Getting Around

In my last article “Where to Begin . . .” I began a discussion of some of the conventions concerning “Points of Beginning” in Legal Descriptions. The discussion was far from exhaustive, and much more can and should be said. However, in an attempt to treat as many of the topics related to the preparation of good deeds as is possible, I decided it was time for me to be “Moving On. . .” to the next part of a “Metes and Bounds” description, that is, the convention of proceeding “clockwise”. (By the way, those of you who answered “Clockwise” to the question I posed at the end of the last article get 1 point; those of you who answered “It depends” are probably recent law school graduates – either way, you get 2 points)! If you answered “counter‐clockwise”, deduct 1 point.

Beyond that rule though, we can begin a discussion of some of the other elements of deeds, and of “Legals” in general (as we Title Guys and Gals refer to them). After all, there are many elements to a deed, and the Legal is just one of them. (More will be said about the other elements of a good deed in the future). As always, I welcome your comments, suggestions, war stories, disagreements, etc., in keeping with the goal of all of us preparing Good Deeds.

Regards, Gil Hoffman
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In my inaugural edition of “Good Deeds,” I discussed a number of ways in which lawyers use (and sometimes misuse) language to identify the “Point of Beginning” in a legal description¹. The article pointed out that there are customs by which to identify Points of Beginning, and began discussing some legal description customs, or “rules” related to Points of Beginning:

  • Rule Number 1: Don’t use one if you don’t need one;
  • Rule Number 2: If the map to be referred to is not a matter of public record, don’t refer to it;
  • Rule Number 3: Choose a “Point of Beginning” that is fixed, locatable, and, preferably, monumented;
  • Rule Number 4: If the existing property description is vague or indecipherable, create a new one; and
  • Rule Number 5: “A Point of Beginning” is different from a “Point of Commencement!”

There are many parts to a “Metes and Bounds” Legal Description and the Point of Beginning is only one of them. Having correctly identified a Point of Beginning, it is necessary to describe the route of traverse around the various boundaries of the parcel of land being described, and, with a few exceptions, then to return to the Point of Beginning, in order to accurately describe a “closed” polygon.

So, your sharpened pencil is poised at the Point of Beginning, and you want to describe the first line – thus your first dilemma: which way do you go? The surveyor provided a map showing bearings and distances (collectively referred to as “courses”), but you have at least two choices to describe that first line: you could proceed clockwise around the parcel, or counter‐clockwise. What to do?

Point of Beginning – Rule Number 6

Given the opportunity to do so, proceed clockwise around the parcel being described. Remember, every line has two bearings. For example, a line with a bearing of North 45 degrees East, can also be correctly described as South 45 degrees West. In the diagram below, the course “N. 80 degrees East, a distance of 200.00 feet” is the same line as “S. 80 degrees West, a distance of 200.00 feet.” As to Parcel I below, that line bears S. 80 degrees W., but as to Parcel II, the same line bears N. 80 degrees E, in each case proceeding clockwise from the Point of Beginning.

So, don’t hesitate to convert a bearing depicted on a survey proceeding in one direction around a parcel to the opposite direction, if doing so will permit you to describe the parcel by traversing in a clockwise manner around it. Why did the surveyor describe the course going the other way? Perhaps the line is part of the description of another, contiguous parcel, and the course traverses clockwise in that other parcel (as was the case in the diagram below); or, well, the possibilities are endless….

Gil Hoffman Illustration - Issue 2 Good Deeds

Following Rule Number 6, though, your description will be more predictable, and, more importantly, more easily plotted. Perhaps you noticed that Point of Beginning Rule Number 6 isn’t really a “Point of Beginning” Rule at all. It is a departure from the Point of Beginning.

Well, we can’t stay on the Point of Beginning forever if we want to get anyplace!

Perhaps I have crossed the line, but Rules are made to be broken. There will be circumstances when following rules will create more problems than they could ever solve. If confronted with such a situation, use your judgment. The goal, after all, is to “be able to identify from the legal description, with a high degree of certainty, the location and boundaries of the property with reference to its surroundings”². If you have to violate a rule in order to solve a different problem, and the description you select achieves the goal, so be it!

Description  Rule Number 1:

If Rules are made to be broken, Laws are not! A Legal Description generally begins with language like “ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Smith, County of Lake and State of New York…” . When describing multiple parcels in the same instrument though, the “Town” and “County” language is frequently left out of the subsequent descriptions, perhaps something like “ALL THAT TRACT OR PARCEL OF LAND, beginning at a point… “, leaving out the names of the Town and County.

