Vermont Bar Journal, Vol. 40, No. 2 Vermont Bar Journal, Fall 2016, Vol. 42, No. 3 | Page 19

by James Knapp, Esq.

WHAT’S NEW

Real Estate: Title Standards Subcommittee
BACKGROUND

The Title Standards Subcommittee is affiliated with the Real Estate Section of the
Vermont Bar Association. The Subcommittee’s membership ranges from 15-20 lawyers whose practices are limited primarily
to real estate practice. Several members
have served nearly continuously since the
founding of the Subcommittee in the late
1980’s. Members come from all areas of
the State and from all sizes of firms.
The Subcommittee identifies issues that
regularly appear in real estate practice
throughout the State. Once an issue is
identified, the members consider how the
issue is addressed by practitioners across
the State. If there is a common solution or
understanding, members of the Subcommittee prepare a draft standard describing
the issue and the resolution. The draft is
circulated among all the members and is
then debated and revised at the quarterly meetings of the Subcommittee. If there
is wide acceptance of the resolution for a
particular issue, the standard is approved
and presented to the Vermont Bar Association’s Board of Managers for adoption.
Following adoption by the Board of Managers, the Title Standards are published by
the VBA. The next publication should occur
this October after which time the changes
will remain posted to the VBA website.
ACTIVITY DURING 2014-2016
Existing Standards Revised

One of the significant revisions to the existing standards saw a new paragraph added to Standard 1.1 – “The Role of the Examining Attorney.” This new paragraph incorporates the title examination standard
expressed by the Vermont Supreme Court
in the case of Fleming v. Nicholson, 168 Vt.
495 (1998). The Court explained the role
of the title examiner as:
An attorney has an obligation to identify those factual circumstances which
constitute clouds on the title that are
disclosed in the public records and report those matters to the recipient of
the results of the search. An attorney
has a duty to inform and explain to the
client the implications of any clouds on
title that would influence a reasonably
prudent purchaser not to purchase the
property. Fleming v. Nicholson, 168
Vt. 495 (1998) citing North Bay Counwww.vtbar.org

cil, Inc. v. Bruckner, 563, A.2d. 428,
431 (N.H. 1989)
Standard 1.1 had always declared the
scope of the title examiner’s role to: (i) conduct an examination of the land records to
determine if the title is marketable; (ii) assess other factors discoverable from sources outside the land record books that might
affect the marketability of the title and then
(iii) report on the findings from the research
that would influence a reasonably prudent
buyer’s decision whether to acquire the
property for full value. The additional language added in 2016 was included in the
event the holding in Fleming was broader
than the original standard.
A parallel revision was made in Standard
2.2 – The Concept of the Chain of Title and
Its Relationship to the Rule of Record Notice and The Scope of the Title Examiner’s
Obligation. An additional comment was
added to Standard 2.2 reminding title examiners that there may be an adverse impact on marketability of title if: (a) a municipal or state land use permit is required but
was not obtained; (b) a certificate of occupancy was required and was not obtained;
or, (c) proof of compliance with the terms
of a permit in the form of written documentation is required but cannot be found.
A further revision was made to Standard
2.2 Comment 4, to alert title examiners to
the possibility that certain documents discovered in the search may put the examiner on inquiry notice necessitating further
review or research. A person who has actual notice or is put on inquiry notice may
be bound by the obligations that would be
disclosed by a diligent inquiry as held in
Richart v. Jackson, 171 VT 94 (2000).
The Subcommittee also researched the
question of springing liens – those liens
recorded before the person subject to
the lien owns property in the municipality
where the lien is recorded. The Subcommittee concluded that a springing lien will
attach to after-acquired property meaning
that a lien may be recorded in advance of
the acquisition of title but will immediately
attach to any property acquired during the
period the lien is effective.
The comments to Standard 2.3 – The Effect of the Recording of Instruments Claiming an Interest in Real Estate were expanded to include a reference to the rule describing when an instrument recorded may
slander the title as described in the holding
of Wharton v. Tri-State Drilling & Boring,
THE VERMONT BAR JOURNAL • FALL 2016

2003 VT 19, 824 A2d. 531 (2003).
A new Comment 9 was added to Standard 6.4 to account for changes to statutes
validating certain powers of attorney executed outside the State of Vermont.
Finally, there was a major revision to Title Standard 13.1 – Conveyance by Heir’s
Deeds. The Subcommittee reconsidered Comment 4 to the Standard in light
of the issues that have presented themselves since the adoption of the Standard
in the late 1980s.1 The revised Comment 4
changes the timeframes for assessing the
presumptions that attach to an heir’s deed.
Previously, an heir’s deed was deemed insufficient until it had been on record for
more than 15 years. Under the revision to
the comment, an heir’s deed of record less
than 15 years is effective if it can be established that all the heirs signed. As revised,
the comment provides that an heir’s deed
which has been of record is presumed valid
unless there is evidence in the record that
not all the heirs signed.
New Standards Adopted

A new Standard 12.1 was added to the
Title Standards discussing the sale of a
ward’s Vermont real es