Legislature(2001 - 2002)
04/24/2002 01:12 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 263 - AFTER ACQUIRED TITLE IN REAL PROPERTY Number 1206 CHAIR ROKEBERG announced that the next order of business would be CS FOR SENATE BILL NO. 263(RLS), "An Act relating to the subsequent acquisition of title to, or an interest in, real property by a person to whom the property has purportedly been granted in fee or fee simple; and providing for an effective date." Number 1220 SENATOR LOREN LEMAN, Alaska State Legislature, sponsor, explained that representatives of the Sealaska Corporation ("Sealaska") brought forth the concept of SB 263 in order to solve a dilemma that Sealaska is experiencing regarding the transfer of property and the ability of homeowners to use property that comes to them via transfers of land from village corporations; this dilemma occurs when the village corporation has the surface rights but its regional corporation has the subsurface rights. He noted that village corporations sometimes transfer land to shareholders via what is called a quitclaim deed, which provides that any title or rights are given up. But when quitclaim deeds are used, because [village] corporations do not have subsurface rights, the shareholders do not gain the right to use or disturb the subsurface. He said that SB 263 will amend the conveyance statutes to allow for what is called "after-acquired title" for shareholders, that it will only apply to Alaska Native Claims Settlement Act (ANCSA) lands, that he knows of no opposition to the current version, and that the administration is comfortable with the bill. REPRESENTATIVE KOOKESH declared a [potential] conflict. REPRESENTATIVE JAMES said she supports the concept of SB 263. She asked whether, in the future, some other method of transferring property could be used that wouldn't create the problems currently being experienced with the use quitclaim deeds. SENATOR LEMAN said that the other method of transferring property is via a warranty deed, "where you 'warrant' that you have ... a certain right and then transfer that." But because quitclaim deeds were used instead, he remarked, "it creates a real challenge." REPRESENTATIVE JAMES asked whether village corporations could change their practice of using quitclaim deeds and instead use warranty deeds. She suggested that that would be a better long- term solution solution. SENATOR LEMAN offered that others present could better respond to questions regarding property transfer law. Number 1408 REPRESENTATIVE KOOKESH posited that had Sealaska Corporation and other corporations received warranty titles in the first place, that method could have been used to transfer property to shareholders. "But we didn't receive title under a warranty deed," he noted, "and we're still continuing to get title in pieces and increments." CHAIR ROKEBERG asked: "What's the method of conveyance? Just a patent from the federal government?" REPRESENTATIVE KOOKESH replied, "we never got warranty title; ... I suppose we did get a quitclaim deed ourselves, but ... we didn't get it all, for example, in one quick sweep, we got it in increments because we were required to select certain pieces of parcels as we went along." CHAIR ROKEBERG remarked that SB 263 "Establishes, by definition, ... ANCSA real property, so this is only a portion of what may be; like native allotment lands would not be included under this." REPRESENTATIVE KOOKESH said it doesn't refer to native allotments; [the bill] only refers to lands received by regional and village corporations under ANCSA, and it has nothing to do with the "allotment Act," which is an entirely different Act of Congress. In response to a question, he said: It becomes trust property when it is received under [the] "allotment Act," and it can be held in trust by the BIA [Bureau of Indian Affairs], unless you decide to take it out of trust. And the person who receives [the] allotment has the ability, by law, to take it out of trust and turn it into a "fee simple," and they could sell it. Number 1499 CHAIR ROKEBERG surmised that SB 263 would not affect that situation. He asked whether any other lands have been conveyed - for example, "some reservation lands under Metlakatla" - that weren't conveyed by ANCSA. REPRESENTATIVE KOOKESH said that Metlakatla is a reservation, and the entire island is held in trust. There is no other land that this [bill] would [apply to] except for Alaska Native Claims Settlement Act lands, he added, "and we have a specific amount of land that that [bill] does cover." He continued: And the only thing we're talking about, just to clarify for all of you, is that Sealaska Corporation hasn't done this, but the village corporations have given home sites to all their individual shareholders. For example, the village corporation I belong to - Kootznoowoo Incorporated ["Kootznoowoo"] - gave us all three-quarters [of an acre] to an acre each. And what we received from the village corporations is just what they own, which was the surface; Sealaska Corporation, on the other hand, owns all the subsurface under those village corporation land entitlements that they gave to shareholders. I have, for example, a piece of land that's three- quarters of an acre, I have the ... [surface] from Kootznoowoo, but Sealaska still owns the subsurface. So, if I decide I want to put a post in the ground to hold up a house that I want to build on it, then I'm trespassing - technically - on Sealaska's land. So what we're trying to do here is ... give after- acquired title, so that if I want to dig a post in the ground, then I'm not trespassing on Sealaska's land. Number 1600 RUSSELL DICK, Natural Resource Manager, Sealaska Corporation, explained that Sealaska is the regional corporation for Southeast Alaska and, as such, owns the subsurface estate underlying all village [corporation] and urban corporation lands within the Southeast Alaska region. Referring to a situation involving Sealaska and Kootznoowoo, he said: In 1995, we entered into discussions with Kootznoowoo, which is the village corporation for Angoon, regarding the granting of a subsurface easement to Kootznoowoo for its shareholder home-site program in which Kootznoowoo was going to subdivide its ANCSA land for allocation