July 23, 2018
Title Insurance Practices – What Easements Will a Title Insurance Company Insure?
A title insurance company will insure appurtenant easements (exclusive and nonexclusive) and easements in gross.
However, prior to being in a position to consider insurance of such easement interests the title insurer will require that the easement interest be created in writing. The form of writing may be in the form of a deed or an agreement.
Such deed or agreement must be recorded in the office of the County Recorder of the appropriate County.
Title Insurance Practices – Creating Easements that a Title Insurer will Insure
1. Drafting an Easement
Much of the dispute and litigation concerning easements stem from the recording of carelessly prepared easement documents, which are either ambiguously worded or which fail to provide sufficient information. With this in mind, it stands to reason that prior to insuring an easement interest, a title insurer will review such document (source document) to make sure that it meets their insurance requirements.
The bulk of a title insurer’s requirements stem from the application of California real property law and contract law, but certain requirements also arise from the title industry’s experience with claims files through the years.
In general, if you are preparing a document for the purpose of creating an easement interest that you wish to have insured, please note that a title insurer will be looking for the following elements when reviewing your document:
a. Identification of the Parties (the names of the grantors and grantees)
When you are composing a source document, it is important for you to be very thorough with your presentation of the names of the grantors and grantees. Although this step may seem rather obvious, it is not uncommon to see recorded documents that fail to properly identify the names of all of the current owners of record of the properties encumbered by or benefitting by the easement interest. Oftentimes, the source document will reference the name of the party that appeared on the deed when such party acquired title to their property. However, subsequent to their acquisition, such party may have transferred his or her interest into their trust or into their LLC. Or, such party may have transferred a percentage interest to children or investment partners. Therefore, it is recommended that the author of the source document complete the research necessary to determine the current ownership (all current owners) of each and every affected property.
b. Identify Purpose of the Easement
A title insurer will not insure an easement interest unless the source document describes the purpose of the easement. In other words, if an easement is simply described as “an easement over a strip of land 10 feet wide….” the title company will not insure the easement because the purpose of the easement is not described. However, if the easement is described as “an easement for pedestrian and vehicular ingress and egress over a strip of land 10 feet wide….” the title company will be in a position to insure such easement for such purposes. Please note, too, that if you are composing a document to create an easement in gross or an exclusive easement, it is especially important for you to describe the type and purpose of your easement clearly.
c. The Operative Words of Conveyance
Occasionally when an Agreement has been used for the purpose of creating an appurtenant easement, such document will fail to include the operative words of conveyance.
d. Identification of Dominant and Servient Tenements
The good news is that we will rarely see source documents that fail to identify the servient tenement (although it happens). The sad news, however, is that we all too often see source documents, which have been recorded for the purpose of creating an appurtenant easement, but which fail to describe the dominant tenement. If such document fails to identify the dominant tenement, and, only a few years have passed since the recording of the source document, it is not too difficult to complete the necessary research to identify the property owned by the grantee as of the date of the recording of such document. But, as the years pass, such research becomes increasingly more difficult. And, what if the grantee of the easement owned more than one property within the vicinity of the servient tenement as of the recording date of such document? Or, what if the grantee’s properties adjoined more than one boundary line of the servient tenement property? Or, what if one wished to someday modify or extinguish the easement interest, would all of the present owners of all of the properties once owned by source document grantee need to join in such modification or extinguishment document? In short, be sure to identify the dominant tenement when composing a source document for the purpose of creating an appurtenant easement.
e. Description of the Easement Route
As discussed earlier in this seminar, the description for the easement route should be prepared by a licensed land surveyor. Nonetheless, notwithstanding the fact that the description for the easement route has been prepared by a surveyor, it is still important to affirm that the description set forth the full width of the easement route and that the description clearly identifies descriptive ties for the full width of the easement route. Typically, a description will describe with metes and bounds the route for the center line of the easement. If the property traversed by the easement is irregular in shape, it is likely that the description will include tie points for the center line. If so, the side lines of the easement might fall short of or extend beyond a boundary line that serves as a tie point. Such a potential problem could be avoided by using language similar to the following:
An easement for road purposes over a strip of land 10 feet in width the centerline of which is described as follows:
Beginning at a point ……thence, North 55° East 445 feet to a point on the east line of the land described in a deed to Jim Smith Recorded on May 4, 1954, as instrument number 1653, in Book 4567, Page 829 of Official Records, in the office of the County Recorder of said County. Note: The north and south lines of said easement are to be shortened or extended so as to terminate westerly and easterly at the west and east boundary lines of the land described in Exhibit “B” attached hereto and made a part hereof.
Lastly, it always helps to attach a depiction of the easement route to your source document. Through the years a metes and bounds description will be typed many times, which opens the door to typographical errors, which might lead to some confusion with the interpretation of the description. In such instances, the depiction can provide the information necessary to properly interpret the description. Moreover, when a depiction of an easement route prepared by the surveyor who composed the legal description, is attached to the document, it is so much easier for the owners of the servient and dominant tenements to recognize the location of their easement interest.
f. Identify the Right to Divide the Dominant Tenement
More often than not, the grantee of an appurtenant easement is the owner of a parcel of land that is not likely to ever be subdivided or that will be used for same purposes 50 years from now as it is being used today. If such is the case, one need not worry too much about spelling out that the easement created is for the benefit of the dominant tenement and any portion into which is might be divided.
However, if the dominant tenement is sizable, or, if the dominant tenement is in an area wherein the property use might change (for example, an agricultural property might be rezoned to accommodate retail strip malls), then it is meaningful to consider adding language to the document pertaining to the right to divide.
Some examples of such language are as follows:
i. Said easement is for the benefit of and appurtenant to the property described herein as Exhibit “B”, which easement shall inure to the benefit and be used, without limitation, by all persons who may become the owners of said land or any portions or parts into which it may be divided.
ii. Said easement if for the benefit of the property described herein as Exhibit
“B”, which easement shall inure to the benefit and be used, by all persons who may become the owners of said land, and, any portion or parts into which it may be divided, not to exceed 4 parcels.
g. Signatures of the Parties
If the form of writing is a deed, the title insurer will require that the document is signed by all parties with a fee ownership interest in and to the servient tenement. If the form of writing is an agreement, the title insurer will require that the document is signed by all parties to the agreement. All such signatures must be properly notarized.
h. The Recording of the Document
Prior to insuring an interest a title insurer will require that such interest be established of record. This means that such document must measure up to the recording requirements of the County Recorder’s office. One way to be sure that your document will meet your County Recorder’s requirements is the e-mail a copy of your document (prior to closing date) to the County Recorder’s office for a pre-check.