Why Title Insurance for Registered Land?
Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Summer 2007, Volume 6, Number 3
Why Do My Clients Need Title Insurance for Registered Land? — Unregistered Interests Affecting Registered Land
by Ward P. Graham, New England Division Counsel
Fairly recent case law has pointed out the necessity for every conveyancing attorney and title examiner to be familiar with the exceptions to the general concept that matters not shown on a registered land Certificate of Title (including its Memorandum of Encumbrances) do not affect the title to that land. This basic rule stems from the provisions of G.L.c. 185, §§46, 53, 57 and 78. The exceptions to that rule can cause problems for registered land owners who rely on their Certificates of Title in regard to matters they know or should know about but which do not appear on the Certificate. These matters could also form the basis for claims under a title insurance policy issued on the property even though it is registered land.
Essentially, G.L.c. 185, §46 provides that a registered land Certificate of Title holder, who takes title for value and in good faith, holds such Certificate and the title represented thereby “free from all encumbrances except those noted on the certificate,” and any of a certain number of encumbrances then enumerated in that section. In addition to the enumerated statutory exceptions, the requirement of taking title “for value and in good faith” becomes important in understanding certain judicially-created exceptions to the protection of registered land titles from unregistered interests.
Further protection for registered land from unregistered interests is derived from G.L.c. 185, §53. That section provides: “No title to registered land, or easement or other right therein, in derogation of the title of the registered owner, shall be acquired by prescription or adverse possession. Nor shall a right of way by necessity be implied under a conveyance of registered land.”
Under G.L.c. 185, §57, “[a]n owner of registered land may convey, mortgage, lease, charge or otherwise deal with it as fully as if it had not been registered.” However, §57 goes on to provide that “. . . no deed, mortgage or other voluntary instrument, except a will and a lease for a term not exceeding seven years, purporting to convey or affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties, and as evidence of authority to the recorder or assistant recorder to make registration. The act of registration only shall be the operative act to convey or affect the land, and in all cases the registration shall be made in the office of the assistant recorder for the district or districts where the land lies.” [Emphasis added.] This section establishes the recognized concept that a document involving an interest in registered land must be registered in order to affect title to such registered land. Note, however, that, even as to this requirement, the statute provides specific exceptions for wills and leases with less than 7-year terms.
Finally, G.L.c. 185, §78 discusses what kinds of documents must be registered if intended to affect registered land. Essentially, any document that would need to be recorded “in order to create or preserve any lien, right or attachment upon unregistered land” needs to be “filed and registered” with the appropriate Registry District of the Land Court in order to affect registered land. However, we have already seen that §46 lists several exceptions to that statutory rule. In addition to reiterating the exception for federal liens found in §46, §78 excepts “notices, releases and discharges of child support liens pursuant to [G.L.c. 119A]” from its document registration requirements.
While it is important to be aware of the specific statutory exceptions to the protection of registered land titles discussed above, it is equally important to be aware of two broader, judicially-crafted exceptions to this protection. Beginning with Killam v. March, 316 Mass. 646, 55 N.E.2d 945 (1944), the two exceptions that evolved over the ensuing 50 years were succinctly articulated in Jackson v. Knott, 418 Mass. 704, 640 N.E.2d 109 (1994), with respect to an easement claimed against the registered land of the defendants even though the easement was not mentioned in the defendants’ Certificates of Title:
If an easement is not expressly described on a certificate of title, an owner, in limited situations, might take his property subject to an easement at the time of purchase: (1) if there were facts described on his certificate of title which would prompt a reasonable purchaser to investigate further other certificates of title, documents, or plans in the registration system; or (2) if the purchaser has actual knowledge of a prior unregistered interest. See, as to the latter, Wild v. Constantini, 415 Mass. 663, 615 N.E.2d 557 (1993); Killam v. March, 316 Mass. 646, 55 N.E.2d 945 (1944); Feldman v. Souza, 27 Mass.App.Ct. 1142, 538 N.E.2d 64 (1989).
Id., 418 Mass. at 711, 640 N.E.2d at 113.
The Jackson v. Knott Case
In Jackson, nine plaintiffs claimed an easement over a twenty-foot-wide unnamed private way running from a subdivision access road ( Salt Island Road) to a beach along the boundary between the beachfront lots of the two defendants. The unnamed way was shown on several registered subdivision plans from 1908, 1919 and 1942 and was referred to in the Certificates of Title of the two defendants but only as a boundary reference in the metes and bounds portion of the description of their respective lots. Neither of the defendants’ Certificates of Title noted or referred to any easement rights over the way and none of the plans noted any rights in the way.
The defendants’ certificates did refer to prior deeds containing reservations by the common grantor of rights of way in the subdivision ways shown on the plans and (for one of the defendants) the unnamed way in question. However, a review of some 60 deeds from the common grantor conveying various lots in the subdivision revealed specific grants of easements to other roads and ways shown on the subdivision/registration plans, but no express easements were granted to any other lot owners either in or to the beach in front of the defendants’ lots or in or over the unnamed way leading from Salt Island Road to the beach. While the plaintiffs claimed that they, their predecessors and other lot owners had been using the way for some 60 years, the defendants countered that the use of the unnamed way by other lot owners was under a “permissive license.”
