“Now that we’re not in South Carolina anymore, what are you doing to fix it?”
By Chris Burti, Vice President and Senior Legal Counsel, Statewide Title, Inc.
The line between SC and NC was originally surveyed in 1772. This survey was conducted jointly by
surveyors appointed by the governor of each state, and subsequently ratified by both state
legislatures. The original 1772 survey plat shows trees marked every mile, but is devoid of any
reference to bearings and distances and no permanent monuments were set along the line during the
course of this original survey. With marked trees being the only evidence left in the field from the
original survey, it comes as no surprise that modern surveying techniques and new technology have
disclosed substantial variations in the recognized location of the original Boundary.
The Boundary Commissions of North Carolina and South Carolina formed a joint commission to
determine the true location of the Boundary. The process has been under way for eighteen years and
the common boundary has been surveyed using modern technology to determine the correct line.
The result is that the line is, in certain locations, not where it was thought to have been. Properties
thought to have been in SC will now be recognized as properly being in NC and vice versa. States
have the power to negotiate a new boundary, but must have the consent of the U.S. Congress to do
so. Absent such a monumental task, the only alternative to dealing with this issue requires
identifying the true Boundary and then dealing with resulting issues in a way that imposes the least
harm to affected landowners and next, affected governments. It is important to understand, the
Boundary has not ‘moved’ and to keep the issues in focus such terminology should not be used as it
leads to misdirection on the issue, particularly with respect to land title.
This has major ramifications all across the southern boundary of the state, not the least of which is
how to document title on parcels that have been treated as being in one state and are now found to be
located in the other state such as differences in how title passes by operation of law (no antideficiency statute, Tenancy by the Entirety is not recognized, no equivalent N.C.G.S. Section 29-30
marital rights in South Carolina, etc.). Other issues involve the regulatory authority over roads and
highways, utilities (Utility service territories and regulation of water, sewer, electric, telephone and
cable, plants, lines and easements), property taxes (real, personal and business), ABC taxes,
franchise and license taxes, sale of regulated goods (fireworks), etc. In addition to the taxation
issues, there also, mail, police, fire and EMT protection/jurisdiction issues, school districts and instate tuition. Licensing is a major issue, applying to vehicles, drivers, businesses and professions.
one doctor’s office is now recognized as being in a state where he is not licensed and a Boundary
gas station that sells fireworks and alcohol is now not properly licensed and reportedly can’t qualify
under the laws of the estate where it is actually located.
With regard to the issue of establishing the true boundary line, the surveyors were, not surprisingly,
unsuccessful in physically locating any of the old trees, but did find references to some of the
original state line boundary trees in land records of the era after 1772 until about 1850 when the trees
were likely to have still existed. In some cases they were referenced in available private property
surveys conducted after 1772 and were able to establish the original geographic location of 1772
boundary trees by using such instruments and tracing the chain of boundary titles. Representatives
from the boundary commission from both states also agree on the geographic position of the two end
points.
From the work done locating the positions of the boundary trees it became apparent that the original
survey line did not run perfectly straight. This is as would be expected, because the original
surveyors used a magnetic compass for direction which would not reasonably be expected to
produce a straight line along the extensive length of the Boundary. The line as recovered is actually
very close to where it was recognized in many instances, but also significantly different in others
resulting in some Boundary properties only slightly shifting where the line already was recognized
as crossing through the parcel and others shifting the recognized state entirely. The NC/SC Joint
Boundary Line Commission is now working on promulgating legislation for both states to deal with
these issues.
The South Carolina Approach:
The South Carolina Boundary commission at the point of this writing is essentially promulgating
separate drafts of legislation within the respective areas of taxation, title, mortgages, Medicaid,
utilities, recording and in-state tuition. To go into those areas in depth is beyond the scope and space
allowed of this article. Focusing on the title legislation, the South Carolina initial draft limits its
application to the South Carolina counties bordering North Carolina east of Greenville County
(Spartanburg, Cherokee, York, Lancaster, Chesterfield, Marlboro, Dillon and Horry); however, this
is currently in review to include all bordering counties. Upon enactment of South Carolina
legislation approving the clarified boundary, clerks of court and registers of deeds must file a
“Notice of State Boundary Clarification” as specified therein, in the record for all affected lands.
The purpose of the Notice is to alert those checking the title to real property that the property may be
affected by the boundary clarification legislation. The Notice should be properly indexed, including
the correct order of indexing, in the same manner as any instrument conveying or encumbering real
property. Further, the registers of deeds or clerks must provide notices of the statute’s provisions to
attorneys and others using their offices by means they would normally utilize to provide general
notices to users, such as by postings on their web pages.
