October 2004
There is still time and opportunity to earn 4.5 CLE hours, by joining Statewide Title, Inc. at one of our remaining real property seminars across the state. These hours include one hour of ethics. Each of the seminars begin at 12:00 Noon with lunch and end at 5:15 PM.
October 13, 2004
Mill Creek Country Club, Franklin, NC
October 14, 2004
Cherokee Hills Country Club, Murphy, NC
October 21, 2004
Country Club of Salisbury, Salisbury, NC
November 2, 2004
The Hilton, University Place, Charlotte, NC
February 11, 2005
The Black Pelican, Kitty Hawk, NC
The fee for the seminar is $100.00, which includes lunch and all materials.
You may register by calling Meredith Brincefield or Allison Harrigan (704) 637-1027 or (800) 821-5414 or by signing up on our website.
We sincerely hope to see YOU at one of the seminars!
Adverse Possession Decision Affirmed
McManus, v. Kluttz, North Carolina Court of Appeals, COA03-608, filed: August 3, 2004
This decision of the North Carolina Court of Appeals affirmed the trial court’s
grant of partial summary judgment in favor of the plaintiff in case involving
competing claims of title to a strip of land contained within overlapping deed
descriptions. Many of the appellate decisions involving the evidentiary issues
necessary to prove adverse possession set out the hornbook rules and ultimately
find a required element missing. As such, they are more useful as a guide to
defending claims of adverse possession. Predicated upon the facts as reported,
this appears to be a well reasoned decision and should provide an excellent
evidentiary guide for successfully establishing adverse possession.
Additionally, this Court reasoned out the lappage issues and thereby provides an
excellent roadmap for the alternative form of relief. An edited summarization of
the facts as reported by the Court follows.
In 1979, the Clayton Fulcher Seafood Company conveyed a tract of land on
Harkers Island in Carteret County to Bessie Scott. A survey was performed
according to the deed's metes and bounds description, and metal stakes were
placed to mark the boundaries and were shown on the survey map. Bessie Scott
died and title passed to her son, Elliot Anderson Scott.
In 1990, the plaintiff and her (now deceased) husband purchased the property.
Subsequently, another registered land surveyor performed a second survey of the
property. This surveyor physically identified all but two boundary stakes from
the previous survey though they were no longer visible above ground. The Court
noted that the surveyor identified every stake along the purported common
boundary of the parties. The surveyor marked the property boundaries by setting
flags and wooden "witness" stakes beside the original metal stakes.
The plaintiff testified that these stakes and flags remained in the ground
"for the first five or so years" after the property was purchased.
There is a small home on plaintiff's property. Subsequent to the purchase, she
and her husband added a second story. The disputed strip of land lies
immediately west of the home. The plaintiff and her predecessors in title
maintained and cleared the yard and the disputed strip of land. Both surveys
identified the disputed strip as falling within the boundaries of her property.
The plaintiff and her husband believed they owned the strip and actively
maintained it after "1990 by seeding, mowing the grass, planting three
pampas bushes, and paying the related property taxes."
The land owned by defendants since 1964 abuts the disputed strip. There is a house trailer on the property that is only used occasionally. The property is used primarily for storing automobiles and other business items. The record revealed that the defendants' yard "is unkempt and overgrown with waist-high scrub brush, weeds, and smilax." The Court stated that the photographs in evidence and testimony "show that the overgrown nature of the property creates a visible distinction between the land maintained by plaintiff and the land maintained by defendants."
The defendants allege they own the disputed strip based on the description in
their deed. In 2001, a third registered land surveyor prepared a map of the
defendants' property based on the metes and bounds description in their deed.
This map identifies the disputed strip as being part of the property owned by
defendants. The map also shows that the eastern boundary line of the defendants'
land running through part of the plaintiff's home. The surveyor stated that he
did not find any readily visible survey markers.
Subsequently, that year, the defendants' son "bulldozed the strip,
tearing out the grass and pampas bushes and destroying a drainpipe running from
plaintiff's home." After this, the plaintiff hired a fourth registered land
surveyor to perform yet another survey of the property. Like the first two, he
identified the disputed strip as being within the boundaries of the property
owned by the plaintiff. The Court stated that he also "physically located
and identified every stake on the western line of plaintiff's land that was
referenced in the previous survey" while performing the survey.