The court also found that the mere depiction of the way on the subdivision/registration plans, even together with the reference to the way in the defendants’ certificates as part of the boundary description of their lots, was insufficient to establish an express easements over the way. Finding no other deeds or instruments granting express easements (within the registration system or otherwise) and no references to any such deeds or instruments appearing on the defendants’ Certificates of Title, the court then examined whether an easement in favor of the plaintiffs may have arisen under either one of the exceptions quoted above, which the court referred to as the “two recognized exceptions to the rule” that, “in order to affect registered land as the servient estate, an easement [or any other lien or encumbrance] must appear on the certificate of title.” [Citations omitted.] Id., 418 Mass. at 710-711, 640 N.E.2d at 112-113.
Jackson v. Knott Exception 1: Matters on Certificate of Title Requiring Review of Other Documents in Registration System
In considering the first exception, the court looked at “whether there were facts within the Land Court registration system available to [the defendants], at the time of their purchases, which would lead them to discover that either property was subject to an encumbrance, even if that encumbrance was not listed on their certificates of title.” Id. The court went on to observe that “[the defendants] were obligated to review only documentation within the registration system because to require a purchaser to investigate facts not documented within that system would be directly contrary to the purposes of the Land Registration Act. Kozdras v. Land/Vest Properties, Inc., 382 Mass. 34, 43-45, 413 N.E.2d 1105 (1980).” Id.
So, in the context of the Jackson case, what documentation within the registration system might the defendants have reviewed and what would they have discovered? In this case, the defendants would have been required to review their Certificates of Title, the documents referred to in them (the earlier deeds from the common grantor containing the reservations and the registration plans) and other deeds or grants from the common grantor prior to the deeds from the common grantor to the defendants’ predecessors in title.
The descriptions of the defendants’ lots in their Certificates of Title specified that their lots abutted the unnamed way. “If a plan is referred to in the certificate of title, the purchaser would be expected to review that plan.” Id. Because, in this case, the plans in the registration system that the defendants were expected to review revealed that their lots and the unnamed way forming their boundaries were part of a large subdivision, the court found that the defendants “would also be expected to examine the certificates of other lot owners in the subdivision to determine whether others might have an interest in the Way. Myers v. Salin, 13 Mass.App.Ct. 127, 136-137, 431 N.E.2d 233 (1982).” Id., 418 Mass. at 712, 640 N.E.2d at 113. Such a review revealed that none of the other lot owners’ Certificates of Title and none of the deeds to their predecessors contained a grant or reference to a grant of any easement rights in the unnamed way. “On the contrary, [with one exception not relevant here] all the documents consistently express rights only in private ways considered essential for access to the lot being conveyed.” Id., 418 Mass. at 712, 640 N.E.2d at 114.
Jackson v. Knott Exception 2: Actual Knowledge of Prior Unregistered Interests
Turning to the second of our Jackson v. Knott exceptions, the court looked at whether the plaintiffs had acquired any prior unregistered interests in the unnamed way and, if so, whether the defendants had actual knowledge of such interests at the time they purchased their respective lots. As the court stated, the basic rationale for this exception is that, “[i]f the [defendants] acquired title with actual knowledge of a prior unregistered interest, they have not satisfied the requirement of good faith set forth in G.L.c. 185, §46.” Jackson, supra, 418 Mass. at 713, 640 N.E.2d at 114. The court referred to this exception as “the Killam rule,” derived from Killam v. March, supra.
In Killam v. March, the court found that, despite the provisions of G.L.c. 185, §71, where the plaintiff registered landowner had actual knowledge of a recorded but unregistered 25-year lease (for access over a driveway and use of a garage located on the plaintiff’s registered land) and that the lessee (the adjoining unregistered landowner) was continuously exercising the rights under the lease, the plaintiff registered landowner was bound by the lease even though the lease was for more than seven (7) years and was not registered or noted on the plaintiff’s Certificate of Title. In contrast, there were no documents in Jackson, either registered or unregistered, expressly granting an easement in the unnamed way. Further, the court found that the evidence showed only that the defendants had been aware of the use of the way as a path to the beach by other lot owners, but, as far as the defendants knew, it was a permissive use. Thus, the actual notice requirement of the second exception to the prohibition against acquiring unregistered interests against registered land was not met in Jackson.
Recent Cases Applying the Jackson v. Knott Exceptions
Although there have been a number of cases in the last couple of years applying the Jackson v. Knott exceptions, two in particular are worth mentioning as an adjunct to the Jackson case (and cases cited therein that had applied the “Killam rule” before Jackson) in the context of the potential benefits of title insurance covering registered land. These cases also provide examples of how these exceptions can be a trap for the unwary (or uninformed) conveyancer or title examiner.
Lane v. Zoning Board of Appeals of Falmouth – Jackson Exception No. 1
In Lane v. Zoning Board of Appeals of Falmouth, 65 Mass.App.Ct. 434, 841 N.E.2d 260 (2006), the two plaintiffs owned registered land lots on either side of the private portion of a north-south subdivision road located between the defendant developer’s parcel and the public portion of the road. The developer’s parcel abutted the southerly end (terminus) of the road but also jogged north along the westerly side of the road for about 30 feet. Both the plaintiffs and the developer derived their respective titles from common grantors. There was nothing on either of the plaintiffs’ Certificates of Title expressly dealing with the developer’s easement rights over the subdivision road.
