by Danny Duerdoth and John Trepel, ATG Law Clerks

The purpose of the Marketable Title Act is to simplify land title marketability and render harmless ancient defects in title. This article deals with two provisions of the Marketable Title Act, 735 ILCS 5/13-114 and 5/13-118, that deal with time limitations on bringing a claim to real estate.

735 ILCS 5/13-114 generally states that no deed or other documentation is admissible evidence against real estate under a claim or color of title if it is administered, executed, dated, delivered, recorded or entered into more than 75 years prior to the time it is offered. 735 ILCS 5/13-114. If, however, a claim, particularly described incorporating the ancient document, is recorded within three years of expiration of the 75-year period, the document can be used for an additional 10 years. Id. The 75-year period can also be extended if the claimant was a minor or under legal disability during the 75-years. Id. To enjoy the protection of the statute, there are two key elements that must be satisfied: (1) the litigant must be in possession of the property and (2) the possession must be under claim or color of title. Diaz v. Home Fed. S&L Ass'n, 337 Ill. App. 3d 722, 272 Ill. Dec. 199, 786 N.E.2d 1033, 2002 Ill. App. LEXIS 921 (Ill. App. Ct. 2d Dist. 2002).

735 ILCS 5/13-118 states that no action can be brought that is based on a claim against real estate arising more than 40-years prior. 735 ILCS 5/13-118. A claimant can extend this period if, within the 40-years, he or she records a verified statement describing the real estate, the nature and extent of the right of interest claimed, and the facts upon which the claim is based. Id. Minors and people with disabilities may also extend the 40-year period. Id. Claimants in possession of real estate by adverse possession are not entitled to the protection of the statute. Id.

735 ILCS 5/13-114 Case Summary

Possession

Illinois courts have considered possession to be an essential issue to determine if the 75-year limitation of the Marketable Title Act applies. In Diaz v. Home Fed. Sav. & Loan Ass'n of Elgin, an Illinois appellate court considered if the owners of a restaurant could rely on a deed more than 75-years old in a quiet title action against a bank regarding title to an abandoned railroad right-of-way which the restaurant was using. Diaz v. Home Fed. S&L Ass'n, 337 Ill. App. 3d 722, 272 Ill. Dec. 199, 786 N.E.2d 1033, 2002 Ill. App. LEXIS 921 (Ill. App. Ct. 2d Dist. 2002). The bank sought to apply 5/13-114 to preclude the restaurant owners from tracing their deed back more than 75-years, which would be fatal to their case if allowed because transactions over 75-years old would prove the restaurant owners could continue using the right-of-way. The court ruled that 5/13-114 has two requirements; (1) the litigant must be in possession of the property, and (2) the possession must be under claim or color of title. Id. at 210.

The court considered the legislative intent of the statute and determined that Section 13-114 protects individuals who "hereafter come into possession of such real estate under claim or color of title." 735 ILCS 5/13-114. The court noted that possession is a fact-specific inquiry. When considering what acts are necessary to constitute possession, the court determined that possession is any act of dominion exercised over the property by the party claiming to hold title thereto that clearly indicate to others and appropriate thereof to the purposes for which it may ordinarily be used are generally regarded as sufficient. Klingel v. Kehrer, 81 Ill.App.3d 431, 437, 36 Ill.Dec. 719, 401 N.E.2d 560 (1980), quoting LeSourd v. Edwards, 236 Ill. 169, 172–73, 86 N.E. 212 (1908).

In the Diaz case, the Diaz family had used the right-of-way for ingress, egress, parking, and garbage disposal since the restaurant was purchased. On the other hand, the bank did not take any action to interfere with the Diaz's use of the parcel. The court determined on these facts that no matter the definition of "possession" the bank was not in possession of the parcel and was not entitled to invoke 735 ILCS 5/13-114.

Easement by Prescription

When the issue is an easement by prescription, Illinois courts have determined that both the 75-year limitation and 40-year bar on claims to real estate of the Marketable Title Act do not apply. Lawson v. Hill, 77 Ill. App. 3d 835, 396 N.E.2d 617 (1979). In a dispute between neighboring property owners over the need of an easement on the defendant's property for the plaintiff to access their property, the court held that the statute of limitations do not apply to a finding of an easement by prescription. Id. at 628. While both parties in this case waived the statute of limitations argument on appeal, the court still determined for the sake of argument that both 735 ILCS 5/13-114 and 5/13-118 do not apply when the issue is an easement by prescription. Id. and citing the predecessor to 735 ILCS 5/13-120, which prohibits the use of the 40-year statute to bar or extinguish any easement.

