Do I own this (real property) or not?

The pertinent paragraphs of a “Substitutopn of trustee and full reconveyance” document I just received on a piece of property I paid for:

  1. Whereas LARE, was the original Trustor, OurTitleCompany was the original Trustee, blah-blah property description and amount of mortgage.

  2. Whereas (they) desires to substitute FundingCorp as the new Trustee under said Deed of Trust and

  3. Now Therefore, (they) does hereby substitute FundingCorp as Trustee under the Deed of Trust

  4. FundingCorp, blah-blah-blah location and description of the funding company, does hereby reconvey, without warranty, to the person or persons legally entitled thereto, the Estate held by in thereunder.

I’m ok with paragraphs 1, 2, and 3. The mortgage changed hands. But paragraph 4 ends with “to the person or persons legally entitled thereto, the Estate held by in thereunder.” Is that me? How do I know? And really, “held by in thereunder?” How does that parse into English?

I know, IANAL, and I don’t expect anyone here to BAL either and it’s not something that I need a quick answer on and I’m not really looking for legal advice (which I would understand no one, and no message board, would be responsible or culpable for) either. I just want to understand paragraph 4. That’s all. And I’d also like a new guitar. Thank you.

Deeds of Trust are squirrelly.

Assume you have a mortgage. You own your property – subject to the rights to it you gave Mercenary Bank’s mortgage department to induce them to loan you the money to buy it. Title vests in you; they hold a mortgage lien on it.

Under a Deed of Trust, though, Mercenary Bank loans you the money. You go to a closing. And lo and behold, Joe Lawyer, who has worked with the bank before, shows up. And HE gets title to your house, in trust. What you pay for is the right to live there, remodel it, have cookouts, and the like, while you’re paying off the loan. If and when you pay off the loan, Joe Lawyer is then supposed to convey the property over to you. If you default on the loan, Mercenary Bank can tell him to sell it at auction to discharge ithe outstanding balance of your loan. In theory anything over that accrues to you – but if you think there’s likely to be any bid higher than the outstanding balance, I will be happy to grant you a quitclaim deed to a bridge connecting New York and Kings Counties in New York City for suitable consideration. :wink: In practice, of course, what happens is that you the homeowne3r pay on the loan for some years, decide to move (or your employer makes that decision for you), and you put the house up for sale, with, of course, the bank loan having first claim on the proceeds. When all parties are happy with the proposed sale, Joe Lawyer is instructed by Mercenary Bank to sign over title to the new [del]suckers[/del] tenants, or more likiely, gets to transfer title from himself as trustee for your interest to trustee for the new tenants’ interest.

He holds title. You get it from him if and when you pay off the loan./

What you got, so far as I can interpret your description, is that Mercenary Bank sold your loan to some other lending company, call it Crapatall Won. Joe Lawyer as trustee with title to your house is being instructed by Mercenary Bank that the loan is now payable to Crapatall Won, and you as beneficiary of the trust are getting a copy.

To repeat, deeds of trust are squirrelly.

But…but…but…FundingCorp became the trustee in paragraph 3. Then in paragraph 4, they reconveyed to the “persons legally entitled thereto.” I don’t see anywhere that it is spelled out who that might be. It looks like it just went into the ether unless I am that person by default. Or not. Sheesh.

The answer to “how do I know” should be the Deed of Trust, I should think. The document you’re talking about is a reconveyance that is still subject to that deed. So what’s that say?

So … why do Deeds of Trust exist? It seems easier for the bank to resell the property in the event of default, instead of going through repossession. Does the lessee usually get a break on cost, or is security easier to get, in the case of a Deed of Trust?

Missed the editing period - not really “subject to” the deed. That sounds all wrong. What I mean is, the reconveyance doesn’t create or change anybody’s legal entitlement to the property, so just in terms of the reconveyance, it looks like it went into the ether. But somewhere there’s a document that sets out an entitlement to the property, and I think depending on where you are what that document is might be different. But it ought to exist, is the point.

Ah. Don’t have that. The reconveyance just came in the mail. Time to check with the county recorder?

I will point out, not being a jerk, that questions like the OP are the basis for a couple of whole industries based around figuring out, perfecting, and insuring chains of title. I wouldn’t ever hazard an answer on the answer to the OP . . . Hell, depending where one lives it could turn out the Spanish land grant was not perfected . . . .

NO ONE expects the Spanish… (cough)

Short of going to a title company (and paying for the privilege ) it’s seems there’s not anyone who could guarantee me anything. What I found out in this case is that there is indeed a chain of title and with the letter of re conveyance the title ends up with me.

(And thanks to the mod(s) who removed the spam!)

Most modern jurisdictions have title offices. To own legal title, your ownership must be registered with the land title office. Ditto, any valid mortgage.

To avoid all these silly run-arounds, many places have switched to using a simple, computerised system. If they sold you the land, titles or not, it will be registered in the system. The system is the final authority, barring fraud or similar games. This means that someone buying a piece of property does not have to reseach all the way back to the first royal land grant. It simplifies title research.

The whole point of this is - you don’t have people popping out of the woodwork with 20-year-old deeds saying “hold on! I own that!” No register, no owner.