The developer obtained approval for a G.L.c. 40B project for 20 condominium units, conditioned upon the developer establishing its easement rights over the private portion of the subdivision road for access to the proposed condominium project. The plaintiffs appealed the approval and challenged the developer’s access rights in the road.
The Appeals Court analyzed the case under the first Jackson v. Knott exception. Initially, however, the court needed to determine what the ownership status of the road was and then look at whether the developer’s parcel had the benefit of an easement over the subdivision road.
Relying on G.L.c. 183, §58, the so-called “derelict fee statute,” the court determined that the plaintiffs together owned the portion of the subdivision road that ran along the frontage of their respective parcels (each owning halfway into the road, meeting in the middle) but that the developer also owned halfway into the road along his 30 feet of frontage abutting the westerly sideline of the road at its southernmost end. In addition to the ownership rights conferred to the developer under G.L.c. 183, §58, the court determined that the developer’s parcel had the benefit of easement rights not only over the portion of the subdivision road he owned by virtue of the derelict fee statute but also under the common law rules of estoppel articulated in Murphy v. Mart Realty of Brockton, Inc., 348 Mass. 675, 205 N.E.2d 222 (1965).
Turning to the first Jackson v. Knott exception, the court found that the reference in the plaintiffs’ Certificates of Title to the common grantor’s registered subdivision plan (upon which the road and the plaintiffs’ lots and the developer’s parcel were clearly shown in relation to the road), together with the use in their Certificates of Title of the subdivision road as a boundary, combined with the developer’s ownership of a portion of the road pursuant to the derelict fee statute, were sufficient to put the plaintiffs “on notice that their property was bounded by a way in a subdivision, and that others might have rights in the way by which they would be bound.” Lane, supra, 65 Mass.App.Ct. at 438, 841 N.E.2d at 264. In addition, in one of the plaintiffs’ certificates, his easement rights over the subdivision road were stated to be “exercised in common with all others now or hereafter lawfully entitled thereto.” Id. As to that plaintiff, this language in his certificate of title “placed him on notice that rights in the locus similar to those that he acquired might also be enjoyed by the owner of another abutting parcel.” Id. In determining that the developer had an easement of way over the subdivision road “owned” by the plaintiff registered landowners, the Appeals Court applied the doctrine of easement by estoppel in combination with the first prong (documents in the land registration system) of the Jackson v. Knott exceptions.
One-O-Six Realty, Inc. v. Quinn – Jackson Exception No. 2
In One-O-Six Realty, Inc. v. Quinn, 66 Mass.App.Ct. 149, 845 N.E.2d 1182 (2006), rev. den., 447 Mass. 1103, 848 N.E.2d 1212 (2006), the owner of four lots running north-south along Newbury Street in Danvers sold the two southerly lots, both of which were unregistered, to the plaintiff’s predecessor in title. The only means of access to the lots was via Maple Street located along the northernmost lot’s northerly boundary and connecting to Newbury Street. Without access to Maple Street, there was no other means of access to the southerly lots. The deed to plaintiff’s predecessor granted a 40-foot north-south right of way over the back of the grantor’s remaining two lots, the northernmost one (abutting Maple Street) being registered. In the same deed, the grantor reserved a reciprocal right of way over the grantee’s parcels. This deed was duly recorded with the Registry of Deeds but was never registered nor entered on the grantor’s Certificate of Title.
Later, the grantor conveyed his remaining unregistered lot to the defendant. This deed stated that the lot was subject to “an indefinite Right of Way 40 feetin width to Maple Street as described in [the earlier deed of the southerly two parcels to the plaintiff’s predecessor].” One-O-Six Realty, supra, 66 Mass.App.Ct. at 151, 845 N.E.2d at 1184. Still later, the defendant purchased the registered parcel abutting Maple Street from the common grantor. This deed was duly registered. Neither the deed nor the defendant’s Certificate of Title mentioned the right of way. However, at the time of the defendant’s purchase of the northerly two lots, including the registered lot, the right of way area had been painted with yellow lines, yellow arrows and the words “SLOW” and “NO PARKING.” Speed bumps had been installed as well.
The defendant had hired an attorney to search the titles for his purchases of both the unregistered lot and the registered lot. The attorney prepared reports addressing the titles of both parcels and discussed them with the defendant but advised the defendant that the right of way was “extremely indefinite” and only encumbered the unregistered parcel. Before defendant’s purchases, he had walked the properties and discussed the properties and the easements that affected them with a lessee of one of the properties who had done some, if not all, of the line painting in the right of way with permission and part payment by the common grantor. They also discussed the flow and coordination of traffic over the registered parcel. Neither the lessee nor the common grantor, however, discussed with the defendant the recorded deed which granted the right of way to the plaintiff’s predecessor. The plaintiff had been using and continued to use the easement area for access to Maple Street until such time as the use of the defendant’s property so impeded the plaintiff’s use of the right of way that it commenced a Land Court action to confirm its rights.
