August 20, 2018
Author: Robert J. Getchell
Title examination is an area of law which has matured over the last quarter century. Techniques and technologies have developed which can make the work easier, more standardized, more efficient, and perhaps less tedious. In other respects, however, this field of law is much more complicated, challenging, and competitive than ever before. Examination of title evidence and preparation of title opinions can be an enormous commitment requiring the attorney to simultaneously attend to the needs, goals, and abilities of an assortment of parties, from the client (usually the buyer and/or lender), to the title insurance agent and underwriter, real estate brokers, sellers, and in the case of mineral opinions, royalty, surface and leasehold owners, landmen, or others who will be reading your title requirements and attempting to cure or otherwise address them, to the abstracter and county clerk, to surveyors, federal and state agencies in their administrative capacities as well as their prescribed procedures, and to your fellow colleagues in the real estate bar. Even as you bear in mind your client and his or her expectations, you must consider how your work product will both depend on and interact with all those other parties. Moreover, title examination demands a comprehensive knowledge of a broad spectrum of substantive and procedural areas of law. Undertaking a title examination can be a daunting task.
TITLE EXAMINATION METHODS
Preparation and Approach
In order to have a meaningful discussion about title examination, we should begin with a word about preparation and approach. I have found that a consistent methodology is the best way to avoid mistakes. I am not suggesting that there is a single correct way to conduct a title examination. I have tweaked my methods many times over the years. However, consistency will help ensure efficiency and exactness. It also helps when other examiners are utilizing your old notes, as frequently happens in larger firms or title companies. If your system of note-taking lacks coherence, or is illegible, its usefulness as a “head start” becomes limited.
If you are a veteran like myself, with thousands of examinations behind you, I think you will agree with that premise. If you are new in this field, this little prequel is for you.
Recommended Tools. Although, I have examined abstracts in a variety of settings, from airplanes, on vacations, watching sports on television, and in a lawn chair while waiting for football practice to be over, those are far from optimal conditions to do title examination effectively. Title examinations, at least outside of the oil and gas sphere, are generally billed on a fixed fee basis, and generally are expected to be completed in two or three business days. Efficiency is important, both in terms of profitability and client satisfaction. Therefore, I suggest the following:
1. A good desk, great chair, best light available, good computer skills, nice pens, highlighters, and a standard form for note taking.
2. A compass, protractor, good rulers, section charts for drawing out tracts.
3. A capable assistant with precision typing skills.
4. A good bookshelf of resource materials, such as:
a. The Current (and back issues) of the Oklahoma title standards
b. One or more treatises on oil and gas law, such as EUGENE KUNTZ, A TREATISE ON THE LAW OF OIL AND GAS (1989); W.L. SUMMERS, THE LAW OF OIL AND GAS (Permanent ed. 1954); or HOWARD R WILLIAMS & CHARLES J. MEYERS, OIL AND GAS LAW (current through 2005).
c. One or more treatises on land titles, such as JOYCE D.
PALOMAR & CARROLL G. PATTON, PATTON AND PALOMAR ON LAND TITLES (3d ed. 2003).
d. One or more treatises on Indian land law, such as W.F. SEMPLE, OKLAHOMA INDIAN LAND TITLES ANNOTATED (1952), or LAWRENCE MILLS, OKLAHOMA INDIAN LAND LAWS (2nd ed. 1924).
e. One or more treatises on borders and boundaries.
f. Bookmarked pages for secretary of state, FDIC, state banking commissioner, Oklahoma Supreme Court Network and PACER.
g. Bookmarked pages on corporation tracking.
h. Pertinent Oklahoma statutes, such as titles 12, 15, 16, 18, 52, and 84. Other statutes will, of course, be needed from time to time, but in the statutes referenced here you will find your answer most often. That is, if an answer exists
1. Before you begin, clearly agree with your client on the goal. One size does not fit all. I suspect that most of you here today focus on residential or commercial real estate transactions. Some of you may also do oil and gas title examinations. Regardless of the nature of the transaction, it is important to discuss the type of opinion desired, the time constraints, what use will be made of the opinion, who you may want to assist you in the work, who your contact will be, what files or other materials the client has which may assist you, who will be paying for your opinion, and how curative action will be handled. An engagement letter summarizing these items is recommended. In situations where you are doing a high volume of examinations for an abstractor, title company, or title insurance underwriter a comprehensive engagement letter might suffice, allowing you to avoid the necessity of obtaining a separate letter for each examination.
