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February
2007
Prescriptive Easement Opinion Looks at Proof Issues
By
Chris Burti, Vice President and Legal Counsel, Statewide
Title, Inc.
Access
is becoming an increasingly contentious issue in this State. In past decades
property owners acknowledged the right of their neighbors to cross their
property on existing paths in order to gain access to their adjoining lands as a
matter of course.
Today, we are seeing disputes over access as a weapon when the proposed new use
of the dominant tract is what is really at issue. Caldwell
v. Crawford, COA06-94, filed on January 2, 2007, is an opinion on an appeal
by the defendant resulting from a Superior Court order in a bench trial
determining that a prescriptive easement exists.
This decision evidences a cultural predisposition that leads people to believe
that all property should have access as a right. It also reinforces the judicial
predisposition that one should raise objections and affirmatively act to
preserve rights early on rather than after a long course of conduct has given
rise to different expectations.
Legal
access to an Insured’s property is one of the fundamental coverage provisions
of a title insurance policy. We are regularly requested to insure that legal
access exists based upon facts supporting the existence of a prescriptive
easement. While it may be possible to comply with these requests, it is not
always in the client’s best interest given the limitations of the protection
afforded by a title policy for consequential damages.
With the increased claims losses resulting from the increased litigation
concerning these matters, insurers are also becoming more reluctant to insure
without remedial work.
This case may illustrate some of the difficulties encountered when there is a
dispute over such access. As the resolutions of most prescriptive easement cases
are fact driven, it may be best to include the pertinent facts as set out by the
Court of Appeals verbatim in order to
avoid coloring the Court’s view inadvertently through editing.
“
The instant dispute arose over a right-of-way across a parcel of land in
Bessemer City
,
North Carolina
, and all parties in the case are related by blood or marriage.
The servient tract (“
Tract C”) is a 0.42-acre parcel fronting
Inman Avenue
, and the dominant tract (“the Caldwell Property”) is located to the west of
and adjacent to
Tract C. A 0.27-acre lot (“
Tract B”) sits directly to the north of and contiguous to
Tract C. Another 0.27-acre lot (“
Tract A”) sits directly to the north of and contiguous to
Tract B.
T
he lot directly to the south of
Tract C (“the Branch Property”) is owned by defendant's parents.”
“In
1958, plaintiff's grandparents built a house on the Caldwell Property. At the
time, defendant's mother and father lived on the Branch Property; an Episcopal
Church building sat on
Tract A; and the Episcopal rectory was located on
Tract B. During the construction of the
Caldwell
home, workers and vendors used
Tract C for access to the Caldwell Property. By the time the house was completed,
a de facto driveway spanning
approximately 149 feet had been created that bisected
Tract C and ran east to west from
Inman Avenue
to the Caldwell Property.
The
Caldwells
and Branches, as well as their predecessors in interest, have referred at all
times to the driveway as the “
Caldwell
driveway,” and a mailbox for the Caldwell Property was placed at the end of
the driveway where it intersects with
Inman Avenue
.”
“From
1958 to 1990, the Episcopal Church used
T
ract C for parking. During this period of time, the Caldwells and any visitors
to the Caldwell Property used the driveway to access the Caldwell Property. Also
during this time, the Branches occasionally parked their cars on
T
ract C and used the driveway to access their property. Neither the
Caldwells
nor the Branches ever requested permission from the church to use the driveway.
Additionally, although neither the
Caldwells
nor the Branches asked permission to maintain the driveway, both contributed to
its maintenance. At various times over the thirty-two-year period, members of
the
Caldwell
family scraped the driveway with a tractor, spread additional gravel on the
driveway, and sufficiently preserved the driveway's condition so that cars could
traverse it. Dewitt Branch, defendant's father, also scraped the driveway with a
tractor and spread cinders from his mill when the driveway became muddy. At some
point prior to 1990, plaintiff Chad Caldwell, without having asked or received
permission from the church, paved a portion of the driveway with concrete to
prevent rain runoff from causing the driveway to become rutted.
