CHAPTER 3 PRACTICAL ASPECTS OF EXAMINING TITLE, PREPARING WORKSHEETS, CHAINS OF TITLE, AND DOCUMENT INTERPRETATION
| Jurisdiction | United States |
PRACTICAL ASPECTS OF EXAMINING TITLE, PREPARING WORKSHEETS, CHAINS OF TITLE, AND DOCUMENT INTERPRETATION
Liana E. Jones
Lear & Lear PLLC
Salt Lake City, UT
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JEFF TAYLOR is a partner at Lear & Lear PLLC. He graduated magna cum laude in 2002 from Brigham Young University with a B.S. in Wildlife and Range Resources. After graduation, but before law school, Jeff worked for the U.S. Forest Service's Shrub Sciences Laboratory. Jeff graduated from law school in 2006 from the University of Utah, where he was a Leary Scholar and a member of the Utah Law Review. Though born and raised in Southern California, Jeff chose to spend his summers at his grandparents' cattle ranch, where he learned to irrigate, vaccinate cattle, cut, bail and haul hay; and "fix fence". Jeff enjoys climbing, back packing, skiing, hiking and fly fishing. Jeff's current passions are climbing, his family, and wife Ashlee.
LIANA JONES is a senior associate with the natural resource firm, Lear & Lear PLLC. Liana is a graduate of the University of Utah Law School, and has a B.A. in psychology and sociology from the University of Colorado. While in law school, Liana was awarded the Dewsnup Natural Resource Fellowship and went on to clerk for the Utah Attorney General's office natural resources division, and was a member of the Journal of Land, Resources, & Environmental Law. Upon graduation she went in to private practice, and has been with Lear and Lear for 6 years. When not immersed in oil and gas law, Liana can be found in the mountains, either on a bike or on skis, depending on the season. She also rides horses competitively on the Colorado hunter/jumper circuit.
I. Introduction
The receipt of an abstract often results in momentary paralysis, the temporary loss of where to start and what to do with the boxes of bound documents, or in the modern era, a PDF containing thousands of Pages, which have been placed in your office with a deadline of "yesterday." This paper will provide a brief guideline for examining records which have been provided to you, or in obtaining and compiling such records, organizing and chaining title documents, reviewing recorded instruments and preparing worksheets and ultimately, a title opinion. As such, it briefly addresses various types of title opinions, and considerations when examining title from fee, state, federal and tribal sources. This paper will discuss the necessary steps to review title and prepare a title opinion, specifically: (1) preliminary considerations of how documents are received and examples of different types of abstracts and source materials; (2) ascertaining the scope of examination and the specific needs and preferences of each client; (3) obtaining and including additional materials; (4) the process of document analysis and chaining title, including methods and materials relevant to tracking documents and ownership; (5) creating an ownership spreadsheet; and (6) organizing and drafting the title opinion. In addition, this paper includes an appendix of relevant spreadsheets and templates useful in examining title. While there is no alternative for practical experience, this paper focuses on creating uniform processes to implement in order to ensure title defects are thoroughly examined and included in resulting opinions, and ownership interests are accurately reported.
Although the process of document review and interpretation is at the core of an accurate title opinion, understanding the components of an abstract and the scope of review, the organization of materials received and needed, and the implementation of uniform workbooks, spreadsheets and notetaking will help set the examiner on the path for success and client satisfaction.
II. Preliminary Considerations
At the outset, it is necessary to address the method in which the process of title examination commences. An "abstract of title", or simply "abstract" for short, is the term used for the complete body of materials used to prepare a title opinion. While in most instances, an examining attorney is provided with an abstract supplied by the requesting client or a land company on behalf of the client, in some instances, due to time or budget constraints, an examining attorney is required to perform a "stand-up" title examination. Although this paper predominantly focuses on examination of title instruments presented in the form of a prepared abstract provided to the examiner, it is worth noting that in the event a stand-up examination is requested, it is imperative that prior to commencing an examination of the county records it is necessary that the examiner understand the jurisdiction's recording statutes and indexing methods, and diligently research the specifics of the particular county, indices, and how to search for judgments, blanket
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instruments,1 probate records, tax assessments and records, and other instruments which may not be in the records of the county recorder's office. In grantor/grantee recording states, the examiner or abstractor often relies on a "title bank" or a third-party repository, which maintains the instruments recorded with the county by legal description. When conducting a stand-up examination in the true sense of the term, meaning the attorney physically travels to the specific repository of instruments, as opposed to accessing them online, an attorney must focus on taking careful notes, and if possible, pictures, photocopies, or digital scans of instruments which may require additional review. In addition, depending on the lands involved, it may be necessary to obtain and examine records from the Bureau of Land Management ("BLM"), state land agency,2 or Bureau of Indian Affairs ("BIA") agency, possibly resulting in additional time and travel spent procuring and reviewing instruments.
However, as mentioned above, in most instances, an attorney is asked to prepare a title opinion based upon an abstract which has been provided by the client, or by a third-party landman or land company at the request of the client. These abstracts can vary widely in form and substance, and the instruments provided can be presented either in paper or digital form. There are pros and cons to paper versus digital instruments, and most examiners tend to develop a personal preference over time. For example, while paper documents are cumbersome to review, store, and travel with, paper documents allow for note-taking on the document, and are easily shared with other attorneys when further discussion is required. In the alternative, digital instruments are easier to transport and find within an abstract, but require more extensive note taking in the chaining process, which will be addressed further herein, and are best reviewed using multiple computer monitors, in order to keep both the document and the chain visible.
As a final note, an understanding that no person or land company is immune from mistakes is important to remember. While prepared abstracts often provide a tremendous amount of valuable information, mistakes, missed instruments, or incorrect interpretations may occur in an abstract, and it is invaluable for an examiner to view title with an open, inquisitive mind, so as to prepare the best and most accurate product for the client.
III. Source Materials in Examination.
The materials contained in an abstract can vary tremendously, based on the scope of the project and the particular needs of the client. If the abstract is provided by a third-party land company at the request of the client, it should contain the following materials: (1) a certification letter indicating the effective period of the abstract, as well as the particular records searched, noting that when preparing a supplement to an existing opinion, or underlying opinion, as they are often referred to, that the starting date of the abstract should match the effective date of the underlying opinion(s); (2) a runsheet or index compiled by the abstractor listing all instruments indexed against the lands under examination, which can be organized in a number of manners, either by instrument date or recording date, by tract, or separated as to surface, mineral and leasehold interests; (3) all recorded instruments indexed against the lands and/or against parties of interest, as well as any additional materials obtained by the landman, such as court proceedings, judgments, probates, UCC filings, etc.; and (4) federal, state or tribal lease files, if applicable.
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In addition to the above described "necessities" of an abstract, the materials sent by an abstractor may also include any of the following: county and/or title bank indexes; a mineral ownership report or mineral take-off reports, which are cursory ownership reports based on the abstractor's review of the title instruments or tax records; a flow-chart of the chain of title; or a title memorandum, providing an explanation of the ownership and possible defects. While these additional materials are often useful in the title examination process and are particularly useful in ensuring all materials are considered and in double checking ownership, they are not necessary to the examination of title, and an abstract is not incomplete if such are not included. Nevertheless, when commencing an examination, it is important to first locate all of the required elements of the abstract and ensure that all necessary materials are included.
In the event that the examiner is asked by client to order or prepare an abstract, it is necessary to ascertain the scope of the examination, which will determine the type of records necessary, and the dates to be searched.
A. Scope of Examination.
At the outset, when a title opinion is ordered, the scope of the examination should be clearly defined and understood between the parties. The following are examples of various types of title opinions which warrant review of...
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