Easements 101

To download the article, click HERE.

Easements may burden or benefit a parcel of real estate. In either event, easements may affect the value and use of the land. For this reason, it is important to consider whether the property is either burdened or benefitted by an easement. This article will discuss the different types of easements and the ways in which easements can be created and terminated; it will also discuss title company requirements for insuring easements.

An easement is a right acquired by a landowner to use the land of another for a special purpose.  This right may be for such purposes as access, driveway, party wall, drainage, public utilities and other purposes. Easements are divided into 2 general categories: an appurtenant easement or an easement in gross.

An appurtenant easement operates for the benefit of one tract of land and burdens another, usually adjoining tract. Thus, there must be two tracts of land owned by different parties, that is, a separation of title. The benefitted parcel is referred to as the dominant estate (or dominant tenement), and the burdened parcel is referred to as the servient estate (or servient tenement). Because an appurtenant easement is regarded as being so closely connected to the dominant tenement, it is regarded as “running with the land”. This means that once the easement has been properly created, the easement will pass upon a conveyance of the dominant tenement to the grantee of the deed, even if the deed does not mention it.

An easement in gross does not specifically benefit another parcel of land. It runs in favor of a party who does not own the property adjoining the easement. A utility easement given to a utility company such as the phone, gas, cable or electrical company is the most common type of easement in gross. Easements in gross may not be considered interests in real property; they are generally not insured by title companies.

Read More

Understanding the UCCPlus Insurance Policy

An interview with Gary Zimmerman, Senior Vice President and Chief Underwriting Counsel of Fidelity National Title Group’s UCCPlus Division

A UCCPlus Insurance Policy (UCCPlus Policy) is a title insurance product that insures most personal property taken as collateral for a loan. Similar to a lender’s real estate title insurance policy that insures a mortgage or deed of trust is a first priority lien on real property, a lender’s UCCPlus Policy insures that the personal property pledged to the lender as collateral for a loan is a first priority lien. The UCCPlus Policy shifts all of the risk from the insured lender to the title company by insuring proper validity, enforceability, attachment, perfection and priority relating to the lender’s security interest or lien on the personal property. Secured lenders value this as a risk management tool that decreases their operational risk by shifting the documentation, perfection and fraud risk to the title company. Leading commercial law firms and lending institutions recognize the use of a UCCPlus Policy as a best practice.

Are there other ways that a UCCPlus Policy shifts risk?

Yes. A UCCPlus Policy shifts the risk from the insured lender to the title insurance company for loan documentation defects, fraud and forgery, search office errors and omissions, indexing inconsistencies and financing statement irregularities and defects. The attorneys and paralegals who underwrite and issue the UCCPlus Policy are highly-trained professionals with commercial transaction expertise as well as specific knowledge of Articles 8 and 9 of the Uniform Commercial Code.

Read More

Karlen’s Korner Special Edition: A Revised Limited Liability Act

By Douglas M. Karlen, Regional Counsel, Chicago Title Insurance Company

On July 28, 2016, Governor Rauner signed into law a massive re-write of the Limited Liability Company Act, 805 ILCS 180/1-1 et seq. See Public Act 99-637 (HB 4361), effective July 1, 2017.  This comprehensive revision of the Limited Liability Company Act (LLC Act) is based in large part on the Revised Uniform Limited Liability Company Act, a model act written by the National Conference of Commissioners on Uniform State Laws.  Although P.A. 99-637 amends many sections of the LLC Act merely to match the language of the model act, the new law makes some substantive changes and adds some new concepts.  Attorneys who intend to form limited liability companies and draft operating agreements and related documents should study all 112 pages of P.A. 99-637.  For a starting point in analyzing the new law, practitioners may consult M. Hector, Proposed legislation makes sweeping changes to the Illinois LLC Act, July 2016 Illinois Bar Journal, Vol. 104., pp. 12-13.  The following provisions of the new law should be of interest to real estate practitioners.

Read More