RLP Staff Policies Reviewing Title Commitments

Transcription

1 RLP Staff Policies Reviewing Title Commitments This document is meant to outline the general process of how a RLP project manager would review and check a title commitment for the RL project process. This document cannot cover all things to check while reviewing the title commitment, but is intended to be a working guideline of the thought process. Schedule A (the first page): Check the date that the title commitment was issued. Ideally, the commitment should be no more than six months old. If the project has taken longer than usual and the sponsor has been actively working with the landowner and feels confident that there are no changes, then the title commitment can be up to twelve months old. Check the $ amount to be insured make sure that it matches the correct easement value. Check the proposed insured make sure that all the easement co-holders are listed with their full legal names. Make sure that it is an owner s policy, not a loan policy. Check the type of insurance make sure it says conservation easement and not fee simple. Check that the names of the landowners in the easement exactly match the names as shown in the title commitment. Make sure that the legal description used in the title commitment is the description used for Exhibit A of the easement. Schedule B Section 1 (the Requirements): One of the requirements should state that the easement must be executed and recorded in the land records. If there are any mortgages or deeds of trust, then they should be shown in the requirements and NOT the exceptions. The requirements must state that their subordination or satisfaction is a requirement. Any dates in the requirements should be realistic (for example, taxes must be paid by the end of the state fiscal year, which may have passed by the time you are reviewing the title). If the dates need to be updated, simply remind the title company (this change is not needed in the endorsement). If the landowner is some type of trust, corporation, partnership or company, then a review of the documents pertaining to the organization should be listed in the requirements.

2 Schedule B Section 1 (the Exceptions): The following are standard exceptions that are listed by virtually all title companies (language following in italics denotes RLP policy): 1.) Defects, liens, encumbrances, adverse claims or other matters, if any created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the proposed Insured acquires for the value of record the estate or interest or mortgage thereon covered by this Commitment. However, this type of exception should not appear in the final title policy (this can be covered by the endorsement or stated in the commitment itself). 2.) Rights or claims of parties in possession not shown by the public records. This is an acceptable exception. 3.) Any lien, or right to a lien, for services, labor, or materials heretofore or hereafter furnished, imposed by law and not shown by the public records. However, this type of exception should not appear in the final title policy (this can be covered by the endorsement or stated in the commitment itself). 4.) Taxes or special assessments which are not shown as existing liens by the public records. This is an acceptable exception. 5.) Encroachments, overlaps, boundary lines disputes or other matters which would be disclosed by an accurate survey or inspection of the land. This is an acceptable exception unless a survey actually has been done. However, the title company may have ALTA survey standards, which are not required by the state. 6.) Easements, or claims or easements, not shown by the public records. This is an acceptable exception. 7.) This Commitment for Title Insurance does NOT constitute a report of title and is not to be relied upon by the insured(s) or any other party as a title report or representation of the status of title. Any title search and examination conducted by or for the Company in connection with the issuance of a Title Insurance Policy, if any, is solely for the benefit of the Company. This is an unacceptable exception and should be removed. 8.) An exception for taxes and other public charges. This is an acceptable exception but check the dates. 9.) An exception not insuring the exact amount of acreage. This is fine because another RLP requirement for the project is the deed closing letter from the surveyor. However, if a survey has been done then the exact acreage is known and this exception can be removed (unless the title company has ALTA survey standards). 10.) If there is a navigable waterway on the property, there may be one or more exceptions for the rights of others upstream or downstream. It may be that the state owns the water itself (and therefore the public is allowed to access the water, but not the property). If the property touches tidal water, there may be an exception stating that rights of others below the high tide line is not insured. Both of these types exceptions are acceptable. 10.) Be sure to check the back and the cover of the title commitment for additional standard exceptions.

