Welcome title enthusiasts. As Steve Harvey might say . . . “we have a good one for you today.”
The term “chain of title” is probably the most widely recognized term in the title insurance industry. Chain of title and title examination walk hand-in-hand. And it is this chain of title that an examiner studies in preparing the title Commitment.
A chain of title consists of numerous links. Each time a particular parcel is conveyed, a new link is added. Ideally, this chain of title would have no flaws, often referred to as an unbroken chain of title.
But, as the night follows the day, there are many occasions when a chain of title is not perfect, often referred to as a broken chain of title. The broken chain of title represents a workable issue for the title examiner; which issue must be resolved for the attainment of marketable title.
Stray Interests: Example
Fact #1: Lot 4 of Phillips Subdivision has an unbroken chain of title since its creation in 1970.
Fact #2: On May 1, 2014, Lot 4 was owned by A, B, and C.
Fact #3: On October 1, 2014, A and B convey to D.
Fact #4: On June 1, 2015, D attempts to sell to E.
The title examiner, in researching the chain of title, will spot the October 1 conveyance from A and B to D. This conveyance should have included the interest of C, which it failed to do. The chain of title of Lot 4 is now broken. The interest of C will be considered a “stray interest,” as it was not properly conveyed through the chain. The examiner will use the title Commitment to call for proper termination of C’s interest, via deed or otherwise.
Note: a stray interest should not be confused with a “wild deed.” A wild deed is just that – usually a conveyance from a grantor who never appeared in the chain of title. Wild deeds are usually the product of improper drafting, such as the deed being drafted with the incorrect legal description. Conversely, stray interests concern parties who were part of the legitimate chain of title.
The chain of title represents the history of a parcel’s ownership. This chain flows from one link to the next, each link being inspected for flaws. Flaws represent stray interests . . . stray interests represent a broken chain of title. The examiner works to fix the break in the chain, thereby restoring the unbroken chain. Sounds like a Dr. Seuss compilation.
Dave Phillips ~ Examiner
State Street Title Agency