Bulletin: TX000062

Date:
April 05, 2002
To:
All Issuing Offices in Texas
RE:
Area and Boundary Exception; Commissioner's Order for 2000 Hearing

Dear Associates:

Amended Rule P-2

The Commissioner has signed an order amending Procedural Rule P-2 relating to surveys pursuant to the 2000 Biennial Hearing. The order is effective April 4, 2002. The order implements the provisions of Senate Bill 1707, adopted by the last legislature.

The amended rule and Senate Bill 1707 forbid us from requiring an indemnity in order to provide area and boundary coverage. The amended rule and Senate Bill 1707 also forbid us from discriminating between platted and unplatted residential real property in providing the area and boundary coverage.

P-2 will now expressly allow us to rely upon evidence of an existing survey of any date, made for any party, such as a predecessor in title. We must secure an affidavit confirming the status of the boundaries and improvements to the property and evidence of the existing real property survey.

On residential real property transactions, where you are not using a new survey, you must use the promulgated Residential Real Property Affidavit (T-47) (available through the references section at the end of this bulletin). On other transactions you may use this affidavit (after deleting the heading "Residential Real Property Affidavit"). If the Survey Affidavit is not acceptable to the proposed affiant on a commercial transaction, please ask them to mark it up and you may then call our underwriting personnel to verify that the changes are acceptable.

Company Policy: You may rely upon the Survey Affidavit and evidence of an existing survey of any date, made for the existing owner or any prior owner in the chain of title, to provide area and boundary coverage on an Owner Policy (T-1 or T-1R) or a Mortgagee Policy (T-2) or Short Form Mortgagee Policy (T-2R) on residential real property transactions or on commercial transactions not exceeding $10 million.

Please call our underwriting personnel to rely on evidence of an existing survey if the transaction exceeds $10 million.

If you are aware that the existing survey or a new survey is not accurate, please do not rely upon it.

Please except to any encroachments or conflicts evidenced by the survey, if you issue an Owner Policy or a Mortgagee Policy. Please follow our guidelines for providing express insurance as to encroachments. You do not need to except to minor encroachments on the Short Form Mortgagee Policy.

Copyright Issue

A recent letter addressed to and distributed by the Texas Society of Professional Surveyors, stated, in part, as follows: "We recommend that surveyors routinely include copyright notices on their surveys. Such a notice may be in the following form: Copyright 2000 John Doe Surveying, Inc., with the year date being the date that the survey was created. In addition, we recommend that survey agreements include provisions that state that the survey is being provided solely for the use of the current parties and that no license has been created, express or implied, to copy the survey except as is necessary in conjunction with the original transaction, which shall take place within a certain time period (e.g., 6 months) after the survey was provided. Because of the benefits of registration prior to any infringement, we recommend that surveyors consider registering the copyrights in and to their surveys. A surveyor could, for example, register his/her surveys on a periodic basis (e.g., once per year) for a relatively low cost."

We have secured an opinion relating to this copyright issue (See Exhibit 1). We recommend you review that opinion.

In order to protect your right to copy surveys in your files and in order to comply with your escrow obligations if you order surveys, we recommend you consider insisting that a written license be granted on the surveys ordered for your transactions.

The following is a sample license provision:

"Surveyor hereby grants to Purchaser/Borrower, as well as any party participating in a transaction related to the property that is the subject of the Survey, a world-wide, paid-up, royalty-free, transferable non-exclusive license, with the right to sublicense, to copy and distribute copies of the Survey for any purpose whatsoever."

Other somewhat less expansive language could also be acceptable, provided that all parties are given a right to make copies.

Otherwise, it appears to be the position of some surveyors that they have a copyright on their surveys, and you and the purchaser of the survey do not have a right to make copies of surveys from these surveyors. That position also appears to suggest that you may be sued for copyright infringement if you do make copies. This is why it is so important for you to consider insisting on a license to make copies that is shown on the survey.

We recommend, if you cannot secure this license to copy a survey you order, that you secure express acknowledgment from the purchaser of the survey acknowledging the following:

"The undersigned acknowledge that _____ (Title Company) acting on our behalf has ordered a survey from ____ as provided in the Contract pursuant to which the undersigned is purchasing the land, or in order to comply with lender requirements. The undersigned has been informed that the Surveyor of that Survey of the land has asserted or may claim that the Surveyor has a copyright of the Survey. If the Surveyor has such copyright, the undersigned may not have the legal right to make copies of the Survey, even though we are paying for that Survey.

