What are the key things an appraiser should look for in a Preliminary Title Report?

[leasedfee]

Thank you Charles.

For our original poster, sometimes we just can't get a commitment/policy and have to move on. Often a lender has one and it just takes a little pushing to get it. I'd rather review an out of date policy than to have none at all. Sometimes a write-up is just a simple sentence of the document reviewed. Other times it turns into a 2-3 page discussion and analysis.

Fascinating all the things the you discover: like a property being landlocked. Several times it's served as a remind that a property is in a "view plane ordinance" in Denver County. Once I supervised someone where it took him 3 days off and on to get information from the title company to figure out its odd legal description. The policy said it was encumbered by a park easement -- upon review of the easement the property owner couldn't build anything on it -- though the owner could throw a Frisbee or have a picnic. The bank was not happy to receive that appraisal for I believe it was now a REO. An appraiser could've easily sunk him or herself without a policy. .... I heard later that the owner of the bank negotiated with the city to relinquish this easement. It helps to own a bank.

 

[GregoryK]

Good information here from all the responses. Other items that may show are liens and mortgage/financing information which may or may not be germane to your particular assignment. Most often they are not.

I have a related question. How many or how often do other appraisers plot a metes and bounds description to see if there is a significant closure error? I understand that is not necessarily a part of our usual scope of services, except with regards to the actual land area. However, I am finding all too often the legal descriptions and tax records show significantly different land areas. I also find I do this frequently to verify the land area for comparable land sales when they are desribed by a metes and bounds description. But then again, I do a significant amount of litigation work.

 

[Michael S]

Good information here from all the responses. Other items that may show are liens and mortgage/financing information which may or may not be germane to your particular assignment. Most often they are not.

I have a related question. How many or how often do other appraisers plot a metes and bounds description to see if there is a significant closure error? I understand that is not necessarily a part of our usual scope of services, except with regards to the actual land area. However, I am finding all too often the legal descriptions and tax records show significantly different land areas. I also find I do this frequently to verify the land area for comparable land sales when they are desribed by a metes and bounds description. But then again, I do a significant amount of litigation work.

Rare to find metes and bounds here in New Mexico, at least in the cities where we do 90% of our work. We rely on either a copy of the recorded plat or a recent survey. Usually the assessor's information matches up but if not I'll rely on a recorded plat or survey any day. I did come across a plat map that was wrong once. It was a fairly simple shape, all 90 degree angles, but the size listed was wrong. The measurements of all the sides were correct however. The difference was a few thousand square feet but on a 10-acre office park it didn't really matter. Just took a bit of explanation.

 

[leasedfee]

The interest being appraised is fee simple. There is a small restaurant on the ground floor with five years left on the lease. So technically speaking, we could call it a leased fee interest. But 90% of the builiding is owned free and clear of any leases.

It's leased fee. In a tony boutique shopping district of central Denver, a developer wanted to tear down a multi-tenant retail building's large parking ramp to build something ritzy. One of the tenants sued and got an injunction as their lease include the right to have customer parking on the ramp. The court ruled for the tenant. If someone has a leasehold interest of a notable duration, then the property owner rights are constrained and must provide quiet enjoyment to the tenant. Once said tenant's lease expired a decade later or so, both the multi-tenant retail building and its parking ramp could be and were demolished. Until that time, the owner could not enjoy the fee simple bundle of rights. On some other posts I make my argument in detail.

G
How many or how often do other appraisers plot a metes and bounds description to see if there is a significant closure error?

I do it to the extent that the assignment may require. If it is an established area with a generic improvement in conformity with the neighborhood, then I'm less likely to check. It also depends highly on the quality of the information. On two recent assignments dealing with excess land, it was difficult to discern where the parcel ended. Did the land end at the street to include two small platted lots, or did it end before these two small platted lots. The old plat and assessor information was vague. Likewise, in an urban property even the property owner's building manager didn't know where their property line was. I found that it was nearly in the middle of a for-pay parking lot. One could have glibly included the entire for-pay parking lot. If it is a metes and bounds, I usually quickly compare the description and dig further if things don't make sense. I was working on this weird parcel about 700 feet long by 40' to 50'. It was very contentious heading for legal action. Here I walked all the boundaries and dragged a tape (yes, very unscientific) so I'd know approximately where to start looking for surveyor's monuments. I'd then frame the photos to include the boundary market. I my assistant at the time hold the tape 40'-50' out from the fence line to help compose the photographs. I made sure the legal matched up with not only the subject but its neighboring parcel.

When on a site inspection, I keep my eyes open for surveyor's markers or chisels (it can be kinda fun like a scavenger hunt). (fyi, Keep in mind that a surveyor's monument may be a set-aside due to field obstructions or for purposes of orientation, so in and of itself does not establish a corner. But it usually does indicates the corner.)

One more story please. In something that could go to ligation, my employee had made a quick drive-by to photograph the comps. I was going to also drive the comps. One sale had a particularly high price $/sf, which just felt odd. I got out and walked the comp and find a chisel in the sidewalk concluded that a paid advertising billboard was within the most likely property line. Further confirmation with the parties resulted in notable downward adjustment for this income. The comp now made sense. It was a challenging year for me and this other chap as I had to teach an old dog how to do new tricks.

Likewise I make similar discretion in analyzing a title commitment/policy. Sometimes I'm happy without one. Other times it is simply stating the policy #/date and using boiler language. Other times it results in several paragraphs or pages of analysis. One time it resulted in a complete re-start of the scope of the work, resulting in lots of legal research at a law library. Didn't make much money on that project but it was a fascinating experience -- and it tripled my understanding of the legal tests of easements.

Now if I could only convince my dad that I know somethin'.

 

[David M RPRA]

Look at Schedule B-II of your title commitment. That's where all the non-boilerplate (meaning property-specific) exceptions reside. Atleast in the states I work in, which are all in the Intermountain West.

As a reviewer, the property interest appraised tends to be a key weak point in appraisals that I've seen come through my shop. A thorough understanding of the property specific exceptions in Schedule B will allow you avoid that pitfall.

-David
Albuquerque, NM