Untangling Title History Contributes to Smooth Closing of Hotel Sale and Mortgage Assignment

Situation

While under contract to sell its hotel, a property owner realized it had a complicated title issue. Its Albany, New York, hotel was situated on land that originally had been part of a larger tract. Years before this closing that large tract had been subdivided into several parcels with separate deeds. It previously sold one of such subdivided parcels and then merged those remaining into the single, current hotel parcel. The surveyor for the current hotel buyer claimed that there was an error in the legal description on the deed for one of the subdivision parcels, which had been merged into the hotel parcel, creating a cloud on the title.
The owner retained Zeidel & Associates to confirm whether the surveyor had a legitimate issue with the legal description in the public records for the hotel parcel and to draft the documents necessary to correct the legal description on record and to transfer the title of the hotel parcel to the buyer at the closing.

Approach

Zeidel & Associates analyzed several years of recorded deeds and surveys and worked with the hotel buyer’s attorney to understand the seller’s chain of title and confirm the boundaries of the hotel’s land. We discovered that the deed for one of the historic subdivision parcels, comprising a portion of the hotel’s parking area, had a handwritten change on the typed legal description. By comparing the recorded surveys for subdivision parcels with evidence of the boundaries post-merger, we were able to determine that this handwritten change was made in error and to confirm the accurate legal description for this parcel. At our client’s request, we then prepared a correction deed to fix the deficiency in the title.
Our next task was to prepare the deed to transfer the hotel parcel from our client to the buyer. We were faced with a decision as to whether this deed should include customary title warranties for the benefit of the buyer. Normally, a seller is willing to give these warranties to a buyer because it received them from its own seller when it purchased the property. In this case, however, the client had received two deeds, each for a portion of the property, and under the deed with the erroneous handwritten change, it received no such warranties.
Further, when the two portions of the property had been combined, the only documentation consisted of a recorded subdivision map and not a deed, and therefore, there was no historical record of a complete legal description for the entire merged hotel parcel. After further research, our team confirmed that the property depicted on the buyer’s updated survey was the same as the property on the recorded subdivision map. On this basis, the client was comfortable with giving the buyer a warranty deed at the closing, as expected by the buyer.

Result

Zeidel & Associates successfully untangled the land’s chain of title and boundaries. Based on our detailed research and understanding of what an accurate survey and related description should be, we successfully assured the client, hotel buyer, title insurance company and lender that the legal description of the property was accurate and marketable, thereby permitting the transaction to close in a timely manner. Our client appreciated our team’s ability to parse through the historical documentation to identify and resolve the relevant issues so our client could confidently transfer the hotel property to the buyer’s satisfaction without exposing the hotel owner to risk.