The process of re-recording instruments in real property transactions engenders far more questions and debate than one would expect. This article is an attempt to discuss some of the more common issues and provide references for the cases that have shaped the requirements for properly re-recording with assurance of avoiding title defects.

NCGS 47-36.1 is probably one of the most indispensable statutes available to correct relatively minor problems when 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 re-recorded with an explanation attached that has been signed by the party making the correction. Re-execution and re-acknowledgement of the conveyance are not required. The statute does not give any guidance as to what constitutes an "obvious" error. However, Green v. Crane, 96 N.C.App. 464 (1990) tells us that an omitted tract in a description is not within the purview of the statute. We can infer from this case that an error should be obvious on its face or, at the very least, should not change the obligations of the grantor or the rights of the grantee in order to be a valid correction. It is important to note that the statute states that "Notice of the correction made pursuant to this section shall be effective from the time the instrument is rerecorded." Since our Recording Act is a notice statute, it seems apparent that re-recording under this provision does not relate back to the original recording as it affects third parties. The following case differs in result.

One common recording issue results from the failure to attach an exhibit containing a description when recording. In Masonry v. Vision Contractors of Charlotte, Inc., 103 N.C. App. 597, (1991), a lender made a development loan to a contractor for property in Charlotte. The lender accepted a deed of trust from the contractor encumbering the property as security for the loan. However, when the lender recorded the deed of trust, it failed to record a legal description of the property. The developer defaulted on its payments to the lender and to contractors who provided materials and services. Three contractors obtained liens on the property. After the contractors' liens attached, the lender re-recorded the deed of trust with the legal description of the property included. This was an appeal of a judgment in an action to establish the priority of the liens. The Court of Appeals affirmed the trial court’s holding that the re-recording of the deed of trust related back to the original recording date, making the lien of the deed of trust senior to the liens of the contractors.

It is not unlikely that the lender used NCGS 47-36.1 to re-record the deed of trust. Since the issue was not raised, we can not be certain whether such is the case. If it had been, we believe that the holding in Green would likely have changed the outcome of this appeal. First, the statute seems to say that there is no relation back as noted above. Clearly, if relation back is a concern, one should re-execute and re-acknowledge before re-recording as discussed below. Second, with an omitted description, it is obvious that an error has occurred, but it is not necessarily obvious as to what property the grantor intended to convey. If the grantor only owned one parcel, not suitable for subdivision, or in the case of a purchase money deed of trust, the application of Green becomes dubious since there is little doubt as to identity of the property involved. Unfortunately, that information is not apparent on the instrument itself and therefore the error is, arguably, not obvious. In addition, if the exhibit was in fact attached at the time of execution and delivery, the cases discussed below would lead one to the conclusion that a recording error was at issue instead of a typographical error.

NCGS 47-108.20 is a curative statute that 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 re-executed and re-acknowledged they are validated. The statute contains similar limitations as set out in NCGS 47-36.1.

Traditional wisdom is that absent proper use of NCGS 47-36.1, a corrected instrument should be re-executed and re-acknowledged before re-recording. Before delivery, the grantor retains full power and control of the instrument and may choose to make any alterations in the instrument desired. It does not become the deed of the grantor until delivered as determined in Wetherington v. Williams, 134 N.C. 276, 46 S.E. 728. The case of Krechel v. Mercer, 262 N.C. 243, 136 S.E. 2d 608 holds that after delivery, a deed may be changed with the consent of the parties and may then be redelivered. In such cases the new delivery constitutes a re-execution. But, the burden is on those claiming under the altered deed to prove that the changes were made with the knowledge and consent of the grantor.

This begs the question of whether such an agreement in fact existed in the case of an instrument bearing changes that are not initialed or re-signed. "A deed must always be consummated by delivery, which is the final act of execution, and this delivery must be either actually or constructively made by the grantor to the grantee." Perry v. Hackney, 142 N.C. 368, 55 S.E. 289. Recording creates a rebuttable presumption of delivery. Perry tells us that without re-execution, however accomplished, transfer of title cannot be accomplished by substituting material terms such as the name of another person for that of the grantee who was designated in the deed (or a different parcel of land). "The registration of deeds is primarily for the protection of purchasers for value and creditors; an unregistered deed is good as between the parties and the fact that it is not registered does not affect the equities between the parties." Bowden v. Bowden, 264 N.C. 296, 141 S.E. 2d 621. Bowden tells us that even after recording "[t]he ultimate inquiry is not what the records show, but what the terms of the original deed…" were between the parties.