__ We authorize purchase of the Survey, even though we may not have a right to make copies of the Survey.

__ We do not authorize purchase of the Survey, unless the Surveyor provides a written license allowing us and anyone else involved in a real estate transaction relating to the land to make copies of the Survey."

If you do not secure the license or the above consent, you may be liable to the purchaser of the survey for failure to secure a license.

Transfer of Survey

Copyright law does not prohibit the title company from reviewing a survey that is in its files or one that is brought to it by a third party. When such a survey is the evidence of a survey or which you are going to rely, you may note the new file as the location of the survey, the surveyor's named and rps number, The date of the survey and the matters on that survey to which you are going to make exception.

TREC Contracts

Paragraph 6 of the new TREC One to Four Family Residential Contract (Resale) contemplates use of an existing survey. It provides that:

"C. SURVEY: The survey must be made by a registered professional land surveyor acceptable to the Title Company and any lender. (Check one box only)

__ (1) Within __ days after the effective date of this contract, Seller, at Seller's expense, shall furnish a new survey to Buyer.

__ (2) Within __ days after the effective date of this contract, Buyer, at Buyer's expense, shall obtain a new survey.

__ (3) Within __ days after the effective date of this contract, Seller shall furnish Seller's existing survey of the Property to Buyer and the Title Company, along with Seller's affidavit acceptable to the Title Company for approval of the survey. If the survey is not approved by the Title Company or Buyer's lender, a new survey will be obtained at __ Seller's __ Buyer's expense no later than 3 days prior to the Closing Date."

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

EXHIBIT 1

BAKER BOTTS LLP

PRIVILEGED AND CONFIDENTIAL ATTORNEY/CLIENT COMMUNICATION

January 7, 2002
VIA FACSIMILE: 713 629 2248

James L. Gosdin
Senior Vice President/Senior Underwriting Counsel
Stewart Title Guaranty Company
National Legal Department
1980 Post Oak Boulevard, Suite 770
Houston, Texas 77056

RE:Survey Copyright Issue
Our File: 019723.0114

Dear Mr. Gosdin:

Pursuant to your request, we reviewed various issues concerning real property survey maps made by surveyors. Our views with respect to these issues are summarized below. In this letter, all references to "The Act" are references to the 1976 Copyright Act (title 17 of the United States Code). This letter assumes, but does not opine, that such surveys are copyrightable. It further assumes, but does not opine, that the surveying company (or individual surveyor in the case of a sole proprietor) owns the copyright in a survey in the absence of a written agreement to the contrary.

Our views are based solely upon the copyright laws of the United States of America and we express no views with respect to any matter that is governed by the law of any other jurisdiction or by any other kind of law. We have suggested contractual language in various places. Such contractual language will not necessarily be interpreted the same or be enforceable in every state or other relevant jurisdiction.

Our views are given as of the date hereof and we do not undertake any obligation or responsibility to inform you or to update or supplement this opinion in response to subsequent changes in the law or future events affecting the views stated herein.

This letter is furnished to you solely for your benefit in connection with your internal consideration of the issues upon which you have requested our views. This letter and the views expressed herein may not be used or relied upon by you for any other purpose and may not be relied upon for any purpose by any other person or entity without our express prior written consent. You should also realize that disclosure of this letter to third parties may waive the attorney-client privilege as to the issues discussed herein and could subject you to various kinds of liability. If you choose to provide this letter to any third party, no attorney/client relationship is created thereby between such third party and Baker Botts L.L.P. (or any member or employee thereof) nor is such third party entitled to rely upon this letter and the views expressed herein.

1. Under what conditions will a purchaser of a survey from a surveyor have the express or implied right to make copies of the survey?

Assuming that the surveyor owns the copyright to a survey, some type of license would ordinarily be required to make copies. Generally, a copyright owner has control over the use and redistribution of the protected work. This includes the exclusive right to reproduce the work (make copies) and to distribute copies of the work. 17 U.S.C. § 106. While a fair use defense might be successful depending upon the circumstances of the copying, that defense must be analyzed on a case by case basis and the purpose of the copying is an important factor. Setting aside the possibility of fair use, the purchaser of the survey would generally require an express or implied license.

a. Express License. A written contract between the surveyor and the purchaser of the survey could include the express, unrestricted right to copy the survey. Also, a general statement granting permission to copy placed on the survey itself by the surveyor would likely suffice. A written contract allowing copying for limited purposes would also be sufficient presuming that the copy was made for an allowable purpose.

