A PICTURE IS WORTH A THOUSAND WORDS:
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1 A PICTURE IS WORTH A THOUSAND WORDS: Legal Descriptions, Surveys, Easements & Endorsements Chicago Title CPE Seminar October 2017 LEGAL DESCRIPTIONS UNUSUAL LEGAL DESCRIPTION! 1
2 From the white horse in the field As long as it takes for a man on a horse to smoke a cigarette DRAFTING OF LEGAL DESCRIPTIONS Omitted Schedule A Metes and bounds that fail to close Poor monumentation Improper Lot/Block Improper map old legal descriptions And others. THE PROBLEMS 2
3 Old legals are adequate New legals are adequate That the legal actually describes the property your client is buying LEGAL DESCRIPTIONS: BAD ASSUMPTIONS All surveyors know how to draft adequate legals Any prior M&B actually closes Realtors know what description to put in the contract RULES OF CONSTRUCTION You must know and understand how the content of the legal will be construed. See Webster s Real Estate Law in North Carolina et seq. The intent of the parties will be construed within the four corners of the document. G.S In construing conveyances court shall give effect to intent of the parties. (a) In construing a conveyance executed after January 1, 1968, in which there are inconsistent clauses, the courts shall determine the effect of the instrument on the basis of the intent of the parties as it appears from all of the provisions of the instrument.... RULES OF CONSTRUCTION 3
4 [D]eed purporting to convey an interest in land is void unless it contains a description of the land sufficient to identify it or refers to something extrinsic by which the land may be identified with certainty. Cannot be aided by extrinsic or parol evidence WHAT IS AN ADEQUATE LEGAL? DRAFTING THE LEGAL DESCRIPTION: SOURCES OF INFORMATION The Contract Prior instruments For the dirt in question For the adjoining tracts, occasionally Surveys, Plats Surveys are key tell them to get one! Tax office Deed Plotting Software Deed Plotter, Quick Plat, etc. Google Maps, Google Earth, Bing? Lacks monumentation Low print quality Has prior deed reference SAMPLE DESCRIPTION 4
5 Closure error SAMPLE DESCRIPTION PLOTTED Deed plotting software can analyze a tract and make recommendations to correct a defective legal as it did here: First run on Legal North 81 degrees Should be North 18 degrees ONE ADVANTAGE OF DEED PLOTTING SOFTWARE Clarify commencement and beginning points Define them and Capitalize them Be sure that your legal is tied down Separate runs for clarity and ease of verification Dyslexics Untie! Count em When tract is shown on a prior map or survey say so LET S IMPROVE THE LEGAL STEP ONE 5
6 Adding monuments from easily located resources Without a survey Use tax maps to locate adjoiners STEP TWO WHEN IN DOUBT MONUMENT IT! Good Monuments are Permanent or nearly permanent At least hard to move! Easy to locate (usually) Include Roads and intersections Rivers, creeks & ditches Adjoining tracts Trees (to some extent) Easements Concrete monuments culverts Not as Good Monuments are: Movable, removable Not so permanent as in the case of trees Include Irons (old or new) PK nails A stone (a BIG stone might be okay) axles STEP TWO WHEN IN DOUBT MONUMENT IT! ALWAYS!!! INSIDE THE 4 CORNERS (THE DEAN SMITH APPROACH) Why is all of this so important? The deed that saves itself Incorporating as much identifying information as is available may prevent a minor typo from causing a deed to fail NCGS Minor and obvious error Versus corrective deeds Time and MONEY 6
7 THE LEGAL DESCRIPTION IN THE OFFICE (OR THE PLUTONIUM THEORY) Simple Ideas to avoid mistake, confusion, & error in the office. Draft, copy or prepare the legal at preliminary opinion. Save the correct legal in your software Print multiple copies for file and do so only once at the beginning. Print a Master Legal on colored paper so everyone in the office can easily locate the correct exhibit Keep the correct legal in the same place in every file Flag the legal or place in a colored folder in the file Affix Exhibits at the registry one document at a time ALWAYS have two people review descriptions for errors Count the number of runs MONUMENTS & CALLS: WHY THEY MAKE ALL THE DIFFERENCE!!! Where? 7