If you attempt to record a deed or mortgage of one of those subsequent parcels without the Town and County designation, and you’re lucky, the County Clerk will notice the omission and reject the instrument instead of recording it. Then, the consequences are limited to having to have the instrument corrected and recorded (assuming you have the cooperation of the parties executing the instrument), hopefully before anyone records different deed or mortgage to the same property, and before the instrument, if a mortgage, exceeds the 30‐day perfection window between creation and perfection of a security agreement³. If you are less lucky and the omission is overlooked by the county clerk, and the deed or mortgage is recorded, you may find yourself living in a Fool’s Paradise. Well, at least you have someplace to live, unlike your clients, who now have NO PLACE TO LIVE!

One reason, of course, is the Recording Act, which requires that -
Every instrument presented to said clerk for record, and requiring to be indexed under [the Recording Act]… shall have included therein, in the description of the premises a designation of the town in said county in which the land affected by the instrument lies … And a record of the instrument shall not be effectual by way of notice to bona fide purchasers or encumbrancers in respect to any land situated in any town of said county not so designated [emphasis added] .…

Hey, it’s the Law! And, it’s also a convenient defense when enforcement is sought. To summarize Rule Number 1, a legal description must name the Town and County where the property is located.

The other reason is that in a bankruptcy scenario, a mortgage not perfected within 30 days of its creation can sometimes be avoided as a preferential transfer, because the transfer will be deemed to have been taken place at the time of perfection, and Bankruptcy Code Section 547 provides that -
. . . the trustee may avoid any transfer of an interest of the debtor in property. . . made on or within 90 days before the date of the filing of the petition . . . .

And further provides,
. . . a transfer [of real property] is made . . . at the time such transfer takes effect between the transferor and the transferee, if such transfer is perfected at, or within 30 days after, such time ….

Late perfection can lead to a bankruptcy trustee avoiding the transfer or lien as being preferential vis‐à‐vis creditors, with serious consequences for your lender or purchaser. Instead of paying the Lender, the trustee may use loan payments from the debtor to pay other creditors!

What does all of this mean? Well, among other things, it means legal descriptions must name the town and county where the real property is located, or we risk having the instrument rejected by the county clerk, or worse, suffering a failure of title or the loss of lien priority. As for other possible consequences, I will leave those to your imagination.

I hoped to get to “how much is too much” and “judicious use of boundary calls,” in this edition, but that would definitely be too much for now! Instead, I promise to try to touch on those topics next time. In the meantime, let me say again that I truly appreciate your comments, questions, suggestions and disagreements, in order that we may all gain and grow in our professions. I was gratified by the many comments I received. If you want your comment to be included in the blog, be sure to post it on this blog site rather than sending me an email.

Until next time, keep up the Good Deeds!

¹ See earlier blog posting, The Point of Beginning, September 30, 2013
² See Point of Beginning Rule Number 3
³ See Section 547(e)(2) of the Bankruptcy Code
⁴ See Real Property Law Section 316‐a(4)

New York’s New Non-Profit Revitalization Act – How Does This Impact You?

Many of you are by now aware of New York’s new Non‐Profit Revitalization Act of 2013, which will be effective this July 1st. The Act has implications for conveyances, leases and mortgages of real property, with which we all should become familiar.

For example, Types “A”, “B”, “C” and “D” have been eliminated, and replaced by “charitable” and “non-charitable”.  Also, many corporate meetings may be “noticed” and conducted using various electronic media, and corporate integrity rules have been strengthened vis‐à‐vis conflicts of interest and audits.  For charitable NFP’s, Supreme Court approval has been eliminated for some conduct, requiring only Attorney General approval instead.

As to real property transactions involving less than substantially all assets, a simple majority will sometimes suffice, in lieu of the super‐majority required under current law.

My firm recently issued a Legal Alert about this new legislation,  which may serve as a primer to highlight some of the features of the law. Feel free to review this important announcement which can be found on our website. Click the link below to download the PDF Alert.
ALERT: Revitalization of New York Not-for-Profit Corporation Law

The Point of Beginning

As anyone who has ever penned an article knows, the greatest difficulty can be agonizing over where to begin.  For lawyers describing real property though, there are certain conventions or recommended practices to guide us with Points of Beginning, and, if we follow them, our work product is clearer, and our colleagues will respect our ability to “do it right.”  Not doing it right, on the other hand, is kind of like driving on the right side of the street – in London.

So, let’s go over some concepts concerning the “Point of Beginning”:

Point of Beginning Rule Number 1:  Don’t use one if you don’t need one!

