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Inside this issue:The Case of the
Missing Easement 1-
NC Fun Facts 2
RESPA Roundup
Newsletter 3
Caveat or Revocation 3
Claims Corner 4
When I was younger, I loved toread detective stories I couldnot
get enough of Nancy Drew,Encyclopedia Brown, The
ThreeInvestigators, and the bestdetective of them all,
HerculePoirot. My dreamwas to use mylittle gray cells tosolve the
mystery,catch the culprit,
and save the day.Needless to say,that dream hassince drifted
awaydue to my currentoccupation as a title insuranceattorney or, so
I thought. Theworld of commercial real estatesometimes
containspuzzles that need to be solved even if there is no
unmasking of
the villain in the final act withlots of fanfare.
One such conundrum is theelusive blanket easement.Occasionally,
an easement willappear in the title examinationand be reported to
the titlecompany. This is typically not acause for concern as the
titlecompany will simply except to
the easement in Schedule B;however, if the easement is ablanket
easement, it is a cue toput on your trusty trench coatand exclaim
The game isafoot! in your best British
accent. In short, ablanket easementis an easement thatis not
plottable orlocatable due to its
vague or overlybroad description;it affects the insured
property, but
no one knows exactlywhere the blanket easementshould be placed.
Utilityblanket easements tend to berepeat offenders. A
blanketeasement will confound even themost crafty and skilled
surveyors.
For commercial real estatetransactions, the specter of a
blanket easement can be afrightening prospect. But, donot
despair! There may be asolution to this riddle and itcomes in the
form of anendorsement. The AmericanLand Title Association
hasdrafted the ALTA 28-06Endorsement (Easement Damage or Enforced
Removal)to combat a blanket easement
on improved property. TheALTA 28-06 Endorsement isavailable to
both a lender and aowner and gives the followingaffirmative
coverage forblanket easement issues onimproved property:
Continued on page 2
The Case of the Missing EasementbyTonya Mason, Esq.Clickhere for
Tonyas Bio
[email protected]
...the specter of a
blanket easement
can be a frighteningprospect.
http://csd.invtitle.com/about/index.php#biosmailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://csd.invtitle.com/about/index.php#bios
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The Case of the Missing Easeme nt (cont. from page 1):
The Company insures against loss or damage sustained by the
Insured by reason of:
damage to an existing building located on the Land; or
enforcedremoval or alteration of an existing building located on
the Land;
as a result of the exercise of the right of use or maintenance
of the
easement referred to in Exception ______ of Schedule B for
thepurpose for which it was granted or reserved.
Typically, a title insurance company will require a review of a
current survey in order to give theALTA 28-06 Endorsement. The
survey should indicate whether the easement can be located or
not.
For those transactions on unimproved property or vacant land,
the CLTA 103.1-06 Endorsementmay be utilized as approved by the
title insurance company. However, as danger lurks behind
everyblanket easement, this coverage is heavily scrutinized and
debated before the endorsement isprovided. The CLTA 103.1-06
Endorsement gives the insured affirmative coverage for any
exerciseof the right of use or maintenance of the blanket easement
over or through the property. A series
of questions may be asked in order to give the CLTA 103.1-06
Endorsement:
Is the easement unlocated?
What is the purpose of the easement?
What are the possibilities that the easement will be
exercised?
To what extent will the improvements be damaged if the easement
is exercised?
Will damage occur from the maintenance of the easement?
The title insurance company will evaluate issuance of the CLTA
103.1-06 Endorsement based on theparticular facts of each case. In
addition, as with the ALTA 28-06 Endorsement, the title
insurancecompany shall require a review of a current survey in
order to strengthen their analysis.
We may never fully solve the mystery of the location of the
blanket easement, but at least we canoffer the insured another
possible solution to their dilemma. So, the next time a blanket
easementcrosses your path via a title search, feel secure in the
knowledge that the insured party may request
affirmative coveragethrough an endorsement.Just be prepared to
outlinethe facts andcircumstancessurrounding yourblanket easement
andhave a current survey
readily available for review. Through acollaborative
investigativeeffort between the attorneyand the title
insurancecompany la SherlockHolmes and Dr. Watson,the case of the
missingeasement may be resolvedthrough the availability
ofaffirmative coverage.
Many people believe that North Carolinawas the first state to
declare independencefrom England with the MecklenburgDeclaration of
1775. It was supposedlysigned on May 20, 1775 at Charlotte,
North Carolina, by a committee of citizens of Mecklenburg County
whodeclared independence from Great Britain after hearing of the
battle ofLexington. The authenticity of the Mecklenburg Declaration
has beendisputed since it was first published in 1819, forty-four
years after it wasreputedly written. There is no conclusive
evidence to confirm the originaldocument's existence, and no
reference to it has been found in extantnewspapers from 1775. Both
the seal and the flag of North Carolina bear thedate of the
declaration. A holiday commemorating the MecklenburgDeclaration,
"Meck Dec Day, is celebrated on May 20 in North Carolina,although
it is no longer an official holiday and does not attract the
attention
that it once did.
...we can offer the
insured another
possible solution
http://csd.invtitle.com/
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Clickhere or visitwww.hud.gov/respa
RESPA ROUNDUP NEWSLETTER
December 2010
Topics include:
VOE/VOD Charges
Services Obtained in Prior Transactions
Sales and use taxes for information purposes
RECENTLY UPDATED!
