Tuesday, December 25, 2007

Bill Limits Title Insurance Sales

A bill that requires licensure of individual title insurance agents and bars licensed insurance agents from selling title insurance was approved by the House Wednesday.

A floor substitute for House Bill 3176, by Rep. Richard Phillips, R-Warr Acres, also prohibits abstractors and attorneys from acting as a title insurance agent unless licensed to do so.

Phillips said insurance commissioner John Crawford interprets current law as providing that only abstractors can sell title insurance, an interpretation that affects about 29 individuals who could offer title insurance under a previous commissioner's interpretation. Currently, Phillips said, real estate closing firms sometimes employ attorneys to countersign title policies, a practice he said frowned upon by Crawford and abstractors. Under the bill, title insurance agents would have to be state residents, obtain a surety bond of not to exceed $50,000, file an annual financial statement with the state insurance commissioner and disclose on each policy any other real estate, abstractor or title business in which the agency is engaged. A licensed title insurance agency without an abstractor or licensed attorney as a partner or owner would have to contract with or employ a licensed abstractor or attorney who is also licensed as a title insurance agent to countersign title insurance policies. Title insurance agencies licensed on or before the bill becomes effective would have until July 1, 2001, to comply with the measure. The bill passed 67-31, but upon a vote of 66-32 its emergency failed.

Copyright 1998
Provided by ProQuest Information and Learning Company. All rights Reserved

Consider Title Insurance For Yourself

In terms of real estate, a title is the piece of paper that proves your house is really your house. It is your deed.

That piece of paper is so important that before you get it the lender will insist on a title search. And just in case that search misses something, your lender will also insist that you buy title insurance to protect his or her investment. Even though it is not required, you should also consider purchasing title insurance to protect yourself.

A title search is a records search to see who actually owns the house. Does the seller have a clear title to it? If two people own a home, for example, both must agree to sell it. If one tries to sell it while the other does not want it sold, the whole matter could end up in court.

A side note: If you bought the house with someone else whose name is still on the deed, such as an ex-spouse, that person has a say in whether or not the house can be sold. Make sure the house is completely in your name or that the other deed holder agrees to the sale before you try to sell it.

Another question to be resolved in a title search is if there has ever been a dispute over who owned the property at any time since legal ownership was first established.

Liens can also complicate a title. Let's say the homeowner has been sued and the person suing has a lien against the house. Let's say, for example, a contractor remodeled a bathroom and was not paid for the work.

That lien will have to be settled before the property can be sold. The IRS and other government agencies often file liens against property to collect back taxes or fines. What usually happens is that the lien holders get paid first out of the proceeds of the sale.

In theory, a title search establishes that no one else can claim to own, or have any direct financial interest in, a piece of property. Sometimes, however, claims don't show up until years later. That is why title searches routinely go back to the first time that piece of property was sold.

Consider yourself Owner 1. The person you are buying it from is Owner 2. The person he bought it from is Owner 3, and so on. Let's say there was a problem with Owner 4 or 5, or anywhere down the line.

Now, years later, someone comes forward with legal proof that there was a problem when the home was sold from Owner 6 to Owner 5, or from Owner 5 to Owner 4, and challenges your right to the property.

Problems also can arise after a major disaster, such as a fire, flood or earthquake. In some cases, the municipal records themselves are destroyed. How do you prove ownership then? What do you do when the records are missing or in dispute?

That's when your title insurance becomes involved. At that point it becomes the insurance company's problem, not your lender's, and not yours if you have purchased title insurance for yourself.

Two of the most common types of title problems that occur have to do with inheritances and divorces. In cases of inheritance, a will could be challenged or contested, or another legal heir could appear years later, or there could be proof that fraud was committed at some point during or before the settlement. Perhaps someone passed him- or herself off as an heir who wasn't really an heir at all.

In the case of a contested divorce, separation or unhappy marriage, one spouse may use a "friend" to impersonate and forge the other spouse's signature, and then take the money and run. When the legal spouse or ex-spouse finds out the house has been sold, it becomes the current owner's problem. There have been cases when spouses coming back from long business trips, hospital stays or overseas assignments have discovered that their house has been sold and their spouse has left town with all the money.

There can also be problems when elderly parents are moved into a nursing home and their children decide to sell the house, especially if the parents, or even all of the children, are unaware of what is going on.

The fact that this could have happened six weeks, six months, six years or even 60 years ago does not change things. The court is concerned with legal ownership-- not occupancy. The fact that you paid for the house doesn't matter if the person who sold it to you had no right to sell it. Nor does it matter that the person who sold it to you thought that he/she had a right to do so.

The court's job is to determine who the last legal owner of the property was. Once that is settled the lawyers can step in and sue and countersue until the problem is resolved.

As long as you have title insurance, it becomes the insurance company's problem. You could think of title insurance as another way of saying "It's not my problem."

Buying title insurance for a home purchase to protect yourself from loss is a personal decision, but the pros and cons should be considered thoroughly before making up your mind.

Bill Steele is financial editor of Interest.com, a national publisher of mortgage rates and information.

Copyright The Chicago Sun-Times, Inc.
Provided by ProQuest Information and Learning Company. All rights Reserved.

Thursday, December 20, 2007

Condominium unit title insurance (page5)

Examples of these documents include a declaration, by-laws, plats and maps. See JOYCE PALOMAR, TITLE INSURANCE LAW, 9.07 (1997). ' See ALTA Endorsement 4 (Condominium), Appendix A, infra p. 194. The ALTA Condominium Endorsement Form 4 was adopted in New York on September 1, 1993.

8 See ALTA Endorsement 4.1 (Condominium), Appendix B, infra p. 196. Form 4 and Form 4.1 are identical with two exceptions. In those states where the association lien for common charges has been granted a super-priority status, Form 4.1 is used and assures only that the insured interest has priority and that no amount is due or lien is in existence for condominium association charges at the date of the policy.

ALTA Endorsement 4, supra note 7; ALTA Endorsement 4.1, supra note 8.

See, e.g., ALA. CODE 35-8A-401 to -417 (1991); N.C. GEN. STAT. 47C-4101 to -113 (1996). For example, the condominium acts in Alabama and North Carolina each have sections that require offering statements to provide specific information to purchasers. See ALA. CODE 35-8A-403 cmt.; N.C. GEN. STAT. 47C-4-103 cmt. The first comment to each of these sections notes that "[t]he best `consumer protection' that the law can provide to any purchaser is to insure that he has an opportunity to acquire an understanding of the nature of the products which he is purchasing." ALA. CODE 35-8A-403 cmt.; N.C. GEN. STAT. 47C-4-103 cmt. However, there is further explanation that such is "difficult to achieve" in connection with the purchase of condominiums "because of the complex nature of the bundle of rights and obligations which each unit owner obtains." ALA. CODE 35-8A-403 cmt.; N.C. GEN. STAT. 47C-4-103 cmt.

UNIF. CONDOMINIUM ACT (amended 1980), 7 U.L.A. 199 (1997). UNIF. COMMON INTEREST OWNERSHIP ACT, 7 U.L.A. 1 (1997).

See UNIF. CONDOMINIUM ACT 2-105, 7 U.L.A. at 244. See UNIF. CONDOMINIUM ACT 1-103(15), 7 U.L.A. at 214 (defining a "leasehold condominium" as "aa condominium in which all or a portion of the real estate is subject to a lease the expiration or termination of which will terminate the condominium or reduce its size").

See UNIF. CONDOMINIUM ACT 2-106 cmt. 3, 7 U.L.A. at 248 (explaining that its "requirements concerning leasehold condominiums . . . are not typically contained in the statutes of most states").

" See Richard J. Wirth, The Uniform Common Interest Ownership Act Nonresidential Use Exemption: When an Out May not Be an Out, 26 REAL PROP. PROB. & TR. J. 885, 886 (1992) (noting that Alaska, Colorado, Connecticut, Nevada, and West Virginia have enacted statutes based on the Act).