Setting reasonable expectations is important; often it is difficult to accurately estimate how long or how complex an examination will be until you dig into it. The number of pages in an abstract is not always indicative of the intricacies of the issues that may lurk between the caption page and final certificate. Therefore, I recommend telling the client that once you have had a look at the documents, you’ll advise them if the matter will require more time than usual. A major complaint about title examiners over the years has been that they (we) make unrealistic estimates, which clients hear as promises, which we do not, or cannot, then keep.
2. Although this should go without saying, take pride in your work. It can be very tempting to take shortcuts, relying on the work of previous title examiners, or the existence of a title insurance policy. However, unlike trial practice, where a good outcome virtually brings down the curtain on the attorney’s performance and any minor mistakes get erased, subsumed into the verdict or settlement, a title opinion?like a diamond?is forever. It may well be used and re-used, cussed and discussed, relied on or misunderstood, for decades. It’s your personal interpretation and evaluation of a complicated set of facts and possibilities. It’s vitally important and it’s valuable. So don’t deprecate or diminish what you do, and don’t allow others to do so either. 3. Be your own boss. More than almost any other field of law, title examination permits, even requires, that you manage yourself. No one is looking over your shoulder every moment. Rarely is anyone scrutinizing your time sheets at the end of each day or week. Thus you must be scrupulously honest with yourself and with your client?just because! Examination and the preparation of title opinions often involve hundreds of pages of reading followed by careful analysis. In commercial transactions or oil and gas matters, there may be thousands of pages of material and many hours of analysis and calculation involved. Whether considered individually or in the aggregate, they can be huge projects, and you cannot do them well in fits and starts. You must commit large chunks of time to them. That means shutting the door, muting the phone, removing all distractions, and concentrating intently.
4. Make it a habit to communicate and collaborate. In most cases, it is best to communicate with your client or the title company who will be using your opinion. At various points in the course of each opinion, an examiner may pause and say, “Hmm, I wonder if the client really intended to do XYZ,” or “I wonder if this detail I’m obsessing over even matters to the client.” My advice is, “Never assume when you can verify.” So pick up the phone or send an e-mail and find out. The answer you receive may change how you construct your opinion.
Collaboration with colleagues is even more important. Of course, your opinion is your own independent legal opinion. However, title examiners before you and title examiners beside you may have encountered the very same question, fact pattern, perhaps the very same instrument with the very same problem. Thus, it can be enormously helpful to see how they have handled it. Not only does it allow you to test your ideas against another experienced examiner’s, but it can also expose you to other ways to approach a problem and other solutions that have been forged. Most important, it even reflects the respectful and collegial and professional attitude that is mandated by Oklahoma law. Title Standard 1.2 actually addresses the examining attorney’s attitude:
When an examiner finds a situation which the examiner
believes creates a question as to marketable title and has
knowledge that another attorney handled the questionable
proceeding or has passed the title as marketable, the
examiner, before writing an opinion, should communicate,
if feasible, with the other attorney and afford an
opportunity for discussion.
Keep in mind, however, that even in these discussions?which are encouraged?we must protect the confidences of our client, and the questions must be phrased carefully. Nevertheless, this is one of the best features of title examination: our fellow attorneys are not enemies, not opponents, rarely even adversaries. We are most often all pointed in the same direction: researching documents, applying the appropriate law, weighing difficulties, solving mysteries, and rendering clear and useful opinions for our clients. It is not a culture of “limited good,” so that if one wins, another must lose. We can all be doing fine work, and we can enjoy helping one another from time to time.
