Law students are taught to think of title to real estate as a bundle of sticks that can be conveyed to others, with each stick representing one of the many ownership rights to the real estate. For example, one stick might represent mineral interests and allow someone to drill on the land for oil and gas; another stick might stand for an access easement granting the right to build a road across the land, while yet another could represent a lien that permits someone to fore- close on the land to pay a debt.
One of the most important tasks in buying land is to “find who has the sticks.” Does the seller have them all? If not, who? The only way to know is to trace the title back through the decades and even centuries and follow the branches as the “sticks” are conveyed or taken. But that takes lots of time (and money). Instead of tracing the chain of title themselves, buyers typically buy title insurance to insure that the buyer is getting good title. The title insurance company will research the title and issue a title insurance commitment. “Schedule B” of the commitment will list the “sticks” that the seller does not have. Each of the items listed on Schedule B will become exceptions to the coverage under the insurance policy.
It is then up to the buyer to investigate the “sticks” listed on Schedule B, decide if these title defects are acceptable, and determine if there is anything that can be done to mitigate the effects of not having these sticks. The buyer’s investigation should include locating items that can be located on the survey, such as easements, reading and analyzing the effect of the documents that create the title defect, considering available endorsements to the title insurance policy to insure around the risks created by the title defects, and considering ways to get the sticks back, such as releases or amendments to the document creating the title defect.