CHAPTER 7 FUNCTION OF TITLE STANDARDS IN MINERAL TITLE EXAMINATIONS
| Jurisdiction | United States |
(Apr 1982)
FUNCTION OF TITLE STANDARDS IN MINERAL TITLE EXAMINATIONS
Kirven and Kirven
Buffalo, Wyoming
for
The Rocky Mountain Mineral Law Foundation
April 1 and 2, 1982
I. INTRODUCTION
Utilization of title standards, particularly in the area of minerals and acquisition of surface for mineral purposes, is becoming increasingly important. While many early title standards are more or less taken for granted by examiners, revised standards explaining and illustrating the effect of legislation are becoming the new tools of the examiner as he or she seeks to determine the status of title with speed and clarity sufficient to satisfy the client and precision and accuracy to sufficiently satisfy the examiner.
The purpose of this paper is to briefly review the development of title standards and generally describe the current status and usage of such standards. The paper will also explore the changing role of title standards in mineral title examinations and how utilization of title standards has been affected by the growth of title insurance. However, it appears that title standards, particularly revised standards, yet have a function in conducting a mineral title examination.
It is not within the scope of this paper to make a standard by standard comparison among the states. Rather, examples of title standards from different states are set out as illustrative of various types of standards in use. Where possible, the standards set out deal with matters peculiar to mineral title examinations.
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II. DEVELOPMENT OF TITLE STANDARDS
The development of title standards can be traced to the title practitioner's efforts to ease the burden on clients of title examination costs resulting from an antiquated system of conveyancing and examination of title, and at the same time preserve the exclusive province of lawyers to pass upon title to real property. To some extent, such efforts were too little and too late, particularly to the non-mineral title examiner. Examination of non-mineral title is now predominantly done by title insurance companies.
As public records multiplied, so did the demands on the examiner to conduct his examination in a less laborious and time-consuming manner. Added to that burden was the existence of practitioners who "construct against title" or the "nit pickers", roughly defined as overzealous and over meticulous examiners who considered every slight divergence in name, description or other slight irregularity in the complete chain of title as a defect requiring curative action.1
Even though title practice was traditionally localized, examination of the same record by two different practitioners rarely resulted in the same opinion. The client found that the title which was passed by one examiner was unacceptable to another examiner. As a further result, the first examiner found his work and reputation being called into question by the second examiner's treatment of meaningless technicalities as defects. To avoid that occurrence, each examiner adopted a viewpoint that no technicality, no matter how insignificant, remote or lacking in practical significance, would be overlooked. This attitude among examiners eventually led to adoption of what is generally
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found to be one of the first title standards to be adopted in any of the fifty states:
"Standard 1. Re Previous Examination by Another Attorney.
PROBLEM: When an attorney discovers a situation which he believes renders a title unmarketable, what steps should he take first, if he has knowledge that the same title has been examined by another attorney for marketable title who has not objected to the defect?
ANSWER: He should communicate with the previous examiner and explain to him the matter objected to, and afford opportunity for discussion."2
or stated differently:
"Standard No. 1. The Examining Attorney's Attitude. The title should be considered realistically; and objections and requirements should be directed only to such irregularities or defects as actually impair the title or as may be reasonably considered to expose the purchaser or lender to the hazard of adverse possession."3
Adoption of standards similar to those set forth above were the first step in giving the examiner confidence that review and disregard of a meaningless defect would not be used by a subsequent examiner to cast doubt on the abilities of the initial examiner. Prior to adoption of such standards there was never any reason to ignore any matter regardless of how insignificant. To a large extent the early title standards were nothing more than a gentleman's agreement as to which defects were material and which defects could or could not be passed over by the examiner.
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Because early title practice was localized down to the community level, the first compilations of standards were done by the bar associations of individual counties in the mid-1920's.4 A natural progression has followed by the adoption of standards at the state level beginning with the state of Connecticut in 1938.5 Since that time approximately half the states, either through legislation or promulgation by state bar associations, have adopted standards for title examination. The pertinent western states adopting standards are listed elsewhere herein.