5. The typical title opinion often began with a client presenting the attorney with a set of abstracts covering the land, from inception clear through to the present day. This remains the practice in most residential and commercial sale and refinance transactions. For various reasons, that scenario is now rare in oil and gas matters . Most often the client will not have a full set of abstracts, if any at all, and will want the title opinion prepared from a stand-up examination of the records, or perhaps from photos of the records obtained by a land service. The practice of examining records other than an abstract is becoming more common in residential or small commercial transactions, particularly in transactions involving smaller local banks. Therefore, now more than ever it is critical that you take a thorough set of notes. Your first look at the instruments in the chain of title is the most important. If you get the right information down in your initial set of notes, you’re not likely to miss a crucial fact when you calculate title and write your opinion. But if you didn’t have sufficient detail, or correct information down in your notes, no amount of analysis or fine writing is going to suffice Good notes are invaluable in answering questions that arise later once the abstract is sent back for storage, lost, or otherwise unavailable. So I repeat: in my opinion, thorough and correct note-taking is the single most important step in the entire undertaking.
For that reason, the remainder of these materials will share with you items you should watch for as you take your notes, potential problems that can be a huge headache or no headache at all. But either way, you can be prepared and write your opinion with a measure of confidence, knowing that you have taken down all the pertinent information available and necessary to produce that opinion.
The Examination Process
It should be clear that I am a big proponent of careful note-taking. That said, it is not necessary, desirable, or expedient to write down every instrument contained in an abstract. I recommend making a quick review of the abstract (or other title evidence) noting the root of title and the most recent vesting deed, the plat and dedication in the case of platted property, and the instrument creating the specific description if dealing with a metes and bounds description.
Once you are familiar with the contents of the abstract, you can begin your examination. The level of detail you include in your notes is a matter of personal preference, based upon the type of examination, your experience, and the availability of other materials, such as prior opinions, title insurance policies, or examination notes. I believe it is important to proper pagination, continuous certification, and the chain of title, even if those items are not written down in your notes. Care should be taken to note easements, rights-of-way, restrictions, encumbrances, and any other matters you are making a requirement for, or taking an exception to, in your opinion. I have attached some sample notes in the appendix to these materials.
The Final Product
The appearance of the final product of your examination is typically a title opinion, which can take the form of a narrative letter, or be in a more summary form. Generally, letter opinions are generated for clients that do not wish to purchase title insurance. A summary form opinion is used in instances where a title insurance agent will be utilizing the opinion to generate a title insurance commitment and subsequent policy. Precision is very important as mistakes made in the opinion are often carried forward in conveyances, releases, and other instruments. Sample opinions are also attached in the appendix to these materials.
COMMON PROBLEMS AND SOLUTIONS
Spousal joinder/marital status
With the constitutional and statutory provisions relating to homestead in Oklahoma (See 16 O.S. §§ 4 and 6 and Okla. Const. Art. XII, §2) and the provisions of Chapter 7 of the Title Examination Standards, one would think issues concerning spousal joinder and recitation of marital status would rarely arise. That is not my experience. Conveyances relating to property division in divorce, transactions involving out-of-state grantors, or commercial transactions often don’t conform to what the title standards require. In such situations there may be some easily available remedies, perhaps recording the underlying divorce decree or an affidavit. When these issues present themselves your course of action may be dictated by the context of the transaction, such as the availability of title insurance, the expense involved in resolving the requirement, assessment of the risk involved, and the how soon the problem might be cured by operation of law. Great care should be taken before waiving a requirement involving a lack of spousal joinder or the omission of a recitation of marital status, and the facts and circumstances ought to be clearly expressed in writing waiving such a requirement. Habendum clauses and deed reservations I am sure that all of us have had discussions with our colleagues and other practitioners about how quickly we can examine an abstract, and what tricks-of-the-trade or other methods we have developed to examine title more quickly and with greater efficiency. It is an important consideration since most of us charge a flat rate for title examinations, particularly in residential transactions. Lawyers are not immune to the economic pressures of the bottom line. Therefore, it is not uncommon to hear lawyers talk about techniques that will shorten the examination process. In considering such techniques, beware the provisions tucked away in the habendum clause, or other reservations lurking in those older conveyances you are thinking of flipping past to find your 30 year root of title, or a “good” first mortgage from which to begin your examination.