The plaintiff’s complaint alleged that the defendants' claim of ownership
was a cloud upon her title, which she acquired by seven years adverse possession
under color of title. The defendants denied that the plaintiff had met the
requirements for adverse possession and they alleged superior title and fee
simple ownership of the strip of land. The trial court granted partial summary
judgment in favor of the plaintiff by virtue of seven years adverse possession
under color of title.
On appeal, the defendants contended that genuine issues of material fact
exist concerning the character of the plaintiff's possession and holding of the
property under known and visible lines and boundaries. The Court of Appeals
concluded that any questions of fact were immaterial and that summary judgment
was appropriate.
The Court prefaces the analysis of the applicable law by noting that
"Section 1-38(a) of the North Carolina General Statutes provides that one
acquires title to real property after possessing it for seven years under color
of title and under known and visible lines and boundaries. N.C. Gen. Stat. §
1-38(a) (2003). In addition, such possession must be actual, open, hostile,
exclusive, and continuous for the required time period. Merrick v. Peterson,
143 N.C. App. 656, 663, 548 S.E.2d 171, 176, disc. review denied, 354
N.C. 364, 556 S.E.2d 572 (2001)."
"Adverse possession under color of title is occupancy under a writing
that purports to pass title to the occupant but which does not actually do so
either because the person executing the writing fails to have title or capacity
to transfer the title or because of the defective mode of the conveyance used. Cobb
v. Spurlin, 73 N.C. App. 560, 564, 327 S.E.2d 244, 247 (1985). In North
Carolina, a deed may constitute color of title so long as it contains an
adequate description of the land. Marlowe v. Clark, 112 N.C. App. 181,
186, 435 S.E.2d 354, 357 (1993). In addition, the claimant must prove that the
boundaries described in the deed cover the land in dispute. McDaris v.
"T" Corporation, 265 N.C. 298, 300-01, 144 S.E.2d 59, 61 (1965).
Since plaintiff's deed contains a thorough metes and bounds description of the
property, and because three maps and the testimony of two surveyors show the
disputed land as falling within the boundaries of the deed, the requirement of
color of title is satisfied. See e.g. Willis v. Johns, 55 N.C. App. 621,
624-25, 286 S.E.2d 646, 648-49 (1982)."
The defendants argued that summary judgment was improper because genuine issues of material fact exist concerning plaintiff's possession of the land under known and visible lines and boundaries. They contend that N.C.G.S. Section 1-38(b)(1)-(2), requires the plaintiff to prove that the boundaries are marked by stakes or other monuments that are at least eighteen inches above ground level for the entire seven year period.
The Court dismisses this argument noting that "the addition of § 1-38(b) did not abrogate the provisions of § 1-38(a), but was merely "designed to facilitate proof of possession under known and visible lines and boundaries, which is often difficult with respect to farmland and woodland not actually occupied." James A. Webster, Jr., Webster's Real Estate Law in North Carolina § 14-12, at 660 (1998) (emphasis added). Thus, § 1-38(b) simply provides one undisputable method by which a claimant may establish possession under known and visible lines and boundaries in difficult cases. However, since § 1-38(a) remains valid, claimants may still prove known and visible lines and boundaries under common law methods."
The court opined that the dramatic difference in yard maintenance of properties
that has existed for roughly thirty years prior to the initiation of this
lawsuit placed in evidence (apparently uncontroverted) created a visible line
marking the extent of the plaintiff's possession. "Based on all of these
facts, we conclude that the waist-high overgrowth in defendants' yard, and the
contrasting maintenance of plaintiff's yard, creates a sufficiently visible line
to apprise defendants of the extent of possession claimed by plaintiff.
Therefore, the requirement of possession under known and visible lines and
boundaries is satisfied. As such, defendants' asserted questions of fact
regarding the placement of markers are immaterial because they do not affect the
outcome of the case. See Kessing, 278 N.C. at 534, 180 S.E.2d at
830."
The Court states that "even if the dramatic difference in growth and
maintenance does not create sufficiently known and visible lines and boundaries,
the matter can be resolved by the applicability of lappage rules to this case.
