CHAPTER 7 AN OVERVIEW AND INTERPRETATION OF STATE TITLE STANDARDS
| Jurisdiction | United States |
(Jan 1994)
AN OVERVIEW AND INTERPRETATION OF STATE TITLE STANDARDS
Ray, Quinney & Nebeker
Salt Lake City, Utah
I. INTRODUCTION
a. Prior and Other Publications.
b. States which have Adopted Title Standards.
II. BACKGROUND
III. TITLE STANDARDS IN COURT DECISIONS
a. Creation of Joint Tenancies.
b. Severance of Joint Tenancies.
c. Marketable Title Acts.
d. Reasonable Title Examiner.
e. Use of Title Standards in Real Estate Contract.
f. Judicial Support of Title Standards.
g. Title Standards being Distinguished.
h. Title Standards as Standards of Care.
i. Title Standards Cases Involving Oil and Gas Issues.
j. Miscellaneous Cases Dealing with Title Standard.
IV. COMPARISON OF TITLE STANDARDS
a. General Provisions.
b. Effect of Unreleased Oil and Gas Lease.
(i) Oklahoma.
(ii) Kansas.
(iii) North Dakota.
(iv) Colorado.
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c. Marketable Title Acts.
(i) Utah.
(ii) Wyoming.
(iii) North Dakota.
d. Duhig Rule.
IV. CREATION AND UPDATING OF TITLE STANDARDS
V. SUMMARY
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I. INTRODUCTION
This segment of the Special Institute on Land and Permitting is to review existing title standards and to bring up to date the effect of using title standards in reviewing title.
a. Prior and Other Publications.
As is the tradition in the Rocky Mountain Mineral Law Foundation, the author expresses thanks to those who have gone before and specifically makes reference to prior RMMLF publications dealing with title standards1 .
Also, the author wishes to thank Phillip Wm. Lear, Esq. of Snell & Wilmer in Salt Lake City, for his invaluable help in assembling examples of Title Standards throughout the country.2
b. States which have Adopted Title Standards.
The following is a list of the states which have adopted title standards through the efforts of the local bar associations: Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Ohio, Oklahoma, South Dakota, Utah, Washington, Wisconsin and Wyoming. Title standards from some of these states will be analyzed in Section III dealing with case law interpreting title standards. We will also compare title standards from several states in Section IV herein.
II. BACKGROUND
While Title Standards have been with us for a number of years and have been utilized by numerous courts in reaching determinations concerning real property matters,3 there has been some question as to their applicability to mineral title examination. Title standards were developed to increase the marketability of title, and, in many states the title standards
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concentrate on marketable title acts as means for clearing title.4 At least one writer, however, has stated that "[M]arketable title is a concept which has little, if any, meaning in the context of a mineral title examination.5
With the advent of title insurance companies, the role of the attorney who examined abstracts and rendered title opinions was diminished.6 Presumably, the usefulness of title standards would diminish in the general practice of real estate law. And yet the opposite is true; the courts continue to rely on the contents of title standards for the bases of their decisions. Title standards are here to stay and continue to remain an important part of the work of the bar in many states. The only question remaining for the members of the mineral land title examiners club is whether title standards can play a reasonable role in assisting the preparation of a mineral title opinion. As will be seen as we review court decisions dealing with the influence of title standards, the benefit of following title standards even in mineral title settings will prove beneficial to the mineral title examiner. The key to using title standards is understanding those fact situations in which the standards must be abandoned.7
III. TITLE STANDARDS IN COURT DECISIONS
a. Creation of Joint Tenancies.
The courts in most jurisdictions where title standards exist tend to be very supportive of title standards in matters involving title issues. With differences in the laws in the various jurisdictions, the conclusions of the courts may differ, while still upholding the general principles set forth in the applicable title standards.