to shareholders. Usually when confronted with these types of programs, we will issue a subsurface agreement to that village corporation that would automatically inure to the successor of interest in the property, regardless of whether or not it's the shareholder now, and then that shareholder sells that property later to a non-shareholder. And like Representative Kookesh said, that subsurface easement agreement would allow them to put in a post, or ... a sewer system, or a water system, or foundations, or what have you. Now, unfortunately, Kootznoowoo went ahead and conveyed over 600 individual lots to the shareholders without the subsurface easement agreement, and the conveyance was done through a surface estate quitclaim deed. Now, because the doctrine of after-acquired title doesn't apply to quitclaim deeds, we're faced with either having to provide individual subsurface easements to each individual lot owner or allowing the cloud of title to remain on our property, which also brings to bear the issue of adverse possession. We have no intention nor do we have the desire to hold any home-site owner liable for trespass on our property, but we would like to avoid having this problem continue to fester and to address the problem in a manner that's least imposing to everybody and all - financially ... for ourselves and ... for the home- site owners as well. Number 1695 MR. DICK concluded: So ... that's ... our reason for this piece of legislation. And I think we can address Representative James's question with regard to this piece of legislation fixing a current problem, but ... we'd like to see it go forward as a mechanism for solving future issues as well. See, village corporations ... transfer the surface estate, and they don't have to approach Sealaska to get the permission to do so. So there's nothing that requires them to let us know that they're going to be transferring surface estate. ... And if we use this bill to only address this issue at hand, ... then we potentially could be coming back to you ... in a year, or a year and a half, or two years.... REPRESENTATIVE JAMES said, "That does bother me just a little bit, but of course it's none of my business, I think; it's your land, you can do whatever you want to with it, but we have to help you make these things work." She asked Representative Kookesh, "Do you have all of that land tendered to you now, or do you having pending cases like the state does [wherein] we don't have the patents yet?" She also asked whether the land was gotten by patent or "real good perfection that it's always going to be yours and you're never going to be challenged," noting that "sometimes when the federal government does things, they kind of leave ... loopholes." She asked whether the same rules that apply to regular property owners also apply to owners of the type of property being discussed. Number 1773 JON TILLINGHAST, General Counsel, Sealaska Corporation, explained that in a couple of respects, Alaska Native Claim Settlement Act property is different both from other Native property and from the type of property that he has at his house, for example, or that Representative James has at her house. He elaborated: One, I think most responsive to your question, is that it did come to the native corporations in sort of dribbles and drabs, and it was very clearly subject to whatever preexisting rights were out there. So, it is a little cloudier than most native corporations would like; it's the best the federal government would give. That's what makes it hard for the village corporations to in turn give a warranty deed to individual shareholders if they're going to parcel out some of their property, because it's hard for them to warrant title that came to them sort of soiled - unwarranted.... MR. TILLINGHAST mentioned that SB 263 has received some criticism for being another "ANCSA-only bill," but offered that the issue ought to be addressed via legislation because of the [transfer] methods used by the federal government. He went on to say: [Alaska Native Claims Settlement Act] property is unique in that the subsurface estate is owned by a private party rather than the government, and the courts have said that it extends virtually to the surface, so it includes sand and gravel. So you create an inevitable conflict whenever anybody wants to stick in a foundation or stick in a sewer pipe, which you don't [have] in my house with the federal government because their subsurface estate is oil and gas and coal - it's the stuff that's way down there. Because there is an inevitable conflict between the subsurface owner and the surface owner, it's doubly important to keep a clear line of communication available between the subsurface owner and the person that owns the surface now so [that] they can sort that out. So on the one hand you've got an especially important reason and need for after-acquired rights to ... be passed though, and, yet, you've got village corporations [that] find it very difficult to use warranty deeds, which are the only existing way of creating that pipeline, because they don't want to warrant something ... [that is] unwarranted. So that's why the bill's confined to ANCSA property .... Number 1889 REPRESENTATIVE JAMES said her concern is that "you have all the rights that you're entitled to." She surmised that SB 263 will solve the immediate problem, but it still doesn't offer the same benefits that other landholders have. REPRESENTATIVE KOOKESH pointed out that although Sealaska representatives were present to testify, SB 263 is not a "Sealaska bill." It's a bill that would cover all the regional and village corporations in Alaska, he noted, adding that they are all in the same boat. Congress gave the authority to village and regional corporations to give out home sites to individuals, but there are limitations to how big the parcels could be. For example, in Angoon, he noted, there are 729 shareholders, so there are 729 lots that were given out. This land transfer, he remarked, is an attempt to enrich some of the people in the villages by giving them their own land so they could build something. But there is a cloud in the current situation, and SB 263 is intended to remove that cloud, not just for Sealaska, but for all the