1. real estate

The Chain of Title
Andrew Graham
Steptoe & Johnson PLLC
Morgantown, WV
Chain of title
• Listing (or copy) of the various successive
recorded and filed conveyances and other
instruments from the current owner running
back to a specific beginning date
– The spine of an abstract
– The roadmap for a title opinion
• Indexing
– Grantor/grantee
• Predominates in the eastern U.S.
• Instruments are recorded in chronological sequence and are
indexed by the name of the grantor (and the grantee)
• Building the chain of title requires significant amount of
work and expertise
– Tract
• Used more often in the western U.S.
• Each tract of land (and subdivision of tracts) is assigned a file
in the recorder’s office
• Instruments affecting the tract are filed in chronological
order
• Establishing the chain of title to a given parcel is less difficult
than under grantor/grantee indexing
• No single “right” way to create a chain of title
– The examiner’s preference should control;
provided that the examiner insists upon
• Completeness
• Accuracy
• Consistent method of organization
• Many insist upon a professional summary of
the chain of title along with copies of all pages
of all relevant documents.
• The run-sheet method
– All documents related to tract are organized and
summarized in chronological order
• The abstract method
– Instruments are grouped by category
• Conveyance documents are separate from liens which
are separate from leases which are separate from taxes
which are separate . . .
• Is there such a thing as a “perfect” title?
• “Marketable” title
– Reasonably free from the probability of litigation
beyond a reasonable doubt
– Will the meaning of “marketable” change?
– “Marketable” title statutes
• Record title
– Exceptions noted for all deviations from required
proper record title
What should be “in there”?
• All conveyances affecting the interest being
examined
• All liens and encumbrances affecting the
interest being examined
• All tax information found in the county land
records affecting the interest being examined
Recorded where?
• Deeds and security instruments (deeds of
trust, mortgages)
• Wills and non-testamentary estate records
• Liens, judgments and court actions
• Guardianships and competency
• Real estate assessment and real property
taxes
• Tax sales
Where?
• The location of these records vary from state to state,
and may vary from county to county within a state
• The title examiner must find the functional records
wherever they might be hidden
• Does the examiner have to leave the county
courthouse?
– Maybe
• What about federal court records?
• What about environmental filings?
• Watch for land records filed in unlikely places
– Competency
– Marriage
– Births and deaths
What should be reported?
• Full and accurate names of parties as they
appear on the instruments
– Addresses of parties, if given
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•
•
•
Date of instrument
Date of recording
Date of acknowledgment
Description
– Notation that description is exactly the same as
prior instrument
• Consideration
– Amount of tax stamps
• Words of grant
• Exceptions
– What someone before the grantor kept?
• Reservations
– What the grantor is keeping?
• Is anything missing?
• What about recitals in deeds?
– Often helpful if you have them
• But many deeds don’t
– Practitioners of yore disfavored recitals
» Why should you help competitors?
– Accuracy should be verified
• Many recitals are merely copied word-for-word by
typists from one deed to the next
• All security interests affecting the interest
– Watch out for “all land in the county” catch-all
provisions in security interests
• All rights of way
• All miscellaneous agreements
– Boundary line
– Surface use
• All judgments
•
•
•
•
•
All local tax claims and liens
All federal tax claims and liens
All lis pendens
All pending litigation
Examine the signatures
– Does anything look “funny” about them?
• Forgery
• Mistake
• In states using grantor/grantee indexing, every
ownership step must be “adversed”
• Check owner as GRANTOR for all
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–
–
–
Conveyances
Agreements
Deeds of trust or mortgages
Liens
• Examine every instrument in which owner was
granting party to determine whether subject interest
was affected
• Checking before and after ownership periods
– Especially in “notice” states
• Some people will sell the same property twice
• Some people will agree to sell Blackacre to A
and then sell it to B
• Some people file for bankruptcy on their way
to the closing to sell their house
• How long do you search?
– Is good title important to your project?
– Is your company willing to take on the risks of a
longer, or shorter, search?
• You can always search from today back to patent
(or grant)
– Do you want to spend that kind of money?
– Do you really need to trace the title back that far?
• Can you rely on a marketable title statute in this
state?
• For a mineral title, the search should at least
get back to the time of
– First production in the state
– First mineral severance in area being searched
• Especially in states with mining activities that pre-date
oil or gas exploration
• Time considerations might be different for
units as opposed to well sites
• A complete chain of title for any parcel will
include separate chains for:
– Surface
– Minerals
• Oil
• Gas
• Coal
– Any other severed estate
• Should be reported in the same form and style
• Should be separately analyzed
• Chain of title should be arranged in a form
that
– Displays the data on the instruments
• Party names
• Dates of ownership
– Keys ownership periods and instruments to
exception instruments
– Demonstrates that search has been made for all
relevant document types
• Can be arranged in chronological order
– The run-sheet method
– From present-day back to beginning of certification
– From earliest point in the search forward to present-day
• Others organize instruments with title instruments
first, followed by exceptions (outparcels, liens, ROWs)
– The abstract method
• Must show the beginning date and end date of the
search
– Needed for certification and bring-down
QUESTIONS?
Andrew Graham
Steptoe & Johnson PLLC
[email protected]
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