In a dispute over land restrictions thought to have been extinguished from a 2007 acquisition, Chicago Title alleged that the use restrictions at issue actually were extinguished by the Oklahoma Marketable Record Title Act (MRTA).
An Oklahoma district court looked into the 1956 and 1954 deeds at issue to determine whether MRTA extinguished the restrictions. It found that the 1956 restrictions were voluntarily released, but ruled against Chicago Title’s judgment on the pleadings because the 1954 restrictions were not extinguished by MRTA.
The case is Chesapeake Land Development Company LLC v. Chicago Title Insurance Co. (U.S. District Court, W.D. Oklahoma, 16-cv-0132).
The case involves two adjoining lots which Chesapeake bought in 2007. A title search discovered that the lots were burdened with specific use restrictions included in two 1954 deeds, which were conveyed in 1956. Chesapeake bought the property for $10 million, obtained releases from the seller, and purchased title insurance from Chicago Title.
When Chesapeake tried to sell the properties in 2014, it found they were still burdened by use restrictions from the 1954 deeds, and when that prevented the sale, Chesapeake submitted a claim to Chicago Title.
Chicago Title claims that the 1954 use restrictions were extinguished by the Oklahoma Marketable Record Title Act (MRTA), and that the 1956 restrictions were voluntarily released.
Capitol Title, which conducted the search, contended that the 1956 deeds constituted a “root of title” under MRTA and thus extinguished the 1954 restrictions.
The court, however, concluded that the MRTA does not cut off the 1954 restrictions because the “root of title” which Chicago Title relies upon – the 1956 deeds – are not the type of “root” that can eliminate the restrictions.
“Oklahoma’s MRTA is ‘based upon the principle that when one has clear record title for at least 30 years, all interests recorded prior to this period should be cut off unless preserved by filing a proper notice,’” the court wrote. “Of particular consequence here is the requirement that the conveyance relied on as the root of title must purport to create the interest claimed by the person asserting title.”
The court said that Chicago Title claims Chesapeake received title to the property free and clear of restrictions. “So the question because whether the 1956 deeds, upon which Chicago Title relies for its root of title, actually purported to create such an interest,” the court wrote. “The court concludes they plainly did not.”
The court wrote that the 1956 deeds included the same restrictions which the 1954 deeds did, and nothing in the 1956 deeds was inconsistent with the interest in earlier deeds to cut off the prior interest.
The court said the issue was not whether the 1956 restrictions were released at the 2007 closing, saying it presumed they were. “Rather, the question is whether the conveyances that had been of record for 30 years purported to claim an interest inconsistent with the 1954 use restrictions, so as to cut them off under (MRTA). They did not,” the court concluded.
The court said that although Chicago Title argued that the 1956 restrictions were not preserved because the deeds did not specifically reference earlier restrictions, the language in the deeds called for a different interpretation.
“It might well have applied if the 1956 deeds had purported to convey fee simple title ‘subject to restrictions of record’ or some similar language,” the court wrote. “But that is not what the 1956 deeds did. Rather, they conveyed the fee title but did so explicitly subject to church/park use restrictions. The quantum of interest in the real estate conveyed by the deeds explicitly did not include the right to use the property for anything other than those uses.
“As stated above, the interest which was purported to be conveyed by the 1956 deeds did not include the interest that defendant is attempting to acquire via the MRTA. There was, hence, nothing in the 1956 deeds which would serve to ‘cut off’ the earlier 1954 restrictions.”