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QUIET TITLE ACTIONS Prepared by: Dana
Garrett Diment Presented by: Carol
V. Clark Presented
at the year end meeting © Copyright. Diment. 1997 - 2000. CLEARING
THE CLOUDS: TABLE OF CONTENTS I.
Introduction
Various methods have been employed in Georgia to remove clouds to land titles. Most actions traditionally have been brought as "conventional" quia timet actions. Originally they were brought under common law and later under a codified quia timet statute contained in the original Code of Georgia of 1863. Because of inadequacies with conventional quia timet actions, other methods of eliminating clouds to title have developed. These methods include the Land Registration Act of 1917 - a system of judicial title registration. While land registration remains a viable method of clearing clouds to title, its use has declined rapidly in recent years in Georgia. Land registration has now been largely replaced by the most recently developed method for clearing titles, the Quiet Title Act of 1966. Pindar, Georgia Real Estate Law and Procedure, § 24-2 (3d ed. 1986). An additional method of clearing clouds to title may be used in situations involving a life estate and a contingent remainder. This method, sometimes referred to as virtual representation, warrants some attention as it is very useful given appropriate facts. Generally, suits to quiet title are referred to as actions quia timet, which comes from the Latin for "because he fears or apprehends." Black's Law Dictionary (5th ed. 1979). In Georgia, there are two statutory types of quia timet actions, "conventional quia timet" and "quia timet against all the world". "Qui timet against all the world" is authorized by the Quiet Title Act of 1966 which will be discussed in detail later in this paper. Conventional quia timet actions are governed by O.C.G.A. § 23-3-40, et seq. A conventional quia timet proceeding is an equitable action for the purpose of "causing to be delivered and canceled any instrument which has answered the object of its creation or any forged or other iniquitous deed or other writing which, though not enforced at the time, either casts a cloud over the complainants' title or otherwise subjects him to future liability or present annoyance, and the cancellation of which is necessary perfect protection." O.C.G.A. § 23-3-40. An essential element of a conventional quia timet action is that the party requesting the relief must specifically identify the instrument which is creating the cloud to title. O.C.G.A. § 23-2-42. Relief is granted in those cases where the invalidity of the instrument creating the cloud appears on the instrument's face or is proven by outside facts. O.C.G.A. § 23-3-41. The usefulness of the conventional quia timet action is limited by the Georgia Supreme Court's definition of what creates a cloud to title. In Thompson v. Etowah Iron, 91 Ga. 538 (1893), the court held that in order for an instrument conveying real estate to constitute a "cloud upon title," and therefore to be subject to a conventional quia timet proceeding, the instrument must constitute an apparent title. This decision is the basis for O.C.G.A. § 23-3-42, which specifies when an instrument constitutes a cloud to title. The statute provides that:
Examples of instruments that courts in Georgia have found to constitute clouds to title include a lease which had expired, a contractor's claim of lien, and an execution issued upon a judgment already satisfied. Pindar § 25-18. Another limitation on the conventional quia timet action is that the party seeking to clear the cloud to title must be in, and prove, actual possession of the subject property. Hale v. Turner, 183 Ga. 593 (1936). In Hale, the court held that where the defendant is in possession of the disputed property, the party claiming title has an adequate remedy at law in that he can bring an action for ejectment. Since the plaintiff had an adequate remedy at law, he was not allowed to bring a conventional quia timet action. III. Georgia's Land Registration System The Georgia Land Registration Act of 1917, O.C.G.A. § 44-2-40 et seq., was enacted to provide a simple and inexpensive method for evidencing title to land. Although the Quiet Title Act of 1966 has largely supplanted land registration, some mention of the land registration system should be made because it remains a viable method for clearing clouds to title. Basically, land registration is an "action in rem" against "all the world" in which a person claiming title to land petitions the court for a decree authorizing the registration of title to the subject land. The decree also vests title to the land with the petitioner. O.C.G.A. § 44-2-61. The complicated nature of an action to register land partially explains why land registration has been supplanted by the Quiet Title Act of 1966 as the preferred method for clearing clouds to title. The following is a brief summary of the complex procedures involved in bringing a land registration action:
Upon receiving the petition for registration, the superior court refers the matter to an examiner appointed by the court. The examiner reviews the petition and the survey of the subject land, conducts a hearing, and then prepares a report setting forth his decision concerning the state of the title to the land. Within twenty days of receiving the examiner's report, the superior court judge issues a decree. The petitioner or anyone contesting the petitioner's rights has the right to take exception to the examiner's decision and request a jury trial in the superior court prior to the superior court's issuing its final decree. Following the issuance of the final decree or the conclusion of a jury trial, the clerk of the superior court issues a certificate of registration which is conclusive as to all parties. Land registration to establish title has never been widely used to establish title in Georgia. It has been suggested that the system never gained popularity because of its complexity and its unfamiliarity to most attorneys. Additionally, there has been reluctance on the part of attorneys to open up title to attack by potential adverse claimants with a published notice "to whom it may concern." Pindar § 25-10. Perhaps the biggest disadvantage of land registration is that ownership is conclusively established by physical possession of the land registration certificate. If the certificate is lost, an elaborate procedure to reissue the certificate must be followed. Pindar § 24-4. Because of inadequacies with the other methods cuff clearing clouds to title, the Georgia Legislature passed the Quiet Title Act of 1966 (the "Act"), which authorizes claimants to bring an action known as "quia timet against all the world." The purpose of the act is to:
The Act offers several advantages over land registration and conventional quia timet actions and has become the primary method of clearing clouds to title in Georgia. The action binds "all the world" without the issuance of the all important title certificate required by the land registration act and without the publication of notice, unless personal service cannot be effected. Additionally, unlike in Conventional quia timet actions, specific instruments creating clouds to title need not be identified. The requirements for using the Act are as follows:
The following are the basic procedural steps for utilizing the Act:
With the petition, there must also be filed: 1) a plat of survey of the land, 2) a copy of the immediate instrument or instruments, if any, upon which petitioner's interest is based, and 3 ) a copy of the immediate instrument or instruments of record or otherwise known to petitioner, if any, upon which any person might base an interest in the land adverse to the petitioner. O.C.G.A. § 23-3-62. It has been held that this provision is limited to requiring the petitioner to include with his petition the most immediate instrument upon which his interest is based. Capers v. Camp, 244 Ga 7 (1979).
