A few weeks ago, a reader asked whether he was entitled to extra compensation from the seller because he found out that the seller had sold a piece of his property to the city without telling him. The seller sold a lot that was half an acre instead of six-tenths of an acre. The city used the slice of property to lay water mains, and then replaced the dirt and sod. In effect, the property looked whole but, in fact, was not.
In our answer, we wondered what the buyer had bought. Was the property advertised as six-tenths of an acre or a half-acre, or was the size of the land never discussed? Had there been a survey? (We guessed not.) And did it really matter, after all, since the property looks and feels like six-tenths because the city covered over the pipes and nothing else will be built on that strip of land?
We received a number of responses to our answer. The first is from a retired patent attorney researching land records back to the 1850s for a case he is fighting.
"This is in regard to your recent article titled 'Does seller owe buyer for part of land sold to city?' I think he does, although it may be possible to escape responsibility if the sale of the land was properly recorded in the County Recorder of Deeds (which may also be called the County Recorder's Office).
"It is well-established that ownership of real estate is to be established by documents recorded in the Recorder's Office. This often must include the recording of a survey tract, which shows the land involved and even who owns it. A city is not above the need to do this. I have found that individuals can make those searches themselves if they go to the Recorder's Office with a clear description of the land they are interested in. This may provide enough information for the customer to decide if he should buy or not."
The whole point of recording a sale — even for a tiny strip of land — is to put the world on notice that ownership has changed. Buyers typically go through that process during the purchase of the property if they are buying title insurance for themselves (an owner’s policy) or the lender (a lender’s policy). It was unclear from the letter we received whether either type of title policy was purchased or if the sale to the city had come up.
We also received another question from a reader.
Q: Why don’t you mention checking the survey, which should have been obtained by the buyer when he closed, if not before, to ascertain what the legal description is for the property he bought? Also wouldn’t the title insurance indicate what he purchased?
When I was a warranted real estate contracting officer at various federal agencies, I would always obtain both of those documents as well as an appraisal documentation and walk the property before any closing or taking.
Another thought is that the seller may have granted an easement to the city.
A: Good points. In the letter to us, it was not clear whether the buyer had obtained title insurance or a survey for his purchase. In some states, buyers routinely don’t get surveys when they buy homes. In these situations, buyers may not see what they are getting when closing on the purchase. The only effective way for this buyer to have known what was included was to look at a survey before closing to see the outline of the property.
Once the buyer had a survey in hand, the buyer could have seen that a slice of the property was not included in the purchase and could have objected at that time. Now, from a title insurance point of view, the title company will insure only the legal description given to it. So if the owner gives the title insurance company the legal description of the parcel without the land given to the city, the new owner has a right to make a claim against the title company only on the land shown on the policy.
As we stated in our previous answer, if you are buying a property and the dimensions of the land are important to you, you better make sure you make that facet part of the purchase and sale agreement. For example, if you believe you are buying a property that is 10,000 square feet, you should put on the contract a requirement that the seller is conveying to you 10,000 square feet.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through her website, ThinkGlink.com.