We have previously published an article compiling statutes helpful in dealing with title defects. Various amendments adopted in the years since have resulted in a need for an update. Title examiners have always had to deal with problems discovered in the search of the title records. These problems are often either ancient, technical in nature or both. It was common practice to search titles going back to original grants until the early part of this century. This could require travel to adjoining counties to examine records predating the origin of the county where the search originated. 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 dozens of statutes providing relief.

It is beyond the space limitations of this article to address all of these statutes individually, and in depth. 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. For instance, NCGS 47-74 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." Since it would be extremely unusual for a current title examination to go back to the last century, this statute would have almost no utility now.

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 if the original instrument is readily available. 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. We can infer that that the error should be obvious on its face or, at the very least, should not change the obligation of the grantor.

NCGS 47-108.20 provides validity to deeds corrected prior to the adoption of NCGS 47-36.1. If they were recorded prior to June 30, 1986, and were not reexecuted and reacknowledged they are validated. The statute contains similar limitations as set out in NCGS 47-36.1.

SEALS OMITTED

Article 1 of Chapter 39 of the General Statutes has been amended, effective June 25, 1999, by adding a new section.

NCGS 39-6.5. Elimination of seal.

"The seal of the signatory shall not be necessary to effect a valid conveyance of an interest in real property; provided, that this section shall not affect the requirement for affixing a seal of the officer taking an acknowledgment of the instrument."

This also applies to corporate conveyances and would also seem to apply to powers of attorney. The new provisions should not conflict with G.S. 47-43.1, which provides that the power must be under seal for the attorney in fact to be empowered to execute an instrument under seal.

Previously, case law in this State held that a deed that 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, 1995 if they contain language that evidences an intent to affix a seal. This older provision is not as useful as the new one, but its effective date may determine the extent of the required title examination as discussed further in this article.

There are numerous statutes that validate instruments with omitted seals. The following were 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 47-51-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.

The effective dates of these provisions and their earlier versions are also important in the context of the extended title examination period discussed in the last section of these materials.

NCGS 47-53.1, validating instruments where notaries omitted seals, effective January 1, 1991, will solve some problems not corrected by NCGS 39-6.5 or NCGS 10A-16.

NOTARY ERRORS

NCGS 10A-16 validates acts of notaries public in certain instances and the instruments are given the same legal effect as if the errors had not occurred. These circumstances are set out as follows.

.

Acknowledgments taken by a person prior to qualification as a notary public but after commissioning.

A document that:

bears a notarial seal where the date of the expiration of the notary's commission is stated correctly or erroneously,

has a notarial seal that;

does not contain a readable impression of the notary's name,

contains an incorrect spelling of the notary's name,

contains typed, printed, drawn; handwritten material added to the seal,

fails to contain the words `North Carolina' or the abbreviation `N. C.',

contains correct information except that instead of the abbreviation for North Carolina contains the abbreviation for another state.

All deeds of trust in which the notary is named as a trustee only.

 

This section applies to notarial acts performed before February 28, 1999.

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 uncanceled 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. There are also numerous sections, in this Article, having different dates that apply to specified counties.

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, the statute 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 its provisions are 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 affirmative defenses in litigation, they are not corrective or remedial. Their existence, when the facts are well established and documented, often provides a mechanism to permit us to insure the marketability of a land title without the necessity of bringing an action in order to clear the defect.

G.S. 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). It has been applied most recently in Karner v. Roy White Flowers, Inc., 518 S.E.2^nd 563 (N.C.App. 1999).

 

G.S. 1-40 is a twenty years limitation based upon adverse possession. No action for the

recovery or possession of real property may prevail when the person in possession, or his predecessors, has possessed the property under known and visible lines and boundaries openly, notoriously and adversely to all other persons for 20 years. Such possession gives a title in fee to the possessor, in such property, against all persons not under disability.

 

G.S. 1-38 provides that seven years' possession under color of title is a bar to prosecution of a title action if the requirements of the statute are met. Commissioner's deeds in judicial sales and trustee's deeds under foreclosure shall also constitute color of title.

The listing and paying of taxes on the real property marked and occupation of any portion of the property constitute prima facie evidence of possession of the entire tract. Note that color of title does not apply against tenants in common. The twenty-year limitation applies in such cases and requires ouster.

G.S. 1-35 provides for adverse possession against the State. The State will not sue any

person for any real property by reason of the title of the State to the same:

(1) When the persons in possession, or their predecessors have been in the adverse possession for thirty years.

(2) When the person in possession thereof, or those under whom he claims, has been in possession under color of title for twenty-one years.

NCGS 98-8 provides for color of title under a destroyed instrument. Every person who has

been in the continual, peaceable and quiet possession of land, using and occupying it for seven years, under known boundaries, is deemed to have been lawfully possessed, under color of title although unable to exhibit a conveyance. Provided, that the possession commenced before the destruction of the registry office and also that any such person makes affidavit and produces such proof as is satisfactory to the court that the possession was rightfully taken; and if taken under a written conveyance, that the registry thereof was destroyed by fire or other means, or was destroyed before registry as aforesaid, and that neither the original nor any copy thereof is in existence.

Note that these limitations are not applicable to torrenized land, public streets or railroad property owned in fee. See NCGS 43-21, NCGS 1-45 and NCGS 1-44.

TRUSTEES

NCGS 43-63 provides that an instrument describing party as trustee or agent does not to operate as notice of limitation upon powers of such party in certain circumstances. Any instrument affecting title to real estate describing a party as trustee or agent, not indicating the beneficial interest, not setting forth powers or specifying some other recorded instrument setting forth such powers, and there is no recorded instrument in the record chain of title to such real estate setting forth such powers, is not notice of any limitation upon the powers of the party. Nor does it require any inquiry or investigation as to the trust or agency. The trustee or agent is deemed to have full power to convey or otherwise dispose of the real estate. No person interested under such trust or agency is entitled to make any claim against the real estate based upon notice given by the description.

 

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, the instrument may be registered upon order of the 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.

SOME CONCLUSIONS ABOUT USE OF CURATIVE STATUTES

If a deed (or other instrument) to a grantee is invalid because of a technical defect and the grantor makes a subsequent valid transfer to someone else which is for value and recorded, it is doubtful that a subsequently enacted curative statute can validate the grantor's first attempted transfer to the detriment of the second grantee. That is one reason why new curative statutes or amended curative statutes must be used prudently. We advise that the out-conveyances of the grantor of a defective instrument be checked through the effective date of the corrective statute. See, generally, Hetrick and McLaughlin, Webster's Real Estate Law in North Carolina, Sec. 23-2 (Fourth Ed. 1994).