8 Which way are you going? LEGAL DESCRIPTION: NCGS MONUMENTATION LEGAL DESCRIPTION: said rebar having coordinates of N: 670, feet and E: 919, feet and lying a grid bearing and distance of South East feet from NCGS Monument Sardis (with coordinates of N: 671, feet and E. 919, feet) CURVES LEGAL DESCRIPTIONS: C1: thence on a curve to the right having a radius of feet, an arc length of feet, a chord bearing of South West, and a chord distance of feet to C3: thence on a curve to the right having a radius of feet, an arc length of feet, a chord bearing of North East, and a chord distance of feet to the point and place of beginning 8
9 Water, Water EVERYWHERE!! Along the creek/river? OR Metes & Bounds? ROAD Right-of-way SIMPLE, RIGHT? MAPPING THE LEGAL DESCRIPTION 9
10 GREAT ARTICLE BY ANN CANTRELL WITH NEXSEN PRUET SURVEYS SURVEYS: WHY YOU NEED ONE 10
11 Review and compare the written metes and bounds legal description against the actual drawing itself. Survey exception should only have NON-RECORD instrument items b/c recorded instruments should have their owner exception, NOT RECORDED PLATS OR EASEMENTS which should go in a separate specific exception. Survey exception should not include matters that are clearly excepted elsewhere, such as a 200 railway right-of-way or a street right-of-way. If you are able to remove an exception from Schedule B-Section II of the commitment, remember to use the IO code ([INTENTIONALLY DELETED]). This will help keep the exception numbers consistent for any incoming comments on the commitment, as well as keep the numbering the same for the survey. If you can use a strikethrough and keep the exception, that is even better, such as: Easement(s) to Duke Power Company recorded in Book 2432, page 489. [INTENTIONALLY DELETED] 31 If the survey identifies the actual location of the easement on the survey (not just a generic reference), the preference is just to reference the survey: 32 SURVEY COVERAGE Lender survey coverage without a survey - Underwriting Philosophy - Risk Survey required to give lender coverage - amount of loan - certain endorsements Survey Access Contiguity Easements others NOTE: If you have a survey, you need to take the exception for matters it shows and give affirmative coverages where appropriate! 11
12 SURVEYOR S STATEMENT ON SURVEY When you only have a preliminary survey you CAN use that survey designating it as follows and add the CR119: The following matters disclosed by PRELIMINARY survey entitled "ALTA/ ACSM Land Title Survey Prepared For: BMPI- SB1520 LLC" by Charles E. Bell, P.L.S. of R.B. Pharr & Associates, P.A., dated, 2015 (the "Survey"): Company must be provided with a copy of the survey of the Land dated August 18, 2015, bearing the signature and seal of Charles E. Bell, P.L.S., which has been prepared in accordance with North Carolina standards for surveys of land or the Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys. DRAFT OR PRELIMINARY SURVEY What is a TITLE EXCEPTION? What is NOT? 12
13 MIND THE GAP? (OR, WHERE DID THAT COME FROM?) CONCRETE & ASPHALT: PROBABLY NOT AN ENCROACHMENT BUILDING ADDITION: IS IT AN ENCROACHMENT OR A POSSIBLE PRESCRIPTIVE RIGHT? 13
14 SIGN & FENCES ARE AN ENCROACHMENT, BUT WE TYPICALLY GIVE LENDER COVERAGE ANYWAY! A real problem!! What is a setback? Zoning = Regulatory not title Plat = Title What is a violation? Covered porch Screen porch Steps 14
15 WHAT IS MINOR? CONTROLLED ACCESS (WHETHER THEY SAY SO OR NOT!) Some things you cannot ignore!! Easements and rights of access! 15
16 OUR ACCESS? THEIR ACCESS? What s on the ground really matters!!! REVISED TOWNHOUSE PLAT: JUST BECAUSE IT WAS FROM THE DEVELOPER DOESN T MAKE IT RIGHT! Lot 40 sale first (plat 29/272) Lot 39 sale later (plat 31/8) REVISED / RECOMBINATION PLAT WHAT IS THE LEGAL DESCRIPTION? WHAT TITLE SEARCHED? 16