UNIF. CONDOMINIUM ACT 2-107, 7 U.L.A. at 250; see also UNIF. COMMON INTEREST OWNERSHIP ACT 2-107(a)(i), 7 U.L.A. at 59 (requiring an allocation in a condominium "a fraction or percentage of undivided interests in the common elements and in the common expenses of the association . . . and a portion of the votes in the association").


19 See, eg., N.Y. REAL PROP. LAW IW 339-d to -Ij (McKinney 1989 & Supp. 1999). See UNIF. CONDOMINIUM ACT 2-105, 7 U.L.A. at 248 (describing the differences between Alabama subsection (a)(12); New Mexico, omitting subsection (a)(13); North Carolina subsection (a)(5); and Rhode Island subsection (a)(2)); see also UNIF. CONDOMINIUM ACT 2-108, 7 U.L.A. at 250 (explaining the changes made in Alabama subsection (b) and North Carolina subsections (a),(b),and (c)).

it ALTA adp ?: .

22 ALTA Endorsement 4, supra note 7.

UNIF. COMMON INTEREST OWNERSHIP ACT 3-116(b), 7 U.L.A. at 122. 24 N.Y. REAL PROP. LAW 339-z(ii); cf MASS. ANN. LAWS ch. 183A, 21(a)(3) (Law. Co-op. 1996) (stating that by-laws can provide "[lor limitations upon the first mortgages of record or the types or categories thereof which shall have priority').

as UNIF. COMMON INTEREST OWNERSHIP ACT 3-116(b)(ii), 7 U.L.A. at 122. 26 Examples of such services include street maintenance, garbage collection, parks and recreational activities, and a security force. 27 ALTA Endorsement 4.1, supra note 8.

See also N.J. STAT. ANN. 46:8B-21(a) (West 1989 & Supp. 1998) (stating that a "common expense" lien "shall be effective from and after the time of recording in the public records of the county in which the unit is located of a claim of lien stating the description of the unit, the name of the record owner, the amount due and date when due").

29 ALTA Endorsement 4, supra note 7; ALTA Endorsement 4.1, supra note 8. so ALTA Endorsement 4, supra note 7; ALTA Endorsement 4.1, supra note 8. Sl ALTA Endorsement 4, supra note 7; ALTA Endorsement 4.1, supra note 8.

ALTA Endorsement 4, supra note 7; ALTA Endorsement 4.1, supra note 8. See generally PALOMAR, supra note 6.


* Counsel, Berkman, Henoch, Peterson & Peddy, P.C., Garden City, New York; Visiting Professor of Law, St. John's University School of Law, 1988-1992; Chief Counsel, The Title Guarantee Company, 1969-1979; Eastern Regional Counsel, Pioneer National Title Insurance Company (now Ticor Title Insurance Company), 19721979.

Copyright St. John's Law Review Association Winter 1999
Provided by ProQuest Information and Learning Company. All rights Reserved

Condominium unit title insurance (page4)

The ALTA Condominium Endorsement Form 4.1 of October 17, 1992 goes even further than insuring priority by substituting a new paragraph four in place of the paragraph four in the ALTA Condominium Endorsement Form 4 as follows: "Any charges or assessments provided for in the condominium statutes and condominium documents due and unpaid at Date of Policy."27

This Form 4.1 language insures that there are no unrecorded common expense liens unpaid as of the date of policy. Without this language an inchoate unpaid lien that existed at the date of the policy, but not filed or recorded until later, would not be covered by the policy as a post-policy lien. Under a statute such as New York Real Property Law section 339-aa, the common charges lien is effective only from and after the filing of a verified notice of the lien in the recording office in which the declaration is filed. Furthermore, the notice of lien must conform to the various requirements set forth in the statute.28

Paragraph five of both Endorsements insures against "[t]he failure of the unit and its common elements to be entitled by law to be assessed for real property taxes as a separate parcel."29

This entitlement to be separately assessed and taxed is an important attribute of being part of a condominium validly formed under a statute that provides for separate taxation. UCA section 1-105, UCIOA section 1-105, N.Y. Real Property Law section 339-Y all contain such provisions.

Paragraph six reads: "Any obligation to remove any improvements which exist at Date of Policy because of any present encroachments or because of any future unintentional encroachment of the common elements upon any unit or of any unit upon the common elements or another unit."30 This is a form of survey coverage assumed by the title insurer without the benefit of a survey; it is usually based upon a similar provision in the applicable condominium documents. In fact, it is not common conveyancing practice to require title surveys of individual condominium units in a multi-unit structure such as an apartment house. If the unit is a separate structure similar to a single family house, or even if it is a structure attached to other units, such as one of a row of houses, a title survey may be available. In those cases, unless the condominium documents or the applicable statute covers the problem, a survey reading should be done before the insurance is issued; otherwise it becomes a pure business risk on the part of the title insurer.

The last numbered paragraph is number seven which states: "The failure of title by reason of a right of first refusal to purchase the unit and its common elements which was exercised or could have been exercised at Date of Policy."31 Many condominium documents contain a right of first refusal in favor of the association (board of managers) as a means of limited control over a sale to a purchaser deemed to be "undesirable." In practice, it is rarely exercised, if for no other reason, because most condominium associations do not maintain a sufficient reserve fund to exercise such an option. In any event, this provision gives the unit purchaser or its mortgagee comfort that either the provision has been complied with or that there was no such provision. The last and unnumbered paragraph of the endorsement is one that should be and usually is boilerplate in all endorsements added to a title policy:

This endorsement is made a part of the policy and is subject to all of the terms and provisions thereof and of any prior endorsements thereto. Except to the extent expressly stated, it neither modifies any of the terms and provisions of the policy and any prior endorsements, nor does it extend the effective date of the policy and any prior endorsements, nor does it increase the face amount thereof.32

It should act as a reminder that the endorsement is only one part of the title policy and that none of the insuring provisions stand alone. Each provision must be read in the context of the entire policy, including the boilerplate exclusions, conditions and stipulations, Schedule B exceptions and any other endorsements.

Some of the protections contained in the Condominium Endorsement are also available to purchasers and lenders of units in a planned unit development ("PUD"). For those, ALTA has adopted its March 27, 1992, standard endorsements 5 and 5.1. These endorsements cover matters similar to those contained in paragraphs three, four, five, and seven of the Forms 4 and 4.1, except that the language of paragraph six in those forms is somewhat modified in paragraph three of the PUD forms to read: "The enforced removal of any existing structure on the land (other than a boundary wall or fence) because it encroaches onto adjoining land or onto any easements."33

Every title insurance policy should contain one of the ALTA Condominium Endorsement forms. It provides additional and important protection for purchasers and lenders. Notwithstanding the various assurances in the title insurance, a purchaser or lender is unwise to rely on title insurance alone without a complete understanding of what is contained in the declaration, bylaws, and any other recorded document that affects the entire project. Whatever is contained in that document will be "excepted" from the title insurance coverage by its inclusion in Schedule B-1 of the title policy. Although the ALTA Condominium Endorsement primarily deals with the most common problems which usually require attention, this does not mean that there is nothing else in the documents for a particular condominium that may not be equally significant. The only way to make such a determination is by a reading and analysis of the documents, preferably by a competent lawyer.

1ALTA Owner's Policy, at IV-9 (October 17,1992) [hereinafter Owner's Policy, at IV-9 (October 17, 1992) (hereinafter Owner's Policy]. See ALTA Loan Policy, at IV-13 (October 17, 1992) [hereinafter Loan Policy].

3 In New York, insuring provision 7 is deleted from the Loan Policy. Instead, a broader form of coverage is added to both the Loan Policy and the Owner's Policy by a New York Endorsement which provides insurance against loss by reason of "[a]ny statutory lien for services, labor or materials furnished prior to the date hereof, and which has now gained or which may hereafter gain priority over the estate or interest of the insured as shown in Schedule A of this policy." Standard New York Endorsement for Use with ALTA Loan Policy, at V-3 (September 1, 1993). 4 Loan Policy, supra note 2, at IV-13.

