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<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060">In my personal opinion (not binding on my company in any way), this is a big issue that the escrow agents should handle very carefully such that the parties
make the choices to resolve the ambiguity that is presented by the typical P&SA. The P&SA, as noted in prior post, does not provide sufficient guidance for the LPO to know what exceptions to the warranties are “pursuant to the agreement of the parties.” In
my opinion, choosing the “boilerplate” or choosing to specifically list the Schedule B exceptions on the preliminary commitment are both a choice that the LPO should defer for the parties to decide.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060">Consider that the warranties of the statutory warranty deed are different than the title insurance coverage. Note that coverage varies according to the policy
and the particular exceptions listed by a particular title company on the particular commitment. It is not correct that the Schedule B exceptions are the only exceptions to the warranty that may be appropriate based upon that ambiguous P&SA language about
acceptable encumbrances. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060">An example will illustrate that gap. Presume there is a long-standing boundary based upon a neighbor’s fence that is inside of the invisible survey line of
the legal description of the land to be conveyed. Presume the warranty deed given lists only Schedule B exceptions. Normally, the variance between occupation by the fence and the legal description is not disclosed by the public records, so the title company
will not list an exception there. However, the title company may have a general exception that applies to survey matters that are not disclosed in the public records. After the purchase, the neighbor files a quiet title action alleging ownership of a portion
of the land described by that deed. The purchaser tenders that action to the seller, seeking defense and compensation for that portion of the land on the neighbor’s side of the fence. Presume that the purchaser knew about the variance and had no expectation
of possessing on the other side of that fence. Do the warranties apply? Is that consistent with the ambiguous acceptable encumbrances language of the P&SA? Would it be fair and consistent for a seller to have an exception to the warranties for that fence variance?
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060">For those that don’t recognize the facts, see
</span><i><span style="font-size:10.5pt;font-family:"Helvetica","sans-serif";color:#333333;background:white"><a href="http://www.northwestlandlawforum.com/wp-content/uploads/sites/317/2012/01/Edmonson-v.-Pop.opn_.pdf">Edmonson v. Popchoi</a></span></i><span style="font-size:10.5pt;font-family:"Helvetica","sans-serif";color:#333333;background:white">,
172 W2nd. 272 (2011).</span><b><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:#002060"><o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Verdana","sans-serif";color:navy"><o:p> </o:p></span></p>
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