Category: Title Insurance

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Introduction

A power of attorney (“POA”) can be granted when an individual, referred to as a principal, appoints another individual, known as an agent, to act on his behalf. Usually this occurs when the principal cannot attend or carry out a specific purpose for himself. (“POA’s”) are granted in Illinois under 755 ILCS 45-1-1 et seq.

Types of Powers of Attorney

There are two types of POA:

1. Statutory (“POA’s”), a model form of which is set forth in the Illinois (“POA”) Act; and
2. Non-statutory (“POA’s”), which are all other types.

Statutory Form v. Non-Statutory Form

The difference between the two is that statutory (“POA’s”) can be used after the incapacitation or incompetency of the principal; a non-statutory cannot. However, neither statutory nor non-statutory (“POA’s”) survive the death of the principal.

Statutory (“POA’s”) can be limited in time. A principal can include a termination date or state that they do not want the (“POA”) to survive the incompetency of the principal. A statutory (“POA”) may thus state a beginning and/or end date.

Powers of Attorney and the Elderly

If a (“POA”) is being used for an elderly principal in the mortgage or sale of property, it is important to find out whether the principal is incapacitated or incompetent. There is also a concern about possible elder abuse or fraud. If the principal is incompetent, a title company can only rely on the (“POA”) if it was executed before the principal became incompetent.

Specified Powers

If a (“POA”) is being used for a person’s property, the title company must confirm that the powers granted or described are those for which the (“POA”) is being used. For example, if the principal is taking out a mortgage, the following powers should be permitted to the agent: “borrowing transactions” and “real estate transactions”. The powers granted to the agent must be specific. Any powers not granted can be struck out from the statutory form.

Requirements for a Power of Attorney

Every (“POA”) (statutory and non-statutory) must meet the following requirements:

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“Covenants, conditions, and restrictions” (hereafter CC&Rs) is a generic term for privately-created rules and regulations that frequently govern the use and improvement of real property.  They are a long-time staple of the real estate market, appearing regularly as exceptions to title.

The Basics – CC&Rs Defined

A covenant is an agreement or promise to do or not to do a particular act.  It is created by those words in a deed or other instrument that denote an agreement between the parties to that deed or instrument.

A restriction is a limitation on the use of the land. 

Land developers often utilize covenants and restrictions when subdividing land in order to establish uniform provisions concerning the use of the lots and the character, size, and location of the improvements to be constructed on the lots.  These restrictions are usually called general plan restrictions, and are normally set forth on a plat of subdivision, in the developer’s deeds to the initial lot purchasers, or in a declaration. (While probably not entirely synonymous, the terms “covenant” and “restriction” will be used interchangeably in this article.)

A condition in a deed, on the other hand, is a qualification of the estate granted.  It is a requirement of the conveyance. 

Building lines (also known as building setback lines) create areas of unobstructed light, air, and vision for the benefit of the public and for the benefit of all the owners upon whose property the restricted area is laid out.  They also secure uniformity in the appearance of the buildings, which helps keep property values high.

Building lines are a form of covenant.  A declaration of covenants, conditions, and restrictions containing building lines is a limitation on the use of the land.  The building line limits where the improvements may be placed on the land.  Most building lines are created by a plat of subdivision or in a declaration of CC&Rs.  These are privately created building lines.

Through the zoning power, municipalities and counties may create building lines as well.  These publicly-created building lines on occasion are different from the privately-created setbacks. 

The difference between these two types of setbacks lies in their enforcement.  Private building lines may be enforced by other owners in the subdivision.  Zoning setbacks may be enforced by the municipality or county.

Because building lines are a form of covenant, they will not be discussed separately in the remainder of this article.

By Richard F. Bales
Chicago Title Insurance Company

The Old Days

In the late-eighteenth and early nineteenth centuries, attorneys began hiring abstractors to perform title work.  Abstractors would compile a history of the land, sometimes from the original land patent forward.  (A land patent is a land grant or deed from a sovereign entity.  In Illinois the examiner will sometimes see a land patent from the United States of America for a section of land or more.)  These abstractors would then issue this compiled history, together with an abstractor’s certificate.  The certificate would inform the proposed purchaser and the attorney as to the matters purported to be covered by the abstract.

Abstracts have not been used in the Chicago area for many years. Until a few years ago, though, they were occasionally prepared in the central and southern parts of the state.

But relying on an abstract had its disadvantages.  Consider the case of Watson v. Muirhead, 57 Pa. 161 (1868).   Watson wanted to buy some property in Philadelphia.  He hired Muirhead to abstract the public records.  Muirhead discovered an unsatisfied judgment.  Relying on a previous opinion from a local lawyer who felt that the judgment was not final and that therefore did not affect the land, Muirhead omitted the judgment from his report.

After Watson purchased the land, the judgment creditor successfully enforced his judgment, and Watson lost the property at a judicial sale.  Watson sued Muirhead for his damages.  The court ruled, however, that Muirhead had exercised due care and therefore decided that Muirhead should not be held liable for an error that was not due to his negligence.

It was clear that something better was needed.