Condominium unit title insurance (page3)

It should be noted that the insurance only deals with "present violations" as of the date of the policy. It is difficult to imagine how the violation of a restrictive covenant by the seller might result in loss or damage to the new purchaser or mortgagee.

Paragraph four in ALTA Condominium Endorsement Form 4, although seemingly applicable to loan policy coverage only, can actually be used for either form of policy. Paragraph four insures against loss or damage sustained by reason of: The priority of any lien for charges and assessments provided for in the condominium statutes and condominium documents over the lien of any insured first mortgage identified in Schedule A.22

The mortgage lien priority insured only deals with charges and assessments that were given priority by the applicable condominium statute. This usually involves the lien in favor of the condominium association for common expenses and charges. Underwriting requires an examination and understanding of the applicable statutory provision. Without attempting to review all of the statutes, both section 3-115(b) of the UCA and section 3116 of the UCIOA give the condominium association a lien on the unit for unpaid assessments and fines levied against the unit and give that lien a priority by stating that:

A lien under this section is prior to all other liens and encumbrances on a unit except (i) liens and encumbrances recorded before the recordation of the declaration. . (ii) a first security interest on the unit recorded before the date on which the assessment sought to be enforced became delinquent . . . and (iii) liens for real estate taxes and other governmental assessments or charges against the unit . . .23

The New York statute preserves the same priority for "a first mortgage of record," and also gives the same priority to a "subordinate mortgage of record" held by the New York Job Development Authority or the New York State Urban Development Corporation.24

Section 3-116(b)(ii) of the UCIOA contains similar provisions, except that the common expense lien is given a priority even over the first security interest "to the extent of the common expense assessments based on the periodic budget adopted by the association pursuant to Section 3-115(a) which would have become due in the absence of acceleration during the 6 months immediately preceding institution of an action to enforce the lien."25

Since the title policy speaks only as of its effective date, the Condominium Endorsement can only give mortgagee protection against the first six months of common expenses in a UCIOA state. Some title underwriters may even delete that risk by a modification of the coverage. A closing requirement usually requires satisfactory proof of payment of all common expense charges as of the policy date.

Because of the importance to the condominium of the ability to collect the common charges in order to provide the various services to the unit owners, some states have amended their condominium statutes to give the association a limited "super lien" that would even prime a prior unit mortgage. The argument made by the associations supporting such legislation has a certain validity with respect to large developments where the association performs many of the services that would normally be performed by a municipality.26 The argument that is made is that common charges should be in a category similar to local real estate taxes. No title insurer can provide protection against loss of priority to a future lien under such legislation.

Condominium unit title insurance (page2)

While paragraph one of the Condominium Endorsement deals with the unit not being part of a statutory condominium, paragraph two deals with the adverse effect on title to the unit if some of the required statutory documents do not comply with all of the statutory requirements. Usually, the basic statutory condominium documents are the declaration, by-laws, and plans.

Many of the condominium statutes require that the declaration or other documents either contain certain provisions or conform to standards set forth in the statute. For instance, UCA section 2-105 sets forth fourteen necessary contents of the declaration of a condominium.13 With respect to "Flexible Condominiums" and "Leasehold Condominiums,"14 both of which are impermissible in many states,15 there are additional statutory requirements in sections 2-106 and 2-107. In the states that have adopted the UCIOA, its section 2-105 also contains fourteen requirements.16 Similarly, there frequently are other requirements, such as the "Allocation of Common Element Interests, Votes, and Common Expense Liabilities"17 and the requirements as to "Plats and Plans."18

Each state has its own requirements as set forth in its own act.19 Even those states that have adopted the UCA or UCIOA frequently have some variations from the uniform act.20 A title insurance policy containing a Condominium Endorsement provides valuable protection with respect to the compliance of the condominium regime and the various documents with the applicable statute.

Paragraph three of the ALTA Endorsement Form 4 was amended as of March 27, 1992 to exclude some environmental protection coverage (as underlined below), so that it now insures against loss or damage sustained by reason of:

Present violations of any restrictive covenants which restrict the use of the unit and its common elements and which are contained in the condominium documents, except violations relating to environmental protection unless a notice of a violation thereof has been recorded or filed in the public records and is not excepted in Schedule B. The restrictive covenants do not contain any provisions which will cause a forfeiture or reversion of title.21

This additional insuring provision can be significant. It is quite common for one or more of the "condominium documents" to create restrictions, although it would be highly unusual for a violation to cause a forfeiture or reversion of title. It is not clear whether this protection would apply to a set of restrictions affecting all or part of the condominium recorded by a developer as a separate document, as distinguished from the declaration, bylaws, plats, and plans that are "required" by the applicable condominium statute.

A careful reading of this coverage prompts additional questions. Although most condominiums are of residential units only, the ALTA Condominium Endorsement could also conceivably be utilized for non-residential units. Insurance against violation of a use restriction is normally avoided by a title underwriter, if for no other reason than the difficulty in ascertaining the type of use. The proliferation of home computers, for example, has increased the number of businesses being run out of people's homes. Thus, questions may also arise as to whether local zoning regulations regarding use, or some other standard, would apply to an "in home" business or professional use.

Condominium unit title insurance

A condominium unit is real property and, as such, is insurable under all current forms of title insurance policies, including the almost nationally accepted forms of the American Land Title Association ("ALTA"). As such, the owner's policy insures against loss sustained by the insured by reason of the following four coverages:

1. Title to the estate or interest described in Schedule A being vested other than as stated therein;

2. Any defect in, or lien or encumbrance on, the title;

3. Unmarketability of the title;

4. Lack of a right of access to and from the land.l The ALTA loan policy2 furnishes all four coverages to a condominium unit mortgagee plus four additional coverages:

5. The invalidity or unenforceability of the lien of the insured mortgage upon the title;

6. The priority of any lien or encumbrance over the lien of the insured mortgage;

7. Lack of priority of the lien of the insured mortgage over any statutory lien for services, labor or material: (a) arising from an improvement or work related to the land which is contracted for or commenced prior to the Date of Policy; or

(b) arising from an improvement or work related to the land which is contracted for or commenced subsequent to Date of Policy and which is financed in whole or in part by proceeds of the indebtedness secured by the insured mortgage, which at Date of Policy the insured has advanced or is obligated to advance;3

8. The invalidity or unenforceability of any assignment of the insured mortgage, provided the assignment is shown in Schedule A, or the failure of the assignment shown in Schedule A to vest title to the insured mortgage in the named insured assignee free and clear of all liens.4

Because a condominium unit is a unique form of real property whose ownership is normally founded upon compliance with a state statute and certain documentation,5 the title insurance industry developed a form of condominium endorsement. Without a special endorsement, standard exclusions from coverage in both the Owner's Policy and the Loan Policy would leave a condominium unit owner or mortgagee unprotected against violation of state condominium statutes or subject to liens for common charges.6 The endorsement to supplement the basic insuring provisions of ALTA policies was promulgated at the urging of attorneys for condominium unit owners and their mortgagees. The ALTA Condominium Endorsement Form 4 became available on June 1, 1987. The endorsement was later revised on March 27, 1992,7 and a supplementary endorsement Form 4.1 was adopted by ALTA on October 17, 1992.8

This article will examine the need for these endorsements and what they add to the basic ALTA policy coverage. Initially, it must be noted that a title examination normally will disclose the recording of the declaration, by-laws, plans, and possibly a set of restrictive covenants, easements, etc. These documents will be listed on Schedule B-1 of the title policy.