Is this the case where this property is located?

I believe so, and I have the title showing the lending company, followed by the reconveyance from them.

(I’m dreading your next post telling me why that isn’t enough…)

With all due respect, this post is founded on a falsehood. Only in parts of Canada and a couple of U.S. states does title to a piece of property depend on what is registered with the relevant official. It is true that titles are generally so filed in almost all jurisdictions, but title vests in the most recent recipient of whatever the jurisdiction considers a legal conveyance, or his estate or heirs and assigns, irrespective of whether anyone has bothered filing the appropriate paperwork with the local registry. For example, Jones dies. His children live in three other states and have no sentimental ties to his retirement home; it is to be sold and the proceeds distributed as called for in his will. No executor or administrator would file a deed transferring title from Jones to Jones’s estate; they would merely transfer title to the new purchaser after sale, and leave him or his lawyer to file a deed. Or Hardacre closes on his purchase of Blackpool’s land, and his lawyer, planning to file the deed the next day, is struck and killed by a drunk driver and the deed lost in the accident. Hardacre’s title is not voided by the failure to record the deed. (Except, as noted, in those jurisdictions where the controlling title is whatever is on file.)

Well, IANAL, and I am sure there are some rules about appropriate amount of time to file changes of title. In Ontario, there was a case where someone pretended to be the owner, took out a mortgage and disappeared. According to the letter of the law, the registered mortgage was valid since it was accepted by the registrar; some people lost their house to a bank that had given money to a crook and insisted on foreclosing. (Aren’t Canadian banks great!?) The law was corrected, and now you need to present serious ID for land transactions, but the title registration is the ultimate authority.

My apologies. I had understood this new system was more widespread than it was. As I said, it makes sense because it simplifies title searches and disputes. If a title registry means nothing, what’s the point?

A few states did have the Torrens System, which merely registered anything that affects a parcel of land. Illinois did allow any county to adopt the Torrens System. Cook County adopted it, but few parcels were placed in it. Illinois recently abolished the Torrens System. The reason that few parcels were registered is that mortgagees were not satisfied with it. They wanted a title policy. So, even though property might have been registered, a title policy had to be obtained anyway if there ever was a mortgage on it.

State laws vary as to the effect of trust deeds (deeds of trust). They are basically the same as mortgages. The difference is that title is technically conveyed to the trustee. In mortgages, the mortgagor owns the land, subject to the lien of the mortgagee. But in actuality, there is no difference, except that upon satisfaction of the debt, the trustee must execute a release deed, releasing, conveying, and quit-claiming all interest in the property to the trustor. A mortgagee merely executes a “satisfaction piece,” indicating that the debt was satisfied. The “auction” that Polycarp referred to is the public sale upon default, but this is basically the same as the foreclosure proceedings under a mortage, at least in Illinois. In Illinois, a TD must be foreclosed, the same as a mortgage. I know that in some states, a TD allows for a shortening period of the right of redemption, with some other differences.

TDs are usually used in place of mortgages in large developments (where the debt is a large amount), not for a single family owner’s house. It comes in handy when the debt is a very large one, with different lenders. The lenders delegate one company as trustee to handle all the matters, to simplify things.

In the OP, it sounds like the debt(s) were satisfied in full, and the property had to be conveyed back to the lendee (trustor). For some reason, the original trustee does not want to execute that instrument so they substituted another entity as substitute trustee to reconvey the property back to the lender, who is now the owner free and clear of the lien. (For all practical purposes, he was the owner before, subject to the lien, but technically he conveyed the property to the trustee.)

Thank you.


At common law, the only way to prove your title was to show that you had a chain of title, starting with the deed of sale from the person you bought the land from, and then the deed of sale from the person that person bought the land from, and so on, ultimately ending up with a grant from the Crown (although in practice, it would suffice to prove chain of title for a customary lengthy period, often 40 or 50 years). That was a cumbersome system and caused problems if you (or one of your predecessors in title) lost a deed that was in the chain of title (eg. in a fire). If you lost a deed, it broke your chain of title, possibly causing problems in the future if you tried to sell the land and the buyer wasn’t satisfied with your chain of title. You had to keep all of the original deeds, and each vendor was supposed to transfer the bundle of deeds to the purchaser, to enable the purchaser to prove he owned the land. The system was also vulnerable to fraud, by crooked individuals who weren’t above forging false deeds.

The registry system was the next step in the evolution of real estate law. Governments set up registry systems, which allowed the holders of title to register their claims of title. Registering the deeds made it much simpler to show the chain of title, and was notice to the world that you were the owner. However, registry was not proof of title. Title still ultimately depended on the chain of title. If a challenger could show that a previous vendor didn’t have good title, and therefore could not pass title, the title shown on the registry could be defeated.

The title system was the next step. Commonly called the Torrens system after the fellow who invented it, the title system is a government-run program where the details of ownership in the land titles system are the proof of title, not the various deeds. Once land is on the title system, the pubic record of title is the proof of title. You don’t need to keep the deeds showing the chain of title, and the title shown on the public record can’t be defeated by allegations that a previous vendor didn’t own the land and therefore couldn’t pass good title. There are a few exceptions to this principle, such as fraud, and there is also an insurance system that compensates an owner if he or she is accidentally deprived of title by a screw-up in the title system itself.