17 NOTES ARE IMPORTANT! Customer needs to understand this is a separate title prior to the document that joined the fee and the easement together, so it s subject to whatever came before the recording of that easement document. Consider if appropriate: 1. Legal Description 2. Schedule B Exception 3. Endorsement(s) When survey doesn t show easement, we need to be clear that not giving survey coverage or, if we are, to what extent CAUTION: RESIDENTIAL & COMMERCIAL ISSUE!!!! EASEMENTS -- APPURTENANT ACCESS? ENCROACHMENTS? EASEMENTS? WHO OWNS THE LOTS? LEGAL DESCRIPTION? EASEMENT AGREEMENT? 17
18 Plat #1 PLAT REVISED AFTER ADJOINING LOT SOLD Plat #2 MAPS ATTACHED TO DEEDS OR OTHER INSTRUMENTS: NEW RECORDING STATEMENT 7/1/2017 (HB 454, S.L ) Errors in development documents TACKING: CONDOMINIUM RISK CASES Failure to revise Declarations and plats carefully Significant noncompliance of Declarations or plats Wrong unit Wrong association Prior policy has errors Failure of prior attorney to appreciate title issues, such as association deeds of trust on common areas or payment of association dues Inadequate review of prior policy and its exceptions Endorsement requirements not met Problems not addressed prior to closing 18
19 BONUS SECTION!! ENDORSEMENTS & AFFIRMATIVE COVERAGE You re the one who knows the property, what s in the file, how long it s been there Why is it a good idea or not You are familiar with the file information Setback on survey zoning or plat (record matter)? Are you giving zoning coverage? How long has it been there? How can we give coverage to this attorney and his/her client and how can we avoid 20 questions. ASKING FOR AFFIRMATIVE COVERAGE: DRAFTING AFFIRMATIVE COVERAGE AND REVISING ENDORSEMENTS Alliance Mortgage Company v. Rothwell, 10 Cal. 4th 1226, 44 Cal. Rptr. 2d 352 (1995) Distinguished between guarantee of a state of facts rather than indemnity insurance
20 Affirmative coverage reads: The Company insures against loss or damage incurred by the Insured by reason of the forced removal of the encroachment by final order of a court of competent jurisdiction. The Company insures against loss or damage incurred by the Insured solely in the event that the existence of the encroachment affects the validity, priority, or enforceability of the Insured Mortgage. The Company insures against loss or damage incurred by Insured solely as a result of the encroachment. The Company insures against loss or damage incurred by Insured solely as a result of *. The Company insures against loss or damage incurred by Insured as a result of entry of a final decree by a court of competent jurisdiction ruling that the conveyance insured is void or voidable or subject to a forfeiture or reversion of title solely as a result of *. The Company insures against loss or damage incurred by Insured as a result of invalidity, unenforceability, or loss of priority of the Insured Mortgage solely as a result of *. The Company insures against loss or damage incurred by Insured as a result of an entry of a final decree by a court of competent jurisdiction ruling that the Insured Mortgage lacks priority, is unenforceable, or is invalid solely as a result of *. Affirmative coverage reads: The Company insures against loss or damage incurred by Insured resulting from the exercise, maintenance, or attempted enforcement of said easement(s). As to the foregoing general easement(s), the Company insures against loss or damage incurred by Insured arising from the forced removal of any improvements to be constructed on the insured Land as a result of the enforcement of the easement(s). Notwithstanding the above, no protection is given for utility improvements shown on the survey referenced above/below. The Company insures against loss or damage incurred by Insured solely as a result of interference by the foregoing easement(s) with the intended use of the Land or improvements located thereof. The Company insures against loss or damage incurred by the Insured solely as a result of encroachment of any improvement onto said easement(s) or in the event of and to the extent that said easement(s) adversely affects the Title to or use of said Land. AFFIRMATIVE COVERAGES: COMPANY INSURES ALLIANCE MORTGAGE CO. V. ROTHWELL as a result of entry of a final decree by a court of competent jurisdiction ruling that