Through such maintenance, the path of the driveway has remained the same over the
years.”
“With the exception of a few months following his marriage in 1990, Chad
Caldwell has lived in the
Caldwell
house since he was born on 7 August 1971. In 1994, Chad Caldwell purchased the
house and property from his grandfather, and the Caldwell Property formally was
conveyed to plaintiffs by deed recorded 4 December 2002.”
“In
1990, Dewitt Branch purchased
Tracts A, B, and C from the Episcopal Church, which was in the process of
relocating. Without asking permission from the Branches, plaintiffs and visitors
to the Caldwell Property continued to use the driveway for ingress and egress,
and the Branches, aware of such use, did not object.”
“In
1996, DeWitt Branch told defendant that he would give defendant
Tract C, and in 2002, the property was deeded to defendant. Chad Caldwell then
asked defendant if he could continue to use the driveway to access his property.
Defendant, who was planning to build a house on
Tract C, refused to allow plaintiffs continued access over the right-of-way in
dispute, but stated that he would find another point of access for plaintiffs.
Nevertheless, plaintiffs and visitors to the Caldwell Property continued to use
the driveway until defendant blocked the driveway in January 2003. Consequently,
on 17 January 2003, plaintiffs filed suit claiming they had acquired an easement
across
Tract C and that defendant was interfering with the use of that easement.”
T
he Court of Appeals set out four required
elements of proof necessary to establish the existence of a prescriptive
easement:
(1) that the use is adverse, hostile or under a claim of right;
(2)
that the use has been open and notorious such that the true owner had notice of
the claim;
(3)
that the use has been continuous and uninterrupted for a period of at least
twenty years; and (4) that there is substantial identity of the easement claimed
throughout the twenty-year period.
In weighing the sufficiency of the facts to support the trial court’s judgment
the Court of Appeals observed that the “failure of the owner of the servient
tenement to object, even if he was aware of the use, is insufficient, as the
party seeking to claim the easement must overcome the presumption that a party's
use is permissive and not adverse.”
T
he court further clarifies that ‘hostility’ is not required to be proved by
any sort of enmity but rather that the “use is simply a use of such nature and
exercised under such circumstances as to manifest and give notice that the use
is being made under claim of right. Dulin
v. Faires, 266 N.C. 257, 260.61, 145 S.E.2d 873, 875 (1966)”
T
he Court of Appeals determined that the
plaintiffs in this case had satisfied their burden of proving each of the
elements required for a prescriptive easement. Most of the illustrative facts
are typical of the sort of use that one would expect for a drive that was the
sole access used for a property.
T
here was ample testimony of continued use and maintenance exclusive to the
plaintiffs and their predecessors.
T
he Court noted that the plaintiff “testified
that prior to filing the lawsuit, he never had any conversations or negotiations
regarding purchasing the right-of-way.”
T
his Court concludes by quoting Cannon v.
Day,
“[w]here, as here, the evidence shows that permission to use the lane had been
neither given nor sought, that the plaintiffs performed maintenance required to
keep the road passable, and that the plaintiffs used the road for over 20 years
as if they had a right to it, the evidence is sufficient to rebut the
presumption of permissive use and establish that the use was hostile and under a
claim of right. Cannon, 165 N.C. App.
at 308, 598 S.E.2d at 212.”
It
is important for practitioners to note that the most significant issue of this
appeal was whether the evidence supported the trial court judge’s findings of
fact. At the risk of an oversimplification of the issues, it can still be fairly
said that these cases are essentially “swearing contests”.
Thus, while your clients’ view of the facts may be compelling, that may not
result in agreement by the trier of facts if litigation results.
Therefore, it is also not unfair to say that no prescriptive easement can be
conclusively said to exist until so adjudicated. It should be considered prudent
to discuss these issues with your client and with your title insurance
company’s counsel well in advance of closing.
Dirt
T
ales From
T
he Deed Vault
By
John Dillard
, Vice President and Legal Counsel, Statewide
Title Exchange Corporation
Virtually
every day title company underwriters see situations where problems could be
prevented from turning into claims if a bit more diligence were exercised.