Legal descriptions take many different forms, and not all of them need a “Point of Beginning.”  For example, in many parts of New York State, and, especially in counties that historically maintained a “numerical” or “block” index for real property records, it is customary to describe real property located within a subdivision with reference to a map filed in the county clerk’s or recorder’s office.  Such a description might read:

ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Smith,     County of Jones and State of New York, Being part of Farm Lot No. 73 in said Town, and being more particularly described as being Lot No. 88 of the Missing Acres Tract, according to a map of said Tract made by Way Lost, L.S., dated May 1, 2013 and filed in the Jones County Clerk’s Office on May 2, 2013 as Map No. 9,444.

     As you can see, such a description may briefly and accurately describe the property, without ever mentioning a Point of Beginning. Much more can be said about these “sublot” or “numerical” descriptions, and not all of it is good, but that’s a topic for another day.  One rule that probably should not wait for another day, though, is this:

Point of Beginning Rule Number 2:  If the map to be referred to is not a matter of public record, don’t refer to it.

If the map to be referred to in a legal description is not a matter of public record, as by filing or recording, the description making reference to the unfiled or unrecorded map is deficient.  We often see proposed legal descriptions that make reference to a newly completed, and as-yet unfiled map of survey.  Often, the map is intended to be filed, but sometimes it doesn’t make it to record.  The map might be rejected because it fails to comply with the stringent requirements of RPL Section 333-a, et seq., or with local requirements, or, it may be decided to revise the map before filing it.  Whatever the reason, if the map referred to is not a matter of record, reference to it in the legal description is to be avoided.  Title examiners who see the map reference will invariably attempt to retrieve a copy of the map, because if it shows setback lines, easements, restrictions, etc., those would be “matters of record” a title company will be charged with knowledge of.  Not finding them would then result in an exception to title.  Also, if the description consists of ONLY the lot on the map, and the map is not of record, the description fails for vagueness.  In such cases, it is better to employ a “metes and bounds” description, without reference to the map.  If the map needs to appear, such as for clarity or to indicate or disclose some unusual condition of the property, attach a copy of the map to the instrument of conveyance, following the procedure described in RPL section 333-b.

Point of Beginning Rule Number 3:  Choose a “Point of Beginning” that is fixed, locatable, and, preferably, monumented.

Describing real property with the adequacy needed for conveyancing means being able to identify from the legal description, with a high degree of certainty, the location and boundaries of the property with reference to its surroundings.  In furtherance of that objective, a well-monumented point of reference contained in the legal description will assist future owners, attorneys, surveyors and judges in more accurately understanding the intent of the parties.  Also, if a dispute arises or if boundary litigation becomes necessary, there are accepted practices that courts follow in determining boundaries, especially when there are conflicting “calls” (descriptive elements) as between various deeds and other instruments, and surveys.

Knowledge of the priorities applied to these different descriptive elements is fundamental to drafting descriptions that will withstand attack.  A relatively recent case, Pauquette v. Ray, 58 A.D.2d 950 (3d Dep’t, 1977), contains a clear explanation of the majority and New York rule:

“. . . resort is to be had first to natural objects or landmarks, next to artificial monuments, then to adjacent boundaries, then to courses and distances, and lastly to quantity”.  In other words, descriptive calls to natural objects occupy the highest order of priority, followed by artificial monuments, etc.   Of course, adherence to the above rule can be accomplished without the Point of Beginning being a natural or artificial monument, but the objectives of clarity and certainty are best achieved if the Point of Beginning is a natural or artificial monument.  Otherwise, an interpretation of the description, backtracking from the monument referred to, may be necessary to locate the Point of Beginning, a process that is arduous and time-consuming.

Also, many secondary market purchasers of home loans have established detailed requirements for what may and may not be in legal descriptions utilized in security instruments and title policies.  In order to comply with Freddie Mac standards, for example, “The beginning point should be established by a monument located at the beginning point or by reference to a nearby monument”. (Freddie Mac Single Family Seller/Servicer Guide, Vol. 1, Ch. 40.1 (a) (1)).  Of course, the Guide also refers to and allows “Lot and block” descriptions (referred to as “Sublot, block, or numerical descriptions” in Rule No. 1 supra).

Point of Beginning Rule Number 4:  If the Existing property description is vague or indecipherable, create a new one. 

Title standards, both the “official” NYSBA version, and those introduced with the advent and growth of secondary mortgage market (via loan purchasers such as Fannie Mae, Freddie Mac, SONYMA, etc.), have become considerably more precise than they were 10 or 20 years ago.  Also, the value of urban and suburban property has increased over the same period.  These factors militate against the application of a purely local standard, often resulting in the need for greater precision in describing real property. Consequently, the legal description and the Point of Beginning that were acceptable a few years ago, may not meet current standards.  When confronted with such an issue, i.e., an antiquated Point of Beginning or legal description, scrap it, and create a new one.  Utilize a surveyor if need be to describe the subject property with greater accuracy.