This differs significantly in North Carolina in that we already have a statute that would permit
anyone to record a certified copy of a document of recorded anywhere including South Carolina, see:
N.C.G.S. Section 47-31. If a recordable instrument has never been recorded in either South Carolina
or North Carolina, the original instrument must be recorded in South Carolina with the appropriate
register or clerk in South Carolina. If the title to the property was derived from an inheritance in
North Carolina and no deed of distribution exists as is required in South Carolina, a certificate of
new recording may be filed in South Carolina which must include information about the derivation
of the title to the property which would be sufficient for someone searching title in North Carolina to
determine the chain of title to the property in North Carolina prior to the recording of the certificate
in South Carolina. A significant limitation implicit in this provision is that the examiner will need to
be fully conversant with North Carolina real property law.
Prior title, liability and casualty insurance policies continue in effect so long as the property owner
maintains any payments and other requirements of those policies. Liability and casualty insurance
policies may not be cancelled due to the boundary clarification absent a minimum of thirty days’
written notice to the owner. Should the insurer be a registered South Carolina insurance carrier, they
may not cancel.
The filing of the certificate is mandatory and is intended to be an aid to filing and research of real
property transactions. Even absent filing a certificate, priority for recording will relate back to the
original documents and priority established in the state from which the recording originally existed.
No new priority is established by the recording a Certificate of New Recording or failing to do so.
With respect to mortgages in the affected counties, the proposed South Carolina draft would permit
or require foreclosure proceedings under the terms of a mortgage on that property to be brought in
the state in which the mortgage was entered applying the law applicable to the mortgage when it was
entered.
The North Carolina Approach:
One important note: As of now, the Local Government Division North Carolina Department of
Revenue has interpreted N.C.G.S. Section 105-287 to permit affected County tax offices to elect, as
several have elected, NOT to pursue omitted taxes, nor issue refunds should a taxpayer come
forward seeking one on affected properties. They are proceeding under N.C.G.S. Section 105-287,
and making the required changes effective for 2014 forward except where the new boundary survey
has already incorporated into a recorded plat prior to the recordation of the full survey as it applies to
affected
counties.
In order to assure appropriate consideration of the title issues affecting land owners an ad hoc
committee was formed by the North Carolina Boundary Commission to consider real property title
issues associated with the planned realignment of the North Carolina/South Carolina boundary as
well as recommending provisions of or drafting a statutory proposal for consideration by the North
Carolina/South Carolina Boundary Commission. This proposal is the work of a diverse group of
individuals composed of representatives from the North Carolina Land Title Association, the North
Carolina Secretary of State’s, the North Carolina Attorney General’s office, the Local Government
Division, North Carolina Department of Revenue, North Carolina Association of Assessing Officers
and the North Carolina Association of Tax Collectors, North Carolina Register of Deeds
Association,
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With respect to drafting North Carolina title legislation, several differing proposals were suggested
early on in the process. Some proposals would have required a chain of title to be searched and the
muniments of title recorded as the esc proposal allows and is already permissible under our current
recording acts. The proposals implied that the instruments of title revealed by a true ‘full’ search will
be incorporated into a recorded chain of title which might prove prohibitively expensive to
landowners. Other proposals suggest a thirty-year search as being sufficient. One problem with this
concept is that it ignores the clear implications of the inadequacy of the Marketable Title Act in
North Carolina as proof of title as opposed to it being an extremely limited statute of repose. Without
discoursing further upon the wisdom or the practicability of using such a remedy, it seems clear to
that most if not virtually all of affected properties will not be urban or highly developed and a 30year chain of title will be totally inadequate as the basis for a ‘satisfactory’ title opinion upon which
title companies can lawfully issue title policies. There are simply far too many easements, covenants,
interests and property rights that are more than likely to exist and not be cut off by a Marketable
Title Act approach.
The realignment of the boundary with our neighboring states has the potential to create very difficult
challenges for the citizens or our state who own properties that will be affected. The purpose of this
draft proposal is to ameliorate, to the extent possible, at least some of those challenges in a manner
that will not be prohibitively costly for those affected citizens. The proposed statue currently on the
table makes legislative findings to support the necessity of remedial legislation and would adopt a
new Article 2 of Chapter 141 of the General Statutes. The new Article incorporates a definitions
section in order to create a uniform terminology with respect to realignment issues. It is the hope of
the ad hoc committee that South Carolina will at least adopt the same definitions so that the issues
may be addressed more consistently across the Boundary.
