VACATED STREET OR ALLEY - INSURING

Transcription

1 VACATED STREET OR ALLEY - INSURING I. If the vacated street or alley has been insured previously, bring forward those exceptions which have not been waived in the usual manner. If the vacated street or alley has not been insured previously and there is no indication whether the applicant wants the vacated public way insured, the applicant should be contacted. In the relatively rare situation when the applicant does not want the vacated street or alley insured, raise the following for the commitment: NOTHING CONTAINED IN THIS COMMITMENT/POLICY SHOULD BE CONSTRUED AS INSURING ANY PART OF THE STREET/ALLEY PURPORTEDLY VACATED BY THE ORDINANCE RECORDED ~ AS DOCUMENT ~. ~ If the applicant does want the vacated street or alley insured, consider whether an additional examination premium would be appropriate, and if so, the applicant should be informed that an additional premium will be charged. II. Verify that the LEGAL DESCRIPTION has been properly drafted. Referring to the ordinance of vacation, ascertain that the public way which has been vacated in fact adjoins the land. Normally, the legal description is drafted as two separate parcels, for example: PARCEL 1: LOT 1 IN HAPPINESS SUBDIVISION... etc. PARCEL 2: THE EAST 1/2 OF THE VACATED ALLEY LYING WEST OF AND ADJOINING SAID LOT 1 IN HAPPINESS SUBDIVISION... etc. 1

2 If, however, the legal description used on the application, prior instruments, etc., indicate that a combined legal description is desired or preferable, a combined legal description may be used. For example: LOT 1 AND THE EAST 1/2 OF THE VACATED ALLEY LYING WEST OF AND ADJOINING SAID LOT 1 IN HAPPINESS SUBDIVISION... etc. Caution must be exercised when drafting legal descriptions for vacated public ways which adjoin unsubdivided, irregularly-shaped, angled, or corner properties. Refer to step VII(B) below for those situations in which half of the vacated public way will not accrue to the adjoining land. A company underwriter should be consulted if asked to insure a vacated public way by itself, without reference to an adjoining legal description. III. IV. Consider the need to have the property visually inspected to determine current use and possession. Verify that the vacated public way is being assessed (check the tax legal, tax or Sidwell maps, etc.), that the proper tax number(s) have been searched and that the proper "affects" language, if any, has been inputted. If the vacated public way remains unassessed, raise the following exception: THE FOLLOWING DESCRIBED PORTION OF THE LAND APPARENTLY IS NOT ASSESSED FOR GENERAL REAL ESTATE TAXES FOR THE YEAR(S) ~. V. Verify that the search covers specific conveyances of the street or alley at any time. VI. If the vacation occurred prior to October 3, 1969, verify that the search certifies that there are no metes and bounds conveyances of the property abutting the vacated street or alley, except as shown. 2

3 VII. Examine a copy of the applicable plats of subdivision/resubdivision/ dedication. (A) Verify that the instrument which dedicated the street or alley did not contain any special provision or condition regarding the devolution of title upon a vacation, e.g., a provision whereby title reverts to the subdivider upon vacation. Such a reverter provision may be ignored if the plat was over 40 years old when the vacation took place. 765 ILCS 330/4 (effective July 8, 1959) provides that possibilities of reverter shall not be valid for longer than 40 years from the date of the creation of the possibility of reverter. If the public way was created by other than a subdivision or a dedication (that is, by prescription or a condemnation proceeding), a company underwriter should be consulted. (B) Examine the plat to review the legal description for accuracy and to determine the location and description of that part of the street or alley which would accrue to the adjoining property being examined. Normally, one-half of the vacated public way accrues to the adjoining property. Be careful, however, in the following situations which result in different effects on title: (1) Vacated public ways on the edge of a subdivision. (2) Vacated public ways adjoining railroad property. (3) Vacated public ways adjoining a waterway or other natural boundary. If you encounter any of these situations, please consult a company underwriter. VIII. (INTENTIONALLY LEFT BLANK) IX. Raise the following: 3

