Underwriting Manual: Railroad Right Of Way

State Supplements

View state supplements to the national underwriting manual.

Underwriting Manual Subtopic

In General

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Railroad corporations cannot acquire real estate property except under specific authority of either statute or their charters and for the exclusive purposes stated in the latter. Without special authority, railroad corporations cannot alienate property acquired under the right of eminent domain.

Railroad corporations can acquire title to real property by any of the following methods:

  • A Congressional Act
  • Condemnation proceedings
  • Adverse possession
  • Dedication on a recorded plat
  • Public or private grant

Underwriting Manual Subtopic

Fee Simple Or Easement (Railroad Right of Way)

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The interest or estate acquired in land by a railroad corporation may be construed to be either "fee simple" or an "easement."

The estate or interest acquired by a railroad corporation and conveyed to it for a right of way is generally construed to be an easement, but a railroad may, unless prohibited by statute or its charter, acquire fee simple in the right of way in cases where:

  • The deed of conveyance is sufficient for that purpose.
  • The state statute permits a railroad corporation to acquire a fee simple in its right of way.
  • The charter does not contain any prohibition to such an acquisition.

Generally, the question as to whether a railroad corporation takes a fee or an easement depends on a combined analysis of the following:

  • The construction of the instrument.
  • The intention of the parties.
  • The charter of the railroad corporation.
  • The local statutory provisions.
  • Judicial dicta.

In many cases, courts draw a distinction between deeds conveying land to a railroad corporation for "right-of-way purposes" and deeds conveying land for "other railroad purposes." Based on this distinction, courts have shown the tendency to take the view that, irrespective of the language being used, deeds conveying land for right-of-way purposes convey nothing but an "easement", and that deeds conveying land for "other railroad purposes" may be held to have conveyed a "fee simple" if language appropriate to that result is employed therein.

Underwriting Manual Subtopic

Some Situations Or Elements Which May Confirm The Existence Of An Easement Acquisition

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  • Statutory prohibition in relation to fee acquisition.
  • Condemnation decree vesting only an easement.
  • Lack of adequate consideration.
  • A mere strip of land (generally).
  • Deed with reversionary clause.
  • Deed of gift.
  • Charter of the railroad company not authorizing the railroad purpose.
  • Any of the following phrases contained in the deed or grant to the railroad corporation:

    • "For an easement"
    • "For railroad station"
    • "For depot purposes"
    • "Land shall be used for railroad purposes only"
    • "As long as the land used for railroad purposes"
    • "As a right of way"
    • "On condition that a crossing be maintained"
    • "For location and maintenance of railroad"
    • "So long as the land shall be used for railroad."

Underwriting Manual Subtopic

Examining Railroad Grants

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In examining title to lands derived from a railroad grant, it is necessary to ascertain:

  • Whether the act establishing the grant itself vested title in the railroad or whether a patent was additionally necessary under the terms of the grant.
  • Whether the grant was ever declared to be void.
  • Whether the nature of the grant was a fee simple or an easement.
  • Whether the grant excepted mineral lands or reserved lands.

Underwriting Manual Subtopic

Fee Possibility (Railroads)

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A deed to a railroad corporation on full consideration, purporting to convey absolute fee simple, and containing neither words of limitation nor reversionary clause vests fee absolute in the railroad corporation in the absence of any statutory or charter prohibition.

Underwriting Manual Subtopic

Easement Situation (Railroads)

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In the treatment of an easement interest held by railroad corporation, consideration must be given to the following:

  • That the railroad company, as holder of the easement, cannot acquire title by adverse possession.
  • That in case of abandonment, a formal declaration of abandonment or nonuser must be made a matter of record.
  • That the land is subject to a tax conversion (railroad taxes to general state, county, and city taxes) from the time of abandonment or conveyance.