This doctrine of re-execution appears to be limited by the holding in Respass v. Jones, 102 N.C. 5, 8 S.E. 770, that, so far as it affects them, a deed may be changed in any way that may be agreed by the parties. The case holds that the agreement to change the instrument must be made prior to registration. To the extent that it affects third parties, recordation will obviously curtail the right to make changes. What is not clear is whether this case limits the right to make corrections. Clearly, Masonry permits corrections even where the rights of third parties are affected.

Therefore, with a Krechel style of re-execution there is a question of the proof of the agreement of the change necessary to support the conveyance. Actual re-execution is considered the better practice. It would seem safe to operate under the premise that an initialing of the correction also operates as a re-execution as well as proof of agreement and should support a re-acknowledgement.

Another common re-recording issue comes from undue reliance upon the doctrine of estoppel by deed. Schuman V. Baker and Assoc., 70 N.C. App. 313, (1984), involved a case where the debtor did not acquire title and register its deed until one month after the execution of its deed of trust to the plaintiff lender. The Court of Appeals held that a deed of trust to a bank registered after the debtor acquired title had priority over plaintiff lenders' deed of trust under G.S. 47-20. Actual notice by the bank of plaintiffs' prior deed of trust did not operate to defeat the bank's statutory priority under the doctrine of estoppel by deed. This case makes it clear that re-recording is required in order to establish a proper chain of title and to receive the protection of the Recording Act.

In conclusion, re-recording should not be lightly undertaken without due regard for the effect the various forms will have on the title.

Slavin v. Town of Oak Island, COA02-671, Filed: August 19, 2003 (____ NC App. ____ (2003-355))

Plaintiffs are oceanfront property owners in the Town of Oak Island who unsuccessfully appealed a summary judgment in favor of the town, which plaintiffs alleged had committed an unconstitutional taking of their beach access.

The U.S. Army Corps of Engineers conducted two beach renourishment programs in the town, one to restore a sea turtle nesting habitat and the other to replace sand that had been reclaimed over the years by the ocean during storms and heavy tides. Both projects involved placing new sand below the mean high water mark, thus creating a new mean high water mark seaward of where the mark was before the renourishment. In order to protect the newly-created dry-sand dune, the Town of Oak Island implemented a "Beach Access Plan," which involved fencing along the length of the dunes. Whereas Plaintiffs used to be able to directly access the ocean from their properties, they now must use designated public access points.

The cause of action against the Town alleged that the plaintiffs had a direct right of access to the ocean and that the Town’s plan constituted an unconstitutional taking of that right. The trial court granted summary judgment, and the property owners appealed.

Plaintiffs asserted on appeal that the Town was not entitled to summary judgment because it lacked the authority to enact the Access Plan or erect the protective fence. The argument was that the authority is vested solely in the State of North Carolina and the Department of Administration pursuant to the State Lands Act (N.C.G.S. 146-1 et seq)

The appellate court rejected the plaintiffs’ assertions. N.C.G.S. §146-6(f) vests in the State "title to land in or immediately along the Atlantic Ocean raised above the mean high water mark by publicly financed projects which involve hydraulic dredging or other deposition of soil materials or sand." Despite that, the court held that nothing in the State Lands Act should be interpreted to limit the authority of a municipality to exercise its police power by enacting regulations protecting a local public beach.

