This article provides a comprehensive discussion and analysis of the current ALTA loan policy, including the types of loan policies, the differences from an owner's policy, the insuring provisions and scope of coverage, exclusions from coverage, and conditions and stipulations. The article also contains several policy forms as exhibits.
This article discusses the attorney malpractice risks in connection with real estate transactions; notably the issue of whether the failure of an attorney who represents the purchaser of a property to obtain a title commitment and an owner’s policy of title insurance constitutes legal malpractice, and whether this duty should, under certain circumstances, extend to third parties. The article also discusses the issue of whether an attorney commits legal malpractice by not requiring a fee owner of real estate to obtain a title insurance commitment or policy, and examines recent case law in this area.
This article discusses the features of the ALTA 13 Leasehold Owner's Endorsement and the 13.1 Leasehold Loan Endorsement, which were adopted by the American Land Title Association on October 13, 2001. The article explains the benefits of the new endorsements and the difference between the coverages provided thereunder and those available under the 1975 owner's and lender's policy forms, which are now withdrawn.
This article describes and analyzes the relationships and responsibilities that exist between title insurers, agents, and approved attorneys with respect to closing a transaction that is the subject of title insurance. It also analyzes the case law regarding the obligations of title insurers with respect to closing protection letters, and discusses the various forms of closing protection letters utilized in connection with insured real estate transactions.
This article gives a brief overview of coinsurance and reinsurance issues with respect to title insurance, including the difference between the two, the nature and scope of each, and the variations available. The article includes, as exhibits, the standard ALTA form of Facultative Reinsurance Agreement and a sample form of Coinsurance Endorsement.
This article contains an exhaustive analysis of creditors' rights issues in mortgage loan transactions, including fraudulent conveyances, preferential transfers, equitable subordination, leveraged buyouts, "upstream," "downstream," and "cross-stream" transfers, reasonably equivalent value, the "insolvency," "capitalization," and "cash flow" tests, and the "DePrizio doctrine."
This article analyzes, in detail, the genesis and scope of the creditors' rights exclusion in the ALTA Owner's and Loan policies. It discusses the factors considered by title insurers in identifying and underwriting the risk in connection with commercial real estate transactions. The article also reviews and analyzes the applicable federal and state statutes and case law relating to fraudulent conveyances and transfers, preferences, and equitable subordination.
This article analyzes the applicable case law with respect to the issue of whether the deletion of exclusions or exceptions from a title insurance policy means that coverage is provided for the matter excluded or excepted, or whether a specific insuring provision or endorsement is required in order to provide coverage. The article also discusses the “reasonable expectations” of the insured as they apply to this issue.
This article contains a brief description of the creditors' rights exclusion in both the owner's and lender's title insurance policies, and explains the circumstances under which title companies may delete the exclusion. The article also discusses, and includes as exhibits, affirmative creditors' rights endorsements that may be available in certain limited circumstances, where not otherwise prohibited by applicable laws or regulations.
This article summarizes a Connecticut trial court decision, which held that an attorney retained by the purchasers in connection with a residential closing was not guilty of professional malpractice for failing to review the local zoning records to determine whether there was a use restriction in effect on the property that limited its use to seasonal occupancy, or for failing to advise the purchasers that the title search he conducted did not address zoning issues. The article also discusses the applicability of title insurance and the additional zoning coverages provided by the new ALTA Homeowners Policy.
This article discusses a recent Wisconsin Supreme Court case, First American Title Ins. Co. v. Dahlmann, which held that for purposes of claims liability under a 1992 Owner’s Title Policy, a substantial encroachment by an improvement on the insured land onto adjacent property constituted an “encumbrance” on the “title” of the insured property that is covered under the policy’s insuring provisions. Under the “Insuring Clauses” in the 1992 ALTA Owner’s Policy, items numbered 2. and 3. provide coverage for, respectively, “Any defect in or lien or encumbrance on the title” and “Unmarketability of the title.” The article argues that the existence of an encroachment over adjoining land is probably more of a marketability issue than an encumbrance issue, because it is difficult to understand how an encroachment onto adjoining property can be an encumbrance “on the title” within the insuring provisions of the 1992 Owner’s Policy. If the encroachment in the Dahlmann case is an encroachment at all, it would appear to be an encumbrance against the adjoining property and not the insured property.
