2011 North Carolina Tax Collectors’ Association

Spring ConferenceAsheville, North Carolina

Kimberly Mullinax, Cleveland CountyLorie Domnas, Durham CountyChip Reinhardt, Attorney, Durham, NC

Taking the Mystery out ofTitle Searching

Easements

Notice

Why perform a title search?

To establish chain of title for In-Rem foreclosure

To locate lienholders for a parcel to aid in collection efforts

To correct tax scroll records regarding ownership

To locate heirs to aid in collection

How is property transferred?

Deed

Probated Will or Administered Estate

Inheritance (Intestate Succession Act)

Court order

Types of Ownership

Business

Individual

Tenancy by the Entirety

Life Estate

Types of Ownership

Tenants in CommonTwo or more people, related or unrelated, equal or unequal shares. Upon death, a co-tenants share passes to his/her heirs

Joint Tenancy with Right of SurvivorshipEach owner must receive title at the same time on the same deed, each has equal share, upon death of co-tenant, his/her share goes to other co-tenants.

The Players….

Deed

Grantor – the one who transfers Real Property

Grantee – the one who receives Real Property ownership

Types of DeedsGeneral Warranty Deed◦ Deed containing full warranty of title.

Types of DeedsLimited Warranty Deed◦ Deed containing warranty only against the

chain of title being disturbed by action of the grantor.

Types of DeedsQuitclaim Deed (Non-Warranty Deed)◦ Deed containing no warranties of title. This

transfers the interest the grantor has in the land, not the land itself.

Types of Deeds

Trustee’s Deed or Substitute Trustee’s Deed (as in Mortgage Foreclosure)

Types of Deeds

Commissioner’s Deed (as in Tax Foreclosure

Types of Deeds

Administrator’s Deed, Executor’s Deed (Estate)

Sheriff ’s Deed (as in In Rem Foreclosure)

Guardian Deed

Where do you start?

Name of current owner

Description of Property

Tax ID number

Remember the Big Three!

(three offices you will need to check)

1. Register of Deeds2. Clerks Office3. Tax Office

First Stop…Register of Deeds

Using the Grantor-Grantee IndexStart with how the current owner acquired the propertyGo backwards in time – who owned it before the current owner?

Inde

x

Keep following the chain backwards in time Sometimes a deed refers to a previous deed where the grantor acquired property.If not, you can use the current Grantor in the Grantee index.

PlatBe sure to make a copy of the platCompare the with GIS/Land recordsSometimes a street will be closed or a recombination plat will be filed without a corresponding deed or court order

Document Everything!

Chain Example

Current Owner – Norville Rogers

sdfsdfsdf

Chain continued

Since we see that Norville acquired the property from Johnny, we need to see how Johnny acquired the property.We will look for Johnny in the Grantee Index

June 2010

Chain continued

The Grantee index gives us deed book 2172 page 300

Now our chain shows:

June 2010January

1990

•Norville acquired the property from Johnny Bravo, Johnny Bravo acquired the property from Fred & Wilma Flintstone• Now we need to see where Fred and Wilma became owners (by the Grantee index)

Deed to the FlintstonesHere we see the Flintstones acquired the property from Rosie Robot on March 2, 1978

Chain continuedSince we know that the Flintstones acquired the property in 1978, we have completed the chain of title for 33 years. If you want a 40 year search, check to see when Rosie acquired the property. According to her deed it was 1960.

June 2010January

1990

March 1978

May 1960

With each deed…

Be sure to take accurate notes on:◦ Book and page reference for each◦ Full name of grantor(s) and grantee(s)◦ Date and time of recordation◦ Date of Deed◦ Type of Deed◦ Consideration and revenue stamps◦ Legal description, including plat reference if

any

Pay attention!

Check description of the property on each deed and note discrepanciesCheck for all necessary signatures. If signed by Power of Attorney be sure a POA has been recordedIf the grantor was a corporation, was the corporation active when they conveyed?Verify notary expiration date had not passed

Before we go further…

Let’s review two other ways real estate can change ownership

Court Order (less common)

Will or Estate Administration, Intestate Succession

Court OrderNot very common, but can be seen in Civil Suits

Real life example from Durham County

Tax office records:

Owner of record:1993 Andrea Lanzar

1997 -2004 Durham Homeopathy Associates

2005 -2008 George HaynieTaxes were not being paid and it was clear from system notes that George Haynie did not believe he owned this property.