the conveyance insured is void or voidable or subject to a forfeiture or reversion of title solely as a result of *. as a result of an entry of a final decree by a court of competent jurisdiction ruling that the Insured Mortgage lacks priority, is unenforceable, or is invalid solely as a result of *. as a result of invalidity, unenforceability, or loss of priority of the Insured Mortgage solely as a result of *. **** the easement will not interfere with the intended use of the land or the improvements located thereon for an easement. the easement will not adversely affect the land and that the improvements are not located within the easement. the exercise, maintenance or attempted enforcement of the easement will not cause loss or damage. against enforced removal of improvements constructed or to be constructed on the property as a result of the enforcement of the easement. 20
21 TYPICAL SURVEY-RELATED ALTA ENDORSEMENTS 3.1 Zoning 9 series CCR s 17 & 17.1 Access 17.2 Utilities 19, 19.1 & 19.2 Contiguity 22 Location 25 Same as Survey 26 Subdivision 28 Easement 28.1 Encroachments 34 Identified Risk COMMERCIAL ENDORSEMENT MANUAL (FOR CUSTOMERS AND UNDERWRITERS) ON-LINE AT: BULLS PAGE ALTA FORMS IN NC 21
22 ALTA ENDORSEMENT FORM 3 & 3.1 ZONING PERMITTED USES HOW TO GET THE INFORMATION FOR THE ZONING ENDORSEMENT New ALTA/ACSM surveys say title companies provide??? Cities won t give compliance letters Engineering firm? Surveyor? Attorney? CAUTION: Risky to opine on who is entitled to notice without full title exam THE NEW FORMS IN THE ALTA 9 SERIES Coverage Lender Owner Covenants, Conditions & Restrictions (not private rights) Private rights (assessments, options, rights of first refusal & rights of prior approval of purchasers or occupants) (Land Under Development) (current violations) (Unimproved) (Improved) (Land Under Development) Encroachments over boundaries or onto easements (Land Under Development) (current violations) ALTA 28 series Mineral & subsurface rights (Land Under Development) (current violations) ALTA 35 series ALTA 28 series ALTA 35 series 22
23 EACH ENDORSEMENT (AS APPLICABLE): Excepts to Exclusions, Exceptions and Conditions of the policy itself Defines Covenant as a covenant, condition, limitation or restriction in a document or instrument in effect at Date of Policy. Defines Improvement specifically, depending on the coverage Excludes private rights other than the (loan policy) and (owner s policy) Excludes, among other things, leases, obligations for maintenance, repair or remediation, environmental protection covenants not recorded in the Public Records normally searched in a title examination, where applicable, physical issues (contamination, explosion, fire fracturing, vibration, earthquake or subsidence), and negligence in extracting mineral or other subsurface rights (on loan policy endorsements providing mineral rights coverage). No longer provides owner s coverage for encroachments (now available to owners through separate specific underwriting of the ALTA Endorsement Form 28 series) and No longer provides owner s coverage for minerals and other subsurface rights (now available to owners only through separate specific underwriting of the ALTA Endorsement Form 35 series). ALTA Endorsement Forms & Access ALTA Endorsement Form 17 (Direct) Access and Entry Owner & Lender Requires: Survey Direct Access COMPARE: ALTA Endorsement Form 17.1 (Via Easement) ALTA ENDORSEMENT FORM UTILITIES ACCESS 23
24 ALTA ENDORSEMENT FORMS 19-06, & CONTIGUITY ALTA Endorsement Form 19 (Contiguity-Multiple Parcels) Identifies parcels and boundaries ALTA Endorsement Form (Contiguity Specified Parcels) Identifies parcels only Contiguity between multiple insured separate parcels Owner & Lender Requires: Multiple parcels Survey COMPARE: ALTA Endorsement Form 19.1 (Contiguity-Single Parcel) Contiguity between insured parcel and some other parcel ALTA ENDORSEMENT FORM SURVEY ENDORSEMENT A.K.A. SAME AS SURVEY 1. Legal description matches survey OR 2. Certification from the attorney or from the surveyor that the property shown on the survey and described in the composite legal description is the same property as that described in the multiple legal descriptions covered by the prior policy. Governmental Regulation ALTA STANDARD POLICY EXCLUSION FROM COVERAGE: LOSS OR DAMAGES SUSTAINED BY REASON OF ANY LAW, ORDINANCE OR GOVERNMENTAL REGULATION WHICH RESTRICTS, REGULATES OR PROHIBITS THE OCCUPANCY OR USE AND ENJOYMENT OF THE LAND AS WELL AS THE CHARACTER OR LOCATION OF IMPROVEMENTS SITUATED ON THE INSURED PROPERTY. ZONING AND SUBDIVISION ARE NOT COVERED!!!!!!! 24