Plaintiffs also asserted on appeal that North Carolina law recognizes a littoral property owner’s unlimited right to access adjacent water, a right upon which the Town could not infringe without adequate compensation. Relying primarily on Capune v. Robbins, 273 NC 581, 588 (1968), the Court rejected that argument as well, ruling that a littoral property owner’s right of access to the ocean is a qualified one subject to reasonable regulations. The court also relied on prior holdings that "appurtenant littoral rights are subordinate to public trust doctrines," Weeks v. N.C. Dept. of Nat. Resources and Comm. Development, 97 N.C. App.215, 226, disc. rev. denied, 326 N.C. 601 (1990). The Court noted that Plaintiffs did not argue that the regulation was unreasonable, but rather that its mere existence constituted a taking. Therefore, the Court concluded, the plaintiffs’ argument that they have an unlimited right of access is incorrect as a matter of law and therefore the lower court’s granting summary judgment to the Town was proper.

Proponents of the Town’s Access Plan argue that the plaintiff’s beachfront properties are protected by the renourishment efforts by ensuring that the ocean will not wash up to reclaim the properties altogether. In the 1960s some residents of Carolina Beach saw their oceanfront lots become completely washed away "by successive storms, tides, winds and other natural forces." Carolina Beach Fishing Pier, Inc. v. The Town of Carolina Beach, 277 N.C. 297 (1970). When the Town constructed a beach erosion seawall, completely covering where plaintiff’s lots had been and vesting title to the new lands in the State, he alleged that the Town had engaged in a complete taking of his property. The Supreme Court held that the ocean itself, by virtue of its gradual westward movement in Carolina Beach, had divested plaintiff’s title to his lots. The federal Submerged Lands Act of 1953 vests title to all submerged lands within three miles of the shoreline in the states. In addition, the NC Legislature’s 1963 Session Laws, Chapter 511 ("An Act Relating to the Title to the Land Built Up and Constructed in the Town of Carolina Beach…") established fee simple title to the Town of Carolina Beach in all lands restored east of a platted building line. Because plaintiff’s land had ceased to exist, and Carolina Beach had raised land from below navigable water for a public purpose, the newly created beach area belonged to the Town. (It should be noted that the 1963 Session Laws incorrectly vested title to the Town of Carolina Beach to the low-water mark, rather than the high-water mark, but when enacted it repealed all laws – including GS 146-3(1) – inconsistent with its provisions.)

Courts in North Carolina have consistently held that an owner of land fronting navigable waters does not have an unfettered right of access. In Capune v. Robbins, 273 N.C. 581, the defendant owner of a commercial fishing pier threw bottles at plaintiff, who was attempting to paddle a board under the pier. The court held that a littoral owner must keep any pier area unobstructed over the entire width of the foreshore, such that the public will be able to walk under it or boats to pass under it (depending on the tide), and had no right to keep the public out. In Orin Haywood Weeks v. NC Dept. of Nat. Resources and Community Development, 97 N.C. App. 215, the court reasoned that a littoral property owner’s rights "derive from two distinct properties: 1) the principal estate of land extending to the shoreline…, and 2) the appurtenant estate of submerged land… benefiting the principal estate." Weeks was another plaintiff who alleged a taking after his request to build a 900-foot pier was denied. The court analyzed the takings issue by first determining whether the goals of the denial was within the scope of DENR’s police power and then whether DENR acted reasonably.

A takings argument in a littoral case can succeed only if the plaintiff can prove that the government deprived her of all practical uses of her property and it renders the property of no reasonable value. Like the plaintiff in Weeks, the plaintiffs in Slavin would have a difficult time convincing a court that their properties were left without practical use or reasonable value simply because they no longer have direct access from their homes to the ocean.

Without relying on a takings analysis, however, it would appear the Slavin court could have put the issue to rest by simply relying on the State Lands Act. The renourishment projects at Oak Island fall squarely within the Act. The State holds the new beach "open to the free use and enjoyment of the people of the State, consistent with the public trust rights in ocean beaches, which rights are part of the common heritage." §146-6(f) Moreover, it would seem obvious that the State and local municipalities have an obligation to preserve the state lands, and fences are widely used for maintaining dunes. This is not a case of landowners going to the expense of renourishing their land to the high water mark.

The plaintiffs in Slavin have filed a petition for writ of certiorari to the North Carolina Supreme Court, but as of the print deadline there was no response from the Court. Regardless of whether the Court grants cert, this issue will no doubt be litigated again as we see the renourishment of other beaches hit hard by Hurricanes Floyd and Isabel.