The basic thrust of the Condominium Endorsement is to insure against loss by reason of non-compliance with the requirements of the applicable condominium statutes and other provisions frequently found in the documents. It insures against most violations of any restrictive covenants contained in the condominium documents and provides insurance to a condominium unit first mortgagee against loss of priority of the insured mortgage by reason of charges and assessments provided for in the condominium documents. Additionally, the ALTA Condominium Endorsement insures against any obligation to remove improvements due to encroachments by other units or any of the common elements, failure of title resulting from a right of first refusal, or loss or damage by reason of the unit not being entitled by law to be assessed as a separate tax parcel. Of course, a special condominium endorsement can be negotiated and custom crafted, subject to state regulatory restrictions, but the standard ALTA endorsements are usually the only ones available and utilized.

This article will examine the seven additional items of insurance coverage contained in the ALTA Condominium Endorsement, noting the variations between the original June 1, 1987, endorsement, the March 27, 1992, revisions, and its variation from the October 17, 1992, Form 4.1.

Paragraphs one and two in each of the forms are identical and read as follows:

The Company insures the insured against loss or damage sustained by reason of:

1. The failure of the unit identified in Schedule A and its common elements to be part of a condominium within the meaning of the condominium statutes of the jurisdiction in which the unit and its common elements are located.

2. The failure of the documents required by the condominium statutes to comply with the requirements of the statutes to the extent that such failure affects the title to the unit and its common elements.9

These provisions insure that the unit is part of a valid statutory condominium and that the documents do not adversely affect title to the unit. In most states, it is possible to create what is sometimes referred to as a "common law condominium." With proper and extensive documentation, it is possible to convey a physical part of a building. That documentation should deal with the relationship of the parcel conveyed to the balance of the structure and the land upon which it stands. However, the contemporary notion of condominiums existed in various parts of the world hundreds of years ago without any known special statutory basis. It is normally preferable, however, to be in compliance with the condominium statute of the particular jurisdiction, since those statutes not only sanction this type of subdivision of the parcel, but also create valuable additional rights that could not be claimed by a common law condominium. Although the various state statutes differ in numerous details, these statutes usually create valuable and desirable "bundles of rights" for purchasers, owners, and lenders. Those rights usually deal with the operation of the condominium, termination, eminent domain, insurance, separate unit taxation, and the creation and priority of liens for common charges. Some statutes also contain valuable consumer protection provisions.lo Subsequent and more sophisticated statutes such as the Uniform Condominium Act ("UCA")11 and the Uniform Common Interest Ownership Act ("UCIOA")12 have not only provided for the aforementioned rights but have provided flexibility as to expansion or contraction of a condominium, leasehold condominiums, borrowing powers, and numerous other matters.

Chicago Title Insurance Company

Chicago Title Insurance Company has appointed James G. Hyland to the position of assistant vice president and counsel to its Mineola office. Hyland was formerly chief underwriting counsel to Stewart Title Insurance Company in New York City.
COPYRIGHT 2006 Hagedorn Publication
COPYRIGHT 2006 Gale Group

Wednesday, December 5, 2007

The Importance of Purchasing Title Insurance

The Importance of Purchasing Title Insurance
Every day, buyers put in offers on Philadelphia Condominiums they would like to purchase. Such offers are usually contingent upon certain inspections such as a termite, mold, or home inspection. This is a great idea especially because purchasing a home-whether it's an Old City Loft or a Rittenhouse Square Condominium-could be the biggest and most important purchase of someone's life. But for some reason, no one ever seems as concerned about the condition of their new condominium's title. Most people may not even realize that purchasing a home with a "moldy" title could end up causing you more financially, not to mention emotionally, than having to replace a roof.

Before I continue, let me explain that in the State of Pennsylvania, title insurance is a standard rate based on sales price and regulated by the "Title Insurance Rating Bureau of Pennsylvania" as you can see on most title company websites like this one: http://www.rcatitle.com/. Just Click on the "title calculator". Depending on the transaction, whether the condo or home had a title insurance policy in the last 10 years or if it is a new construction or condominium conversion you may be entitled to a discounted rate such as reissue rate (a 10% discount) or substitution rate (a 20% discount).

Another important factor here is that if you are obtaining a mortgage to purchase your condominium or home, your lender will force you to obtain a "lender's title insurance policy" based on loan amount but you will not be forced to obtain an "owner's policy". Most of the time, your loan amount is very close to your purchase price so if you must obtain a "lender's policy" it would be very silly not to spend the extra hundred or so dollars to go ahead and purchase the title insurance policy for the entire purchase price. For example: If your Society Hill condominium purchase price is $500,000 and your loan amount is $470,000, you would be forced by your lender to pay approximately $2710 for title insurance that only protects your mortgage company, not you. If you decided to obtain an owner's policy for $2860, both you and your lender would be issued an all-inclusive policy that would cover you and/or the lender in the event that a problem came up on your title. That is the best $150 you can spend, in my opinion!

I know most people arenot 100% sure what title insurance actually covers?" Let me give you a few scenarios I have encountered while working with a title company:

Perhaps you are purchasing a brand new construction condo in Old City. Well, perhaps the builder obtained a $2 Million mortgage to rehab the building. If you purchase title insurance, your title company will force the builder to pay a substantial amount of the mortgage which will then force the bank to give your title company an original "Partial Release of Mortgage" to file a on your unit with the City of Philadelphia Recorder of Deeds. What this means, is say Unit 302 (your unit) will be released from any and all responsibility for the balance of that mortgage. If for some reason, this does not occur and the builder never pays his mortgage in full, when to sell your unit in 5 or 10 years, an unsatisfied $2 Million mortgage will show up on the new title report and you will not be able to sell your unit until that mortgage is released with the City of Philadelphia Recorder of Deeds.

Let's say that same newly constructed Old City loft produces a clean title at closing. No liens, no judgments, all taxes are paid. Well, not that you see the clean report, you decide only to pay for the lender's policy and save yourself $200. The report was clean so there is no reason to pay extra for nothing right?.....wrong. Let's say the sub-contractor still hasn't gotten paid for work he completed in your unit 3 months before you bought the place. Guess what? If you didn't purchase an owner's title insurance policy, the sub-contractor can place a lien against your specific unit and guess who will be legally responsible for that lien. And if you don't pay it, you will also be responsible for the interest and penalties and court costs and you may be required to show up for a small claims hearing. Your credit may even be affected. The only way at that point to try and get your money back would be for you to file a lien against the builder you purchased from-that is, if you can find him at that point.

Another scary situation most people do not think about is the fact that the person you are buying from may not be the rightful owner of the loft or condominium you are purchasing. Perhaps, the owner passed away and left the home to his or her heirs in a will. In that case, the title company would review the will and make sure the will was filed correctly and be sure that every individual that may be entitled to a percentage of the home signs the deed and has their original signature notarized. Not to mention that any and all inheritance tax that may be due and payable is accounted for, collected, and paid. Unpaid inheritance tax is something that could come up as a lien or judgment against your Society Hill condo years down the line and with no title insurance, you would be held responsible to pay it as the owner of record. Not to mention the fear of a long lost son or daughter of the previous owner that you may not have known about coming along and claiming to have rights to a percentage of ownership of your home.

Powers of attorney can get pretty tricky too. Again, I think the best bet when dealing with a seller that wants to use a power of attorney, is to get a title insurance company to insure the transaction. The thing here is that if "Jane" has power of attorney for the actual owner of the property being sold, "John", you want to be sure that everything here is in order. I once encountered a situation where the actual homeowner, John had passed away. His passing actually made Jane's Power of Attorney null and void. Jane went ahead and sold his property here in Center City Philadelphia anyway. She signed over the deed to an innocent buyer and the documents were recorded with the City of Philadelphia Recorder of Deeds. The buyer moved in and got himself settled and bought new furniture only to check the mail a few months later and find a letter from an attorney representing John's wife (not Jane, Nancy) asking him to get out of her house or pay her for it. Since she was John's sole heir, the house was hers and Jane did not have any right to sell it. Because the buyer was smart enough to have purchased title insurance, his title company was able to negotiate a deal with Nancy and her attorney and pay her a lump sum to rightfully sign over the house to the innocent buyer. I wonder what would have happened to him had he not purchased that title insurance policy? I hope I never have to know.