25 ALTA ENDORSEMENT FORM 26-06: SUBDIVISION ENDORSEMENT Require: Attorney's or surveyor's opinion that the Property is in compliance with applicable ordinances, unless exemptions, such as: Greater than 10 acres & no street right-of-way dedication is involved Division by will Separate parcel for many years through multiple conveyances N.C.G.S. 153A-335, Counties N.C.G.S. 160A-376, Cities and Towns ALTA Endorsement Form (Easement - Damage or Enforced Removal) ALTA Endorsement Form (Encroachments - Boundaries and Easements) ALTA Endorsement Form (Encroachments - Boundaries and Easements-Described Improvements) ALTA Endorsement Form (Encroachments- Boundaries and Easements-Land Under Development) ALTA ENDORSEMENT FORM 28 SERIES EASEMENTS AND ENCROACHMENTS ALTA ENDORSEMENT FORM 28-06: EASEMENT - DAMAGE OR ENFORCED REMOVAL Insured lender or owner for damage to or enforced removal or alteration of an existing building on the Land which encroaches into or over an easement identified by exception number in Schedule B Exceptions of the policy solely as a result of the exercise of the right of use or maintenance of the specified easement according to its terms. 4. This endorsement does not insure against loss or damage (and the Company will not pay costs, attorneys fees, or expenses) resulting from the encroachments listed as Exceptions of Schedule B. 25
26 ALTA ENDORSEMENT FORM 28-06: EASEMENT - DAMAGE OR ENFORCED REMOVAL Survey note shows: Commitment example: UNDERWRITING TIP: When issuing an ALTA Endorsement, can add a note at the end of the exception: Easement(s) to Carolina Power & Light Company recorded in Book 508, page 64. (See ALTA ENDORSEMENT) Improvement Encroachment Coverages 28 Existing Building Onto easement Damage or enforced removal/relocation by easement holder 28.1 Existing Building on the Land 28.2 Described Improvement 28.3 Existing or Future building, structure or paved area per specific Plans 28.1 Existing Building on Adjoining land Onto adjoiner or easement Onto adjoiner or easement Onto adjoiner or easement Onto Land Enforced removal/relocation by easement holder or adjoiner Loss or Damage (if no exc. In Sch. B) Enforced removal/relocation by easement holder or adjoiner Loss or Damage (if no exc. In Sch. B) Enforced removal/relocation by easement holder or adjoiner Loss or Damage (if no exc. In Sch. B) Loss or Damage (if no exc. In Sch. B) 28.2 Described Improvement on adjoining land Onto Land Loss or Damage (if no exc. In Sch. B) ALTA 28 EASEMENTS AND ENCROACHMENTS Common sense analysis Can you locate the easement Does the easement hit an improvement Does the easement only serve this lot Does it cross this lot to serve other lots 26
27 1 1 SURVEYOR NOTED ENCROACHMENTS CUSTOMER WANTS ALTA 28.1 ALTA Endorsement Form 28.3 Coverages Coverages Loss from an encroachment by an Improvement onto a neighboring property or onto an easement area within the insured Land, other than as disclosed in Schedule B exceptions. Loss from an encroachment by a neighboring Improvement onto the insured Land, other than as disclosed in Schedule B exceptions. Enforced removal of an insured Improvement based upon the encroachment into the easement area or onto neighboring property. ALTA 34 - IDENTIFIED RISK COVERAGE All purpose basic format for affirmative coverage, conforming to Alliance case Identify the violation, encroachment or particular risk issue Identify the applicable recorded document & Schedule B Exception Identify the specific type of affirmative coverage enforced removal or enforcement for a particular type of use, etc. 27
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