The Statewide Title Newsletter and Legal Memorandum

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Issue  8  Article  14
Published:  3/1/1996

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Rx For Title Ailments - Curative and Other Statutes
Chris Burti, Regional Vice President and Legal Counsel

For generations title examiners have had to deal with problems discovered in the search of the title records title for real property. Quite often the problems have been technical in nature, ancient or both. Until the early part of this century it was common practice to search titles going back to original grants. This could require travel to adjoining counties to examine records predating the origin of the search county. As an alternative to expensive and protracted litigation, to clear up such problems and to reduce the need for extensive grant searches, the Legislature has passed literally hundreds of statutes providing relief. It is beyond the space limitations of this newsletter to address so many statutes individually, in addition many are drafted so narrowly as to apply to very few cases or are themselves so old as to be no longer relevant (see NCGS 47-74 which provides "Wherever any deed of conveyance registered prior to January 1, 1886, purports to have been attested by two witnesses and in the certificate of probate and acknowledgment it is stated that the execution of such deed was proven by the oath and examination of one of the grantors in said deed instead of either of the witnesses named, all such probates and certificates are hereby validated and confirmed, and any such deed shall be taken and considered as duly acknowledged and probated."). This article will attempt to address some of the statutes most frequently used to cure modern title problems. Title examiners will be familiar with most of these but we hope that having a handy reference will prove helpful.

TYPOGRAPHICAL ERRORS

NCGS 47-36.1 is probably one of the most indispensable statutes available to correct relatively current problems. This statute provides that an obvious typographical error may be corrected on the instrument, initialed by the signatories or the drafting attorney and rerecorded with an explanation attached signed by the party making the correction. Reexecution and reacknowledgement is not required. The statute does not give guidance as to what constitutes an "obvious" error, however Green v. Crane, 96 N.C.App. 464 (1990) has shown us that an omitted description is not within the purview of the statute.

NCGS 47-108.20 provides validity to older corrected deeds recorded prior to June 30, 1986, which were not reexecuted and reacknowledged and contains similar limitations as NCGS 47-36.1.

SEALS OMITTED

Case law in this State holds that a deed which does not contain the seal of all grantors is not sufficient to convey property, NCGS 47-108.11 validates such deeds where they were executed prior to January 1, 1991 and which contain language evidencing intent to affix a seal.

There are numerous statutes that validate instruments with omitted seals. The following are often helpful and apply to instruments executed prior to January 1, 1991:

NCGS 47-71.1-Corporate deeds with seals omitted.

NCGS 47-53-Clerks of Superior Court and Notaries taking acknowledgments omitting seal, name or signature.

NCGS 47-53.1- Notaries omitting seals

NCGS 47-51-Deeds of sheriff, commissioner, receiver, executor, administrator, and other officials omitting seals

NCGS 45-20.3-Deeds by attorney-in-fact where the principal omitted the seal in the power of attorney.

UNCANCELLED MORTGAGES

NCGS 45-37(b) provides a conclusive presumption as against creditors and purchasers for value, of satisfaction of Mortgages and Deeds of Trust which remain uncancelled of record more than 15 years after the due date of the last installment of the debt secured. There are provisions for the beneficiary to extend this limit once. This is done by the filing of an affidavit or "separate instrument" by the holder of the indebtedness. This filing is with the register of deeds. Before relying on this statute where the last due date is less than 30 years past it would be prudent to check the indices for the beneficiary in counties where the Register of Deeds either does not make marginal entries or is inconsistent about making them.

ANCIENT MINERAL CLAIMS

Where an instrument of record severs mineral rights from the fee title and the mineral rights are not listed for taxes between 1981 and 1988, notice has been published by the County Commissioners pursuant to NCGS 1-42.9 and drilling or mining has not occurred, the record owner of the surface rights with an unbroken chain of title of more than 30 years is presumed to own a fee simple estate assuming no adverse possession. The statute is lengthy and complex and should be consulted for other requirements and limitations.

LOST DEEDS

NCGS 8-21 provides that if in any judicial proceeding it is shown that a recorded conveyance of real estate is lost, and the record destroyed, it shall be presumed to be made upon sufficient consideration and to be an estate in fee simple if the grantor was possessed of such estate unless the contents be shown to be otherwise.

NO PRIVY EXAMINATION

NCGS 39-13.1 provides that deeds executed without a privy examination are valid and NCGS 52-8 validates contracts executed between January 1, 1930 and January 1, 1978, when the requirement for a finding that the contract was not unreasonable or injurious to the wife has not been complied with. In Dunn v. Pate, 334 N.C. 115 (1993) our Supreme Court overturned a controversial Court of Appeals decision (which had held that the legislature could not validate invalid deeds) by ruling that such examinations were unconstitutional.

MARKETABLE TITLE ACT

Passed in 1973, Chapter 47B of the North Carolina General Statutes is a legislative attempt to extinguish ancient claims and title defects. Due to the numerous exceptions in the statute it does not provide the title examiner with a means to shorten the length of the search but rather establishes a prima facie case in litigation if complied with. There are 13 exceptions to the Act including certain easements, restrictive covenants, access and utility easements as well as enforceable secured liens and parallel chains of title. Interestingly enough, the act does not except vested non-possessory interests and the Court of Appeals has ruled in Kirkman v. Wilson 98 N.C. App. 242 (1990) that vested remainders can be cut off.

LIMITATIONS

Article 4 of Chapter 1 of the North Carolina General Statutes deals with limitations affecting real property. Since limitations are defenses they are not truly corrective or remedial. Their existence, when the facts are well established and/or documented, often provides a mechanism to insure the marketability of a land title without the necessity of bringing an action in order to clear the defect.

NCGS 1-50(3) is a six year limitation on actions for injury to an incorporeal hereditiment. This has been held to apply to the enforceability of a restrictive covenant, Allen v. Sea Gate Ass’n, Inc. 119 N.C.App. 761 (1995).

DISSOLVED CORPORATIONS

When a corporation has been out of existence for more than ten years and the grantee or those claiming under the grantee have been in uninterrupted possession since the execution of the instrument by the corporation in its corporate name by its president, such instrument may be registered upon order other clerk of the superior court on proof of a subscribing witness, without further requirement of acknowledgment. NCGS 47-16.

FORECLOSURES

NCGS 45-39, et seq., set forth numerous validating and limiting provisions for correcting inadequate notice, improper party and other defects in foreclosures. However most involve older problems and technical defects of statutes that have been amended often.

OFFICIAL CAPACITY NOT DESIGNATED

NCGS 47-108.17 provides that, where an executor, executrix, administrator, administratrix, guardian or commissioner has executed a deed or other instrument and the granting clause of the instrument sets forth the official capacity of the grantor, neither the failure to redesignate the grantor's official capacity following his or her signature nor the failure to designate the official capacity of the grantor in the acknowledgment of the instrument shall invalidate the conveyance provided the instrument is otherwise properly executed.

We hope that you find this article useful and will include it in your title search "first aid kit". If there are other statutes, which we have not addressed, that you have found helpful in curing title defects please fax them to us at 1-800-522-8563 and we may include them in future materials.

SOME CONCLUSIONS ABOUT USE OF CURATIVE STATUTES

If a deed (or other instrument) to A is invalid and then the grantor makes a subsequent transfer to B which is for value and is valid and is recorded it is doubtful that a subsequently passed curative statute can validate the grantor's transfer to A to the detriment of B. That is one reason why new curative statutes or amended curative statutes must be used prudently. See, generally, Hetrick and McLaughlin, Webster's Real Estate Law in North Carolina, Sec. 23-2 (Fourth Ed. 1994).


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