4 RIGHTS OF THE PUBLIC AND QUASI-PUBLIC UTILITIES, IF ANY, IN SAID VACATED ~ FOR MAINTENANCE THEREIN OF POLES, CONDUITS, SEWERS AND OTHER FACILITIES. ~ X. Examine the ordinance of vacation. (A) Verify that the ordinance has been recorded. If the ordinance has been passed but is not yet recorded, raise an exception requesting its recordation. If the ordinance has not yet been passed (that is, if the customer has requested a commitment to cover a public way which has not yet been vacated), or if it is over 40 years old and has not been recorded, consult with an underwriter of the company. (B) Determine on what date the ordinance was effective. As discussed below, this date may be important in determining the identity of the current title-holder. (C) Verify that the ordinance: (1) Contains a statement that the "public interest" will be served by the vacation; and (2) Has been certified. The certification must state that the ordinance was approved by at least 3/4 of the aldermen, councilmen, trustees (if in incorporated areas) or commissioners (if in unincorporated areas), etc., then holding office. Note: 65 ILCS 5/ provides: No ordinance shall be passed vacating any street or alley under a municipality's jurisdiction and within an unincorporated area without notice thereof and a hearing thereon. At least 15 days prior to such a hearing, notice of its time, place and subject matter shall be published in a newspaper of general circulation within the unincorporated area which the street or alley proposed for vacation serves. At the hearing all interested persons shall be heard concerning the proposal for vacation. 4

5 (D) Raise an exception for any easements, restrictions, conditions, etc., which may be in the ordinance. For example: EASEMENTS IN FAVOR OF PUBLIC UTILITIES, AS RESERVED BY THE ORDINANCE OF VACATION RECORDED ~ AS DOCUMENT ~. (AFFECTS PARCEL ~) - or - (AFFECTS THAT PORTION OF THE LAND LYING IN VACATED ~ AFORESAID) (1) Often an ordinance of vacation states that it is contingent upon the payment of compensation to the municipality by the adjoining owners or a payment to defray the cost of removing curbs, etc. If a receipt by the municipality for the payment has not been recorded with the ordinance (or is not otherwise in the file), an exception should be raised requesting that proof of the payment be submitted. (2) If the ordinance provides that it is contingent upon the dedication of a new street or alley, the examiner must verify that such subsequent dedication has occurred and that the newly dedicated street or alley has been accepted (that is, is in fact open and used). (3) If the ordinance provides that it is contingent upon being recorded within a certain number of days after its passage and it was not recorded in a timely fashion, consult with a company underwriter. XI. Determine the identity of the record titleholders to the adjoining land as of the effective date of the vacation. The title to the vacated street or alley normally passes to the party(ies) who held title to the adjoining property on the effective date of the vacation. XII. Consider the effect on the title-finding regarding: (1) conveyances which may have expressly excluded the street or alley; (2) conveyances which deeded the adjoining property by using a metes and bounds description (which may have evidenced an intent to retain an interest in the street or alley); and (3) the effect of 765 ILCS 5/7a (Section 7a of the Conveyances 5

6 Act), by which a deed made after October 3, 1969 must specifically exclude the adjoining public ways or it is deemed to include them. XIII. If the current titleholder of the adjoining property is someone other than the record owner of the vacated public way, it may be necessary to raise the possible interest of the current titleholder of the adjoining property in and to the vacated public way as an exception: BY ORDINANCE RECORDED ~ AS DOCUMENT ~, THE STREET/ALLEY DESCRIBED IN SCHEDULE A WAS VACATED. WE FIND NO SPECIFIC CONVEYANCE OF RECORD OF THE VACATED PROPERTY SINCE THE RECORDING OF SAID ORDINANCE. RELATIVE THERETO, WE NOTE THE POSSIBLE INTEREST OF ~, THE OWNER(S) OF THE ADJOINING PROPERTY, IN SAID VACATED PROPERTY AND OF ALL PARTIES CLAIMING THEREUNDER. (AFFECTS ~ ) ~ XIV. Verify that exceptions relating to mortgages, trust deeds and other encumbrances which by their explicit language purport to affect only the adjoining property have been modified to add, for example: (AFFECTS PARCEL ~, MAY AFFECT PARCEL ~) - or - (AFFECTS LOT 1, MAY AFFECT SAID ADJOINING VACATED ALLEY) XV. Relative to inspection, raise exceptions for any easements, adverse rights, etc., which may be apparent. Note: A primary concern lies in determining that the public way has in fact been closed off from the public (usually by means of a fence or other barrier), for a considerable period of time (usually six months or more). 6