Mineral Rights, Purchase Options, and Surface Easements

Illinois courts have held that the 75-year bar on claims to real estate of the Marketable Title Act do not apply unless the claim is under color of title. Illinois also recognizes that the 75-year bar on claims does not begin to run until a factual situation arises where a party has had a right to sue or enforce some right.

In Arclar Co. v. Gates, a plaintiff mining company brought suit against a surface owner for specific performance of an option to purchase a portion of the surface estate and for an injunction to prevent the surface owner from interfering with its use of the surface easement for mining activities. Arclar Co. v. Gates, 17 F. Supp. 2d 818 (S.D. Ill. 1998). The defendant surface owner tried to apply the 75-year statute of limitation to dismiss the case and not allow the plaintiff to purchase the surface option. The court found that the defendant's argument failed for two reasons.

Firstly, the court found that 735 ILCS 5/13-114 was not applicable because the case did not involve a "claim or color of title." The court considered a claim or "color of title" as, the appearance or semblance ... of title. Any fact, extraneous to the act or mere will of the claimant, which has the appearance, on its face of supporting his claim of a present title to land, but which, for some defect, in reality falls short of establishing it." Black's Law Dictionary 241 (5th ed.1979). The court also looked toward the definition of "claim or color of title" in Illinois case law and found it was defined to be such a title as in law would pass the estate prima facie, if a better title be not shown. Anoweurth v. Burlingin, 1 F.Cas. 1036, 1037 (C.C.D.Ill.1848).

But neither party sought to assert, by claim or color of title, the same interest in the same property. The defendant simply took title to his acreage subject to an easement for a coal extraction activities and the option to purchase the surface necessary to mine the coal. The plaintiff mining company held title to the coal, an easement for the coal extraction activities, and the option to purchase, and is simply seeking to exercise that option. Id. at 821. Neither party was asserting, by claim or color of title, an interest in the same property; therefore, the 75-year statute of limitation is inapplicable. Id.

Secondly, the court considered if the statute would apply if the facts in the case were under a claim or color of title. The court found that the statute would still not apply. The statute does not apply to any person who during the entire period permitted for reassertion of title, or prior thereto, has not had the right to sue for and protect his or her claim, interest or title. 735 ILCS 5/13-114. The plaintiff mining company's predecessor in interest acquired the coal, easement, and option to purchase in 1905, around 82 years before the cause of action. But, the plaintiff has not needed to use the coal extraction activity easement or the surface until recently, and therefore has not had the right to sue for the entire limitation period. Id. at 822.

735 ILCS 5/13-118 Case Summary

Competing Chains of Title

In Illinois, when there are competing chains of title the 40-year bar, on claims to real estate contained in the Marketable Title Act do not apply. In Rowland v. Shoreline Boat & Ski Club, there was a dispute over the border of neighboring lots. Each party relied on differing plat descriptions from the 1800s. The dispute was over whether there was an exact location to the boundary of the property or whether a river was the intended boundary The defendant attempted to rely on 735 ILCS 5/13-118, stating that the 40-year limitation on claims to real estate had expired thus barring the plaintiffs' quiet title action.

The statute, however, does not apply in this case because there are competing chains of title. Rowland v. Shoreline Boat & Ski Club, 187 Ill. App. 3d 144, 148, 544 N.E.2d 5, 7-8 (1989), quoting Exchange National Bank v. Lawndale National Bank (1968), 41 Ill.2d 316, 243 N.E.2d 193. The court also noted that color of title is required to sustain a claim under the statute and there can be no color of title where the property is not described with reasonable certainty and where there is a dispute over a boundary line that has never been defined. Rowland at 148.

Easements

The 40-year bar on claims in the Marketable Title Act does not apply to easements by prescription nor does it begin to run until a factual situation arises when a party has a right to bring an action. In the Diaz case from above, 735 ILCS 5/13-118 was also invoked by the defendant railway. The court found that Section 5/13-118 did not apply either. Under the facts of Diaz, the court concluded that the railway had a right to access the property until at least 1997, which was well under the 40-year bar on asserting a claim. Diaz at 211.