Statewide Title will begin highlighting true stories from an underwriting or claims
perspective in order to illustrate how easily the problem or claim might have
been avoided as a part of its continuing education series and claims prevention.
No actual names will be used.
T
he first illustration this month involves a very common conveyance of property
into a trust and some of the issues that derive from what is otherwise an
ordinary transfer by deed.
Husband
and Wife purchase their home in 2000 and take title as tenants by the
entireties.
T
heir closing attorney obtains an owner’s policy of title insurance insuring
their purchase. In 2004, they
consult an estate attorney and begin a series of consultations for estate
planning.
T
he attorney advises them they would benefit from certain tax advantages if they
would transfer title to their home into a living trust.
Subsequently, Husband and Wife make a deed for their home and transfer
title to the trustee of the HW Living
T
rust by Quitclaim Deed. In 2005 a
title defect surfaces and Husband and Wife are advised by the attorney who
closed their purchase to file a claim on their policy of title insurance.
T
he claim is submitted, processed and denied by the title company because the
named insured on the title policy, Husband and Wife, no longer own the property.
T
he trust is the current owner of the property according to the Quitclaim Deed
filed in the public records.
Is there anything that Husband and Wife could have
done to have prevented this problem and continued coverage under their title
insurance policy? Under the terms of
the 1992 standard AL
T
A title policy, coverage only extends to the insured named under Schedule A.
Item 2 of the Conditions and Stipulations provides “
T
he coverage of this policy shall continue in force as of Date of Policy in favor
of an insured so long as the insured retains an estate or interest in the land,
or holds an indebtedness secured by a purchase money mortgage given by the
purchaser from the insured, or only so long as the insured shall have liability
by reason of covenants of warranty made by the insured in any transfer or
conveyance of the estate or interest”.
In other words, the owner has to continue to own an interest in the
property and not convey it outright in order to keep coverage under their
policy.
Another point that should be noted here is that title
into the trust was transferred by a Quitclaim Deed, which seems to be the
preferred instrument of choice, when transferring title into trusts.
Had the instrument been a General or Special Warranty Deed then coverage
under the title insurance policy might have been invoked by having the trust sue
the grantors on the warranties in the deed, thus invoking coverage for Husband
and Wife against the title defect.
T
he attorney preparing
the Quitclaim Deed should have called the title company that issued the policy
and asked whether the client’s coverage would be affected by transferring
title into the trust. Some title
companies will continue coverage based on the fact that the trust is merely the
“alter ego” of the named parties. However,
most companies will not continue coverage on that basis, but will endorse the
policy to change the named insured to the trust on the “alter ego” theory.
Continuation of coverage for transfers into trusts is
not a problem under the current AL
T
A Expanded Coverage Policy as that policy specifically provides that title
coverage continues when title to the insured property is transferred into a
trust for the benefit of the named insureds.
T
he new standard AL
T
A policies that are due out later this year will provide the same coverage as
well.
T
hose new polices provide “
T
he term ‘Insured’ also includes (a) successors to the title of the insured
by operation of law as distinguished from purchase, including heirs, devisees,
survivors, personal representatives or next of kin; …. A grantee of an Insured
under a deed delivered without payment of actual valuable consideration
conveying the title … (4) if the grantee is a trustee or beneficiary of a
trust created be written instrument established by the Insured named in Schedule
A for estate planning purposes”. Clearly
conveyances into family trusts used for estate planning purposes will no longer
cause coverage problems under the new policies.
In the meantime and until those policies become available it is suggested
that either the Enhanced Coverage Policies be used or endorsement obtained
changing the named insured under Schedule A to the name of the trust along with
a deed that at least contains some warranties, such as a Special Warranty Deed.
So
often, real property issues are co-mingled with other areas of the law, such as
trust and estate planning. When
title insurance is involved it is a good practice to always call your title
company and run the fact situation by their attorney underwriters.
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