A written license is not necessarily required in some circumstances. The Act requires the exclusive grant of rights to be in writing. 17 U.S.C. § 201(d). However, a nonexclusive license may be granted orally, or may even be implied from conduct. Lulirama Ltd., Inc. v. Axcess Broadcast Services, Inc., 128 F.3d 872, 879 (5th Cir. 1997). While express nonexclusive license can sometimes be granted orally, oral licenses are obviously dangerous for a third party to rely upon.

b. Implied License. As you might suspect, the conditions where a purchaser will have the implied right to make copies of a survey is a much grayer area. While the purchaser may have an implied license in certain circumstances, implied licenses are beyond the scope of this letter.


2. How can a homeowner, survey purchaser, lender, or other person secure permission to make copies of the survey and to use the survey in subsequent transactions?

The best way to obtain the ability to make unfettered use of the survey is to obtain ownership of the copyright in the survey itself. We suggest that you consider making assignment of copyright to the survey a non-negotiable issue in your contractual relationships with surveyors and with surveying companies. To the extent that you do not contract with surveyors directly, you will need to rely upon those who do enter into such contracts in order to obtain the rights. The assignment language below assumes that "Surveyor" is the owner of the copyright (but counsel should be consulted to make this determination). An appropriate assignment provision might be as follows:

Assignment: "Surveyor does hereby sell, assign, and transfer to Purchaser, its successors and assigns, the entire right, title and interest in and to the copyright in the Survey and any registrations and copyright applications relating thereto and any renewals and extensions thereof and in and to all works based upon, derived from, or incorporating the Survey."

In the alternative, a license (including a right to sublicense) granting permission to make copies of the survey, as well as the right to use the survey in subsequent transactions, could be included in the written agreement with the surveyor. The license language below assumes that "Surveyor" is the owner of the copyright (but counsel should be consulted to make this determination). In general, the right to sublicense must be expressly provided and will not be implied. Ozyagcilar v. Davis, 221 U.S.P.Q. 1064, 1070 (D. S.C. 1983). This right should be expressly provided as it may be a desirable right for the purchaser of the survey to have. Because the owner of the property also may desire to transfer the license to a third party who purchases the property, it also may be desirable to make the license transferable. An example transferable written license that includes a sublicensing provision is as follows:

License: "Surveyor hereby grants to Purchaser, as well as any party participating in a transaction related to the property that is the subject of the Survey, a world-wide, paid-up, royalty-free, transferable non-exclusive license, with the right to sublicense, to copy and distribute copies of the Survey for any purpose whatsoever."

3. Does the copyright prevent the customer from giving or selling the original survey to a third party or allowing a third party to review the survey on a later transaction?

This section assumes that the surveyor owns the copyright, that there is no written agreement between the copyright owner and the customer to the contrary and that the customer obtains ownership of the copies of the survey when they are purchased. Under those circumstances (and assuming no violation of some other legal right), the Copyright Act allows the owner of a copy of the survey to give or sell the survey to a third party. The owner of a copy lawfully made is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy. 17 U.S.C. § 109. This concept is commonly referred to as the "first sale doctrine." Thus, a customer would be able to give or sell the original survey to a third party. Note, however, that neither the third party nor the customer, would have the right to reproduce the survey simply because the customer is allowed to dispose of an existing copy. See Design Options, Inc. v. BellePointe, Inc., 940 F. Supp. 86, 91 (S.D.N.Y. 1996) Likewise, a third party would be allowed to review a survey on a subsequent transaction as long as a copy is not made and the survey is not being shown to the public at large. Id.

4. May we review a copy of a survey provided by an owner of the land?

This section again assumes that the surveyor is the owner of the copyright. It also assumes that the copy is a legal one that is owned by the party providing it to you. You should verify that the party providing you the copy had authorization to make the copy. Given the analysis of section 3, it is permissible for the owner of the copy of the survey to give that copy to you for review. It would then be permissible for you to review that copy. If you wanted to make a copy, you would need to consider the analysis in the rest of this letter and other factors to determine whether copying was permissible.

5. Conclusion.

We appreciate the opportunity to be of assistance to you, and hope that this information is helpful. Please let me know if we can be of further assistance.

Very truly yours,

David G. Wille

DGW:AN:

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
T-47 TX Residential Real Property Affidavit