In conclusion, I'd just like to say that as a buyer, the title company works for you. Sellers or mortgage companies in Pennsylvania are not allowed to bully you into using the title company of their choice. In Pennsylvania, you will receive the same insurance policy for the same price no matter which comapny you choose. Go ahead and shop around. Look for a title company like Trident Land Transfer. They don't have any closing fee. You may want to see some references as well or maybe take a look at the company's history and find out which is their underwriter. Whichever company you decide to use, I urge you to go ahead and protect one of your biggest investments and purchase that title insurance policy. Remember, you wouldn't buy a home with a bad foundation, so please don't buy a Philadelphia Condominium or any other home with an "unstable" title.

Mark Wade has been selling Philadelphia Condos and Lofts for 19 years and is a Realtor with Prudential Fox and Roach Realtors in Society Hill. www.CenterCity.com . If you would like additional information about title insurance or any other settlement related topic, free to give him a call at 215-521-1523 or send him an email at Mark@CenterCity.com

Monday, December 3, 2007

The basics of title insurance

The basics of title insurance.

Buying a home is a long process that requires a lot of different things to all come together at one time.

Once you have gotten past one hurdle, you find that there is something else you have forgotten to do or think about in your home buying transaction.

One thing that is commonly cast to the side is the title insurance.
When you line up your mortgage and financing, the lender will probably assign a title company to your home, but that doesn’t mean you should just stop there and forget about it all together.

It is important that you research the title company and understand the title process before you proceed so you do not run into problems down the road.

This can save you a lot of time, energy and stress in the long run.
A recent article by Bobbie Sage of about.com, “What you need to know about your title insurance company,” discusses some important things that every homeowner should know about title insurance and the company you are working with.

So for all of you out there who are buying a home but do not exactly know what title insurance is, we will explain that first.
“Purchasing your home is an important decision. But how does one know that the property they purchased has a clear title? Because unknown problems can be hidden in the history of a property's title, homeowners pay a title insurance company for title insurance.”
“Title insurance companies provide title insurance. Title insurance is an insurance policy that guarantees the property title is free from the problems of hidden liens and claims.”

The main job of a title insurance company is to make sure that the title on your home is free and clear, or at least tell you if it isn’t.
In most cases, there will be no trouble, but in some instances there will be things found on a title that could cause a lot of problems and trouble for a new homeowner if they aren’t taken care of in advance.
“Possible hidden title problems your title insurance company may find can include: Errors or omissions in deeds, Mistakes in examining records, Forgery, Undisclosed heirs, Liens for unpaid taxes and Liens by contractors. Title insurance pays for title companies to search for problems in a property's title by examining public records.”

Although a title insurance company will most likely be initially provided for you, you definitely do not have to go with this company.

You should shop around and see which title insurance will offer the services you need at the best cost.
After all, you are already paying a lot of money just to buy a house, so it is helpful to save money whenever possible. Article Source: http://www.ArticlesAlley.com

Friday, November 23, 2007

Types of Insurance

Types of insurance

Any risk that can be quantified can potentially be insured. Among the different types of commercially available insurance are:

Types of insurance--Automobile insurance
known in the UK as motor insurance, is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself.
Throughout most of the United States an auto insurance policy is required to legally operate a motor vehicle on public roads.
In some jurisdictions, bodily injury compensation for automobile accident victims has been changed to a no fault system, which reduces or eliminates the ability to sue for compensation but provides automatic eligibility for benefits.

Types of insurance--Aviation insurance
insures against hull, spares, deductible, hull war and liability risks.

Types of insurance--Boiler insurance
(also known as boiler and machinery insurance or equipment breakdown insurance) insures against accidental physical damage to equipment or machinery.
Builder's risk insurance insures against the risk of physical loss or damage to property during construction.
Builder's risk insurance is typically written on an "all risk" basis covering damage due to any cause (including the negligence of the insured) not otherwise expressly excluded.

Types of insurance--Casualty insurance
insures against accidents, not necessarily tied to any specific property.

Types of insurance--Credit insurance
repays some or all of a loan back when certain things happen to the borrower such as unemployment, disability, or death.

Types of insurance--Crime insurance
insures the policyholder against losses arising from the criminal acts of third parties. For example, a company can obtain crime insurance to cover losses arising from theft or embezzlement.

Types of insurance--Crop insurance
Farmers use crop insurance to reduce or manage various risks associated with growing crops.
Such risks include crop loss or damage caused by weather, hail, drought, frost damage, insects, or disease, for instance."

Types of insurance--Defense Base Act
Workers' compensation or DBA Insurance provides coverage for civilian workers hired by the government to perform contracts outside the US and Canada.
DBA is required for all US citizens, US residents, US Green Card holders, and all employees or subcontractors hired on overseas government contracts.
Depending on the country, Foreign Nationals must also be covered under DBA.
This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.

Types of insurance--Directors and officers liability insurance
protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes incurred by directors and officers for which they are liable.
In the industry, it is usually called "D&O" for short.

Types of insurance--Expatriate insurance
provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits.

Types of insurance--Financial loss insurance
protects individuals and companies against various financial risks.
For example, a business might purchase cover to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time.
Insurance might also cover the failure of a creditor to pay money it owes to the insured. This type of insurance is frequently referred to as "business interruption insurance."
Fidelity bonds and surety bonds are included in this category, although these products provide a benefit to a third party (the "obligee") in the event the insured party (usually referred to as the "obligor") fails to perform its obligations under a contract with the obligee.

Types of insurance--Health insurance policies
will often cover the cost of private medical treatments if the National Health Service in the UK (NHS) or other publicly-funded health programs do not pay for them.
It will often result in quicker health care where better facilities are available.

Types of insurance--Disability insurance policies
provide financial support in the event the policyholder is unable to work because of disabling illness or injury.
It provides monthly support to help pay such obligations as mortgages and credit cards.

Types of insurance--Liability insurance
covers legal claims against the insured.
For example, a homeowner's insurance policy will normally include liability coverage which will protect the insured in the event of a claim brought by someone who slips and falls on the property, and brings a lawsuit for her injuries.
Similarly, a doctor may purchase liability insurance to cover any legal claims against him if his negligence (carelessness) in treating a patient caused the patient injury and monetary harm.
The protection offered by a liability insurance policy is two fold:
-a legal defense in the event of a lawsuit commenced against the policyholder
-indemnification (payment on behalf of the insured) with respect to a settlement or court verdict.
Liability policies typically cover only the negligence of the insured, and will not apply to results of willful or intentional acts by the insured.

Types of insurance--Marine cargo insurance
covers physical loss or damage to property while in transit via sea or inland waterways.
Marine insurance typically refers to coverage of physical damage to the transporting vessel.
Many marine insurance underwriters will include "time element" coverage in such policies, which extends the indemnity to cover loss of profit and other business expenses attributable to the delay caused by a covered loss.

Types of insurance--Purchase insurance
is aimed at providing protection on the products people purchase.
Purchase insurance can cover individual purchase protection, warranties, guarantees, care plans and even mobile phone insurance.
Such insurance is normally very limited in the scope of problems that are covered by the policy.

Types of insurance--Life insurance
provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for burial, funeral and other final expenses.
Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.

Types of insurance--Annuities
provide a stream of payments and are generally classified as insurance because they are issued by insurance companies and regulated as insurance and require the same kinds of actuarial and investment management expertise that life insurance requires.
Annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources.
In that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance.

Types of insurance--Total permanent disability insurance
provides benefits when a person is permanently disabled and can no longer work in their profession, often taken as an adjunct to life insurance.

Types of insurance--Locked funds insurance
is a little-known hybrid insurance policy jointly issued by governments and banks.
It is used to protect public funds from tamper by unauthorized parties.
In special cases, a government may authorise its use in protecting semi-private funds which are liable to tamper.
The terms of this type of insurance are usually very strict.
Therefore it is used only in extreme cases where maximum security of funds is required.

