Connecticut Bar Journal
81 CBJ 369.
NAVIGATING CONNECTICUT'S MARKETABLE RECORD TITLE ACT: A ROADMAP FOR THE PRACTITIONER
Connecticut Bar JournalVolume 81, No. 4, Pg. 369December 2007NAVIGATING CONNECTICUT'S MARKETABLE RECORD TITLE ACT: A ROADMAP FOR THE PRACTITIONERBy Jonathan M. Starble (fn*)The Marketable Record Title Act (the "MRTA") has been an integral part of Connecticut property law for 40 years. The existence of the MRTA helps to facilitate real estate transactions by providing purchasers, attorneys, title insurers, and lenders with a level of certainty regarding the status of land titles. Yet despite its importance to the real estate community, the statutory scheme of the MRTA is often misunderstood. The state's Supreme Court and Appellate Court have addressed the MRTA on only a few occasions, and the resulting decisions have not provided much guidance.
This article dissects the MRTA and provides a roadmap for practitioners who seek to use the MRTA in connection with the examination and litigation of competing land titles. Section I discusses the background and scope of the MRTA. Section II explores the structure of the MRTA and provides a step-by-step analytical model for examining the process by which competing property interests are resolved under the MRTA. Sections III and IV discuss two specific analytical issues under the MRTA, both of which have resulted in unusual and important judicial interpretations. In particular, Section III addresses the "specific identification" exception to the MRTA, and Section IV addresses the ability of an appurtenant dominant servitude holder to use the MRTA as an affirmative tool to extinguish an adverse servient interest.
Background and Scope of the MRTA
Connecticut is one of 19 states to have enacted some form of marketable record title act.(fn1) Iowa became the first state to do so by enacting a simple version in 1919.(fn2) The first modern act was developed in 1945, when Michigan adopted legislation that would become a prototype for other states.(fn3) In 1960, the Michigan law was adapted into a model act (the "Model Act"), which appeared in a treatise written by Lewis M. Simes and Clarence B. Taylor.(fn4) The Model Act then became the basis for Connecticut's MRTA, which was proposed by the bar and enacted into law in 1967.(fn5) The enactment of the MRTA was for the stated purposes of "reducing the time and cost of title searching, ... removing the risks of ancient defects, ... and ... reducing the need for quiet title actions."(fn6) The text of the MRTA describes its purpose as "simplifying and facilitating land title transactions by allowing persons to rely on a record chain of title."(fn7)
The MRTA is distinctly limited in scope. Despite its ostensibly broad purpose, the MRTA is not designed to be a comprehensive system for determining the priority or validity of various competing title claims. Since colonial times, the primary mechanism for accomplishing any such determination has been Connecticut's "recording statute," which is codified in its present form at § 47-10(a) of the Connecticut General Statutes.(fn8) Under this statute, priorities between competing land titles are determined based on the date of the conveyance of the property interest, with the caveat that no conveyance is valid against a third party unless the conveyance is recorded in the land records within a reasonable time after execution.(fn9) The recording statute is subject to the principle that "a grantor cannot effectively convey a greater title than he possesses."(fn10) Thus, the recording statute does not give validity to an otherwise invalid conveyance merely because it is promptly recorded in the land records. In addition, the system of recordation set forth in section 47-10(a) has long been subject to common-law and statutory principles by which certain land titles may vest despite the absence of any conveyance and/or recordable instrument. These principles include, for example,(fn11) adverse possession,(fn12) pre-scription,(fn13) implication,(fn14) descent and devise,(fn15) and lien.(fn16)
Prior to 1967, a Connecticut court seeking to quiet title to any property interest undertook an analysis of the parties' chains of title as far back as necessary to resolve the dispute. In all cases, the objective was to determine the true title rights of the parties based on the history of the subject property from the beginning of time until the date of trial. The adoption of the MRTA did not abolish this long-standing system for resolving the majority of title disputes, nor did it create a surrogate method for determining true title.(fn17) Rather, the MRTA created a mechanism that could be invoked by the putative owner of a recorded title interest for the purpose of limiting a court's review of historical title in certain situations.
Under the MRTA, a party with an unbroken chain of title of at least 40 years can establish legal title and extinguish certain competing interests, despite the otherwise invalid nature of the party's own interest or the otherwise valid nature of the competing interest. The MRTA is not merely an evidentiary rule, nor is it intended as an aid in determining true title. Indeed, whereas an analysis of true title involves a full chronological examination of historical title, an analysis of marketable record title is based on a reverse chronological examination of historical title that is arbitrarily limited as to time. Therefore, the results of a marketable-record-title analysis and a true-title analysis will differ in some cases and be identical in others. In the event of inconsistent results, however, the MRTA will always prevail, provided that the party invoking the MRTA is able to satisfy the statutory criteria.
An analysis under the MRTA is conceptually binary in nature. It first requires a determination of whether the party invoking the MRTA has "marketable record title," which consists of an unbroken chain of title of at least 40 years. If this first element is established, the next question is whether one of several exceptions applies. If no such exception applies, the party invoking the MRTA may extinguish all other interests. If, however, the party is unable to prove both that marketable record title exists and that no exception applies, then the MRTA becomes irrelevant to the title analysis, and the search for true title resumes. As discussed below, it is the second part of the analysis - the application of the statutory exceptions - that is the most common cause of confusion and controversy.
MRTA: The Basic Route
Whenever a title dispute arises, the first inquiry is whether one of the disputing parties is able to claim marketable record title that might extinguish a competing interest under the MRTA and therefore preclude any examination of true title. Under the MRTA, this inquiry requires an eleven-step analysis that is shown in the diagram labeled "MRTA Roadmap," which appears as the Appendix to this article. The map, which is in flowchart form, assumes a title dispute in which Party A seeks to extinguish an interest held by Party B. The following is a discussion of each step.
Step 1. Does A have an unbroken chain of record title to the interest for at least 40 years?
Under § 47-33c, "[a]ny person having the legal capacity to own land in this state, who has an unbroken chain of title to any interest in land for forty years or more, shall be deemed to have a marketable record title to that interest," subject only to the statutory exceptions discussed below. In order to have an "unbroken chain of title," a person's title must rely on a "title transaction,"(fn18) or series of title transactions, going back at least 40 years, with "nothing appearing of record ... purporting to divest the claimant of the purported interest."(fn19) For the purpose of determining whether a person possesses statutory marketable record title, the MRTA assigns technical meaning to some otherwise common real estate terms and concepts. This creates the potential for confusion in at least four principal areas. Accordingly, the following words of caution should be given to anyone who endeavors to traverse the MRTA:
First, the use of the term "marketable record title" in the MRTA is not intended to create any standards for determining if a purchaser under a land contract is legally obligated to accept title.(fn20) In some situations, a seller might be able to satisfy the conditions of § 47-33c, but the title might still be subject to an encumbrance that renders title otherwise "unmarketable" from a commercial standpoint. Similarly, a seller might not be able to satisfy section 47-33c, due to the mere recency of the interest's creation, but the interest might otherwise be undisputed and therefore legally marketable to a buyer.(fn21)
Second, the term "chain of title" in the MRTA pertains to a very narrow concept. In the context of a title dispute not involving the MRTA, the term "chain of title" usually refers to the entire series of transactions from which a party claims title. Each competing party has a chain of title, and the chains are traced back as far as necessary for the purpose of resolving the dispute. Under the MRTA, however, the term refers only to the most recent portion of a chain of title, going back only as far as the last recorded title transaction prior to the 40-year period preceding the time of examination. Once such a title transaction is found, the chain stops...