On these facts, the court concurred with the Land Court judge in finding that not only was the right of way visible on the ground and crossed over both of defendant’s parcels, including the registered one, but it also was intended by the language in the deed creating it (“over and in other land of the grantors to Maple Street”) to burden both parcels, particularly where there was no way to reach Maple Street except by traveling over both parcels. Id., 66 Mass.App.Ct. at 153, 845 N.E.2d at 1185-1186. As the deed creating the right of way was not registered or mentioned in the defendant’s Certificate of Title, it became necessary for the court to review the second Jackson v. Knott exception (actual knowledge of the unregistered interest) to determine if the right of way nonetheless encumbered the defendant’s registered parcel.
In regard to the issue of actual knowledge, the court’s discussion of the attorney’s role in this case is instructive:
There is no question that prior to his purchase of the registered parcel, the defendant was advised of the existence of the Tremblay deed by his counsel. The Tremblay deed purported to (and, as found by the judge—correctly in our view—did) create an easement from the plaintiff's land “over and in other land of the grantors [Sullivan] to Maple Street.” The land affected by that grant included the registered parcel. The defendant knew of the Tremblay deed, and of its provision concerning the easement grant. Thus, the defendant had the requisite notice of the prior unregistered interest. [Footnote and citations omitted.]
The defendant's attorney's knowledge of the Tremblay deed and its contents is properly imputed to the defendant. See Quinn v. Hintlian, 4 Mass.App.Ct. 805, 805, 346 N.E.2d 374 (1976); Ruml v. Ruml, 50 Mass.App.Ct. 500, 507, 738 N.E.2d 1131 (2000). Charged with knowledge of the Tremblay deed and its contents, the defendant is likewise properly charged with their correctly interpreted legal effect. That is to say, we decline to apply a subjective standard to consider whether the defendant correctly understood the meaning of the Tremblay deed, rather than an objective standard charging the defendant with knowledge of the actual legal effect of that instrument. [Footnote omitted.] The fact that the defendant's attorney advised him that the right of way did not burden the registered parcel does not relieve the defendant of actual knowledge of the unregistered interest. A client is bound by the mistakes of its counsel. See Massachusetts Parole Bd. v. Civil Serv. Commn., 47 Mass.App.Ct. 760, 766, 716 N.E.2d 155 (1999). See also Chestnut v. Lowell, 305 F.3d 18, 26 (1st Cir.2002) (Lipez, J., dissenting), and cases cited.
Id., 66 Mass.App.Ct. at 154-155, 845 N.E.2d at 1186-1187. Thus, in addition to providing an example of the “actual knowledge” aspect of the second Jackson v. Knott exception, this case provides a good example of how the knowledge of an attorney can be imputed to his or her client and how a mistake of law in evaluating the effect of that knowledge will not save the client from the consequences of that knowledge. It also points out a potential trap for an attorney not well-versed in the nuances of the Jackson case and its exceptions to the common notion of the “sanctity of registered land.”
Why Title Insurance for Registered Land?
Protection for the Insured as well as for the Title Attorney
From time to time, title insurance policy issuing agents are questioned by registered land purchasers and their real estate brokers as to why the purchaser should buy an owner’s policy of title insurance. After all, isn’t the whole purpose of registered land to protect the purchaser from interests that are not shown on the Certificate of Title? As the foregoing discussion shows, while that is generally true under the registered land system, there are exceptions to that rule that can cause a registered landowner to be subject to rights or interests of others that do not appear on the owner’s Certificate of Title or to have to defend against claims of such rights or interests. In such circumstances, the registered landowner could suffer loss or damage just as an unregistered landowner could. In addition, from the real estate practitioner’s standpoint, coverage under a title insurance policy for issues affecting registered land under theJackson v. Knott exceptions could save the practitioner from a claim of malpractice or negligence or a claim under a title certification given under G.L.c. 93, §70.
How would title insurance have helped in Jackson v. Knott?
In the Jackson case, the defendant lot owners, over whose land the plaintiffs were seeking rights of way to the beach, won. However, in order to come to the conclusion that the plaintiffs had no such rights in the defendants’ land, the court looked at a series of registration/subdivision plans involving the subject properties and, in addition to the deeds specifically referred to in the defendants’ Certificates of Title, the court reviewed some 60 deeds coming out of the common grantor long before the dates of the defendants’ certificates. As discussed earlier, the court also found that the defendants (i.e., their attorneys) “would also be expected to examine the certificates of other lot owners in the subdivision to determine whether others might have an interest in the Way.”
While the plans and deeds referred to in the defendants’ Certificates of Title would be part of a title examination under c. 93, §70 and REBA Title Standard No. 1, a review of all the deeds and Certificates of Title of such a large number of grantees from the common grantor would normally be far beyond the scope of a customary registered land title examination. Accordingly, under circumstances such as those in the Jackson case, if it turned out that a legitimate claim of rights in favor of the plaintiffs had been found and a claim were made by the defendants against an attorney who had certified title to them (whether on the basis of malpractice, negligence or negligent misrepresentation under the title certification), it is hoped that a court would find that the extraordinary measures undertaken to review prior plans, deeds and Certificates of Title in Jackson was beyond the scope of the attorney’s responsibility under the certification statute and the REBA title standard. Of course, such a conclusion is not certain and the attorney would have to defend against such a claim even if the attorney is ultimately vindicated.