Caveat or Revocation
For more information
contact Ben Foreman
877.327.9110 [email protected]
Personal service and individual
attention delivered the oldfashioned way.
Customized portfolios constructed
with individually managed stocks
and bonds, for agency accounts,
IRAs, and trusts.
Over 200 years of combined
experience from trusted
investment and trust professionals
who will work with you and your
clients.
Each month, the Investors Trus
Company provides an article
related to trust and investment
services. See below for more
information about the Investors
Trust Company.
Although it is a close distinction, thedifference between a
caveat proceedingand a revocation proceeding havedifferent
litigation requirements thatapply to the appeal process,
accordingto the North Carolina Court of Appeals.The case developed
after Ona MaeDurham died in February 2006. A fewdays after Durham
died, her husband,Lewis, executed a new Will thatchanged the
distribution of his assets.In an earlier Will, Lewis divided
hisproperty between the Methodist Churchand Gary Dixon (the
Caveator in thiscase). The new Will left his assets tohis surviving
nieces and nephews, in
equal shares. Lewis diedeleven years laterin September2007and
his executors presented his2006 Will for probate a few days
later.Thereafter, Dixon filed a petitionseeking to have the letters
oftestamentary revoked. A month later,Dixon also filed a Caveat to
PurportedWill, arguing that the 2006 Will wasinvalid because Lewis
had lackedtestamentary capacity when it wasexecuted. There were a
number ofprocedural issues, but the trial court
ultimately entered an Order forSanctions against Dixon in March
2008,followed by an Order of SummaryJudgment in favor of the
executors inNovember 2008. Dixon appealed bothOrders on December 8,
2008. Theappellate court affirmed. In reachingthat outcome, the
Court extensivelyanalyzed the differences between thevarious
proceedings and court ordersthat had been filed in this case. As
anexample, the Court noted that, understate law, a revocation
petition couldonly be filed by a person interested inthe estate,
and since Dixon was not abeneficiary under the 2006 Will, he
lacked standing in a proceeding seekingto remove the executors.
Accordingly,the Court concluded, Dixons appealsuffered from
numerous insurmountableissues: it had not been timely filed,
wasimproper under the rules of procedure,or lacked the sort of
evidencenecessary to prove a lack of testamen-tary capacity. The
trial courts Orderswere then affirmed. --In re Durham,
No.COA09-274,N.C. Ct. App. 8/3/10
The information contained in this article isnot to be construed
as legal advice.
http://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfhttp://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdfmailto:[email protected]:[email protected]:[email protected]://www.invtrust.com/mailto:[email protected]://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdf
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Is the Secur ity Interest Secured ?
Part II
By Robert Crabill, Title Attorney& Risk Control Manager
Investors Title continues to see lender claims
based on security instruments that lack signaturnecessary to
effectively create the security
interest. Documents make it all the way through
closing and finalization and are still not signed by the owners.
When the lender goes to foreclose, th
problem comes to light, and the lender files a title claim. The
following examples illustrate how
avoidable errors have led to expensive claims.
Th e S y m bo l & Does N ot Equ al +: In this claim, a
security instrument arrived with the
name of the grantor preprinted as A & B Homes, Inc. The
vesting deed was actually to A & B Home
II, Inc. When the president of the company went to sign the
documents, he hand printed the name
+ B Homes II, Inc. on the front of the security instrument and
above his signature line. When the
security instrument was recorded, the clerk indexed the name
with + rather than &. Years later,
the lots securing the loan were sold in bankruptcy. After the
sale, the Bankruptcy Trustee objected t
the incorrect indexing. The lender filed a claim and Investors
was forced to pay a large settlement to
the lender under the terms of the policy.
Marital Interests: Another frequent fact pattern leading to
claims is when an owners spouse fai
to sign the security instrument. There are times where one
spouse with good credit obtains a loan.
They may have a spouse with poor credit who does not participate
in obtaining the loan. When the
loan is closed, only the spouse with good credit (the borrower)
signs the security instrument. If th
property is owned by husband and wife or if the state where this
property is located has a statutorymarital interest, the spouse
with bad credit must also sign the security instrument. When our
claim
department looks into the situation, they will ask why one of
the spouses did not join in signing.
Often, the answer is because they were not the borrower. This
observation may be correct, but it ma
also be costly. In order to foreclose, the lender is going to
need all of the property owners to have
signed the security instrument. If an owner of the property does
not sign, that owner could object to
the foreclosure and prevent the bank from taking the property to
satisfy the debt.
Lender-Prepared Do cuments: Another potential cause of a grantor
problem is a document
prepared by the lender. Loan officers may use software to
generate the security instrument. The
software may simply populate the document with the name of the
borrower. When a person owns ainterest in the property and is not
listed to sign the security instrument, the loan may be closed
with
a necessary party missing from the security instrument.
If the transaction is going to result in a lender having a
security interest in the property, confirm all
vested owners will sign the security instrument. If an owner of
the property did not sign the security
instrument, the policy must except to a failure of a necessary
party signing the security instrument.
The policy must also except to the fee simple interest of a
non-signing owner.
2010 Investors Title Company. All rights reserved.
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