Real Estate Legal Descriptions
Understanding Legal Descriptions in Real Estate
It is important in land development to understand the role of legal descriptions and the different kinds that are commonly used. The first step in creating a legal description is a survey conducted by a licensed surveyor. A legal description is the finished, stamped and recorded product.
The acid test of a valid legal description is that a licensed surveyor can locate and identify the parcel using only the legal description. Title companies and the courts will not recognize documents that reference informal property descriptions like common street addresses. Therefore, formal legal descriptions are necessary for a valid contract, conveying title, or recording any instrument for real property.
Legal descriptions in real estate contracts:
Since a formal legal description is required for a valid contract, it must be accurate. Most Purchase and Sale Agreements contain a fill-in section where the common street address of a property is inserted. This is an informal description only and newbies might conclude that is all they need for a valid contract. Looking more closely however, there will also be a fill-in section where the necessary formal legal description is inserted. Sometimes, formal legal descriptions can be quite lengthy, so they are frequently referenced as an additional Exhibit in the Purchase and Sale Agreement
An example would be as follows:
Legal Description – “Attached, hereto, as Exhibit A”.
Sometimes additional documents are added to a Purchase and Sale Agreement prior to closing. This is typically in the form of an Addendum. Addenda (plural) should have a recital statement that legally ties them into the Purchase and Sale Agreement which, you will remember, has the legal description already attached.
Properly executed Addenda become part of the Purchase and Sale Agreement. A recital might look something like this: “This Addendum, Exhibit B, becomes part of the Purchase and Sale Agreement, dated June 30, 2016, between ABC, the Seller, and XYZ, the Purchaser. All other terms and conditions of the Agreement remain in full effect”. When done correctly, the recital ties the Addenda into the Purchase and Sale Agreement, so it is not necessary to attach the legal description separately (subject to any laws that differ).
Types of Legal descriptions:
If you are in real estate for any amount of time you will need to be familiar with all these forms of legal descriptions created from the survey. The survey will be conducted on site to measure boundaries, lot lines, distances and the area of a property and can also identify encroachments of a neighbor or identify easements.
Lot and Block legal description:
This is a very common form of legal description used for a formal subdivision plat. First, the perimeter of the plat is identified and then the land within the plat is segmented into blocks and lots by the surveyor. The civil engineer submits the blocks and lots for the plat with the county. When the plat is approved and recorded it becomes part of the legal description, and is so referenced.
Example of a Lot & Block legal description:
Lot 2, Block 3, Addison Addition, Pretend County, North Dakota
Metes and Bounds legal description:
Metes is a reference to distance and direction – Bounds references landmarks or monuments. This type of legal description is usually the longest since you start at a “point of beginning, then follow direction, angles and distance to monuments or landmarks, and then return to the point of beginning for closure. The rule in Metes and Bounds is that the property must be fully enclosed, i.e. you must return to the point of beginning.
Example of a Metes and Bounds legal description:
Beginning at the Northeast corner of the Southwest Quarter of the Southwest Quarter of Section 36, Township 26, Range 16, Fictional County, Kansas; thence East along the North line of said Southwest Quarter, a distance of 158.5 feet.
Rectangular Survey (Government Survey) legal description:
This goes way back to the year 1785, but you still commonly see it. It is also known as a government survey since it was created originally as a standard way of describing lands to be acquired by the Federal Government during the westward migration. Rectangular surveys are based on principal meridians and base lines. Principal meridians run north and south, base lines run east and west. The principal meridians and base lines are used to establish and define ranges and townships within.
Example of a Rectangular Survey:
The W1/2 of the SW1/4 of Section 22, Township 14 South, Range 6, East of the 4th. Principal Meridian.
Air Lots -don’t forget about measuring elevation:
If you have read my post “The Difference Between Real Estate and Real Property” you know that ownership of land extends from the earth’s surface downward to the center of the earth and upward in the air to infinity. Therefore, It is possible to survey and create air lots. Think New York city, where a structure on the surface could have separate structures or easements, leased or owned by others in the air above it.
Another use for measuring elevations is in Condominiums where elevations are taken above a defined point or surface. In condominiums a unit is referenced, in part, by the elevation of the floor and ceilings above this fixed point which is called a datum.
Getting the swagger on:
If you want to impress an experienced guy in land development, learn how to read and understand legal descriptions. If you really need to kiss butt, learn how to read and understand construction plans and master CAD, thus completing trifecta of developer ass kissing. Of course I hope most of us are more interested in doing it right by making money with a top-notch project, as opposed to impressing some meaningless idiot. Therefore, take the time and effort to dig deeper and learn how to read and understand legal descriptions. It’s important!
Ask your surveyor, they are always …(alright usually) happy to assist. Some title officers are also very adept. Not only that, there are excellent online tutorials. Practice makes perfect, so don’t be lazy. A parting thought is about a certain project that I developed that used very complex, ½ page long metes and bounds legal descriptions. I estimated that the title company (and they were good) had about ¼ of them wrong during the life cycle of the project at lot closings. A developer that signs agreements and closing paperwork has the obligation and responsibility to the investors to make sure the legal descriptions used for the task are absolutely correct, every single time.