From the standpoint of both the registered landowner and the title certifying attorney, pursuing a claim against the attorney for malpractice, negligence or negligent misrepresentation is likely to be a long, drawn-out and expensive process for both parties no matter who wins. How does title insurance fit into the picture for the benefit of both the owner and the attorney? Essentially, just as for an unregistered landowner, if a registered landowner’s title is subjected to claims such as those in Jackson and the property against which the claims were made had been insured under an owner’s title insurance policy, the owner would have a direct claim under the policy for the company to provide and/or pay for the defense against the claims as well as to pay for any loss or damage suffered by the insured owner if an adverse decision is rendered.
Fortunately for the defendants in Jackson, the court found nothing in the plans, prior deeds and other lot owners’ Certificates of Title granting the rights of way claimed by the plaintiffs. Nonetheless, the defendants no doubt expended substantial sums in attorneys fees and expenses to defend their title. If the area over which the plaintiffs had claimed their rights of way had been included in the description of the property insured in an owner’s title insurance policy purchased by the defendants and no exception had been taken for the rights of others in the way, it is likely that a tender of defense under the owner’s policy would have been accepted by the title insurance company and the company would have paid the attorneys fees and expenses of defending the insured’s title against the easement claim. Such is the case even when the court decides in the insured’s favor.
Had the result in the case been adverse, a claim for damages could have been maintained under the title insurance policy as a contract of indemnity without the necessity for showing malpractice, negligence or negligent misrepresentation and without the necessity of suing the attorney. Unlike the possible defense of the title attorney, it is generally not defense under a title insurance policy that a matter, if otherwise covered by the policy, was outside the scope of a customary title examination. Indeed, insurance against record title matters that are outside the scope of a customary title examination is part of what title insurance is all about.
How would title insurance have helped in other cases involving the Jackson v. Knott Exceptions?
Technically, as to the registered land lot owners in Lane v. Zoning Board of Appeals of Falmouth, supra, who were trying to prevent the 20-unit condominium project from going in next door, title insurance may not have covered that particular situation because the dispute was over a subdivision paper street lying between the plaintiffs’ lots as opposed to a dispute over a right of way located on their lots. However, if the ownership of that portion of the paper street had been insured, say, based on its undeveloped status and the application of G.L.c. 183, §58, and no exception for the rights of others had been taken, it is possible that title insurance would have provided coverage against the easement claim of the defendant condominium developer.
Alternatively, let us say that the strip of land in which the right of way was claimed was not an abutting street shown on a plan but had been actually located on the registered land lot itself and the lot was insured under an owner’s policy without exception for the right of way or the rights of others in the way. Let us also say that, since the doctrine of easement by estoppel would not apply in that instance, the court found that rights of way existed based on an instrument either within the registered land system that was outside the customary title search parameters or outside the registered land system of which the insured had actual knowledge. Here again, an owner’s title insurance policy could provide coverage and, depending on how and when the litigation arose and the company was notified, the title insurance company could be responsible to pay for the defense against the claim.
In One-O-Six Realty, Inc. v. Quinn, supra, one of the key factors there was that the attorney who searched and rendered an opinion on the title actually found the deed on record on the unregistered land side of the Registry of Deeds as he was running the title for the unregistered parcel his client (the defendant) was purchasing. As to the registered parcel his client was purchasing, he was likely unaware of the Jackson v. Knott exceptions to the customary registered land protection against matters not noted on a Certificate of Title and advised his client that the easement previously granted by his seller to the southerly neighbor (the plaintiff’s predecessor) did not affect the registered land. Had an owner’s policy of title insurance been issued to the defendant in that case through that attorney or based on a certification of title from that attorney, it is likely that the policy would not have taken exception for the plaintiff’s right of way and would have provided coverage if no other exception or exclusion from coverage applied under the circumstances.
Although the focus of this article is primarily on title insurance for registered land, it is worth noting that title insurance coverage is just as important in relation to unregistered land that has the benefit of rights over registered land as in the One-O-Six Realty case. If the plaintiff unregistered landowner in that case had been issued an owner’s title insurance policy, it is likely that the policy would have included the right of way as an insured matter as it had been expressly granted in the deed to the plaintiff’s predecessor and would customarily have been carried forward in the deed to the plaintiff or would nonetheless inure to the benefit of the plaintiff as an appurtenance carried forward by G.L.c. 183, §15. If that were the case, the registered landowner defendant’s counterclaim against the plaintiff (One-O-Six Realty) seeking to invalidate the right of way would likely have triggered coverage under the policy.
Similarly, the 25-year lease in Killam v. March, supra, affected registered land but the driveway and garage occupancy rights under the lease were held by the next door neighbors whose land was unregistered. Although title insurance was not in vogue here in Massachusetts when the Killam case was decided in 1944, were the circumstances in Killam to occur in more modern times and an owner’s title insurance policy issued to the lessee owner of the neighboring unregistered land, the policy would likely have insured the rights under the duly recorded lease along with the title to the lessee’s next door property. Consequently, a challenge to the leasehold rights by the servient registered landowner would likely trigger a claim under the owner’s policy.