7 INSURING VACATED RIGHTS-OF-WAY AFTER CHAVDA v. WOLAK Public Act (effective July 23, 1997) amended the Illinois Municipal Code. As amended, 65 ILCS 5/ provides as follows: [An ordinance of vacation] may provide that it shall not become effective until the owners of all property or the owner or owners of a particular parcel or parcels of property abutting upon the street or alley, or part thereof so vacated, shall pay compensation... in an amount which... shall be the fair market value of the property acquired or of the benefits which will accrue to them by reason of that vacation.... If the ordinance provides that only the owner or owners of one particular parcel of abutting property shall make payment, then the owner or owners of the particular parcel shall acquire title to the entire vacated street or alley, or the part thereof vacated. (Italicized portions were added by the amendment.) Section states that the vacation may be predicated on the owner or owners of the abutting land paying compensation for the vacated street or alley. In this event, the ordinance should also include a statement, as set forth in the statute, indicating that in the judgment of the corporate authorities, the compensation amount is the fair market value of the property acquired or of the benefits that will accrue to said owner or owners by reason of the vacation. Examiners should require evidence that any required compensation has been paid and that the municipality has accepted the payment. In addition, the ordinance should set forth the specific devolution of title of the vacated property, and it should indicate that the vacation is pursuant to section As previously noted, section states that if the ordinance provides that only the owner or owners of one particular parcel of abutting property shall make payment, then the owner or owners of the particular parcel shall acquire title to the entire vacated street or alley, or the part thereof vacated. This can result in creative right-of-way vacations not heretofore contemplated under earlier statutory law or case law. For example: Assume that the road to be vacated is an east-west right-of-way that is one hundred feet long and in the middle of a subdivision. A and B each own fiftyfoot-wide lots on the north side of the road, and C and D each own fifty-foot-wide lots on the south side. If this road were vacated by a pre-chavda ordinance, all four parties would own equal shares of the road. But an ordinance that is drafted pursuant to amended Section and the Chavda decision might provide that 7

8 upon vacation, A and B will acquire appurtenant interests in the entire width of the street. Or the ordinance might award C all of the vacated right-of-way. The statute provides that no ordinance shall be passed vacating any street or alley under a municipality s jurisdiction and within an unincorporated area without notice thereof and a hearing thereon. At least 15 days prior to such a hearing, notice of its time, place and subject matter shall be published in a newspaper of general circulation within the unincorporated area which the street or alley proposed for vacation serves. At the hearing all interested persons shall be heard concerning the proposal for vacation. Before insuring title to less than all abutting property owners, the examiner should make an inquiry as to the nature of any opposition to the ordinance. Not wanting to defend a claim, it is possible that the Company may decline to insure title through a creative section vacation in an unincorporated area if adjoining landowners strongly object. Municipal meetings are governed by the Open Meetings Act. This Act requires that an agenda for each regular meeting be posted at the principal office of the public body and at the location where the meeting is to be held at least forty-eight hours in advance of the meeting. The Act also mandates that all public bodies keep written minutes of these meetings and that the minutes include a summary of discussion on all matters proposed, deliberated, or decided. Before insuring title to an atypical Chavda vacation, the examiner should ask for a copy of the minutes for the meeting at which the vacation ordinance was passed. By reviewing the minutes, the examiner will be able to determine the scope of any opposition to the right-of-way vacation. If the minutes indicate that meeting attendees were opposed to the ordinance, the examiner should consult an underwriter. The Company may decide not to insure the vacation. At least one municipality has asked the Company to insure the Chavda vacation of an alley with no Section notice being given. In this instance the city argued that it was empowered to approve such an ordinance because it was a home rule municipality. While at first it might appear that this ordinance would deprive the adjoining owner of property without due process of law (thereby possibly being arbitrary, capricious, or unreasonable), note that Section does not require that a municipality publish notice of any proposed right-of-way vacation. The Company should be willing to insure title through any municipal 8