Lappage cases are a specific type of adverse possession case in which the deeds
of each party encompass the disputed property. As such, the deeds are said to
"lap" upon each other. See James A. Webster, Jr., Webster's
Real Estate Law in North Carolina § 14-13, at 660-61 (1998). Since the
metes and bounds descriptions in both plaintiff's and defendants' deeds include
the strip of land west of plaintiff's home, the disputed property is lappage."
"In order to make out a superior title to land that is lappage, it is
necessary to ascribe exclusive possession to one of the claimants. Accordingly,
our courts have formulated certain rules to establish possession of the lappage.
See Price v. Tomrich Corp., 275 N.C. 385, 392-94, 167 S.E.2d 766, 771-72
(1969). See also Webster, Webster's Real Estate Law in North Carolina
§ 14-13, at 660-61. One rule is that a junior grantee claiming title by seven
years adverse possession under color of title does not have to show that the
boundaries of the lappage were visible on the ground, so long as he establishes
the required adverse possession within those lines. See Allen v. Morgan,
48 N.C. App. 706, 709, 269 S.E.2d 753, 754 (1980); Price, 275 N.C. at
394, 167 S.E.2d at 772. Therefore, any questions about the visible lines and
boundaries created by differences in growth and maintenance are resolved by the
applicability of lappage rules. Accordingly, plaintiff can gain title to the
disputed property even without known and visible boundaries on the ground so
long as she can establish the elements of adverse possession within the
boundaries identified by her deed."
"Regarding actual possession, there is evidence that plaintiff has been
in actual physical possession of the disputed property for over seven years.
Since 1990, plaintiff and her husband planted grass and pampas bushes on the
disputed track and maintained the strip by mowing the lawn and keeping weeds
down. In addition, it is the general rule that where one enters upon a portion
of land, but asserts ownership of the whole land based on color of title, the
law extends his possession to the outer bounds of his deed so long as the land
is not held adversely by another. Willis, 55 N.C. App. at 625, 286 S.E.2d
at 649; Vance v. Guy, 223 N.C. 409, 413, 27 S.E.2d 117, 121 (1943). Thus,
plaintiff is also deemed in possession of the tract because she has lived in her
home within the boundaries of her deed for over seven years, her deed
encompasses the disputed tract of land, and because there is no evidence of
competing possession by any other person."
The defendants argued that material issues of fact exist concerning the open
character of plaintiff's possession. The defendants introduced evidence that the
lawn care done by the plaintiff’s agents was seasonal, that people parked on
her property occasionally and that their son never saw her on the property. The
Court questioned whether this evidence was sufficient to rebut the evidence of
the plaintiffs occupancy that it bore upon and noted that "despite the
conflicting testimony offered by defendants, summary judgment was appropriate
because the undisputed evidence was sufficient to place defendants on notice of
an adverse claim." Later the Court recapitulates this issue by saying that
the "plaintiff has continuously lived in her home since 1990. In addition,
plaintiff has regularly subjected the land to use during the course of her
possession by adding a second story to her home, planting grass and bushes along
the disputed property, and hiring a maintenance worker to mow the lawn. No other
evidence, other than the defendants' allegations that plaintiff was rarely seen
at her house and surrounding property, indicates that plaintiff ceased occupying
the property for any amount of time during the required period. Therefore, the
acts of residence and yard maintenance support the inference that plaintiff's
occupation of the land extended over the required seven year period."
The defendants next argued that plaintiff's possession was not hostile because
her use of the land was permissive. The defendants introduce evidence statements
that they had made that provided plaintiff and her husband with notice that a
potential boundary issue. The statements reported were clearly not of a
permissive nature so it may be inferred that the thrust of the implicit argument
was that the continued occupancy must have been permissive since no immediate
action was taken. The Court states that "notice is not equivalent to
permission. Moreover, Mr. Kluttz's statement that "it's your business to do
what you want to" removes him from the situation altogether, rather than
assert his role as an owner of the land giving permission. Certainly, choosing
not to involve oneself in another person's affairs cannot be construed as
permission. Finally, Mr. Kluttz's statement that "I'd straighten it out or
move the house back" appears to be a denial of permission. Viewed in this
light, Mr. Kluttz's conversation actually heightens the hostile nature of
plaintiff's possession because she and her husband continually resided in the
home, and remodeled the home, without ever moving it away from defendants'
alleged property line. Accordingly, any factual issues presented by the alleged
conversation are immaterial because at most it provided notice but not
permission, and at worst it increased the hostile nature of plaintiff's
possession."