Conversely, since the lease in the Killam case was not registered nor noted on the registered landowner’s Certificate of Title, it is quite likely in similar circumstances occurring in modern times that an owner’s title insurance policy issued to the registered landowner may not have taken an exception for the lease because the title examining attorney may not have found it. In this case, however, under traditional title insurance policies, the standard and “survey exception” (for matters that a current survey and inspection of the property would reveal) and/or “parties in possession exception” might operate to negate the coverage because of the visible improvements and use of the driveway and the garage. On the other hand, if one of the new expanded coverage Homeowner’s Policies was issued, it is more likely that coverage would exist as to the leasehold interest unless expressly excepted from coverage in Schedule B.
Finally, in Calci v. Reitano, supra, fn. 10, the neighboring lot owners apparently got into a rather acrimonious dispute. Somehow, Calci found out that a strip of land lying between the public way and the parties respective front lot lines was left over from a former abandonment of a portion of the public street layout and was registered land. Both Calci and Reitano crossed over the strip of land in front of their respective lots to access the public way. Calci found the owner of the strip and purchased it. There was nothing on the Certificate of Title showing any easement rights over the strip in favor of either his lot or Reitano’s lot.
Calci then informed Reitano that she could no longer cross over his registered land strip. Reitano could not point to any instrument in either the registered land system or the unregistered land system providing her an express easement over the registered strip of land. Even though she could not show any easement rights over anyone else’s land to access the public way and even though it was clear that Calci had spitefully purchased the registered land strip to prevent Reitano from accessing her land, the court found that Reitano had no express easement rights and no rights by necessity or prescription (because prohibited under G.L.c. 185, §53). Accordingly, Reitano had no right of access to her land.
This case points out another significant right covered by a title insurance policy and that is a “legal right of access to and from the land.” In this case, it is quite possible that a customary title search of Reitano’s unregistered land may not have caught the issue of the registered land strip intervening between her land and the public way. Consequently, the lack of a document expressly granting easement rights to Reitano (or her predecessors) might not have raise an issue because a title examiner or closing attorney might have assumed a right of access by prescription or necessity, if not by ownership under an assumed application of the derelict fee statute if the title search had revealed the abandonment of that portion of the street. If Reitano had purchased an owner’s policy, it is quite likely, under these circumstances, that, the policy would not have taken any exception for a lack of right of access over the registered land strip to the public way. Assuming no other exceptions in the policy would apply, the coverage for a right of access would have triggered a duty for the company to have defended her interests in the lawsuit as well as to pay loss or damage resulting from the adverse decision denying her a right of access, although the company might mitigate the loss if it could acquire alternative access for her.
As the foregoing illustrates, even where registered land is involved, title disputes can and do arise. The comfort and safety that many people feel they get with a registered land Certificate of Title is by no means absolute, as the cases discussed in this article have shown. There is definitely a place for both owner’s and lender’s title insurance even where registered land is involved. Hopefully, this article will provide some ready answers for you in explaining the value of title insurance to your clients and real estate brokers who question the need when registered land is the subject of your transaction.
1 See G.L.c. 185, §56. [Back to text]
2 The list of encumbrances in §46 that affect registered land even if not appearing in the Certificate of Title are as follows:
First, liens, claims or rights arising or existing under [state or federal law] which are not by law required to appear of record in the registry of deeds in order to be valid against subsequent purchasers or encumbrances of record.
Second, taxes, within three years after they have been committed to the collector.
Third, any highway, town way, or any private way laid out under [G.L.c. 82, §21] if the certificate of title does not state that the boundary of such way has been determined.
Fourth, any lease for a term not exceeding seven years.
Fifth, any liability to assessment for betterments or other statutory liability, except for taxes payable to the commonwealth, which attaches to land in the commonwealth as a lien; but if there are easements or other rights appurtenant to a parcel of registered land which for any reason have failed to be registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass with the land until cut off or extinguished by the registration of the servient estate, or in any other manner.
Sixth, liens in favor of the United States for unpaid taxes arising or existing under the Internal Revenue Code of 1954 as amended from time to time and any other federal lien which may be filed in the commonwealth.
