Statewide Newsletter and Legal Memorandum

View Current Newsletter - Search The Archive 
Sign UpPrint
Unsubscribe

View our Index of Newsletter Articles

Issue  236
Published:  4/1/2017

In re: Thompson (COA 16-1014) 04/18/2017 Latent Description Error will not Defeat Conveyance
Chris Burti, Vice President and Senior Legal Counsel,
This appeal resulted from an order of the trial court that allowed the substitute trustee to foreclose on a loan secured by property owned by the respondents. On appeal, the respondents argued that the trial court erred by failing to vacate an earlier order of the Clerk of Superior Court allowing foreclosure and by entering the order permitting the foreclosure sale to proceed. The respondents contended that due to a faulty description in the deed of trust, the trustee did not hold legal title to the subject property therefore was not entitled to foreclose. The relevant facts of this case are largely undisputed. After a properly noticed foreclosure hearing the Clerk of Superior Court entered an order allowing the foreclosure to proceed. The respondents appealed the Clerk's order to the Superior Court of for a de novo hearing, after which the trial court entered an order allowing the foreclosure to proceed and the respondents entered timely notice of appeal.

In this appeal, the respondents' only challenge to the order allowing foreclosure was their contention that the lender had no right to foreclose on the property simply as a result of an error contained in the Deed of Trust's description, arguing that the trustee never received legal title to the property and therefore had no legal right to foreclose.

Both the vesting deed and the deed of trust "(1) identify the location of the property as 303 Old Pine Ct., Richlands, N.C., (2) identify the property as being Lot 46 as shown on a plat recorded in Map Book 51, Page 149, Slide 1485 of the Onslow County Registry, and (3) identify the property as having Onslow County Tax Parcel ID Number 46B-153." The Court of Appeals opinion states that "the respondents' appellate argument is based upon a single error in the Deed of Trust, evidenced in the following discrepancy between the documents:

1. The General Warranty Deed describes the property as "all of Lot 46 as shown on a plat entitled 'Final Plat Walnut Hills, Section III-C', prepared by Parker & Associates, Inc., dated August 3, 2006 and recorded in Map Book 51, Page 149, Slide L-1485, Onslow County Registry." (Emphasis added).

2. The Deed of Trust describes the property as "all of Lot 46, as shown on a plat entitled 'Final Plat Walnut Hills, Section II-C' prepared by Parker & Associates, Inc., dated August 3, 2006 and recorded in Map Book 51, Page 149, Slide L-1485, Onslow County Registry." (Emphasis added).

"The sole difference between these documents is that the Deed of Trust describes the property as being located in "Section II-C" of the Walnut Hills subdivision, and the General Warranty Deed identifies the property as being located in "Section III-C" of the Walnut Hills subdivision. The parties agree that the Walnut Hills subdivision did not include a "Section II-C" and that the reference in the Deed of Trust to "Section II-C" was incorrect and referred to a location that does not exist. The respondents contend that this error renders the Deed of Trust void as a matter of law. The Bank, however, argues that the Deed of Trust's reference to "Section II-C" is a minor error that creates only a latent ambiguity as to the description of the property, which may be rectified by examination of extrinsic documents referenced in the Deed of Trust. We agree with the Bank's analysis."

The Court of Appeals reasoning in this opinion is apt, articulate and we quote the following in full:

Neither the transfer of property from a buyer to a seller, nor the execution of documents securing a loan used to purchase real estate is a modern phenomenon or an unusual occurrence. Property has changed hands throughout North Carolina's history and there have been many occasions in which a party has challenged the validity of a document evidencing a property transaction on the grounds that the document contained an error or failed to identify the property with sufficient certainty. Our courts have had numerous opportunities during the last 150 years to consider the effect of an error or misnomer in a deed, promissory note, or other real estate-related document. As a result, the law governing the issue of errors or uncertainty in such documents has been firmly established for more than a century. N.C. Gen. Stat. § 22-2 (2015), known as the statute of frauds, requires that all contracts to convey land "shall be void unless said contract, or some memorandum or note thereof, be put in writing and signed by the party to be charged therewith, or by some other person by him thereto lawfully authorized." The Supreme Court of North Carolina has held that "[a] valid contract to convey land, therefore, must contain expressly or by necessary implication all the essential features of an agreement to sell, one of which is a description of the land, certain in itself or capable of being rendered certain by reference to an extrinsic source designated therein." Kidd v. Early, 289 N.C. 343, 353, 222 S.E.2d 392, 400 (1976). The general rule regarding the validity of the description of property in a deed or related document is as follows:

The decisions in this State are in very general recognition of the principle that a deed conveying real estate or a contract concerning it, within the meaning of the statute of frauds, must contain a description of the land, the subject-matter of the contract, "either certain in itself or capable of being reduced to certainty by reference to something extrinsic to which the contract refers."

Patton v. Sluder, 167 N.C. 500, 502, 83 S.E. 818, 819 (1914) (quoting Massey v. Belisle, 24 N.C. 170, 177 (1841)).

"It is presumed that the grantor in a deed of conveyance intended to convey something, and the deed will be upheld unless the description is so vague or contradictory that it cannot be ascertained what thing in particular is meant." Duckett v. Lyda, 223 N.C. 356, 358, 26 S.E.2d 918, 919 (1943) (citations omitted). Thus, "[w]hile the contract must contain a description of the land to be sold, it is not essential that the description be so minute or particular as to make resort to extrinsic evidence unnecessary. The line of separation is the distinction between a patent and a latent ambiguity." Gilbert v. Wright, 195 N.C. 165, 166, 141 S.E. 577, 578 (1928) (citing Lewis v. Murray, 177 N.C. 17, 97 S.E. 750 (1919)). "Whether a description is patently ambiguous is a question of law." Kidd, 289 N.C. at 353, 222 S.E.2d at 400 (citation omitted).