For example, the issue of what constitutes the creation of a joint tenancy with rights of survivorship was raised in the case of Hughes v. Fairfield Lumber and Supply Company8 , where property was conveyed to Harry B. Hughes and Jeanette B. Hughes, husband and wife, "and to the survivor of them and to the heirs and assigns of such survivor."9 After the death of Harry Hughes, Creditors brought an action to enforce an attachment of Harry's interest in the real property. The court held that at his death, Harry's interest in the real
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property ceased to exist and that there was nothing left for the creditors to attach. In reaching its conclusion, the court relied upon a form of survivorship deed which had been drafted by the Connecticut State Bar Association in 1937. The deed had been part of beginnings of the establishment of title standards by the Connecticut State Bar which began its work in 1936 and published the results in 1939.10 The court also considered other citations, but the fact that the title standards and the model deed played an important role in the decision of the court was significant.
Title standards in the State of Kansas were also relied upon by the court in determining that a deed to a husband or wife or the survivor of either" did not create an estate which vested 100% in the survivor. The court in Riggs v. Snell11 held that the deed in question created a tenancy in common and not a joint tenancy due the inclusion of the phrase, later in the deed, which referred to the grantees as the "party of the second part, their heirs and assigns." The plaintiffs introduced portions of the local title standards in an effort persuade the court to find that there was a joint tenancy. The court reviewed the following standard:
Standard B(b) A deed to two or more grantees "and the survivor" of a present interest in possession shall be deemed to pass the entire interest to the survivor, provided there has been no alienation and there is no evidence in the deed that a right of survivorship was not intended.12
In finding that there was a tenancy in common and not a joint tenancy, the court was careful not to contradict the language in the standard by finding that there "is evidence in this deed that a right of survivorship was not intended."13
b. Severance of Joint Tenancies.
The factors contributing to the severance of a joint tenancy were reviewed in two cases, both of which relied on title standards in reaching their conclusions.
In re Baker's Estate 14 held that the entering into a contract for the sale of real property by joint tenants was sufficient to sever the joint tenancy. The contract was signed by Allie and Clara Baker, and Allie died shortly thereafter. The court struggled with issue of
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whether the widow was entitled to the proceeds from sale or whether the heirs of Allie were entitled to a one half share. After a lengthy recital of numerous cases and treatises, the said:
We are conscious of the fact it is the responsibility of this court to make the ultimate decision on matters presented to it. However, it is of interest to note the Committee on Iowa Land Title Examination Standards of Iowa State Bar Association, in its 1950 report, held where joint tenants entered into a contract for the sale of real estate a severance was effected.15
Title standards also assisted the Michigan Court of Appeals in deciding whether one joint tenant could sever the joint tenancy by a subsequent conveyance. In Snover v. Snover16 , Mayland B. Snover quitclaimed to himself, his son and his daughter in law his house in joint tenancy. Several years later, he married and executed a second quitclaim deed to "Mayland B. Snover and Gladys L. Snover, husband and wife." At his death, his son sought to evict his step mother on the theory that the second deed was ineffective to sever the joint tenancy created by the first deed. The court held that:
A conveyance by any of the grantees does not operate to convey more than that interest or in any way diminish the contingent remainder of the named joint tenants [Citations omitted]. Such a consideration has been relied upon for years and is incorporated into the Michigan Land Title Standards.17
c. Marketable Title Acts.
As can be imagined, the effect and the interpretation of the marketable title acts have been the subject of courts and title standards for a number of years. The issue is especially of concern to the mineral title examiner since nearly all mineral title examinations attempt to go back to the origin of title. Unless there is language in the statute dealing with its effect on minerals, reliance on a marketable title act can be dangerous.
Unlike some states which have excepted severed minerals from the effect of marketable title statutes,18 Ohio has no similar provision in its Marketable Title Act. The case of Heifner v. Bradford19 was a dispute between the heirs of the original landowners who
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reserved the minerals in 1916 and the heirs of the surface owners who received title in 1936 without mention of the previous reservation. The issue for the court was whether the filing for record of a an affidavit of transfer of the oil and gas rights under the will of the original owner constituted a "title transaction" under the Ohio Act. The court reviewed the Model Marketable Title Act and took notice of title standards which had been drafted to be used in connection with the Model Act.20
"The recording of an instrument of conveyance subsequent to the effective date of the root of title has the same effect in...
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