Haynie v. Lanzar

Land records had mistakenly transferred the ownership from Durham Homeopathy to Haynie based on Haynie’s victory in his civil suit.However, the language of the judgment was very clear in regards to ownership

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Default be entered against the Defendants, Andrea Lanzar and Durham Homeopathy Associates, Ltd. In favor of Plaintiff as follows:

1. That the deed dated November 15, 1996 and recorded in Book 2255, Pages 204-205 in the Durham County Registry, purporting to convey the real property… from Andrea Lanzar to Durham Homeopathy Associates, LTD be and is hereby avoided, and the Register of Deeds is hereby notified to correct the real estate records accordingly

In other words..

It is as if the Deed never existed.

So instead of:Lanzar Durham Homeopathy HaynieIt should have actually been:Lanzar Durham Homeopathy Lanzar

And the most common court orders transferring ownership are…

Will or Estate Administration

Another way for property to transfer is by Will or Estate Administration

Important!

A Will cannot pass title unless filed or probated in the County where the property is located.

Know the law regarding Wills G.S § 31

Intestate Succession Act §29 North Carolina General Statutes

Sets out the law regarding distribution of property where no will is present for the deceased.

Important to understand this law as it can be complicated

Intestate Succession Act

Mom, Dad, Daughter, Son

Mom 1/3 Daughter 1/3 Son (deceased)

Son’s children1/3

In a situation where property was deeded in Dad’s name only, and Dad is deceased:

Intestate Succession Act

Mom, Dad, Daughter, Son1,

Son 2

Mom 1/3

Daughter2/9

Son 12/9

Son 2 (deceased)

2/9

Son 2’s Wife1/9

Son 2’s Daughter

1/9

What if?Property is in Dad’s name only and he is deceased, leaving behind Mom, Daughter, and 2 sons?

Intestate Succession

Can be very simple to very complicated

Study the law for better understanding

G.S. § 29

Common Problems in the ChainNot finding the owner in the Grantee index (need to check estates, judgments, special proceedings)Sub-divided propertiesDiscrepancies in legal descriptions

Adverse or Out Conveyances

Once you have established your chain, you need to establish the Out Conveyances

The goal:

Examining the transactions of each owner of the property (during their ownership) to insure that they did not do anything to create a defect in title

Examples of defects in titlePrior conveyance of the same property (seller does not have title)Outstanding (uncancelled) mortgage or deed of trustEasementsRestrictive CovenantsLeases, contracts to sell

Examples of defects in title

Mechanics LiensLiens for unpaid state and federal taxesUnpaid county and municipal taxesSpecial Assessments for water, sewer, street paving, etc.

Where to check:

Grantor/Grantee indexUCC ListingsJudgment indexSpecial ProceedingsTax office records

Pay attention to…

DOT Highway & Railroad Condemnations & Rights of Way (property may be incorrectly mapped)

Leases (unexpired? Be sure the lessee is the record owner and gets notice)

Pay attention to…

UCC Filings (unexpired UCC that secures real property? The secured party must be notified)

Court orders. Read it! Is property being conveyed?

Lis Pendens – Parties to a pending lawsuit regarding the property must be notified

Deed of Trust

The Players:Grantor – property owner conveying title to trustee who holds title to secure debt to lender.Grantee - The TrusteeBeneficiary – The Lender

ExampleStart with the earliest owner from your chain – Rosie Robot. She owned the property from 1960 – 1978.Check the Grantor index for Rosie Robot during 1960-1978.Write down all entries (you must look at each to determine if it involves your property)

If you find a Deed of Trust, you will need to also find a Satisfaction or Cancellation. This may be stamped on the actual DOT on file, or may be filed as a separate document.

Deed of TrustIf the Deed of Trust has been assigned, the beneficiary has changed. If the DOT has not been satisfied, the assignee has an interest and must be notified of foreclosure.

Look for Easements. If the easement is anything other than a standard utility easement make a copy and bring this to the attorney’s attention.

If all is well and DOT’s are not outstanding, continue to the next owner

Fred and Wilma FlintstoneThe Flintstones owned the property from 1978 to 1990.Follow the same process as you did with Rosie Robot If all is well, continue to the next owner.

Johnny Bravo

Johnny owned the property from 1990 until 2010.Perform the same steps for that timeframe for Johnny.

Norville “Shaggy” Rogers

Norville acquired the property in 2010. We need to do all the same searches as we did for the others.

Important

ALSO we need to check the Judgment Liens and Lis Pendens index for the past 10 years in Noville’s name and in Johnny’s name.

Important

Make sure to use every possible variation of the person’s name when performing your search.

Johnny Bravo may have had a judgment against him in the name John Bravo.

QUESTIONS