The court looked toward the statute which states that "[n]o action based upon any claim arising or existing more than 40-years before the commencement of such action shall be maintained in any court." 735 ILCS 5/13–118. The plaintiff's cause of action did not arise more than 40-years prior to the date upon which they brought it. The court found it was undisputed that, until at least late in 1997, the railroad continued to use the easement. Because the railroad was entitled to use the easement, plaintiffs could have brought an action against no one while the railroad was doing what it was clearly entitled to do. Thus, section 13–118 does not preclude the assertion of the claim. Diaz at 211.

In Lawson from above, 735 ILCS 5/13-118 was also invoked, waived by the parties, and was considered by the court anyway. The court held that in an action for easement across defendants' land, even if affirmative defenses of 75 and 40-year limitation statutes had not been waived, both 735 ILCS 5/13-114 and 5/13-118 do not apply to a finding of an easement by prescription. Lawson at 239.

Contract Created Easement Appurtenant
When there is a contractually created easement appurtenant the 40-year bar on claims to real estate of the Marketable Title Act does apply. In Harris Trust & Sav. Bank v. Chicago Title & Trust Co., there was a dispute between neighboring property owners over a permanent easement granted in a sales contract. Harris Trust & Sav. Bank v. Chicago Title & Trust Co., 84 Ill. App. 3d 280, 405 N.E.2d 411 (1980).While the easement was acknowledged in the sales contract, the easement was not mentioned in the deed conveying the property.

The court held in Harris Trust & Sav. Bank that the 40-year bar on claims to real estate does apply when there is an easement appurtenant. Harris at 287. The court stated that easements are real property, even if the easement was created by a sales contract. Id. Since an easement is real property, the action is entitled to the protection of the statute since it is an action to recover or establish an interest in real estate against the holder of title of such real estate. Id.

Covenant for Easement in Deed
The Marketable Title Act's 40-year bar on claims to real estate does not apply when there is a covenant for an easement in a deed. In Davis v. Havana Mineral Wells, Inc., there was a dispute between platted lot owners in a park and a non-platted lot owner. An Illinois appellate court held that a covenant in a deed given to lot owners' predecessor in title in 1912 created an easement in area of development west of specified road for the use and enjoyment of all lot owners in development. Davis v. Havana Mineral Wells, Inc., 48 Ill. App. 3d 996, 1000, 363 N.E.2d 856, 859 (1977). The court found it important that the lot owners in development had built and continued to keep on a beach large boxes for storage of oars and other items of equipment. Id. The boxes served as physical evidence which proved use of the easement by the lot owners, and therefore, the easement created by the covenant more than 40-years earlier was not barred by the Marketable Title Act. Id.

Wild Deeds

The Marketable Title Act's 40-year bar on claims is not available as a defense when the chain of title is founded on a wild deed. In Exchange Nat. Bank of Chicago v. Lawndale Nat. Bank of Chicago, a plaintiff bank, as trustee under a trust agreement, brought an ejectment action against another bank. Exchange Nat. Bank v. Lawndale Nat. Bank, 41 Ill.2d 316, 243 N.E.2d 193. In a case decided in 1968, plaintiff's title originated from the United States government starting in 1899. The defendant similarly traced title back in time in excess of 40-years, but had a different source for the title.

The court held that the Marketable Title Act was not available as a defense to the defendant and held that a title founded on a ‘wild deed' cannot have the benefit of the Act. To hold otherwise could result in a wild deed being enabled to serve as the foundation of a new record chain of title, so the more recent 40-year chain of title holder would be entitled to the benefit of the act. Id. at 322. This holding was reaffirmed several years later in Cheadle v. County Bd. of School Trustees of Will County. Cheadle v. County Bd. of School Trustees of Will County, App. 3 Dist.1974, 20 Ill.App.3d 212, 313 N.E.2d 196.

Tax Deeds

When the source of title is a tax deed, the Marketable Title Act's 40-year bar on claims does not apply. In Murray v. Armstrong's Estate, the court held that the defective tax deed defendant relied upon to assert the Marketable Title Act as a defense was not specifically included in the list of deeds protected by the Act and was not protected by the statute. Murray v. Armstrong's Estate, 114 Ill. App. 2d 200, 204, 252 N.E.2d 236, 238 (Ill. App. Ct. 1969). In Murray the plaintiff remaindermen of a life tenant filed an action for ejection against the defendant to surrender the premises.