An experienced examiner may already know that early deeds in a particular subdivision contain restrictions, covenants, easements or other matters that ought to be noted in your title opinion, but one new to title examination practice probably would not, unless they reviewed all if the instruments in the chain of title. I can think of several examples of easements, life estates, restrictions on use, or similar reservations buried in instruments which have substantial impact on title economic considerations that I am certain I would have overlooked if I turned pages as if speed was the only consideration.
Just a little extra time may avoid an expensive and time-consuming curative project later down the road (that you find yourself handling free of charge), a grievance with the bar association, or a claim against your professional liability policy.
It is fascinating to think of the procedures we lawyers devise to protect precious rights. Apparently, among those precious rights is the right to get paid for our services - hence, the attorney’s lien provided for in 5 Okla. Stat. §6, which states: From the commencement of an action, or from the filing of an answer containing a counterclaim, the attorney who represents the party in whose behalf such pleading is filed shall, to the extent hereinafter specified, have a lien upon his client's cause of action or counterclaim, and same shall attach to any verdict, report, decision, finding or judgment in his client's favor; and the proceeds thereof, wherever found, shall be subject to such lien, and no settlement between the parties without the approval of the attorney shall affect or destroy such lien, provided such attorney serves notice upon the defendant or defendants, or proposed defendant or defendants, in which he shall set forth the nature of the lien he claims and the extent thereof; and said lien shall take effect from and after the service of such notice, but such notice shall not be necessary provided such attorney has filed such pleading in a court of record, and endorsed thereon his name, together with the words \"Lien claimed.\"
Levity aside, attorney’s liens present a special challenge for the title examiner. First, notice how the lien is created: All it takes is the notation “lien claimed” on a pleading. There is no recording or other noticing requirement. I have seen that notation in some rather inconspicuous places throughout the years, including the caption, signature block, as a paragraph in the pleading, in a statement of judgment (creating a lien on a lien?), and as a separate pleading. Thinking about how easy it can be to miss some of these notations is enough to keep some of us awake at night. Second, the statute mentions nothing about the lien’s duration. Most practitioners and title insurance underwriters with whom I have discussed this issue have adopted the position that the lien is virtually indefinite. Finally, pay attention to what the lien attaches. If the attorney’s client did not receive an interest in the property in that divorce case, then I would argue the lien does not attach to the property and it may be ignored, which may save you a number of headaches.
Although it appears from the statistical data that number of foreclosure cases has declined, there are still plenty of cases out there to warrant a brief mention of issues presented by mortgage foreclosure actions. Beginning in January, 2012, the Oklahoma Supreme Court has published decision in numerous cases, beginning with Deutsche Bank National Trust v. Brumbaugh, 270 P.3d 151 (Okla. 2012), and Deutsche Bank National Trust Company v. Byrams, 275 P.3d 129 (Okla. 2012). These cases mark a concentrated effort by the Oklahoma Supreme Court to address the issue of standing in the context of a mortgage foreclosure action. What we have learned from this line of cases is that for standing to be proper, the plaintiff must be the holder of the note (or the person entitled to enforce the note) at the time the foreclosure action is commenced. Furthermore, the Court has held that a challenge to standing may be raised at any part of the judicial process. Accordingly, I recommend the following checklist (adapted from material developed by Monica Wittrock with First American Title Insurance Company) for examining titles involving foreclosure cases:
For foreclosure cases that have been concluded, verify the following:
(1) that the plaintiff is the payee or assignee of the mortgage:
(a) that there are no gaps in the chain of recorded assignments of mortgage to the plaintiff; or
(b) If the chain of recorded assignments of the mortgage contains a gap, the note and indorsements in the foreclosure case must be examined to determine that the plaintiff is the holder of the note;
(2) the Order Confirming Sale has been filed;
(3) the Sheriff’s Deed has been recorded; and
(4) no post-trial proceedings have been initiated (e.g. a Notice of Appeal, Motion for New Trial, etc.) within the appropriate time period under 12 Okla. Stat. §990A and §696.2(A) (thirty days past the final, appealable order) For foreclosure cases currently pending:
(1) The abstracted portions of the foreclosure case contains record evidence that at the time of the filing of the Petition, plaintiff had the right to enforce the note by:
(a) proof that the plaintiff was the original payee under the Note; or
(b) proof that the plaintiff was the “holder” of the note (in possession of the note) and the note is either indorsed in blank or specially indorsed to the plaintiff (either on the note itself or by allonge);
(2) There are no “gaps” in the chain of indorsements on the note.