The proposal essentially employs a three-pronged approach to accomplish this. First, it provides for
the recording by the owner of a Notice of State Boundary Abutter. Secondly, it provides for an
Affidavit of Title of State Boundary Abutter which requires a title examination by a licensed
attorney with suitable experience. Finally, the draft would provide an appeal mechanism for an
aggrieved owner claiming a contrary interest in affected land by the creation of a quasi-judicial
proceeding before a newly created North Carolina Boundary Realignment Hearing Commission.
The “Notice of State Boundary Abutter” may be filed by anyone claiming an interest in affected
lands and the filing only operates as a record notice of the claimed interest for recording act
purposes. In effect, it is just a place holder and does not of itself establish any title contrary to the
true ownership. To discourage continued recording in the erroneous jurisdiction, the statute provides
that such instruments registered after the effective date of a proclamation effecting a will have no
force and effect and do not give notice constructive or actual until properly recorded in the correct
North Carolina County. A model form is promulgated but not required and perjury penalties are
imposed.
The second prong is to provide a mechanism and procedure for creating a prima facie title record
without having to re-record all the instruments (or certified copies) establishing an unbroken chain of
title back to the original grant. To accomplish this, provision is made for recording an attorney’s
opinion on title in the form of an “Affidavit of Title of State Boundary Abutter” that may be relied
upon by good faith purchasers for value. The proposed statute provides for minimum standards of
competency, for disclosure of competing claims, for notice to known claimants and for liability
protection for the certifying attorneys. A model form is promulgated but not required. It would seem
evident that due to Unauthorized Practice of Law issues, a South Carolina attorney can’t certify title
to North Carolina property. However, as the statute would adopt the existing treatment of the
property under the laws of the jurisdiction where it had been mistakenly believed to be located as
controlling, in the case of South Carolina, a South Carolina licensed attorney with substantial real
property experience would be required for an opinion on title to be meaningful. The statute would
permit North Carolina attorneys to rely upon such opinions absent actual knowledge of any
inaccuracies, however and perjury penalties are imposed.
The third prong was drafted with alternative options for the Boundary Commission or Legislature
and would provide a mechanism to resolve title disputes arising from the realignment. One method
designed to expeditiously and affordably resolve such disputes without immediate resort to the
courts, would create a Hearing Commission composed of three person panels of knowledgeable
hearing officers. If adopted, it could serve as an alternative dispute resolution mechanism for all
sorts of title disputes beyond boundary realignment. Assuming that there may be budgetary
impediments to such a system, the draft includes an alternate method by resorting to a stated right to
being a quiet title action. Both options would adopt a reasonable 7-year statute of repose.
One change that the realignment makes necessary will likely have broader application than
documenting a record chain of title. South Carolina makes use of mortgages rather than deeds of
trust as are most commonly used in North Carolina. The North Carolina practice derives from the
old common law doctrines protecting the mortgagor’s equity of redemption and making a
mortgagee’s bidding in the property at foreclosure presumptively invalid. To protect the status quo
with respect to affected lands, it is far simpler to change the doctrine and permit the mortgagee to bin
in at the foreclosure sale. To accomplish this, Chapter 45 would be modified to permit mortgagees to
appoint a trustee who will succeed to all the rights, titles, authority, and duties of the mortgagee
under the terms of the mortgage and the mortgagee will be entitled to bid at a foreclosure sale
without limitation. In addition the Chapter 45 amendment reinforces that a mortgagee may record
the Notice and Affidavit of title provided for in the Chapter 141 amendments. Other changes as are
encompassed in the South Carolina proposal were deemed unnecessary. In North Carolina, the case
law is clear that an unrecorded mortgage or deed of trust may be foreclosed, therefore the
commencement of an action coupled with a filing of a notice of lis pendens and the recording of a
sufficient title affidavit will permit the valid foreclosure of affected property in North Carolina.
The proposed legislation would leave tribal lands unaffected. The most current North Carolina Land
Title Association proposal for North Carolina boundary legislation is now being circulated. While
there will likely be changes in the legislative process, we believe the principal parts will be accepted
and suspect that the hearing commission will be the most likely part to be eliminated. Other concerns
as discussed above will need to be addressed. Most of them will be able to be incorporated in to this
draft in additional sections and may fit within the framework of Chapter 141.
This article is reprinted courtesy of and with permission of Statewide Title, Inc.