Types of insurance--Marine insurance
covers the loss or damage of goods at sea.
Marine insurance typically compensates the owner of merchandise for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier.

Types of insurance--Nuclear incident insurance
covers damages resulting from an incident involving radio activated materials and is generally arranged at the national level.
(For the United States, see the Price-Anderson Nuclear Industries Indemnity Act.)

Types of insurance--Environmental liability insurance
protects the insured from bodily injury, property damage and cleanup costs as a result of the dispersal, release or escape of pollutants.

Types of insurance--Pet insurance
insures pets against accidents and illnesses - some companies cover routine/wellness care and burial, as well.

Types of insurance--Political risk insurance
can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.

Types of insurance--Professional indemnity insurance
is normally a mandatory requirement for professional practitioners such as architects, lawyers, doctors and accountants to provide insurance cover against potential negligence claims.
Non-licensed professionals may also purchase malpractice insurance, in which case it is commonly called errors and omissions insurance and covers a service provider for claims made against him that arise out of the performance of specified professional services.
For instance, a web site designer can obtain E&O insurance to cover her for certain claims made by third parties that arise out of negligent performance of web site development services.

Types of insurance--Property insurance
provides protection against risks to property, such as fire, theft or weather damage.
This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance.

Types of insurance--Terrorism insurance
provides protection against any loss or damage caused by terrorist activities.

Types of insurance--Title insurance
provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in conjunction with a search of the public records performed at the time of a real estate transaction.

Types of insurance--Travel insurance
is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, lost of personal belongings, travel delay, personal liabilities, etc.

Types of insurance--Workers' compensation insurance
replaces all or part of a worker's wages lost and accompanying medical expense incurred because of a job-related injury.
A single policy may cover risks in one or more of the categories set forth above. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of health insurance for medical expenses of guests who are injured on the owner's property.
Potential sources of risk that may give rise to claims are known as "perils". Examples of perils might be fire, theft, earthquake, and hurricane, among many others. An insurance policy will set out in detail which perils are covered by the policy and which are not.

NEXT ARTICLE WE WILL LEARN ABOUT: Insurer’s Business Model......

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Sunday, November 11, 2007

Title Insurance Glossary

Title Insurance Glossary


Abstract of Title
A summary of the public records
affecting the title to a particular piece of land. An attorney or title
insurance company officer creates the abstract of title by examining
all recorded instruments (documents) relating to a specific piece of
property, such as easements, liens, mortgages, etc.
to touch or border upon. For example, a piece of land
bordering on a street or an adjoining property is said to abut such
street or property.
a natural increase of land along the shores of a body of water.
a formal declaration before a notary public
or qualified officer that the person signing a document is doing so
voluntarily and using his or her legal name and signature; popularly
called notarizing.
Actual notice
Information that can be observed, heard, or otherwise sensed.
to pay the debts and finalize up the business of a deceased person's estate.
Adverse Possession
acquisition of title to real property through continued occupation over a period of time (usually five years); title acq
uired in this way is not considered marketable until established by court proceedings against the owner of record.
a written statement or declaration that is
sworn to or affirmed before somebody who has the authority to
administer an oath or affirmation.
a legally binding contract made between two or more persons.
Allodial Tenure
the absolute ownership of real estate
which is subject to inheritance by the owner's heirs or to disposition
by the owner as he sees fit, as contrasted with the feudal system of
ownership. Allodial tenure is characteristic of ownership in the United
the increasing of land, especially along river
banks, caused by the natural deposits and build-up of sediment. Such
sediment is called alluvian.
anything incidental or belonging to land
that might be considered part of the property, such as an improvement
or an easement for ingress and egress.
belonging to.
a word used in the title industry which refers to simplified forms of
land descriptions arbitrarily used in indexing in title plants in lieu
of the more involved and complex descriptions contained in deeds,
mortgages and other real estate instruments.
Assessed valuation

value placed on property by the count assessor; used as a basis for computing property taxes.
Assessment bond

an obligation to pay for costs of local improvements such as sidewalks, sewers, or street lighting.
the person who receives ownership of a contract by transfer by another
a transfer in writing of one's interest in something, as to assign an interest in a promissory note and deed of trust.
the act of a sheriff or other court officer in
taking possession of a person or property under the authority and
direction of a write or order issued by a court.
Attorney in fact
one who holds a power of attorney from another allowing him or her
to execute a legal document, such as a deed, mortgage, on behalf of the
Attorney's Opinion
the written statement of an attorney setting forth what he believe to be the condition of a real estate title.

American Land Title Association
ALTA Title Insurance Policy
American Land Title
Association combination of various policies and endorsements that
lenders usually require when making a loan; expands normal coverage to
include unrecorded mechanic's liens, unrecorded physical easements,
facts not revealed by a physical survey, water and mineral rights, and
the right of parties in possession such as buyers who have recorded
claims and tenants.
a change or shift in a water boundary resulting in loss of land by an owner and the acquiring of such land by another.


Back Title Letter
Also called "Back Title Certificate" in some areas, and "Starter"
in others. When title have been previously examined up to a certain
date by reliable examiners, title companies sometimes give subsequent
examiners of such titles a letter which sets forth the condition of the
title at the time of the previous examination and authorizes them to
begin their subsequent examination with the terminal date of the
previous examination.
Bargain and Sale Deed
also called "Fee Simple Deed." A deed of conveyance which presumes
that the grantor holds title, but which makes no warranty with respect
to the title.
a person who is eligible to receive funds or property under the terms and provisions of a will or trust or insurance policy.
Bill of Sale
the instrument by which title to personal property (not real property) is transferred.
written confirmation of insurance coverage provided by an insurer prior to issuance of the actual policy.
a written promise to pay to the bearer or owner a
stated sum of money at a specified time, with interest usually
represented by interest coupons attached to the bond. Also a written
commitment assuring the payment of a stipulated sum of money. A certificate of debt
issued by a government or corporation guaranteeing payment to bearer of
a specified sum of money, plus interest, on a specified future date.
Book and page
location of a recorded document in an office of records referenced by
separate book number and page number, and within that book, documents
are listed chronologically and alphanumerically. Frequently replaced by
document number or official records.
Bundle of Rights
framework designed to help understand the concept of liens,
encumbrances, and rights in title to real estate, and how they are
separate but interelate.


Certificate of Title
Written opinion by an attorney that ownership of a particular property is as stated in his or her certificate.
Chain of Title
The history of ownership of a parcel of real estate; each deed or other instrument transferring the title is called a link and all of these links make up the chain of title.
personal property.
a right to assert a demand for payment of money due; or the
surrender or delivery of possession of property or the recognition of
some right.
Clear Title
title that is free of liens or legal questions as to ownership of the property
an attorney or other person responsible for orchestrating a
closing, often including drafting legal documents, receipting and
explaining documents, handling funds, and meting terms of the purchase
agreement, lender requirements, and Title Company.
In some areas called "settlement" or "escrow." Process of
completing a real estate transaction during which deeds, mortgages,
leases and other required instruments are signed and/or delivered, an
accounting between the parties is made, the money is disbursed, the
papers are recorded, and all other details such as payment of
outstanding liens and transfer of hazard insurance policies are
attended to.
Cloud on Title
An irregularity, possible claim, or encumbrance, which, if valid, would adversely affect or impair the title.
Commitment of title
similar to preliminary title report; guarantees that a title company will issue title insurance.
Common Areas
all the areas in a condominium or planned unit development that are
not specifically reserved for the individual owners; includes walkways,
parking lots, and yards.
legally qualified.
Concurrent escrow
occurring simultaneously, at the same time; real estate exchanges often must be recorded concurrently.
the taking of private property for public use.
specifications detailed in a deed; they may cover such things as setbacks, types of dwellings, etc.
Confirmation of sale
court approval of the sale of property by an executor, administrator, guardian, or conservator
Contiguous- being in actual contact; adjoining or touching.
Constructive notice
notice given to the general public by the county records.
Co tenancy
ownership shared by more than one person; tenancy in common and joint tenancy are both co tenancy arrangements.
Contract for Deed - (land contract)
An agreement to sell and purchase under which the legal title is
withheld from the purchaser until such time as the required payments to
the seller have been completed.
the transfer of title to property from one person to another.
County Assessor
one who sets value of property for taxation purposes.
County Records
a system for recording documents in permanent books or records at
the county court house; maintained by each county and provided by law.
Open to public examination.
a formal agreement or contract between two parties in which one
party gives the other certain promises and assurances, such as
covenants of warranty in a warranty deed.
Covenants, Conditions, and Restrictions
often associated with condominium documents. Limitations sometimes
put on the use and enjoyment of real property. This is done by
agreements contained in deeds and other documents.
a right which a husband has in his wife's property at her death. It does not prevail in all states.
Cut Out
the term applied when a parcel or a portion of the property is taken or "cut-out" from a larger parcel on an arbitrary map.