(3) Evidence of the “right to enforce the note” is attached to the Petition,
Motion for Default Judgment, Motion for Summary Judgment, or other responsive pleading;
(4) There must be a specific finding in the Journal Entry of Judgment that the plaintiff is the holder of the note or has the right to enforce the note:
(5) The plaintiff’s standing or status as a real party in interest has not been challenged by the defendants prior to Judgment or within the “Term of Court’ being within thirty (30) days following the final appealable order, which in most cases will be the Order Confirming Sheriff’s Sale (except post-judgment motions such as new trial, motions or petitions to vacate, or for re-hearing).
May of us prefer to stay as far away from bankruptcy court as possible. That may be a realistic goal, however bankruptcy proceedings can have a profound impact on title examination. Most often, these issues fall into the following categories: unscheduled property; automatic stay and abandonment issues; judgment liens and the effect of the discharge; and the sale or refinancing of property. Chapter 34 of the Title Examination Standards does a good job of addressing these issues, but a closer look at these particular topics may give us a better understanding of how to analyze these issues, and the ways to resolve any problems. It is also important to bear in mind that although the Bankruptcy Code is a federal system of law, there are distinct differences in how some of these issues are addressed in each of the three districts in this state, as a result of local rules and the individual preferences of a particular judge.
Unscheduled property A debtor in a bankruptcy proceeding is required by 11 U.S.C. §521(a)(1) to file a list of assets and liabilities, in the form of official forms called schedules. Since August, 1991, real property is listed on Schedule A and, if claimed as exempt, Schedule C. This tracks what is reflected in Title Examination Standard 34.2. As many of you know, for any number of reasons, sometimes property is omitted from Schedule A (or Schedule C, or both). Whether the reason for the omission is honest oversight, deliberate concealment, laziness, or some misunderstanding about the nature of the debtor’s interest (e.g. a contract for deed transaction), a title examiner must make requirements to ensure marketability of title. I am unaware of any time limitation on the trustee’s ability to administer an unscheduled asset, making a final resolution of an issue relating to unscheduled property critical.
If the case is still pending, or otherwise open, the schedules can be amended to reflect the property. Additional requirements might be necessary to ensure that the bankruptcy trustee’s interest in the property (as an asset subject to administration for the benefit of the estate) is resolved, or that potential objections to a claimed exemption have been cut off. This is especially true if the omitted property is anything other than clearly the debtor’s homestead. Non-exempt real estate, unless substantially encumbered, will be ripe for administration by the bankruptcy trustee. Examples include inherited property, interests under a contract for deed, and joint tenancy property.
The process of amending Schedules A or C to include omitted property becomes more complicated, expensive, and risky with the passage of time. If the case is closed, a motion must be filed to reopen the bankruptcy case. The bankruptcy courts tend to routinely grant such motions, but getting the relief is costly and may take weeks to obtain, depending on the district. Additional time and expense are the mortal enemies of the real estate transaction. Once the case is reopened, amending the schedules months, or sometimes years, later invites increased scrutiny from the trustee. The value and legitimacy of an exemption can be much more difficult to prove. If you encounter a situation where the debtor who failed to schedule the property is no longer the owner of the property, amending the schedules is not possible. In that instance, you must require an order of abandonment, and the absence of the original debtor usually creates difficult issues of proof. Although many of you would not do the curative work for such requirements yourselves, samples of pleadings related to these matters are appended to the materials to give you an idea of what to expect.