My recollection is that in Ontario (where I believe md2000 posts from), the registry system was used originally, dating back to the first British settlements, and that the Torrens system was made available in the later settled areas. It was also possible to apply to move a piece of land from the registry system to the Torrens title system.

I think the registry system is used in the Atlantic provinces, while in the Prairies and territories, it’s all Torrens title. B.C. has a weird amalgam of the two, caused by too many magic mushrooms. (Not sure at all about Quebec, as I didn’t take the immeuble course when I studied there.)

Terminology differs in the various jurisdictions. In Illinois, what Northern Piper calls “registry” is called “recording.” In Illinois, written instruments are recorded in the Recorder’s Office of the county. Defects, of course, such as forgery, fraud, dower, homestead, etc. could arise. Attorneys would examine the chain of title as shown in the land tracts and issue an opinion. The official chain of title is, however, the grantor-grantee index, but that is an unworkable option. In the Recorder’s Office, each parcel of land is kept in its own place, making it much easier to search. As parcels get subdivided, additional tracts are added.

In Illinois, the “registry” is the Torrens system, which was fairly new. The Act allowing for the Torrens system was repealed about a decade ago. Possible defects could appear in this sytem, as well. The funds accrued through the filing in the Torrens system is the insurance for that.

The problem with attorney’s opinions are the net worth of the attorney and the ability to recuperate any losses. Title companies came along. Chicago Title&Trust began in the 19th century. They would defend any claim against the title, so that it was not merely a matter of paying off a loss, but defending the title itself. CT&T Co would make, for internal use, a “tract opinion,” which would cover a lot of land that had the same chain of title. When a large tract was subdivided, and different chains of title arose, it was not necessary to go back to the original “patent” from the US government. CT&T could begin its search from the last tract opinion before it became subdivided. (Many parcels in Illinois began with the patent from the federal government to those who fought in the Revolution. Those lands which were not patented were ceded to the State of Illinois when it was incorporated as a state, and the state issued grants or deeds.) CT & T Co went one step further in its internal workings. A tract opinion ususally covered property described by metes and bounds. When part of that tract became subdivided into a subdivision, it would create an opinion as to the entire subdivision. There was no such thing as going back only a certain number of years, as far as CT&T was concerned. However, when Pioneer attempted to compete with CT&T, that was its only option, as going back to the orginal patent would be too cumbersome. CT&T Co also kept its own “tract books” so it did not have to use the county recorder’s books. As deeds are recorded, employees of CT&T would, make presses of the documents and bound them in a letter-press book, kept in its office (in the third sub-basement in Cook County). Later, “minutes” of the instruments, which was an abbreviated typed summary of the instruments were used, until in more recent times, more modern methods have been used to maintain the entire records.

Counties outside of Cook would have abstract companies (as did Cook County initially), which would make their own letter press books, from which they would make abstracts available to the customer (one wishing to purchase the land). The buyer would then get an attorney to examine the abstract and issue an attorney’s opinion. Or the attorney would order the abstract himself.

But that did not completely cover problems in the land. There’s a certain matter of taxes. Taxes are not only a lien, but a first lien. Hence, the records in the county assessor’s office must be examined. CT&T made its own tax searches by its employees in the assessor’s office. I’ve heard that one fledging title company overlooked that small detail.

Then there’s the matter of liens affecting the land that do not have to be recorded. Federal liens and mechanics’ liens, primarily. Recording is constructive notice. Construction on any property also is notice that possible mechanics’, sub-contractors’, etc. liens may exist. Those do not have to be recorded. Title policies specifically exclude those matters, unless the customer wants them covered. Mortgagees usually require coverage of those in construction loans. So the title company has to examine all the waivers required by the contractors and sub-contractors on a regular basis as the work progresses.

Much of the land in central Illinois was deeded from the French government initially. Hence, there arose a dispute between those who claimed under the French government and those who claimed through the US government. The French claims were not ignored, and those claims had to be settled.

In some states, the Recorder’s Office is called the Registrar’s Office, but the instruments are not registered. They are recorded. When an instrument is recorded, the instrument is returned to the customer. The Recorder’s Office would make a letter press of the instrument first(photos were a later method). When an instrument is registered, such as in the Torrens system, the instrument is kept by the county. After the great Chicago fire, many of the records in the Cook County Recorder’s Office were burned, but CT&T Co had its own letter presses of the instruments and was able to restore the county’s records.

Other examples of unrecorded matters that affect property are easements and adverse possession. CT&T, and other title companies, normally exclude those matters. They can have an employee make a personal inspection, for an additional premium, if the customer wants those covered.

Under the recording system, yes, but not under Torrens (at least, not the ones I’m familiar with). There’s no adverse possession under Torrens, since that would defeat the basic principle that the land is owned by the person on title.

Contractual easements must be registered on the title to bind future purchasers. (There are statutory easements which need not be registered, because they’re so common and essential - eg the power corp’s statutory easement allowing it to string a power line to the buildings on the property.)