Recently, I received a letter from a homeowner who wants to build a backyard swimming pool. His letter said when he bought his home, he thought the local power company had a 10-foot utility easement across the rear of the property.
Instead, during the process of obtaining a building permit for the pool, the homeowner was shocked to learn the electric company has a 100-foot-wide easement, which includes the area of the planned swimming pool.
Although the utility company has no plans to use its 100-foot-wide easement, it will probably prevent issuance of a building permit for the swimming pool.
Presuming that utility easement was correctly recorded, the homeowner should have been informed of it at the time of home purchase. That is when most buyers receive a title report showing their current title status. That abnormally large 100-foot-wide easement should have stood out on the buyer’s title report.
Unless that residence property is unusually large, a 100-foot utility easement means a huge portion of the lot is unbuildable because the utility can install overhead or underground utility wires within that easement area.
The homeowner, at the time of purchase, should have objected to the huge utility easement, but now it’s too late. The utility has the upper hand, and there is virtually nothing the homeowner can do if the utility won’t reduce its recorded easement size.
Beware of recorded covenants, conditions and restrictions. Although recorded easements, such as utility easements, affect virtually every property, millions of properties are also subject to recorded covenants, conditions and restrictions (CC&Rs). These often-complex documents determine what can and cannot be done with a property subject to the CC&Rs “private zoning” that affects an entire neighborhood or condo complex.
For example, Jared and Anne enjoyed raising llamas on their residential property, but their neighbors weren’t equally thrilled. Neighbors cited the neighborhood recorded CC&Rs that allow only residential, non-business purposes; however, Jared and Anne said their deed didn’t refer to the recorded CC&Rs. In a lawsuit, the California Supreme Court ruled the CC&Rs are binding on subsequent owners even if a homeowner’s deed doesn’t specifically refer to the recorded CC&Rs (Citizens for Covenant Compliance vs. Anderson, 47 Cal.Rptr.2d 898).
The purpose of recording laws. Every state has recording laws to protect property owners. The purpose is to give constructive notice of recorded documents, such as deeds, mortgages, deeds of trust, judgment liens, income tax liens, easements, mechanics’ liens and other recordable documents.
Constructive notice means each property owner is presumed to know the contents of all recorded documents affecting a particular property. Since few people know how to search the public records to find documents affecting a specific property, most property buyers learn of recordings at the time of purchase when a title report is prepared.
Simply explained, a title report is an abstract of all recordings affecting a property. The buyer can either accept or reject the current title status. If the homeowner who had the 100-foot power-line easement had read his title report, he could stopped his purchase until the easement size was reduced.
Recording laws create a race to the courthouse. The general recording rule is “He or she who records first wins.” Normally, this is not a problem; however, when a conflict exists between two recorded instruments, the first party to record their document prevails.
In event of title disputes, quiet title lawsuits determine ownership. When there are conflicting claims to a property’s title or when a claimant might hold a mechanics’ or judgment lien against a property or its owner, the legal remedy is to bring a quiet title lawsuit to determine ownership or effect of a document.
To illustrate, suppose I sell my house for cash to Wong, who forgets to record his deed. Wong dies, leaving his assets to his widow, Suzie. Suzie then sells the house to Joe, who records the deed.
When Joe later sells the house, he has a big recording problem. Although Joe recorded his deed from Suzie, he took title by a “wild document.” The reason is Joe’s deed from Suzie was not in the chain of title since Wong never recorded the deed he received from me.
Title problems like this can usually be resolved by bringing a “quiet title lawsuit” to let the court decide who owns what interest in the property.
Always obtain an owner’s title insurance policy. The best way to avoid title problems and to determine the exact title status is to insist on obtaining an owner’s title policy when a property is purchased.
Equally important, at the time of property purchase, the buyer, realty agent and attorney should carefully read the title report to learn exactly what title is being transferred. Especially when title is received from friends and relatives, title insurance is critical to avoid unexpected recorded document surprises, such as unpaid property taxes and judgment liens.
To avoid adverse recording law consequences, the best solution is to record all realty documents promptly and always to obtain an owner’s title insurance policy showing marketable title. For further recording details, please consult a local real estate attorney.
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PLEASE NOTE: Real estate laws vary from place to place. Be sure to check the laws of your state and municipality before making decisions on real estate matters.
Write to Robert Bruss at Tribune Media Services, 435 N. Michigan Ave., Chicago, Ill. 60611.