Decree of Distribution
The final declaration of the rights of heirs to receive the property of an estate.
the setting aside of certain land by the owner and declaring it to
be for some public use, accompanied by the acceptance of such use by
the public. For example: streets, sidewalks, or parks.
a written document that transfers title to property; there are
several different types; a grant deed, the most common, is simply used
to convey property; a gift deed is used to make a gift of property; a
quitclaim deed is used to transfer an interest owned in a property and
contains no warranties; a tax deed is used to convey title held by the
state, and a deed of reconveyance is used to convey legal title back to
the borrower from the trustee.
Deed of Reconveyance
a legal instrument that conveys title from a trustee back to the borrower under a mortgage once the mortgage has been paid off.
Deed of Trust
security for a property loan; deed the property to a third party (trustee0 to hold until the loan is paid.
Deed Restriction
a restriction contained in a deed which limits the use or occupancy
of the real estate or the type, size, purpose and location of
improvements to be constructed on it.
Deemer period- refers to the way a state regulates rate filing by
title companies, in other words, how approval is obtained for rate
filings by the regulatory authorities.
failure to make good on a promise, such as failure to make payments on a note or to live up to the terms of a contract.
a blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
Deficiency Judgment
a personal judgment in a foreclosure action for whatever amount
remains owing after the foreclosure sale of an encumbered property.
a reference to certain maps, plats, and other instruments that are
recorded with the county and serve to make positive property
to give property by will; a devisee is the beneficiary to whom the property is willed and the devisor (more commonly called the testator) is the deceased person through whom the property is devised. A gift of real estate by a will.
to deprive one of the possession and use of real estate.
to deprive of a right or title.
Documentary Stamps
tax applicable to property transfers and affixed to the grant deed;
varies from county to county, city to city; sometimes called a transfer

Dominat Estate
the property for the benefit of which a right-of-way easement
exists across another's adjoining piece of land is said to be the dominant estate. The land across which the easement runs is said to be the servient estate.
a right which a wife has in her husband's property effective at the time of his death.


a right of one person to make limited use of another's property,
for example, the right to cross a property and maintain a road or
right-of-way to install and maintain public utility services.
Easement Appurtenant
created for the benefit of a parcel of land; belong with the land.
Easement in Gross
an easement that is not appurtenant to any one parcel; for example, public utility easement.
A means for departing from one's own property without trespassing on another person's property, as applied to an easement.
Eminent Domain
the government's right to acquire private property for public, or
quasipublic use through condemnation; requires full compensation.
extension of an improvement onto the lane of another.
addition to or modification of a title insurance policy, which
expands or changes the coverage of the policy, fulfilling specific
requirements of the insured
Equitable Rights
rights established primarily by court decisions based upon
principles of fairness, honesty, justness and morality, and not upon
enacted law or common law.
Equitable Title
title of the purchaser under a contract of sale or the right to acquire the legal title.
the wearing away of land surfaces by forces of nature such as wind and water.
The government's right to take property when someone dies with no will and no heirs.
the degree, quantity, nature and extent of a person's interest in a property.
Estate by Entireties
an estate or interest in real estate predicated upon the legal
fiction that a husband and wife are one person. A conveyance or devise
to them vest title in them as one person. Upon the death of either
husband or wife, full title passes to the survivor.
a legal restraint which stops or prevents a person from
contradicting or reneging on his previous position or previous
assertions or commitments.
Et Al
and others.
abbreviations of Latin "et uxor" meaning "and wife."
Et Vir
a Latin term meaning "and husband."
as used in the title industry means to study and interpret the
instruments related to the chain of title of a property and to
determine their effect and condition in order to reach a conclusion as
to the status of the title.
the title examiner.
a conditional item listed on a preliminary title report and
affecting the title; would be excluded from coverage by a title
insurance policy.
also known as an exception. The deduction or subtraction from inclusion.
to give validity by signing documents so that an intention may be completed.
a person named in a will to carry out its provisions.


Fee Simple
the greatest interest one may hold in real property; usually means ordinary ownership of real estate and is sometimes called fee title.
someone entrusted with financial responsibility in someone else's behalf.
relates to the delivery of real estate instruments to a recorder for recordings.
File and Use
title insurers in most states file rate schedules, policy forms,
and endorsement forms with the state insurance department; they may
then use those rates and forms after a specified waiting interval;
rates so filed are mandatory.
First Mortgage
a mortgage having priority as a lien over any other mortgage or lien on the same property.
personal property which is permanently attached to real estate such as plumbing fixtures.
a legal process that deprives a mortgagor of his or her interest in
a property because he or she has failed to comply with the terms of the
Forfeiture of title
common penalty for the violation of conditions or restrictions
imposed by the seller upon the buyer in a deed or other proper
the fraudulent signing of another's name to an instrument such as a deed or mortgage or check.
a life estate or a fee simple estate.
Front Foot
a unit of measurement, one foot in length, along the front boundary
line of a piece of property which measurement, when assigned a dollar
value, is a factor in determining the total value or sale price of the