Although a description of real property must adequately identify the subject property, the law will support a deed if possible. "When a description leaves the land 'in a state of absolute uncertainty, and refers to nothing extrinsic by which it might be identified with certainty,' it is patently ambiguous and parol evidence is not admissible to aid the description. The deed or contract is void." Kidd, 289 N.C. at 353, 222 S.E.2d at 400 (quoting Lane v. Coe, 262 N.C. 8, 13, 136 S.E. 2d 269, 273 (1964)).

" 'A description is . . . latently ambiguous if it is insufficient in itself to identify the property but refers to something extrinsic by which identification might possibly be made.' Thus, a description missing or uncertain in one document may be rendered certain by another and together the documents may satisfy the statute of frauds." River Birch Associates v. City of Raleigh, 326 N.C. 100, 123, 388 S.E.2d 538, 551 (1990) (quoting Lane, 262 N.C. at 13, 136 S.E. 2d at 273 (other citation omitted). In sum:

It is a general rule, that if the description be so vague or contradictory, that it cannot be told what thing in particular is meant; the deed is void. But it is also a general rule, that the deed shall be supported, if possible; and if by any means different descriptions can be reconciled, they shall be, or if they be irreconcilable, yet if one of them sufficiently points out the thing, so as to render it certain that it was the one intended, a false or mistaken reference to another particular shall not overrule that which is already rendered certain. Proctor v. Pool, 15 N.C., 370, 373 (1833).

We have reviewed our appellate jurisprudence addressing challenges to the validity of the identification of property described in documents such as a deed, deed of trust, or contract for the sale of property, and observe that our Courts have generally affirmed the validity of such documents when it is possible to ascertain the identity of the subject property. For example, in Carson v. Ray, 52 N.C. 609, 609 (1860), our Supreme Court upheld as valid a deed in which the grantor agreed to transfer "[m]y house and lot in the town of Jefferson, in Ashe County, North Carolina." The Court noted that "there was no evidence that [the grantor] owned any other house and lot" in Jefferson, and that the deed presented only a latent ambiguity. Similarly, in Gilbert v. Wright, supra, our Supreme Court upheld an order of the lower court ordering specific performance of a contract to sell "the vacant lot" on the grounds that the other documents and the factual circumstances associated with the transaction clearly identified a specific vacant lot.

Where a document that constitutes part of the transfer of property, such as a deed or deed of trust, describes the property in a manner that is uncertain or contains an error, our appellate courts generally have upheld the decision of a trial court to admit extrinsic evidence derived from sources referred to in the challenged document, in order to establish with greater certainty the identity of the subject property. Thus, in Taylor v. Bailey, 34 N.C. App. 290, 237 S.E.2d 918 (1977), this Court upheld an order by the trial court granting specific performance of a contract for the sale of property. The contract erroneously described the property as being located in Buncombe County, rather than giving its correct location in Henderson County. We held that this discrepancy created only a latent ambiguity:

Defendant argues that the description before us for construction is clearly patently ambiguous. We cannot agree. True, there is no metes and bounds description. However, the description gives the acreage and refers to a deed of trust, naming the parties and the date thereof, in which the land is described with particularity. This is adequate to satisfy the "something extrinsic by which identification might possibly be made." Further, the complaint locates the property in Henderson County.

Taylor, 34 N.C. App. at 292, 237 S.E.2d at 919 (quoting Lane at 13, 136 S.E. 2d at 273). In River Birch, supra, our Supreme Court held that "[t]he trial court incorrectly excluded evidence of the preliminary plat for the purpose of resolving a latent ambiguity in the identity of the common area referred to in the covenants." River Birch, 326 N.C. at 126, 388 S.E.2d at 553. And, in Tomika Invs., Inc. v. Macedonia True Vine Pent. Holiness Ch. of God, Inc., 136 N.C. App. 493, 524 S.E.2d 591 (2000), the defendant claimed that the subject deed was void because of the misstatement of the name of one of the parties. This Court held that "there is only a latent ambiguity in the deed" that did not render the deed void. Tomika, 136 N.C. App. at 497, 524 S.E.2d at 594.

Applying the principles discussed above to the present case, we conclude that the erroneous reference in the Deed of Trust to "Section II-C" instead of "Section IIIC" is merely a scrivener's error and creates only a latent ambiguity in the description of the property. This uncertainty may be remedied by examination of the four corners of the Deed of Trust and documents referenced therein. The Deed of Trust identifies the property as Lot 46 of a subdivision depicted on a plat "prepared by Parker & Associates, Inc., dated August 3, 2006 and recorded in Map Book 51, Page 149, Slide L-1485, Onslow County Registry." This plat correctly identifies Lot 46 as being located in "Section III-C." In addition, the Deed of Trust identifies the property with a street address and tax parcel ID number, both of which correspond to the information in the General Warranty Deed and the plat. Upon examination of the information in the record, in the context of the long-established jurisprudence on this subject, we conclude that the erroneous reference to "Section II-C" in the Deed of Trust did not render the document void and that the trial court did not err by allowing the foreclosure to go forward.

This opinion might be paraphrased by what we refer to as the "doctrine of surplusage." This 'doctrine' can be stated where, as here, when after an obvious error is redacted, the remaining description is legally sufficient standing alone, and where the error does not implicate any other property presently owned by the grantors, it is to be treated as surplusage and ignored giving effect to the obvious intent of the parties. This Court of Appeals opinion constitutes important confirmation that the courts of our state will not defeat the obvious intent of the parties to a conveyance as the result of technical and non-material defects or errors.



Follow Statewide_Title on X (Twitter)       View Statewide Title's profile on LinkedIn