Title Matters – Vol. August 2012

As a new service for LAILTA members and subscribers, you can expect an email each month with a short discussion on  matters of interest to the real estate attorney and title agent.  This will be a monthly service, except for the months in which seminars are scheduled.  LAILTA will email you recent cases of interest, notes on legislation and reminders of seldom thought of statutes and rules that affect our day to day work. 

This month’s excerpt is presented by:
Walter L. Comeaux, LAILTA Board Member
2051 Silverside Drive, Suite 160
Baton Rouge, Louisiana 70808
p  225-769-8800
f   225-769-6663

Spillman v. Gasco, Inc (Ct of Appeal, 2nd Circuit) No 47,085-CA

In 2001, the Spillmans purchased a lot in Desoto Parish. The sale contained the following language: “Subject to any restrictions, easements and servitudes of record”. While the act contained no reference to oil, gas, and minerals, there was in fact a prior mineral reservation which presumably left the purchaser unable to lease its’ property located in the Haynesville Shale. The sale was with full warranty of title which the purchaser argued would include the minerals. The seller, of course, argued that the language, “Subject to and restrictions, easements and servitudes of record”, would exclude the minerals from that warranty obligation.

The Court did acknowledge that a mineral servitude is generally considered a nonapparent servitude and that the seller, as required in Civil Code Article 2474, “must clearly express the extent of his obligations arising from the contract, and any obscurity or ambiguity in that expression must be interpreted against the seller.” Nevertheless, the Court found that while the “subject to” language did not inform the seller of any actual “restrictions, easements, or servitudes of record” that encumbered the property, the clause itself was not ambiguous or obscure as prohibited by Article 2474. The court further found, as required by the article, that it expressly limited the sellers warranty, and that it was the purchaser’s duty to search the public records to determine if there were any nonapparent servitudes of record. Consequently, the seller prevailed as the court found that the warranty of title did not extend to the outstanding mineral reservation.

It is noteworthy that the mandated agreement to purchase and sell now required by the Louisiana Real Estate Commission has virtually the same language in its’ contract. I mention this because one must consider the potential liability of the Title Company attorney if he or she recites the same language in the sale and fails to specifically mention the existence of an outstanding mineral reservation notwithstanding the fact that a title examination was done. Would the court have reached the same result?