Seventh, liens in favor of the commonwealth for unpaid taxes arising or existing under the laws of the commonwealth. [Back to text]
3 This is actually slightly different from the effect of an executed and delivered but not recorded document affecting unregistered land. As to unregistered land, G.L.c. 183, §4 provides, in relevant part, that a “conveyance of an estate in fee simple, fee tail or for life, or a lease for more than seven years from the making thereof, or an assignment of rents or profits from an estate or lease, shall not be valid as against any person, except the grantor or lessor, his heirs and devisees and persons having actual notice of it, unless it, or an office copy as provided in [G.L.c. 36, §13], . . . is recorded in the registry of deeds for the county or district in which the land to which it relates lies.” Thus, an unrecorded deed of unregistered land can be effective as a conveyance as to the parties to it, their heirs and devisees and persons having actual notice of it. Such a conveyance wouldn’t be binding on third parties having no notice of it. Even though dealing with unregistered land, the provision in this statute relating to “persons having actual notice” of an unrecorded interest has significance in the cases to be discussed in this article involving registered land. See fn. 7, infra, and text accompanying it. [Back to text]
4 Hereafter, this article will refer to these exceptions as the “Jackson v. Knott exceptions.” [Back to text]
5 One of defendants’ Certificate of Title referred to a deed in which the common grantor had mentioned the unnamed way as one of the ways in which the grantor had reserved easement rights for the benefit of his remaining land but it appears the grantor never attempted to deed those reserved rights to any other lot purchasers. [Back to text]
6 The court in Jackson also explained why the mere depiction of a way on a subdivision plan does not by itself grant or imply the grant of rights in that way. [Back to text]
“A plan referred to in a deed becomes a part of the contract so far as may be necessary to aid in the identification of the lots and to determine the rights intended to be conveyed.” Labounty v. Vickers, 352 Mass. 337, 344, 225 N.E.2d 333 (1967). See Dubinsky v. Cama, supra 261 Mass. at 53, 158 N.E. 321. However, it is important to remember that “reference to a plan like [the plans in this case], laying out a large tract, does not give every purchaser of a lot a right of way over every street laid down upon it.” Pearson v. Allen, 151 Mass. 79, 81, 23 N.E. 731 (1890). See Walter Kassuba Realty Corp. v. Akeson, 359 Mass. 725, 728, 271 N.E.2d 660 (1971); Patel v. Planning Bd. of Andover, 27 Mass.App.Ct. 477, 482, 539 N.E.2d 544 (1989). Further, “[i]t is well established that ‘where land is conveyed with reference to a plan, an easement ... is created only if clearly so intended by the parties to the deed.’ ” Scagel v. Jones, 355 Mass. 208, 211, 243 N.E.2d 908 (1969), quoting Rahilly v. Addison, 350 Mass. 660, 662, 216 N.E.2d 414 (1966). See Wellwood v. Havrah Mishna Anshi Sphard Cemetery Corp., 254 Mass. 350, 354, 150 N.E. 203 (1926), quoting Prentiss v. Gloucester, 236 Mass. 36, 52, 127 N.E. 796 (1920) (“a reference to a plan in a deed, although accompanied by its use for description or bounds, does not result in the conveyance of rights not necessary for the enjoyment of the premises, in the absence of an intent appearing to that effect”).
Id., 418 Mass. at 711-712, 640 N.E.2d at 113. The plaintiffs’ lots in Jackson did not abut the unnamed way and as discussed in the text, there was nothing in the plaintiffs’ Certificates of Title or their predecessors deeds granting any rights in the unnamed way or any other rights (such as to the beach) for which rights in the unnamed way would be necessary or incidental to their use and enjoyment. [Back to text]
7 In Killam v. March, supra, the court was dealing with a recorded but unregistered lease, of which the registered servient estate owner had notice and the rights under which the lessee openly and continuously used. After reviewing the history of the general recording statute (now G.L.c. 183, §4), the court in Killam analogized that the requirement under G.L.c. 185, §46 that a registered land purchaser must take title “in good faith” in order to be protected against interests not appearing on the Certificate of Title is equivalent to the requirement under the general recording statute that a bona fide purchaser of unregistered land must take title without actual notice of an unrecorded interest. In that regard, the court stated that “[a]lthough there are many differences between the two systems it is inconceivable that circumstances that would amount to bad faith with respect to unregistered land, namely, acquiring title with notice of an unrecorded interest, would constitute good faith in the case of registered land.” Killam, supra, 316 Mass. at 651, 55 N.E.2d at 948. [Back to text]
8 G.L.c. 185, §71 provides: “Leases, or notices of leases as defined in section four of chapter one hundred and eighty-three, of registered land for more than seven years from the making thereof shall be registered in lieu of recording.” [Back to text]
9 Although the court did not elaborate on it, neither an adverse use nor the defendants’ knowledge of any such adverse use would have made any difference with respect to registered land because of the prohibition under G.L.c. 185, §53, against the acquisition of easements in registered land by prescription or necessity. The court did address the issue of an easement by estoppel, concluding that, generally, easements by estoppel cannot be acquired against registered land and pointing out that the Supreme Judicial Court had “never applied to registered land an estoppel theory not based on actual notice.” Jackson, supra, fn. 7. However, compare the application by the Appeals Court of easement by estoppel in Lane v. Zoning Board of Appeals of Falmouth, 65 Mass.App.Ct. 434, 841 N.E.2d 260 (2006)(to be discussed next). [Back to text]