regional and village corporations in Alaska. CHAIR ROKEBERG asked if the problem stems from the lack of a warranty deed from the federal government, or because of the penetration of the subsurface estates, or both. REPRESENTATIVE KOOKESH said that it is both. "We're not going to be able to get away from the cloud that ... Congress put on it," he warned, but if there wasn't a "split estate" - with the village corporations owning the surface estates and the regional corporations owning the subsurface estates - "we wouldn't have to be here." He offered that "we're just trying to make sure that, one, our shareholders don't break the law and, two, that we do everything we can to keep them from becoming law breakers." REPRESENTATIVE JAMES asked whether, in receiving the land from the federal government, the regional corporations were not allowed to sell or give away the subsurface rights. Are they stuck with it like the state is? Number 1991 REPRESENTATIVE KOOKESH said, "No, we can sell it; we're considered a private property owner in terms of that, and we're allowed to sell it, except our regional corporation has gone on record saying that we will never sell ANCSA land." In response to a question, he confirmed that the resources, such as coal or gravel, could be used. He noted that the courts have already had to resolve a "sand and gravel issue." CHAIR ROKEBERG noted that "all fee simple lands in Alaska do not maintain subsurface rights." He asked whether there is a statutory easement for general subsurface use of the first few feet of "all other non-ANCSA land." MR. TILLINGHAST replied, "Well, for non-ANCSA land, the stuff that's down in the first few feet - the sand and the gravel - is not part of the subsurface estate. CHAIR ROKEBERG asked: "What about a ten-foot foundation?... Is that because of case law, or is there a statutory requirement?" MR. TILLINGHAST said: "If you look at your patent, what the federal government has reserved is not the subsurface estate but all leasable and locatable minerals, and that is pretty well defined as ... coal, and oil and gas, and that sort of thing." CHAIR ROKEBERG observed that he had always thought that when ANCSA was implemented, that was one of the distinctions, since the state didn't grant subsurface estates and there are few other lands that were granted subsurface estates before statehood. "But it's just the minerals thereunder that are reserved for the state, not the total subsurface rights, is that correct?" he asked. MR. TILLINGHAST confirmed that, adding that such is at least statutory, perhaps even constitutional. CHAIR ROKEBERG surmised, then, that ANCSA land is more valuable because it has total right to the subsurface estate. MR. TILLINGHAST remarked that the subsurface estate is more valuable in the ANCSA context because it includes more. CHAIR ROKEBERG said, "So, there's not a problem as far as the easements for some incidental use of the subsurface rights, then, because it's not mining of or utilization of resources." Number 2117 MR. TILLINGHAST said, "Well, that's what we're trying to do here, is to grant the individual lot [owners] ... an easement to stick their foundations down without trespassing." In response to a question regarding quitclaim deeds, he said: We're going to grant an easement to the village corporation, and then by virtue of this bill - if we're fortunate enough to have it pass - that easement that we've granted to the village corporation will pass, by operation of this bill, automatically to all of the people who have bought lots from the village corporation. CHAIR ROKEBERG remarked, "That's because there is no ... statewide platting authority." MR. TILLINGHAST said that is correct. In response to a question, he said that as the subsurface owner, Sealaska cannot plat. CHAIR ROKEBERG mentioned that typically, only in urban areas, which have "planning power," can easements be granted via platting. REPRESENTATIVE JAMES said that she is assuming that the easements being discussed are private easements to the property owner, and are not public right-of-way. MR. TILLINGHAST said that is correct. In response to a question, he confirmed that the easements would attach to the title and then forever transfer with the land. CHAIR ROKEBERG remarked that it is conceivable that someone granted a title in this fashion could grant a warranty deed to another person, but then the [seller] would be responsible for the warranty. Number 2198 REPRESENTATIVE KOOKESH added, "This title, once it's acquired, passes to whoever buys it; for instance, if I sold my property in Angoon to you, then you would be subject to that, and I'm not estopped, by the way, from selling it to a non-Native or a non- shareholder. CHAIR ROKEBERG remarked, "If you've been granted fee simple title, you're not estopped, under ANCSA." REPRESENTATIVE KOOKESH clarified, "Even now, even with what I got from the village corporation, I can sell it." REPRESENTATIVE JAMES remarked, "You could quitclaim it." REPRESENTATIVE KOOKESH concurred, adding that while this is an "Alaska Native Claims Settlement Act specific title," it doesn't prevent him from selling the property to whomever he wished. CHAIR ROKEBERG pointed out that "you could grant a warranty deed, if you so desired to defend it and buy the title insurance to back it up." REPRESENTATIVE KOOKESH agreed. CHAIR ROKEBERG offered, however, that "We want to marry the easements with the existing quitclaim deeds that you already [have] so they're perfected." REPRESENTATIVE JAMES asked: "Can you lien the property, then, if you build a house or whatever? Can you do a lien to the bank, and would they take a quitclaim deed as security?" CHAIR ROKEBERG said, "Sure." REPRESENTATIVE KOOKESH said that he is sure it is possible, especially if the house is worth anything. CHAIR ROKEBERG noted, "The question here is whether we have the easement to use ... a modicum of subsurface right." He reiterated that one could always grant a warranty deed if he/she is willing to back it up. Number 2268 REPRESENTATIVE BERKOWITZ moved to report CSSB 263(RLS) out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSSB 263(RLS) was reported from the House Judiciary Standing Committee.
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