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 • 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 – 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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