Underwriting Manual Subtopic

Conveyance Of Railroad Property To Another Railroad Entity For Continued Rail Operation

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A conveyance of railroad property into another railroad entity requires:

  • Approval from:

    • The Intestate Commerce Commission
    • The State Commission or any other proper state regulatory body or agency.
    • The Secretary of Transportation (if the railroad facilities were used by the National Railroad Passenger Corporation ("Amtrak") on February 1, 1979 in the operation of railroad passenger services. (49 U.S.C.A. sec 566).This approval is required only if Amtrak was operating passenger service on the property on February 1, 1979.
    • The Bankruptcy Court (if the railroad is undergoing reorganization proceedings).

  • Determination as to:

    • Mortgages and deeds of trust affecting the railroad property.
    • Railroad taxes.

Underwriting Manual Subtopic

Abandonment of Easement Rights (Railroads)

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At the outset it must be emphasized that only an easement can be abandoned. It is not possible to abandon a fee holding.

From the title insurance point of view, abandonment by a railroad corporation of any part of its right of way (easement) must be supported by:

  • Manifest Intention
  • Physical cessation of its use.
  • Removal of the tracks or improvements.
  • Appropriate conveyance duly executed and recorded.
  • In some cases, authorization from certain public bodies.

Note: Prior to issuing a policy on an interest based on abandonment of easement rights, you must obtain approval from your appropriate Stewart representative.

Underwriting Manual Subtopic

Insuring Abandoned Railroad Property

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Whenever there appears in a chain of title an instrument, immediate or remote, creating an interest in a railroad corporation it becomes necessary to determine:

  • Whether the interest acquired or held by the railroad corporation is a fee simple or an easement.
  • Whether the railroad corporation has the authority to convey the same.
  • Whether the sale requires the approval of the Interstate Commerce Commission or any other sate or local authorities.
  • Whether a physical abandonment of the property has taken place.
  • Whether an appropriate conveyance of the property has been obtained from the railroad corporation.
  • Whether proper conveyances have been obtained from the owners of the reversion (unless they are the parties to be insured).
  • Whether the property is subject to any railroad mortgage or deed of trust.
  • Whether any prior railroad mortgage or deed of trust contains an after-acquired clause.
  • Whether the property is subject to railroad taxes.
  • Whether any statutory provision gives the state and/or local government a preferential right to acquire abandoned railroad property.
  • Whether the railroad corporation is subject to reorganization proceedings under the Bankruptcy Code.

Note: Interstate Commerce Act prohibits a railroad from abandoning any part of its railroad lines until it has obtained either a certification from the Interstate Commerce Commission permitting such abandonment (49 U.S.C.A. sec 10505 sec 10903), or and exemption order under 49 U.S.C.A. sec 10505 exempting the railroad from obtaining an order of abandonment.

Underwriting Manual Subtopic

Ownership Of The Reversion After Abandonment Of An Easement By The Railroad

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Upon the abandonment of an easement held by a railroad corporation it becomes necessary to ascertain who becomes the owner of the underlying fee, that is, the owner of the reversion.

The determination of the reversion ownership will depend upon the following factors:

  • The language contained in the instrument creating, conveying, or condemning the easement.
  • The language used by the owners of adjoining land in conveyances subsequent to the establishment or creation of the easement.
  • Whether the jurisdiction where the land is located authorizes the alienation of a possibility of a reverter.
  • The time sequence of the execution and recording of the railroad easement and the deeds pertaining to abutting land.
  • Pertinent state law of the jurisdiction where the land is located.
  • Whether in the particular jurisdiction where the land is located a deed to abutting land carries with it the underlying title in a railroad right-of-way or easement.
  • The ownership and extension of the land upon which the easement was established or created.

Upon due consideration of all the above factors or conditions, the ownership of the reversion will be determined and title to the abandoned land is vested in one of the following:

  • The original owner of the land at the time of the creation of the easement or the original owner's heirs or devisees.
  • The present owners of abutting land who took reversion as appurtenant to their purchases because (unless otherwise provided by state law or stated in the deed) a conveyance of adjoining land carries the fee under a railroad easement.