- Related to practice element 9F1 (to access this link, please login to your Land Trust Alliance The Learning Center account)
Your land trust may have received an expectation for improvement (EFI) related to updating the title investigation for an acquisition within 30 days prior to closing. Remember that, like the initial title investigation, the update must be completed by a title company or attorney.
The most commonly received EFI is:
- For future fee property and conservation easement acquisitions, document the land trust obtains the required title investigation update within 30 days prior to closing
How can a land trust document that it addressed the above EFI?
The renewal application requests both a statement and documentation for how the land trust met each EFI.
Statement: Provide a written description of how the land trust addressed the EFI; describe your efforts as well as your results, including the number of projects completed during the term and how many had updated title investigation. If the land trust implemented new procedures (such as a new project due diligence checklist or process), feel free to describe those as well.
Documentation: This can vary based on the number of projects acquired during the term. Options:
- If only a few, provide the recorded deed and documentation of title update for each.
- If your land trust completed several projects during the term, provide a summary table (see example below), along with an example of one of them: a recorded deed and final title investigation.
Why is updating the title investigation important?
Usually, a land trust conducts a title investigation early in the acquisition process to ensure it knows who owns the property (to make sure the land trust is working with the rightful owner), the correct legal description, and about any encumbrances or other issues that must be addressed. Knowing about problems early in the acquisition can give the parties time to address any issues that may impact the sustainability of the project or the conservation values.
Once the land trust conducts the initial investigation, it can take months or even years before the project closes, so it is critical for the land trust to ensure no additional encumbrances have been placed on the property and there have been no changes in ownership. A land trust could find itself in a difficult situation if a landowner secured a mortgage after the initial investigation and before closing, which could have been addressed if the title was updated or brought current close to closing.
For accreditation, the effective date of the search is the date the title was updated through, not the date the report is communicated to the land trust. (For example, an attorney sends a letter on June 6, 2022 confirming the title was updated for the period of March 1, 2021 (the date of the initial investigation) through June 1, 2022. June 1 would be the title update date.)
There must be documentation of the update, which can include an updated title commitment, a title insurance policy, documentation from an attorney or title examiner that the title investigation was brought current, or written escrow or closing instructions requiring updated title. Unacceptable documentation includes an affidavit signed by the landowner at closing or an update not conducted by an attorney or title company.
More information on EFIs
Disclaimer: The Land Trust Accreditation Commission designed this material to provide information about the subject matter covered, with the understanding that the Commission is not engaged in rendering legal, accounting, tax, or other professional counsel. If a land trust or individual requires legal advice or other expert assistance, they should seek the services of competent professionals.