The Act has been used in a number of different situations to solve land title problems. The following cases are illustrative of the various situations in which the Act can be used: 1) Removal it Easements. In Wiggins v. Southern Bell Telephone & Telegraph Co., 245 Ga, 256 (1980), the Act was used successfully to eliminate a road easement claimed by a local government and to eliminate a utility easement held by a telephone company. 2) Title By Adverse Possession. In Walters v. McNiece, 257 Ga. 440 (1986), the Georgia Supreme Court affirmed a decision under the Act holding that the petitioner had acquired title to property by adverse possession. 3) Boundary Line Dispute. In Middleton v. Robinson, 241 Ga. 174 (1978), the court held that the location of a boundary line was a question of title to land, within the contemplation of the Act. In certain instances, clouds to title may arise from contingent remainders in favor of unborn or minor persons. Georgia courts have acted to clear such clouds pursuant to the doctrine of virtual representation. The doctrine of virtual representation permits a court of equity to step in and extinguish contingent remainders to permit a purchaser of property to obtain marketable title. Pindar § 7-43. The jurisdiction of equity courts to extinguish such contingent remainders is now unchallenged:
The doctrine of virtual representation first appeared in Georgia in the case of Cooney v. Walton, 151 Ga. 195 (1921). Cooney is also illustrative of the factual situations in which the doctrine may be used. In Cooney, the plaintlff's deceased husband bequeathed to the plaintiff a life estate in certain commercial real property. The deceased husband's will stated that at the plaintiff's death, the remainder was to pass to the deceased husband's "then living issue," and if none, to several named relatives. Because the property was unproductive and in need of expensive repairs, the plaintiff decided to sell the property and to put the proceeds in trust for the benefit of the remaindermen. A contract was entered into with the prospective purchaser. The terms of the contract required that prior to the closing, title to the property would be made marketable and the cloud created by the existence of contingent remaindermen would eliminated. The plaintiff then petitioned the superior court for a decree approving the sale and confirming the marketability of the title. The superior court granted the decree and extinguished the rights of all unborn remaindermen . The purchaser questioned the validity of the decree and refused to consummate the transaction. Consequently, the seller filed suit for specific performance. The Georgia Supreme Court upheld the superior court's granting of the decree. The court stated that generally a court cannot find against a man in his absence. Where, however, strict adherence to this rule would deny justice, the court may use its equitable powers to extinguish the estate held by the unborn remaindermen. Id. at 201. Since in Cooney, all living remaindermen were before the court, and all potential additional remaindermen would be the heirs of the remaindermen before the court, the living remaindermen were the "virtual representatives" of the unborn. Because all the living remaindermen desired that the property be sold, and the court viewed the living remaindermen as the virtual representatives of the unborn, the court approved the sale. The factual scenario which would support using the doctrine of virtual representation is as follows:
The following is a brief procedural overview of the doctrine:
Courts have found that valid equitable reasons for sale exist where the land cannot be used in an economically beneficial manner by the owner of the life estate. In Kennedy v. Durham, supra, the court found that where property is vacant and incapable of being farmed or of producing any income for the payment of taxes, a valid equitable reason existed for the sale of the land. Similarly, the sale of land to support a widow and to provide for the education of the testator's children was a sufficient equitable reason for the sale of property. See, e.g., Rakestraw v. Rakestraw, 70 Ga. 806 (1883).
After service on all parties, the court conducts a hearing in which the court may hear evidence. The guardian ad litem for the unborn and minor contingent remaindermen is expected to make a recommendation based on his investigation of the merits of the case. Pindar § 7-46. At the conclusion of the hearing, the court may enter an order authorizing the sale of the subject property in fee simple. If the terms of the sale have previously been negotiated, the court may enter an order simply confirming the sale. Pindar § 7-47. In either case, the order must include a provision requiring the reinvestment of sale proceeds for the benefit of all interested parties. The order may include a provision allowing the value of the life estate to be paid to the life tenant, with the remaining proceeds being invested for the benefit of the remaindermen. Pindar § 7-46. In 1984, the Georgia Legislature enacted a statute, O.C.G.A § 44-6-90, that is closely related to the doctrine of virtual representation. The statute authorizes superior court judges to hear evidence as to the likelihood of a class of contingent remaindermen expanding. If the evidence indicates that the class will not expand, the judge may close the class. The judge may then make a determination as to the marketability of the subject property and allow the property to be sold. Notice: The information presented herein is the opinion of the author and does not necessarily reflect the opinions of the management or staff of Shapiro & Swertfeger, LLP. These articles are not intended to provide specific legal or tax advice, but are intended only to generally familiarize the reader with the subject matter. Matters of specific legal or tax nature should be discussed with a competent attorney or tax professional specializing in that particular field or practice. Allowing the authors and/or their companies to post articles herein and the provision of return links to them, does not constitute an endorsement or recommendation of their products or services. The return links are provided only as an inducement to the author to post what we feel to be useful information on our website. The use of this page is subject to the Contract of Terms.
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