Acreage in the Legal Description

You might see a call in a deed or other conveyance that reference acreage. For instance, the call recites “The North 20 acres” or something similar; we know we do not insure acreage and likely, we will raise an exception. However, is that legal description “insurable”? The answer is a very unsatisfying “maybe” and is going to depend on a number of factors.

• First, what’s the historical legal? Has the property been traditionally referred to as the acreage, and is it discernible what is meant? It is fairly easy to discern where there are clear lines. For instance, “the North 20 acres of a 40” is clear, while “the South 5 acres” is not. If there is no logic in the description and there is ambiguity, it can become troubling.

• Is there a prior policy insuring that legal? If there’s a prior owner’s policy out there that insured the legal, it may be enough to justify the continued insurability of the property.

• How much are you insuring? If it is substantial, a survey may be required. A vague legal description on a large deal is a potential recipe for a claim so it is best to avoid such a situation. By contrast, if the land subject to the questionable legal description is nominal, there may be a business reason to permit the legal.

• What is the reference? Is the reference just an innocuous recitation or is it legitimately a call in the legal description? If it is the former, we likely do not have an issue. As to the latter, can the legal description be plotted without reference to the acreage? If it can’t, then it is likely a case that the legal is uninsurable.

Finally, there may be some other transaction-specific detail that could result in the legal not being insured. If you encounter acreage in the legal description, give your First American Underwriter a call. We will let you know if it can be insured or if something else is necessary.

Written by Steve Zablocki, Underwriting Counsel