's not forget that our first purpose is to render insurance, as defined by our policies. We except from our policies those matters we are unwilling to insure. It is the task of underwriting to make the determination as to which of the matters discovered in the search will be "excepted to" (not insured against) in the policy.

    Beginning with the current owner, run the grantee indices back in time to find the recording information of the deed where the current owner(s) acquired the title to the subject property. You will need to look at the document to confirm that it is the deed to your owner for the title you are searching. In some locations, you will find that the taxing agency may have references to the recording information of the deed where the currently assessed owner acquired the title to the property. Although this may give you a starting point, this type of reference must be verified. It is usually the deed to the owner most recently taxed; there could have been changes since that time. Also, if an owner initially acquired a one-half interest, then later acquired the remainder, the referenced deed will probably be only the most recent. Remember, you must locate 100% of the ownership interest.

    Once you have found the deed into your current owner, stop running his name back in time. Now run the name of the party(ies) who granted the title to the subject property to your owner back until you find the deed where he (they) acquired the title. Continue chaining back, running the grantee indices, until you have completed the chain of ownership back to the accepted starting point for searches performed in your location. 

NOTA BENE: The indices of recording offices vary. Some may have an abbreviated version of the property legal. Many will not. So, if your current owner is very active in real estate, or if you are dealing with a common name, you will probably find a number of deeds where he is named as grantee. You will need to look at each of these documents to be certain you have located the correct one.

    Perhaps you have multiple owners on a deed, either the current ownership or somewhere back in the chain of title. You must be certain that the chain is complete for each party in interest. It is not unusual for the titles to some properties to have been transferred from and to multiple parties, each owning only a percentage interest in the property. It is essential that all interests be accounted for and that the chain for each interest is complete. Another possibility is that you are asked to search a property that is currently a single parcel, but was previously several separate parcels that have been combined. Again, this means you have multiple chains to run.

    Additional resources for establishing the chain of title may be available in your locale. Some of these are as follows:

(1)     A derivative clause: This clause is a recital on the deed that tells where the grantor on the deed acquired his/her interest in the title to the property being conveyed.

(2)     Tax history: Throughout the country, there are various forms of tax history under many different names. Basically, this history will be a chronology of who has been assessed as owner of the property. Some of these may give little more than the name of the owner and the tax year; some may give dates of acquisition; some may give the recording/filing information of the document of acquisition.  

(Webmaster insert:  See Letter from Rocky in Volume 6, Number 3, for a situation where this prevented a claim.)

As a searcher you will need to be familiar with the resources available to you.

    Once the chain of title has been taken back for the requisite period (60 years to a general warranty deed has been the standard search period in Virginia for many years), search for adverse items or exceptions to title and confirm the chain of ownership. Beginning with the earliest deed in your chain, run the grantor indices forward. List each document executed by your owner, by type and recording information, in your notes. Every document executed by your owner must first be listed and then considered for its impact on the subject property. The deed to the next owner in your chain should be one of the final documents you find. Prudent examiners run the grantor indices for a short period of time after finding the deed to the next link in the chain of title. Sometimes the grantee in an instrument holds it for a while, and loses the "race to the courthouse." That doesn't mean the interest conveyed away is totally invalid, it just loses the benefit of constructive notice granted by the recording acts.

NOTE: A good chain sheet will be organized, clearly showing the names run, during what dates they were run, and comprehensively listing the documents found in the run.

    Continue running the grantor indices for all of the owners in your chain of title during the period of their ownership to pick up all documents which could affect the subject property. Continue running each name for a sufficient period after they have gone out of title to make certain you have picked up any late recorded documents.

NOTE: It's easy to see that, depending on the volume of recordings, and the number of "John Smiths," "William Browns," etc., executing documents, this could be a burdensome task. Thorough and clearly organized notes make an invaluable resource for future title examinations. Do the work now, and next time, pat yourself on the back for having done such a good job!

    Look at each document listed to determine whether or not it affects the subject property. Realistically, no document is recorded, naming a property, without specific intent to say something about the property or to affect the status of the title to the subject property in some way. As a searcher, you will be focusing, simultaneously, on two issues: First, those documents that purport to transfer title and, second, all other matters.

    The chain of ownership must be complete. Every party acquiring an interest in the property must be accounted for. Any party who acquired an interest is deemed to hold (own) that interest until such time as that interest is transferred to another or the interest is in some way eliminated.

    With regard to all other matters, strictly as a searching function, you may not be asked to determine how a document affects the subject property, only that it does affect the property. Were you to discover a document entitled "notice," reciting the legal description of the property you are searching, you would include it. It would be an examination function to determine the impact of that notice on the property.

    Regardless of the fact that running the name John Smith will probably net a lot of documents, unless you do look at all of the John Smith documents during that time period, something important could easily be missed: an easement, restrictive covenant, mineral lease or deed, mortgage, or any number of things that could materially impact the title to the property. In looking at a document, you, as a searcher, need to ask yourself some questions. Does this document affect the property I am searching? Is this some type of transfer of ownership, or does this document affect the property in some other way? To determine this, you must read the document. And, if you're going to read it at all, read it all.

EXAMPLE: In searching a lot, you pick up a document in your grantor run executed by your owner, who owned several adjoining lots, including yours. It is a deed for an adjoining lot to someone who does not appear in your chain of title as an owner. On the face of the deed, it does not appear to affect your lot, so you note it as not affecting. However, in reading through the document you find that an easement was granted across your lot to benefit the lot conveyed. This is not unusual. At first glance, this document appears to have one effect, conveying title to an adjoining lot. In reality, it is something more; it is conveying title to the adjoining lot and granting that new owner an easement across the property that is the subject of your search.

    Be wary of documents that appear to do one thing, but really do something quite different. A number of recording offices are now charging, as they are permitted by statute and regulation to do, an additional clerk's fee for an instrument that has an additional purpose. Those additional purposes may not be disclosed in the title of the document, and it is possible that certain buyers and sellers of real property, in order to save a few dollars here and there, may not emphasize those additional functions of their instruments. If you're going to read it at all, read it all.

    This is your task as a searcher: To search out all the elements of the title history affecting the requested property. As a searcher, you can never assume nor presume. You must rely on the recorded instruments, on the public record. (Why, oh why, do I have an irresistible urge to throw in "if any member of your team is captured, the Secretary will disavow any knowledge . . . this tape will self destruct in five seconds . . . ) Many states use warranty deeds, in which the grantor makes specific representations about the condition of title being conveyed. Even though a deed may warrant that it is a conveyance of 100% of the interest in the property, reliance on the warranty provision is an examining or underwriting decision, not searching. 

    Next time, we'll look at some of the other records encountered in the search and examination process, and wrap up the process. After that, future columns may explore underwriting the title search, general principles of title insurance, or we could go off on some wild flight of fancy. Keep reading (if you're going to read it at all, read it all) and ask questions, every step of the way.



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