A final issue with respect to the scheduling of real property has to do with the sufficiency of the description itself. The Title Examination Standards do not address this issue, nor do the Bankruptcy Code or Rules, except in the header on the Schedules which asks for a “description and location.” I am sure all of us would agree that the full legal description of the property is what we would find most satisfactory in the context of a title examination. I have found that most competent bankruptcy lawyers use the full legal description and address. However, there are a great many cases filed by lawyers who pay less attention to such details, or by individuals pro se. Many of us have seen property described in all sorts of ways, including a street address or rural route number, a reference to “homestead in Creek County,” or “10 acres of land in Wagoner County.” When to make a requirement in these situations is a subjective decision process. Personally, I am comfortable with property being listed by an address because you can identify the specific property from that information. I am less likely to accept generic or vague descriptions of property, although the passage of time usually makes me more lenient in this regard. This is an area where a discussion with your client, whether that is a refinancing owner, the buyer, or a title insurance underwriter is very important. They will appreciate receiving an explanation of the risk and the opportunity to provide their input.
Sales and refinancing
I believe it is safe to say that the sale of property by a debtor or trustee in a Chapter 7 or Chapter 11 bankruptcy proceeding has become a rare occurrence in Oklahoma. Title Examination Standard 34.2 is an excellent resource that walks you through a confusing array of code sections and bankruptcy rules, and I do not think there is much reason to parrot that to you today. I will point out one thing that can cause some confusion concerning the appointment of a trustee. Prior to December, 2005, the bankruptcy court file would include a separate pleading entitled “Notice of Appointment of Trustee and Designation of Bond” or the like. That is no longer the case. Now, the only document identifying the trustee is a short statement included in the notice (Form 9) sent from the Court to parties interested in the case. Requesting a formal certificate of the court clerk stating that the trustee has qualified, such as described in the Note in Title Examination Standard 34.2, will often get you a blank stare from the court clerk’s staff. Title Examination Standard 34.2 is less helpful when dealing with sales or refinance transactions arising in Chapter 13 proceedings. Chapter 13 bankruptcy cases have become much more common since amendments to the Bankruptcy Code in 2005, which included statutory changes specifically designed to encourage Chapter 13 filings. These cases last up to five years, making a sale or refinance during the pendency of the case much more likely than in a proceeding under Chapter 7 or 11. The provisions of 11 U.S.C. §1305 are deemed to require the debtor to obtain bankruptcy court approval prior to incurring any new debt. If you are examining title in connection with a refinance transaction involving a Chapter 13 debtor, you must require court approval of the loan transaction. The notice requirements for such motions seem to vary by district. I have seen such orders entered ex parte, and in other cases only after notice and opportunity for hearing. At a minimum, you should make certain the Chapter
13 Trustee approved the order.
The sale of property during a Chapter 13 case can differ from the procedure outlined in Title Examination Standard 34.2 if the property was claimed as exempt and no objections were filed to the exemption. The issue is whether the Chapter 13 debtor can convey clear title before discharge. In the Northern District, the plan confirmation order prevents §1327 from vesting property of the estate in the debtor until discharge. However, if the subject property is exempt homestead, the expiration of the deadline for objections to claimed exemptions would remove the property from \"property of the estate\" and vest it back in the debtor. I would still require court approval for the sale, but would accept an ex parte order as opposed to requiring strict compliance with the provisions of 11 U.S.C. §363. When deciding how to frame a requirement, bear in mind that the Title Examination Standards do not mention the exemption objection deadline mechanism.