3 The following are examples of types of exceptions that may be specific to a title commitment, followed by what to do about them: Agreements, deeds, right-of-ways, easements, or other arrangements to allow lines for power utilities such as electric and phone lines: This type of exception will be found on nearly every single property and are usually for utility lines that run to the residence or along the public road. These are acceptable. However, many of these utility lines have a trimming agreement associated with them to allow the utility to clear trees and vegetation around the lines. The sponsor should be aware of excessively large trimming agreements (over 50 feet) to make sure that they do not negatively impact the conservation values of the property. In addition, the easement may contain special provisions such as CREP areas or endangered species areas where the easement prohibits removal of vegetation. These areas that receive additional value should not have powerlines running through them that would negatively impact what is being protected. (See CREP survey policies for additional information or ask RL Director for additional guidance). Deeds, easements, or other right-of-ways for ingress and egress for driveways, roads, farm lanes, or other types of vehicular access (which can be included in earlier deeds to the property): This type of exception is very common and generally acceptable since they usually allow access for neighbors. The sponsor should be aware of all the roads. The project manager should make sure that the width of the road is not excessive (over feet) or is not for a proposed major road. An exception for a Forestry Declaration of Intent, Natural Resources District, or other type of forestry or stream buffer protection agreement with the county: These agreements are with the county and are often a requirement of the landowner going through the subdivision process. They are most often seen in Baltimore and Harford counties. The agreements usually require some type of forestry and stream buffer protections on the property and must be read carefully to determine if they conflict with the RL easement. Often, the requirements may only go into effect if the subdivision occurs (which will be made moot by the RL easement). Previous easements: Thoroughly read easement from entities such as Maryland Historical Trust, Maryland Environmental Trust, National Park Service, easement with a local land trust or a county ag easement. This may cause a big problem with valuation of the property since the property may already be partially or fully protected. Discuss with RL Director. TDR easements in Montgomery County are acceptable but follow RLP guidelines. It is unacceptable for a MALPF easement to already be on the property, however, it may show up as a mistake since a MALPF easement can apply to one part of a property and the RL easement to another part of the property. If this is the case, make sure the legal description applies to what the RL easement will cover, that the valuation is done using the correct acreage, and that the exception gets removed.

4 MALPF District Agreements: If a MALPF District Agreement is listed in the exceptions, make sure that Article V. S. District Agreement and the signature block for the Secretary of MDA is used in the easement. County Agricultural District Agreements: There may be a temporary ag district signed by the county that is still in effect. If this is the case, the district agreement should either be terminated by the county or subordinated (using a modified Article V. S. and signature block in the easement). Check with the county to determine their preference. An exception for the easement itself: This is unacceptable but alternative language for new sponsors can be discussed. An exception for the survey that has been done for the purposes of placing an RLP easement on a property: this is acceptable but the exception must specifically state that it is the survey for the property. Process for reviewing a title: 1.) Review title commitment and all exceptions before giving to RL Director (easements that are coheld by a state entity will also go to the OAG). Note any problems or corrections that you think are needed. 2.) Once comments are received from the Director and OAG, then the project manager should compile the comments and then forward them to the sponsor in a formal letter. 3.) Some of the problems with a title commitment, especially if the valuation will be affected, may be serious enough to prevent the project from being submitted to the BPW agenda. Check with RL Director. 4.) Check over title endorsement or update before submitting the project for payment. 5.) If the landowners are organized as a corporation, company or partnership, then an authorization memo will be needed from the title attorney. This memo should state the following: the authorized signatories for the easement; the title of the authorized signatories; that the organization is authorized to make this type of real estate transaction; and that the organization is in good standing with the State of Maryland (when appropriate, such as for a corporation). 6.) If a landowner is dealing with a company that will not subordinate the mortgage, then check with the RL Director about using the consent of lienholder form. (This is extremely rarely done). Title Policy Review: The project manager should receive a copy of the easement and title policy in order to close out the project file. The following should be done when reviewing the title policy: 1.) Make sure that the information provided by the title commitment is the same in the title policy (especially the type of insurance is still easement, the landowner names, $ amount, etc.).

5 2.) Make sure that the exceptions that were supposed to be deleted from the title commitment do not appear in the title policy. 3.) Make sure no new exceptions have appeared in the title policy (such as the easement itself). 4.) Make sure the place where the easement is recorded in the land records is correct.