The degree and extent of recognition to which title standards have been accorded has varied from legislative enactment of the standards into law to promulgation by local bar associations as suggested guidelines for their members. In 1947, title standards in the state of Nebraska were enacted into law by adoption of the Nebraska Marketable Title Act which made the existing standards the legal standard of marketable title.6 Subsequently, the title standards were repealed and no longer have the force of law.7 Reasons cited for the repeal of the legislation were that as legislation it was difficult to amend and keep the standards current; new standards proposed by the bar were given no recognition until enacted into law; and as legislation the standards lacked sufficient flexibility.8
Experience would seem to indicate that flexibility and the ability to continually amend the standards are essential to the viability of any set of standards. Unless the standards can be changed to keep pace with legislation and new case law, then the standards will fall into misuse as has occurred in some states.
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III. WESTERN STATES ADOPTING TITLE STANDARDS
The following western states, generally through the efforts of their respective bar associations, have adopted some form of title standards:-9
| State | Date of Initial Adoption | Revision |
| Colorado | 1946 | June 12, 1963 |
| Idaho | 1944 | |
| Montana | 1951 | Second Printing (1962) |
| New Mexico | 1953 | |
| North Dakota | 1950 | Annually (1980) |
| South Dakota | 1948 | Annually (1981) |
| Utah | 1945 | June 19, 1964 |
| Washington | 1942 | |
| Wyoming | 1949 | July 1, 1980 |
Other western states, as near as my limited research reveals, have never adopted a set of title standards:10
Alaska
Arizona
California
Nevada
Oregon
The title standards adopted in each of the above states vary greatly in form, content and in topics covered. The topics include interpretation of title curative legislation; the law applicable to commonly recurring situations; the content of an abstract; presumptions of fact which should ordinarily be applied by examiners; effect of lapse of time on record title defects; the duration of record search; and attitudes and relationships between examiners and between examiners and the public.11 Other, more comprehensive standards, such as those adopted by North Dakota, cover additional topics, such as bankruptcy, minerals, plats and condominium titles.
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At the time of initial adoption most all standards were in a question and answer format. For example, Standard No. 2 adopted by the Washington State Bar Association provides as follows:12
"No. 2
Problem:
Some U.S. Government patents, particularly those issued to railroads, contain a clause: 'Excluding and excepting all mineral lands should any such be found....' May we disregard this exception in our title opinions?
Recommendation:
It is recommended that no exception be listed in our title opinions on this account.
Comment:
The issuance of a U. S. Government patent (except when based on mineral claims) has been held to be a conclusive determination by the Government that the land is agricultural and non-mineral bearing and exceptions such as the foregoing are void."
Other standards pose quite narrow and localized questions and answers, such as Standard No. 3 of the Utah State Bar:13
"-3-
Should the abstract include judgments in the Federal District Court?
Only in Salt Lake and Weber Counties. In other counties, Federal judgments to constitute a lien must be docketed with the County Clerk.
(38-5-1; 59-12-39, U.C.A. 1953) Title 28, Section 812, United States Code Annotated (73-22-1 U.C.A. 1953)"
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Other standards appear to be so broad as to offer little guidance to the examiner. One such standard which appears to be so broad as to be practically meaningless is Standard No. 18 of the State Bar of New Mexico:14
"Standard No. 18. Ancient Instruments. Examination of instruments more than fifty years old should be made only for the purpose of determining that title has passed from the sovereign; that there are conveyances or other instruments of record which reasonably evidence an intent to transfer interest of record owners (without regard to whether such instruments are actually sufficient to convey title) and to ascertain whether or not there exists any 'future interests' which may not have yet vested or may have vested within the last fifty years. It is intended by this standard to disregard all errors in description; to disregard all questions of jurisdiction in probate and mortgage foreclosure...
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