It is conventional wisdom in our profession that it is far better to defend a title case than to prosecute one. The vast majority of problems we deal with involve undeveloped land where proof of any occupancy on the part of any party is dubious at best. In such cases the conventional wisdom hold true because the burden on the plaintiff is to make out a prima facie case of title. If that can be challenged successfully, there is no burden on the defendant to prove superior title. This case establishes that where there is clear and convincing evidence of occupation in an overlap case with little to rebut it, summary judgment is appropriate. Where summary judgment is a real possibility, it is likely to be no disadvantage to be a plaintiff.
It is very important to note that an attorney carefully examining the title to either of the parties’ property would be unlikely to discover this problem. In all likelihood, the only way that it would come to the attention of a closing attorney would be by one of the parties disclosing the issue or by the commissioning of a competent survey that revealed the occupation and overlap. While the case is highly illustrative of the importance in recommending a survey even though the whole world has told your client that they "don’t have to get one", its primary usefulness is as a corrective guide when a problem finally surfaces.
Current Concerns in the State of our Industry
Statewide Title, Inc. is an agent for three national underwriters, Stewart Title Guaranty Company, Lawyers Title Insurance Corporation and Chicago Title Insurance Company. Our customers are expressing their concerns, which Statewide Title shares, about the positions of our insurers on various issues. Chicago Title has provided the following responses to our questions, and they have invited us to share them with our readers:
Where do you stand with respect to settlement companies and title companies closing real estate transactions?
"Our in-house counsel provided key leadership roles with the Bar Association Real Property Section, spending literally hundreds of hours speaking, corresponding, and preparing materials (much of which is still on the Section’s web site) and garnering active participation by the practicing bar to defend the recent FTC "attacks." We continue to regularly educate out of state lenders, agents, potential customers and even local attorneys about the need to have representation by an attorney at the closing table and that it is not just a paper shuffle. Chicago Title has no intention of handling real estate closings in the state of North Carolina."
Where do you stand with respect to having paid lobbyists supporting these matters?
"We have not paid any lobbyists in the state of North Carolina for anything related to changing the present closing system. Like most other title companies, we have supported the NC Land Title Association and its lobbyist who works on many matters of mutual concern with the Real Property Section. Along with all major title companies doing business in North Carolina, Chicago Title is involved in trade organizations, like the American Land Title Association which is involved in political issues across the country. To our knowledge, no efforts have been directed at settlement services in the state of North Carolina."
Where do you stand with respect to bank-owned title agencies operating settlement shops?
"All title companies have bank agents, whether in NC or elsewhere. No title company can control what those banks do internally, other than assuring that any title agencies properly following underwriting guidelines in issuing title coverage. Chicago Title does not have any bank agents involved in settlement shops."
We will provide the responses from other underwriters in future editions.
New V/P of NCLTA
By Bonnie Windom, Eastern Operations Director
Harold K. (Hap) Roberts, President of Statewide Title, Inc., is pleased to announce that Sarah Friede, Legal Counsel and Senior Underwriter, in the Statewide Wilmington office, has recently been elected Vice President of the North Carolina Land Title Association. Also, at the annual meeting of the NC Land Title Association held in Charlottesville, VA, Sarah received the Sam Mann Memorial Award. For those in the title insurance industry, receiving this award is an exceptional honor. It has not been awarded on an annual basis and is given only to those displaying outstanding character and leadership qualities who have also made superior contributions in support of the title insurance industry.
Sarah received her B.A. from the University of Dayton in 1991 and graduated from Villanova School of Law in 1996. She worked in California with the office of the County Counsel for Los Angeles County from 1996 to 1999 doing trial and appellate work. She then moved to North Carolina and worked in a real property practice in Wilmington, after which she worked in the title insurance industry for three years before joining Statewide Title, Inc. in March of 2003. In April of 2004, she was admitted as a practicing attorney to the U.S. Supreme Court.
Sarah works in our Wilmington office and assists Chris Burti, Vice President and Legal Counsel in title insurance underwriting decisions for attorneys and their staff across the state. She also works with claims and with Statewide Title Exchange Corporation in the handling of 1031 Tax Deferred Exchanges and Reverse Exchanges.
Congratulations, Sarah!