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The Legal Description, Alone, Determines Marketable Title

A recent Minnesota Supreme Court decision appears to have undercut the surveyors’ authority to determine whether a legal description is marketable.  According to the decision in Mattson Ridge, LLC vs. Clear Rock Title, LLP, decided December 12, 2012, lawyers may decide on their own whether a legal description constitutes good and marketable title.

The Mattson case was tried as a title insurance case.  At its core, it is a survey case.  Perhaps unintentionally, the case calls into question long standing rules on the purpose of a legal description in a deed.

Prior to the Mattson case, the question of whether a legal description was ambiguous and title not marketable was determined by whether a surveyor could locate the land.  This rule dates back almost 80 years to the Court’s decision in Paynesville Land Co. vs. Garbow, filed October 31, 1924.  The buyer in the Paynesville case claimed title was not marketable because a call in the legal description went “to the center of the Verndale Town Road.”  The Paynesville Court said that the purpose of a legal description “is not to identify the land, but to furnish the means of identification.”  It went on to state: “a description is sufficient if a surveyor can from it readily locate the land.”  That has been the law for almost 80 years.  Until Mattson, the surveyor’s job was to use the legal description as a means to locate the boundary.

Fast forward to the Mattson decision.  In 2005, a developer bought farm land for development, and at closing received a title insurance policy.  We all recall those times, so to no great surprise, in 2006, another developer offered the first developer almost twice the purchase price for the land, which the first developer accepted.  The sale and land development was stopped when the second developer’s title insurance company refused to issue a title policy because the legal description was ambiguous.

The description of the land read in part:

“The North 1/2 of the Northwest 1/4 of Section 25, Township 34, Range 21, Chisago County, Minnesota, excepting however, two acres, more or less, in the Northwest corner of the Northwest 1/4 of Northwest 1/4 of said Section 25, described as follows: Commencing at the Northwest corner of Section 25, thence South 30 rods to the intersection of road leading from the county road at or near Charles Magnuson’s place in Sunrise City;…”.

The lawyer for the developers expressed concerns that the legal description was ambiguous.  The first developer’s own title agent argued that the description was vague.

The Court record states that engineering work had been completed and a final plat proposed, which means that survey work had to have been done.  While the Court record does not specifically state it, I am certain that both developers walked the land and thoroughly understood the location of the boundaries.  It appears from the Court record that neither the lawyers nor title insurance closing company ever asked a surveyor if the boundaries could be located using the description.

The first developer made a claim under his title insurance policy, which was denied.  The first developer then cleared the claimed ambiguity in the legal description by hiring a surveyor to draft a new legal description and registering title.  In the meantime, land prices dropped and the second developer could not get financing, so the purchase agreement was cancelled.  The first developer then sued his title insurance company.  The trial court awarded the full policy limits.  The first developer appealed, claiming he was also due the profit on the lost sale.  The Court of Appeals awarded the first developer the entire purchase price, including the lost profit, which was far in excess of the policy limits.  As you can imagine, this caused a great uproar in the title insurance industry.

The title insurance industry got its lawyers involved as a “Friend of the Court” and the case was taken up by the Minnesota Supreme Court.  The Supreme Court reversed, and limited the damages to the amount of the original title insurance policy.

It was only after the decision came out that some real estate lawyers started to ask why a surveyor was not called upon to testify or to locate the boundaries of the land.  Many real estate lawyers question whether it is proper for attorneys and closing companies, on their own, and without a surveyor, to determine that a legal description is ambiguous and title not marketable.

The state of the law on this question is no longer clear.  The Supreme Court in Mattson did not address the decision in the Paynesville case.  It is probably still good law to say that if a surveyor can locate the boundaries on the ground, it is a good legal description.  But why call a surveyor?  Mattson has created a niche or exception to the law, which says that lawyers and title insurance companies on their own may determine that an ambiguous description is not marketable.

The Mattson decision has two important lessons for surveyors.  First, in the argument over whether a surveyor should stake the deed or stake the boundary, the deed stakers are the clear winners.  Lawyers on their own may now decide that a deed description is ambiguous and title not marketable.  There is no need to send out a surveyor to stake the boundary.  The deed description controls.  The surveyor’s only job is to stake the deed.

This seems to be a reflection of the modern trend that the deed is the instrument of conveyance, and the grantor’s title is defined by only the deed description.  The description in the deed is the end, and no longer the means to the end.  A boundary survey is at best useful in a Torrens or Quiet Title lawsuit to prove possession.

Second, surveyors need to pay attention to the Judicial Branch of government.  Surveyors need to take a page from the title insurance industry and watch the Courts.  When a Court decision is announced contrary to the long standing rules by which surveyors operate, surveyors need to take up the cause by filing Friend of the Court briefs, or other action.

© 2013 David J. Meyers