This article discusses the history and uses of land trusts, especially the Illinois land trust. It discusses the advantages and disadvantages of land trusts, as well as case law dealing with land trust issues. It also discusses the use of business trusts, especially the use of the Delaware Business Trust, in real estate transactions.
This article explains the coverage provided in the ALTA owner's and lender's policies for "unmarketability of title." It describes what matters are covered and what matters are not, and provides case-law citations and discussions regarding the definition of "marketability" and the scope of the coverage provided.
This article describes and analyzes each of the 15 new commercial title endorsements issued by the American Land Title Association in 2003 and 2004, including a discussion of their respective functions and the underwriting issues involved. Each of the new endorsements is also set forth in full.
This is a summary, in outline form, of the creditors' rights issues faced by title insurers in connection with real-estate loan transactions, including fraudulent conveyances, preferential transfers, equitable subordination, and alleged violations of state laws such as the Uniform Fraudulent Conveyance Act and the Uniform Fraudulent Transfer Act. The outline also discusses the availability and use of creditors' rights endorsements.
This article summarizes the proposed HUD revisions to the Real Estate Settlement Procedures Act, which would significantly modify the scope and type of information that mortgages lenders would have to provide to mortgage loan applicants, as well as the method of interaction between service providers, lenders, and consumers with respect to prices and services offered. The article describes the alternative "packages" that lenders could offer under the proposed regulations, and discusses the alternative to these options proposed by the American Land Title Association.
This is an outline of significant changes to the ALTA Loan Policy, as proposed by the ALTA Forms Committee after numerous meetings and input from various customer groups, government agencies, professional organizations (such as the American College of Real Estate Lawyers) and academics. It is anticipated that the final, new ALTA Loan Policy (as well as a new ALTA Owner’s Policy) will be promulgated as official ALTA forms sometime in 2006.
A discussion of the title insurance concerns of commercial real estate customers in connection with loan documentation, workouts/foreclosures, and litigation/policy claims.
This article describes the features of a "tie-in" endorsement in connection with Loan Policies (and, under certain circumstances, Owner's Policies) issued in connection with transactions involving two or more properties where the individual loans on each property are cross-collateralized. The tie-in endorsement (where available) enables the insured to "tie" the cumulative liability of all the policies together to be available to any one or more of the properties for any given loss. The article also contains the available endorsements, including a "single form" that can be set up to be attached to all policies being "tied" together.
This article discusses the "clogging" doctrine as it applies to the situation where the mortgagor grants the mortgagee an option to purchase the secured property, and also discusses the forms of title coverages and endorsements available to minimize the title risks in these types of transactions.
This article discusses title insurance for "unmarketability of the title," which is a covered risk under the ALTA Owner's and Loan Policies. The article discusses that case law that deals with this topic, including the definition of "unmarketability," the determination of unmarketability claims, "perfect title" as opposed to "marketable title," and "marketable title" as opposed to "insurable title."
An analysis of and discussion of the specific concerns of commercial real estate lenders with respect to title insurance coverages and endorsements.
This article contains an analysis and overview of title insurance in commercial real estate transactions, including the necessity for title insurance, the various policy forms, the difference between owners' and lenders' policies, covered risks, exclusions and exceptions, creditors' rights issues, conditions and stipulations, commercial endorsement coverages, and closing protection letters.
This article contains a detailed discussion and analysis of the application and availability of title endorsements commonly requested in connection with commercial real estate transactions. It also contains the underwriting guidelines with respect to the issuance of these endorsements, and copies of each of the referenced endorsements.