The defendant attempted to rely on the Marketable Title Act, but the court pointed to the list of deeds protected by the Act in the statute, and found that the absence of tax deeds in that list meant that it was deliberately excluded to limit the statute. Id. at 204. Specifically, the court pointed to the list of categories that could hold the same title to real estate by will or descent as those who hold it through direct conveyance to include, "by trustee's, trustee's in bankruptcy, conservator's, guardian's, executor's, administrator's, receiver's, assignee's, master's in chancery, or sheriff's deed." 735 ILCS 5/13-118.

The court affirmed this holding about the deliberate absence of tax deeds in the list of those protected by the Marketable Title act nearly a decade later in the Davis v. Havana Mineral Wells, Inc. case discussed above. Davis v. Havana Mineral Wells, Inc., 48 Ill. App. 3d 996, 1000, 363 N.E.2d 856, 859 (1977).

Mineral Rights, Purchase Options, and Surface Easements

In the Arclar case discussed above, the court determined that the plaintiff mining company's suit to enforce an option to purchase and use of the surface estate was not barred by the 40-year bar against claims under the Marketable Title Act. Arclar at 823. The court pointed to the language in the statute citing that the act shall not be applied to bar or extinguish any separate mineral estate or any rights, immunities and interests appurtenant or relating thereto. 735 ILCS 5/13–120(4).

Zoning Rights

When a zoning ordinance provides an exception that allows officially recorded plats or conveyances to provide for the erection of a dwelling on a lot smaller than allowed by a subsequent zoning ordinance, the 40-year bar on claims does not apply. In Builders Supply & Lumber Co. v. Village of Hillside, the court found that the plaintiff was entitled to build smaller dwellings than prescribed in the new zoning ordinances. Builders Supply & Lumber Co. v. Village of Hillside, App.1960, 26 Ill.App.2d 458, 168 N.E.2d 801.

The defendant Village attempted to argue that since the plaintiff acquired the property through a tax foreclosure sale, the plaintiff does not have the same rights as the predecessor in title. The court determined that there was a specific exception in the statute which stated that any person who holds title by decree or order of any court, or by deed issued ... is deemed to hold chain of title the same as though holding through direct conveyance. 735 ILCS 5/13-118.

Commencement of the Limitations Period

In Canali v. Satre, neighboring landowners were in a dispute over the existence of a driveway easement of necessity by implication. Canali v. Satre, 293 Ill. App. 3d 407, 688 N.E.2d 351 (1997). The court found that the 40-year statute of limitations did not apply in this case because the court determined that the interest in the easement did not arise until its use became necessary and that necessity arose within 40-years of the cause of action. Id. at 354. The court rejected the argument that the statute of limitations period began when common ownership of the property was severed and brought the easement into existence.

In In re Estate of Herwig, Miss Herwig made an agreement exchanging a life estate for a quitclaim deed during her lifetime. In re Estate of Herwig, 237 Ill. App. 3d 737, 604 N.E.2d 1164 (1992). There was no agreement on when the deed would be delivered, the remaindermen never demanded delivery during Miss Herwig's life, and Miss Herwig never gave the remaindermen reason to believe that she would not deliver the deed. When she passed away, the remaindermen brought suit when the quitclaim deed was not delivered. The court determined that the statute of limitations could not have started to run until it was clear the quitclaim deed was not going to be delivered, which was upon the death of Miss Herwig. Id. at 1167. The 40-year bar on claims does not apply since the court viewed the agreement as a contract to convey an interest in land which would ripen upon the termination of the life estate. Id. Miss Herwig's death and the subsequent failure of delivery was the factual situation that caused the statute of limitations to run after that interest in land ripened. Id.

Conclusion

The Illinois courts have been reluctant to apply the 40- and 75-year Marketable Title statutes except in cases that clearly fall within one of the statutes, are not barred by the restrictions contained in 735 ILCS 5/13-120, and the facts giving rise to the claim under the statute arose more than 40 or 75 years prior to the filing of the claim. Although many real estate and title practitioners seek to invoke the statutes to clear various title matters, the situations in which the Marketable Title statutes apply are rare indeed.