Real Estate Closing Title ExamNovember 1, 2017 | By Erik Lincoln
One of the primary activities a real estate closing attorney performs is examining chain of title. The chain of title to real property is the history of its ownership. Each transfer from one owner to another is a “link” in the chain. A link can be a deed, a will, an intestacy, a lien foreclosure proceeding, a partition order or a court-ordered conveyance, among other possibilities. The office of the register of deeds of the county or counties where the real property is located is the primary place of examination since most transfers are by deed. The Grantee and Grantor Indexes to Real Estate Conveyances are used. However, the clerk of superior court’s office is the place to look for a transfer by inheritance, court order, or foreclosure.
Even if a chain of title is found in accordance with the above, the real property could actually be owned by someone else due to forgery or fraudulent procurement of a document in the chain of title, the mental incompetence of the grantor, adverse possession claims, or a competing (and, in some cases, superior) chain of title. This is why an attorney never “certifies” that a person actually holds title to real property. Instead, the attorney should only give his opinion that upon a specified examination of the “record title,” a particular person holds “record title” to the real property. The North Carolina Bar Association’s form, 1-P “Preliminary Opinion on Title,” sets forth certain “Standard Exceptions” which make that clear.
If the record title does not clearly establish, for example, an inheritance link in the chain of title, friends, family, attorneys, and physicians who knew a possible decedent can in many cases give highly credible affidavits establishing family history and descent of real property.
In a title search, the first major step is to construct or “run” the chain backwards from the present purported owner for the period to be covered by the search. This period is generally 30 years or less. The chain is traced by tracing the chain through the Grantee Index by looking up the name of the prospective grantor in the Grantee Index to determine his grantor and so on backwards.
After a title examiner establishes the links in the chain of title backwards through the search period, the title examiner then traces or runs the chain of title forward from the earliest grantor up to the present prospective grantor. This is done to see if each grantor has conveyed or otherwise transferred the title (1) to the next grantor in the chain discovered when the links were established by examining the records backwards or (2) to someone else. The second situation establishes what is known as an “adverse conveyance” or “adverse transfer.” Adverse conveyances or adverse transfers can also include liens or encumbrances (such as easements and restrictive covenants) placed upon the title by any grantor as the chain is being run forward. Running the chain of title forward is a tracing of the chain through the Grantor Index by looking up the earliest grantor in the period Covered in the chain to determine his grantee and so on forward.