Automatic stay issues
The existence and effect of the automatic stay imposed upon the filing of a bankruptcy case is an area about which most of this group is well informed. However, there are some “quirks” associated with the automatic stay in bankruptcy cases which should be of particular interest to the title examiner. These are found in 11 U.S.C. §362(c) which provides, in pertinent part:
(c)Except as provided in subsections (d), (e), (f), and (h) of this section—
(1)the stay of an act against property of the estate under subsection (a) of this section continues until such property is no longer property of the estate;
(2)the stay of any other act under subsection (a) of this section continues until the earliest of—
(A)the time the case is closed;
(B)the time the case is dismissed; or
(C)if the case is a case under chapter 7 of this title concerning an individual or a case under chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or denied;
(3)if a single or joint case is filed by or against a debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b)—
(A)the stay under subsection (a) with respect to any action taken with respect to a debt or property securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case;
(B)on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed; and
(i)if a single or joint case is filed by or against a debtor who is an individual under this title, and if 2 or more single or joint cases of the debtor were pending within the previous year but were dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b), the stay under subsection (a) shall not go into effect upon the filing of the later case; and
(ii)on request of a party in interest, the court shall promptly enter an order confirming that no stay is in effect;
I want to point out some language from this section of the statute that may be helpful in the title examination process. First, note the duration of the stay in subsections (c)(1) and (2). Under (c) (1), the automatic stay continues only until property is no longer property of the estate. This is significant in cases of exempt real property, which upon expiration of the claim exemption deadline is no longer property of the estate. Consider then the provisions of (c)(2) which states that the entry of the discharge terminates the automatic stay as to property that is not “property of the estate.” The entry of a discharge in a Chapter 7 case can occur within a few months after the case is filed, although the case may remain open for administration of other assets well beyond that time. Under these circumstances, an order terminating the stay would be unnecessary if a creditor merely awaited until after entry of the discharge to proceed with a foreclosure action.
Subsections (c)(3) and (c)(4) address the duration of the automatic stay in cases involving serial filings by the same debtor. This often arises in Chapter 13 proceedings filed to save the debtor’s home from foreclosure. In the case of a repeat filing within one year, the automatic stay terminates thirty days after the filing of the second case, unless extended by the bankruptcy court. In the case of a second repeat filing within one year (for a total of three cases), no automatic stay goes in to effect, unless the bankruptcy court specifically orders such a stay. Awareness of these provisions will assist you in determining if a requirement for a stay relief order is necessary, especially in connection with titles affected by foreclosure proceedings.
Judgment liens and bankruptcy
Judgments of a court of record of this state can become liens against the judgment debtors real property. Since October 1, 1993, the creation of this lien is accomplished by recording a statement of judgment in the office of the county clerk. And, since November 1, 1997, this lien attaches to all real property, including the judgment debtor’s homestead.
There are some interesting issues to consider in analyzing judgment liens in the title examination process. In my experience there is some confusion with respect to the interaction between 12 Okla.Stat. §706, which prescribes the procedure for the creation of the lien, and the provisions of 12 Okla.Stat. §735, which deals with the dormancy/duration of a judgment. My advice is to pay careful attention to the date of the filing of the judgment, the date of the recording of the statement of judgment, and painstaking review of the docket sheet before deciding whether the lien is still effective. In the bankruptcy context, judgment liens, as they relate to the homestead are easily dispatched. A simple motion under 11 U.S.C. §522(f), normally uncontested, will result in a court order avoiding the lien. That is why it is so puzzling to see so many bankruptcy cases in which the opportunity to avoid the judgment lien is not utilized. I suppose there are a number of possible reasons for this, including sloppy practice, a client unwilling to pay the fees associated with the motion, or ignorance of the existence of the lien (which is not required to be served upon anyone). As an examiner, you must bear in mind that the in rem liability of the judgment survives the discharge, a fact that is little understood by a frustrated property owner who thought bankruptcy was solving all of their financial problems. Fortunately, it is not too late to seek avoidance of the judgment lien. However, the case will need to be reopened, the motion to avoid lien filed, notice given, and an order entered. Once again, this process takes time and money - commodities in short supply in many real estate transactions. Sample pleadings are appended to these materials.
Seminar materials on title examination probably demand some mention of legal descriptions. The first thing to bear in mind is that punctuation matters. The placement of commas and semicolons can drastically change the intended meaning of a legal description. Also, it is helpful to dictate a long legal into a recorder to play back later for comparison purposes.
I think it is important to be able to “draw out” metes and bounds legal descriptions in order to properly examine title to unplatted property and identify, or eliminate, obvious problems. However, many legal descriptions contain complex angles and curves, or refer to matters outside the abstract record, and simply can’t be produced with a level of accuracy sufficient to properly analyze such matters as potential encroachments, overlaps, inclusions, or strips and gores. When you encounter a complicated legal description there is often no substitute for a survey, or certification by a surveyor as to the location of the subject property with respect to adjacent tracts, or tracts conveyed in prior instruments.