This article discusses the holding of the Michigan Appellate Court in PAL Properties LLC v. Ticor Title Ins. Co. In this case, the appellate court upheld the lower court’s ruling that the title insurer was not liable to the plaintiff, where there was no closing protection letter (“CPL”) issued to any party and the issuing agent (acting in its separate capacity as an escrow closer) absconded with funds from the closing intended for a mortgage payoff. The court noted that a title policy was never issued in this matter, and held that because only a title commitment was produced by the title company and only an actual title insurance policy provides insurance, the commitment did not impose any duty on the title company to protect the plaintiff from the attorney-agent’s actions. The court noted that the contract entered into by the parties limited the scope of the title-agent’s agency to the purpose of issuing title insurance only.
This article discusses and analyzes a New Mexico appellate court case, which held that the title insurer owed a duty to a party who did not order a title policy from the insurer because the insurer, which had insured the property in the past, advised the party not to bother obtaining a policy for the current transfer because title was “good and clear,” when it actually was not. Although the court found the title insurer was not liable under a state statute regarding proper search and examination of title, because the statute was only for the benefit of the title insurer and would not create a negligence claim in favor of a third party, the title insurer nonetheless would be liable under various common law doctrines and statutory consumer protection laws, i.e., negligent misrepresentation, implied breach of contract, and violation of New Mexico’s Unfair Practices Act.
This article discusses a recent Kansas case, Redmond v. Kester, in which the court held that a Chapter 7 bankruptcy debtor may claim the homestead exemption where the real property was transferred to a revocable trust prior to the bankruptcy and the bankruptcy debtor was both the settlor and a beneficiary of the trust. The court also noted that under a Kansas statute "the transfer by warranty deed of real property into an inter vivos trust shall not affect the coverage of any title insurance if the settlor of such trust is and remains a beneficiary of such trust during the settlor's lifetime." This statute also provides that upon the transfer taking effect, the trustee shall be deemed to be the insured under the original title policy, and that the transfer shall not affect any exemption or homestead rights. The court ruled that even though the conveyance was by quitclaim deed and not by warranty deed, the court ruled that the statute should be viewed broadly so as to cover any type of conveyance by the "owner" into the trust.
This article focuses on the Illinois Supreme Court's holding in King v. First Capital Financial Services, Inc., a case of first impression in Illinois, which held that lending institutions do not engage in the unauthorized practice of law by preparing loan documents for their own use and charging borrowers a fee for document preparation. The court ruled that the actions of the lenders fell under the "pro se" exception in Illinois law to what would otherwise would be the unauthorized practice of law, i.e., this exception applies to the preparation of documents in situations where the party preparing the legal documents does so for his or her own benefit in a transaction to which the preparer is a party. The court also ruled that the charging of a fee was irrelevant because it is the character of the acts themselves, and not whether a fee is charged, that determines whether a party engaged in the unauthorized practice of law.
The article also discusses the emergence of "do it yourself" legal-document-preparation services, as well as the American Bar Association's proposed Model Definition of the Practice of Law.
This article discusses and analyzes in detail several recent cases regarding the issue of what actions by nonlawyers (including title companies) constitute the unauthorized practice of law in connection with real estate transactions. The article also discusses various state statutes and administrative rules that address this issue, as well as the American Bar Association's proposed Model Definition of the Practice of Law.
This article discusses a recent Illinois appellate court decision, Midfirst Bank v. Abney, which upheld the application of the “Moorman Doctrine” in Illinois, i.e., that a title insurer is not in the business of supplying information to third parties. The court held that, under the doctrine, there could be no claim against the title agency that examined the title and failed to disclose the existence of an outstanding mortgage lien. The court held that the “negligent misrepresentation” exception to the Moorman Doctrine did not apply in this case because a title insurer (or agent) is not in the business of supplying information.