Remember, though, that a surveyor’s description should itself be decipherable, and should NOT be written so as to describe a greater interest or more or less property than a mortgagor or grantor owns or intends to convey.

So, a survey that refers to obscure GIS data understood only by other surveyors and engineers will not enhance the clarity of the description or the certainty required.  Similarly, a survey that describes property on the basis of lines of possession alone, and a description where the surveyor has prepared the survey or map without deference to prior deeds and descriptions, is likely to be defective.

So, DON’T shy away from creating a new description when the old one clearly does not meet current standards, but DO know the rules.

By the way, knowing the rules enunciated in Pauquette v. Ray (supra) also provides a basis to decide what’s right as between conflicting descriptions and surveys. Also, applying the rule often answers the question:  “Which description should I use?”  Now, when I answer:  “Use the one that’s right!” you know how to figure out which one that is! 

Point of Beginning Rule Number 5: A “Point of Beginning” is different from a “Point of Commencement!”

Many attorneys treat Points of Commencement and Points of Beginning interchangeably, but, by custom, they signify entirely different points.  A “Point of Beginning” signifies the first point touching the property to be described.  It is typically followed either by other calls that describe, in succession, the courses that form the boundaries of the parcel, and return to the “Point of Beginning,” or, for “Center-line” descriptions, the courses that form the center-line of a parcel of an expressed width on each side of the centerline.  (I will discuss in greater depth, in other articles, the various types of descriptions commonly used, and how to identify and choose the best type for a given purpose).

A “Point of Commencement,” on the other hand, does not touch on the property to be described.  Rather, a Point of Commencement typically starts some distance from a Point of Beginning, but starts at a fixed and locatable point (the “Point of Commencement”) and then proceeds to describe a pathway to the Point of Beginning.  An example of a Point of Commencement would be:

Commencing at the intersection of the centerlines of East Jefferson Street and South Warren Street, and proceeding thence northerly along the centerline of South Warren Street a distance of 100.00 feet to the Point of Beginning, and proceeding thence  . . .”

As should be apparent, then, a Point of Commencement is intended to serve a different purpose.  Notice also though, that, in the above example, the property could have been described without using a Point of Commencement. Instead of a call to the Point of Commencement, we could simply have a Point of Beginning like:

Beginning at a point on the centerline of South Warren Street, 100.00 feet northerly, measured along said centerline, from its intersection with the centerline of East Jefferson Street, and proceeding thence  . . .”

In other words, it is normally the better practice to avoid wordiness, without compromising precision, whenever possible, and to save the use of “Points of Commencement” for those circumstances where it really will contribute to clarity.

A clumsier device that seeks to accomplish the same intent is to identify a point as a “Point of Beginning,” but then describe a pathway to a “True Point of Beginning.”  But, now that you know the custom, do as the Romans do!

Much more may be said about where to begin, but that’s enough food for thought for one day.  Next time, I will address such questions as:

“Clockwise, or counter-clockwise?”, “Judicious use of boundary calls,” and, “How much is too much?”

I also hope to help you break some bad habits, like describing property with reference to itself.

In the meantime, I welcome your comments, questions, suggestions, and even your disagreements, because some of what is stated here is simply my opinion.  I would like to see this forum turn in to a discussion, among real property professionals, through which we can all gain expertise.

Welcome!

As every real estate practitioner knows, real property transactions have become increasingly complex.  Sometimes, when dealing with changes wrought by regulation, taxation, environmental issues and tight money, we lose sight of the basics, things like the preparation of deeds, legal descriptions, and the like.  Even so, these “basics” can become critical if your client becomes embroiled in a title or boundary suit, where subtle wording differences can mean the difference between winning or losing, with hundreds of thousands of dollars at stake.

I hope to create a series to address some of these basics.  For many, this will be a light “read,” and will hopefully serve as a refresher, something you may wish to share with a paralegal or assistant.  For some of us, though, this series may fill in some technique gaps, and help to hone our transactional skills.

I also hope for feedback, to create an open dialogue.  In that regard, examples, war stories, arguments and disagreements are all welcome.  By sharing our combined knowledge, we all contribute to raising the bar and improving the level of real property practice, and, in the course of doing so, we just might save a client (and ourselves) from the negative consequences of an instrument crafted without attention to detail.

So, please subscribe and be notified when I post something new to my blog. I look forward to hearing from folks regarding topics and issues of “Good Deeds.”

Regards, Gil Hoffman
315.701.6489