In this month’s installment the Statewide Title Newsletter focuses on the topic of Access. In this article, we look at how the title policy insures access.
In both Owner’s and Lender’s policies of title insurance, access may be insured upon the certification by an independent attorney that the insured land contains legal access either by adjoining a public road or over a private appurtenant easement. An appurtenant easement is an easement created for the purpose of benefiting particular land. It attaches to, passes with and is an incident of ownership of the particular land. Shear v. Stevens Bldg. Co., 107 N.C. App. 154, 161, 418 S.E.2d 841, 846 (1992).
Once the attorney makes this certification, what kind of coverage does the title policy give with respect to access? Number 4 under Covered Risks in the ALTA 2006 Policy covers against a defect of “No right of access to and from the land”.
Compare access coverage in the 2006 policy with that given in the Expanded Policy, also known as the ALTA Homeowner’s Policy. The Homeowner’s Policy specifically provides for coverage “against lack of vehicular or pedestrian access to and from insured land” under Item 11. The Homeowner’s Policy is available for 20% additional premium.
The language in the 2006 policy is similar to the language used in previous policies. The court has interpreted this coverage in Marriott Financial Services v. Capitol Funds, Inc. 288 NC 122 (1975). In Marriott, the court ruled that title insurance insures the legal right of access and not actual access. In other words, if a plat shows an easement providing access to the land, it doesn’t matter that the lay of the land makes it impossible to actually construct a road; as long as there is an easement for a road, the insured land has legal access. Although the Homeowner’s Policy gives more specific coverage to access, it is not certain a court would interpret it to provide a better quality of access.
The issue of access has become important because of the large number of foreclosures taking place. All too often the property being foreclosed has been found to be lacking in legal and/or actual access. Therefore, it is more important than ever for the certifying attorney to make sure the property they are seeking to have insured has good access. How can this be accomplished?
First, by verifying there is proper language granting the right of way. Language such as “together with” or “granted” or “conveyed” with a description of the right of way that can be readily ascertained and located on the ground will suffice. Language reserving the right of way without any words of conveyance will not be sufficient to grant an easement that can be insured.
Second, the attorney must examine the underlying fee to the easement to make sure it has not been encumbered. If the servient tract has a deed of trust against it that is not released, then when the easement is conveyed that easement will be subject to the deed of trust. If that deed of trust is later foreclosed the grantee’s grant of easement will be extinguished. Releases must be obtained from deeds of trust encumbering easements that provide access to the insured property. If you are examining title that is receiving the original grant of easement then you should also make sure the grantor of the easement has the right to convey a grant of easement.Easement and access problems have become much more problematic in light of the current real estate market that is awash in foreclosures. Many problems can be avoided down the road if a little extra diligence is applied before certifying as to access.