10 Other cases applying the Jackson v. Knott exceptions in recent years include Lane v. Zoning Board of Appeals of Falmouth, 65 Mass.App.Ct. 434, 841 N.E.2d 260 (2006)(to be discussed next), One-O-Six Realty, Inc. v. Quinn, 66 Mass.App.Ct. 149, 845 N.E.2d 1182 (2006), rev. den., 447 Mass. 1103, 848 N.E.2d 1212 (2006)(also to be discussed in this article), Calci v. Reitano, 66 Mass.App.Ct. 245, 846 N.E.2d 1164 (2006)(knowledge of use of driveway over narrow registered land strip lying between public way and neighbor’s unregistered land not sufficient to overcome protection of registered land from claims of adverse possession and prescriptive easement under G.L.c. 185, §53, where, notwithstanding that the strip was specifically purchased by defendant to block plaintiff neighbor’s access to her lot, no instrument of record created any access easement in the first place), and Commonwealth Electric Co. v. MacCardell, 66 Mass.App.Ct. 646, 849 N.E.2d 910 (2006), rev. gr., 447 Mass. 1110, 854 N.E.2d 441 (Sep. 28, 2006)(where reference to pre-existing recorded utility easement was noted on the Certificate of Title for one of two registered lots but on the wrong lot and it was not noted on defendant’s certificate, even though her lot was the one intended to be affected, defendant’s mere observation of existing utility lines serving defendant’s and her neighbor’s properties was not sufficient “actual knowledge” of the easement rights of plaintiff or of the easement document itself to satisfy the second prong of Jackson v. Knott). [Back to text]
11 The portion of the developer’s parcel that abutted the end of the subdivision road would confer no ownership rights in the road to the developer as property located at the end of a way is not considered as “abutting” the way for purposes of G.L.c. 183, §58. Emery v. Crowley, 371 Mass. 489, 359 N.E.2d 1256 (1976). [Back to text]
12 “[W]hen a grantor conveys land bounded on a street or way, he and those claiming under him are estopped to deny the existence of such street or way, and the right thus acquired by the grantee (an easement of way) is not only coextensive with the land conveyed, but embraces the entire length of the way, as it is then laid out or clearly indicated and prescribed.” Lane, supra, 65 Mass.App.Ct. at 437, 841 N.E.2d at 263, quoting from Murphy v. Mart Realty, supra, 348 Mass. at 677-678, 205 N.E.2d at 224-225. [Back to text]
13 Finding that the developer had a right of way easement over the subdivision road by virtue of his parcel abutting a portion of the road and his deed from the common grantor creating an easement by estoppel, the court also determined that the developer had the right under G.L.c. 187, §5, to place utilities in the road and that the additional use of the road by virtue of the 20-unit condominium was not shown to constitute and overburdening or a nuisance. [Back to text]
14 Relative to standards of title examination, G.L.c. 93, §70 (sometimes referred to as the “attorneys title certification statute”) provides that the attorney’s “certification shall include a title examination which covers a period of at least fifty years with the earliest instrument being a warranty or quitclaim deed which on its face does not suggest a defect in said title; provided, however, that in the case of registered land, it shall be sufficient to start the said examination with the present owner's certificate of title issued by the land court, except that bankruptcy indices and federal and state liens shall be examined.” The Real Estate Bar Association’s Period of Search Title Standard No. 1 is substantially similar. [Back to text]
15 Jackson, supra, 418 Mass. at 712, 640 N.E.2d at 113, quoting from Myers v. Salin, 13 Mass.App.Ct. 127, 136-137, 431 N.E.2d 233 (1982). [Back to text]
16 There would also be issues of coverage as to the duty to defend where the action was brought by the registered landowners as plaintiffs, but those issues get very complicated sometimes and are beyond the scope of this article. [Back to text]
17 As with all claims under a title insurance policy, this assumes the absence of other factors falling within some other exception in the policy or triggering an exclusion from coverage. In the case of a matter of which the insured has “actual knowledge,” for example, if the insured lot owner had actual knowledge of the instrument and/or the interest created by it but the instrument was not recorded and the insured did not let the title insurance company or its policy issuing agent know about it, a policy exclusion for off-record matters known to the insured and not disclosed to the company in writing may apply and coverage, as well as defense, may be denied. [Back to text]
18 The standard survey exception might be deemed to apply at first blush because of the paved area, painted lines and words and the obvious use of the right of way in One-O-Six Realty. However, that exception might not have applied because the easement right was the subject of not only a recorded instrument but one that the attorney actually found in his title examination. Under the particular circumstances as recited in One-O-Six Realty, the standard policy exclusion for matters created, suffered, assumed or agreed to by the insured likely would not have applied either. [Back to text]
19 Again, this assumes no exceptions or exclusions in the policy that would have limited the express coverage for the right of way. [Back to text]
20 Two other illustrative “actual notice” cases similar in circumstances and result to Killam and One-O-Six Realty are Feldman v. Souza, 27 Mass.App.Ct. 1142, 538 N.E.2d 64 (1989) and Wild v. Constantini, 415 Mass. 663, 615 N.E.2d 557 (1993). In Feldman, both properties involved were registered land and, while the grant of easement was noted on Feldman’s Certificate of Title but was not noted on the grantor’s Certificate of Title, Souza had actual notice of it when he purchased. In Wild, the defendant was as successor trustee to a trustee who had obtained a registration decree that “inexplicably” omitted the plaintiff’s acknowledged right of way that had been reserved in a deed of the servient parcel to the defendant’s predecessor in title. Despite the omission, the successor trustee was bound by his predecessor trustee’s notice and acknowledgment of the plaintiff’s easement rights. See also, Commonwealth Electric Co. v. MacCardell, supra, fn. 10, where both parcels were registered land as well. [Back to text]
21 Expanded coverage policies such as the Homeowner’s Policy provide coverage not only for a “legal right of access” but for “actual vehicular and pedestrian access” as well. [Back to text]