9 vacation ordinance as long as we are furnished evidence that notice was furnished pursuant to the Open Meetings Act. This statute provides that a municipal vacation ordinance shall be passed by the affirmative vote of at least three-fourths of the aldermen, trustees, or commissioners and that this vote shall be taken by ayes and noes and entered on the records of the corporate authorities. But the statute does not provide for the memorialization of any abstaining or absent officials. This could prove troublesome to the examiner. For example: Assume that a municipality has eight aldermen. At least three-fourths, or six, of these aldermen would have to approve a section vacation ordinance. But if two aldermen were absent or abstained from voting, an affirmative vote of all remaining six would be needed to pass the ordinance. If the corporate record merely indicates five aye votes and one no vote, one might erroneously assume that the ordinance passed muster. The examiner must verify the number, if any, of the absentee or abstaining officials prior to insuring title to vacated land pursuant to section Until an abutting owner takes exclusive possession of the vacated street or alley, the examiner should raise the following exception on the commitment or policy: Rights of the municipality, the State of Illinois, the public, and adjoining owners in and to vacated. Indicia of such possession would include the fencing in of the vacated land, the construction of improvements on the land, or the removal of the pavement or other surface of the vacated street or alley by the new owner. With a Chavda-type vacation in which less than all adjoining owners take title to the vacated land, the question of possession is even more crucial. Finally, the examiner should remember that any conditions set forth in the vacation ordinance will be exceptions to title until the conditions have been satisfied. Also, the ordinance may include provisions for the reservation of utility facilities within the vacated property. Any such reservation should also appear as a Schedule B exception in the title insurance commitment and policy. 9

10 Guidelines for Examining Chavda v. Wolak Right-of-Way Vacations Order No. Does the right-of-way to be vacated arise by virtue of a plat of subdivision? If not (e.g., the right-of-way was created in an assessment plat), an underwriter should be consulted. If the right-of-way to be vacated arises by virtue of a plat of subdivision, but the right of way is at the edge of the subdivision or next to a body of water or railroad tracks, an underwriter should be consulted. The ordinance should set forth how title to the vacated right-of-way is to vest after vacation. The ordinance should include a statement that the vacation is pursuant to Section of the Illinois Municipal Code (65 ILCS 5/ ). If the vacation ordinance provides that compensation is to be paid by only one abutting owner, then title to the vacated street or alley must vest fully in that one abutting owner. If the vacation ordinance provides that compensation is to be paid by more than one but less than all abutting owners, then title to the vacated street or alley must vest fully in these abutting owners. If the vacation ordinance provides that compensation is to be paid by all abutting owners, then title to the vacated street or alley must vest fully in all these adjoining owners. If the vacation ordinance provides that no compensation is required, then title to the vacated street or alley must vest fully in all abutting owners. If the vacation ordinance requires the payment of compensation, the ordinance should include a statement indicating that in the judgment of the corporate authorities, the compensation amount is the fair market value of the property acquired or of the benefits that will accrue to said owner or owners by reason of the vacation. If the vacation ordinance requires the payment of compensation, we should be furnished evidence that the compensation has been paid and that the municipality has accepted the payment. If the right-of-way being vacated by the municipality is inside the city limits, ask for a copy of the minutes of the municipal meeting at which the vacation ordinance was passed. If the minutes indicate that meeting attendees were opposed to the ordinance, and we are asked to insure title in less than all abutting owners, an underwriter should be consulted. Verify that an agenda for the meeting was posted at the principal office of the municipality and at the location where the meeting was held at least forty-eight hours prior to the meeting. Verify that the proposed right-of-way vacation was on the agenda. If the right-of-way being vacated by the municipality is outside of the city limits, is the property still within one and one-half miles of the corporate boundaries? Ask for a copy of the minutes of the municipal meeting at which the vacation ordinance was passed. If the minutes indicate that meeting attendees were opposed to the ordinance, and we are asked to insure title in less than all abutting owners, an underwriter should be consulted. Also, notice of the meeting must be published in a newspaper of general circulation within the unincorporated area which the street or alley serves. Verify that notice of the meeting was published at least fifteen days prior to the meeting date. Verify that the notice indicated that the proposed right-of-way vacation was to be discussed at the meeting. 10

11 Three-fourths of the municipal alderman, trustees, or commissioners must pass the vacation ordinance. Were there any absentee or abstaining officials who did not take part in the vote on the ordinance? Their number must be included in order to determine if at least three-fourths of the officials voted in favor of the ordinance. Any conditions set forth in the vacation ordinance will be exceptions to title until the conditions have been satisfied. Does the ordinance include any provisions for the reservation of utility facilities within the vacated property? Even if the ordinance is silent concerning this matter, raise an appropriate exception for these utilities until furnished affirmative evidence (such as utility letters) that there are no such utilities. Has the new owner taken exclusive possession of the vacated street or alley? (For example, enclosing or fencing in the vacated land, constructing improvements on the land, or removing the pavement or surface of the right-of-way.) Continue to raise an exception relative to the rights of adjoining owners in and to the vacated street or alley until we are furnished evidence that the new owner has taken possession of the right-of-way, thus evidencing that the adjoining owner or owners have relinquished their rights to this land. 11