General Plan Restrictions
restrictions on the use of property imposed for the benefit of more
than one parcel of property, usually a tract containing many lots.
General Index
an index (kept in the plant) of all matters affecting persons or
corporations and their rights to do business and all matters of a
general nature which cannot be entered on the Lot Books because no
specific property is mentioned.
General Lien
A lien filed against the name of an individual, corporation, that
attaches to all properties owned by the individual, both real and
General Warranty
a warranty provision in a deed or mortgage or other real estate instrument containing all of the common law items of warranty.
Gift Deed
a deed granted out "of love and affection" rather than any material consideration.
to convey title of property by means of a deed; a grantor conveys a property to a grantee.
one to whom a grant is made.
a person who transfers by a written instrument, an interest in land.
an agreement in which a guarantee or assurance of a set of facts or the performance of an objective or obligation is given.
a person who is legally responsible for the care and management of
the person or property of one who is legally incompetent to manage his
own affairs.
Habendum clause
the provision in a deed which begins with the words "to have and to
hold" and which, in effect, defines the quality of the estate or
interest which is being conveyed to the grantee.
a person who inherits or who is entitled to inherit real estate by provisions of law or under the provisions of a will.
any kind of estate, interest, or rights in real estate which can be inherited.
a separation, gap or unaccounted for area. For example, usually a
strip of land between two tracts where the two tracts do not adjoin
because of faulty descriptions.
Homeowner's endorsement
an addition to a policy of title insurance that extends the normal
policy to cover items other than those stated in the standard policy;
may include such items as mineral rights and mechanic's liens.
property designated by the head of a family as his home, which is
protected by law from forced sale to pay debts. Land claimed by a
settler under the National Homestead Act.
to give a thing as security without giving up possession.
presumed or inferred, rather than expressed.
Improvement Liens
liens imposed by municipalities on real estate which has been
directly benefited by municipal improvements such as the construction
of streets, sidewalks and sewer lines. Such liens secure payment of the
proportionate costs of such improvements.
immature or not fully developed. Incomplete. An inchoate right of
dower held by a wife matures and becomes exercisable only upon the
death of her husband.
To agree to make payments for a loss.
insurance against possible loss or damage. A policy of title insurance is a contract of indemnity.
a deed or other real estate contract executed between two or more parties.
an alphabetical listing in the public records of names of parties
to recorded real estate instruments together with the book and page
number of the record. The listing in abstract and title plants of
recorded real estate instruments in groups according to land
descriptions, known as a geographic index. The alphabe4tical listing in
abstract and title plants, by names of the parties, of all recorded
instruments which affect but do not describe particular real estate,
such as judgments, powers of attorney, will and probate proceedings.
Such indexes are known by various names such as General Index, Judgment
Index, and Name Index.
Inflation endorsement
coverage that may be added to the standard owner's policy of title
insurance; it adjust the amount of coverage according to the
cost-of-living index.
a means for entering one's own property without trespassing on another person's property, as applied to an easement.
In gross
an easement created for the benefit of an individual apart from the
ownership of the land; a public utility easement is one example. It is
not assignable or inheritable.
a written legal document such as a contract, a promissory note, a deed, or a grant.
Insurable Title
a property title that a title insurance company is willing to insure.
Insured closing letter
A letter issued by a title underwriter to a lender or buyer accepting responsibility for certain closing (nontitle) issues.
Intermediate theory state
a state in which the security for the mortgage is based on the
title theory or deed of trust, but that requires the lender to
foreclose to obtain legal title.
Inter vivos trust
a living trust; inter vivos is a Latin expression meaning "among the living."
Interval ownership
same as time share ownership, or partial ownership.
someone who has died with no will; the estate reverts to the next of kin.
Joint Protection Policy
a title insurance policy insuring the interest of both owner and lender.
Joint Tenancy
one way for several persons to hold title; joint tenants own an
undivided equal interest and have equal rights to use the entire
property; they are said to have the right of survivorship, that is,
they inherit the property automatically upon the death of the other
joint tenant; this right if the principal distinction between a joint
tenancy and a tenancy in common.
a court's final decree, generally resulting in a lien; may
encumber the sale of a property and must be satisfied before it can be
of or pertaining to courts of law or the administration of justice
Judicial foreclosure
type of foreclosure that requires court proceedings; mortgage
foreclosure requires court proceedings while deed-of-trust foreclosures
generally do not; state laws dictate.
Junior Lien
Any lien or mortgage that has less priority than another. May be a
judgment or a second or third mortgage filed after another lien.
certificate of an officer, such as a notary public or magistrate,
who has witnessed someone's signature to a sworn document; also, that
part of an affidavit stating by whom, where, when, and before whom it
was sworn.
the right and power of courts to interpret and apply the law. Also, the legal power of control over persons and property.
Leasehold estate
an estate created by a lease for a certain period of time; in contrast to a fee simple estate, it is a lesser interest.
Legal description
a description of land recognized by law and based on government
surveys, spelling out the exact boundaries of the entire piece of land;
should so thoroughly identify a parcel that it cannot be confused with
any other.
A legal claim upon property for the payment of a debt; a money
encumbrance; such as, a mortgage lien, a judgment lien, or a mechanic's
Lien theory states
states in which the mortgagor (borrower) retains legal title to the
property; lender (mortgagee) has a lien on the property as security for
the debt.
Lien waiver
A document provided by a contractor, subcontractor, or materialman,
showing that they have been paid for their work and are waiving rights
to file a lien.
Life Estate
use of property only during a person's lifetime; this interest may
be sold, encumbered, or leased, but only for the term of the life
Lis Pendens
legal notice that litigation is pending on a certain property and
that anyone obtaining an interest in the property after the notice date
may be bound by the judgment.
Littoral rights
rights to shoreline property on a large body of water, such as an ocean or lake.
as referred to in the title industry, damage
suffered by a person resulting from defects or liens upon his title to
real estate. Also could be money paid by a title insurance company in
settlement of policy claims.
Lot book report
a short title company report providing the property owner's name, the vesting, the property's legal desrip5ion, and a plat map.
Marketable title
A "good" title, one where there is no reasonable doubt as to the
interest held in land; one that can be readily transferred to another
Market Value
an average between the highest price which a buyer, willing, but
not compelled to buy, would pay and the lowest price a seller, willing,
but not compelled to sell, would accept.
Mechanic's Lien
a lien that s subcontractor, laborer, or supplier of materials may
put on a property after furnishing labor or materials to improve the
property without being paid.
Meeting of Minds
the state that exists when all parties to a contract agree to the exact terms thereof.
Metes and bounds
A description of land by measures and distances. It must have a
known point of beginning, define the perimeter of a parcel, and return
to the point of beginning to be legally acceptable.
Mineral Rights
ownership of minerals found on a property.
a person under 18 years of age.
Mortgagee Policy
a policy of title insurance insuring the hold of a mortgage against
loss caused by the impairment or invalidly of the lien of such mortgage
or because of defects in, superior liens upon, or unmarketability of
the title.
Mortgage insurance
insurance r4quired to be paid for by the borrower to protect the
lender in the event payment s are not made on time; most often required
when the loan amount exceeds 80% of the purchase price.
Muniments of Title
deeds and other original documents showing a chain of title.
Mutual Consent
approval of both parties to terms of a contract.
the omission of or failure to use reasonable precaution, care or action
capable of being assigned or transferred by endorsement' checks, drafts, and notes are all negotiable.
Non-recurring closing costs
fees and costs that are paid only once, usually at closing, such as title insurance or points.
Notary Public
person who acknowledges oaths, such as the signing of a grant deed
or deed of trust; must be duly appointed by the property authorities.
Notice of completion
document recorded to give constructive notice that a building job has been completed
Notice of Default
a formal recorded declaration that a default has occurred; starts foreclosure proceedings.
Notice of Nonresponsibility
notice recorded by an Owner of real property that he will not be
responsible for payment of mechanics' liens for work contracted by
Official Records
a master set of books kept by the county recorder in which copies
of all recorded documents in that county are stored; may be microfilmed.
Offset statement
a statement by an owner or a lien holder concerning the liens against a property
Opinion of title
an attorney's written evaluation of the condition of title to real
property, based upon a careful examination of the abstract of title.
Owner's Policy
a policy of title insurance usually insuring an owner of real estate against loss occasioned by defects in, liens against, or unmarketablility of the owner's title.
land fitting in a single description
Parcel Map
A map of a given area, designed, drawn, and labeled for the
purposed of identifying parcels and distinguishing them from one
another in a given area. May be called a subdivision map or a plat map
Partial reconveyance
the release of part of someone's interest in real property secured by a mortgage or deed of trust
a lawsuit between joint owners of real estate in which the court
either divides the property between them or orders the property sold
and divides the proceeds between them
Party wall
a wall built long the boundary line of adjoining properties and shared by the respective property owners or tenants
the boundary lines enclosing a tract or land. Also the length of the boundary lines enclosing a tract of land.
Personal property
which which is not real property; curtains, furniture, appliances, and other items not attached permanently to the property.
personal property
Plat Book
one in a set of books in the public records in which maps, plats, and copies of surveys are recorded.
Plat map
map of a land subdivision or housing development
Possession date
day when the buyer actually moves into the property; may be different from the close of escrow or recording date.
Power of Attorney
the authority given one person by another to act on his or her behalf.
Preliminary Certificate
same as a Binder Certificate
Preliminary Report
a report showing the current status of a property and the condition
under which a title company is willing to insure title as of a specified date
doctrine by which easements are acquired through long, continuous, and exclusive use of possession of property
taking place in rank or order; taking precedence over; in real
estate transaction, priority is established by the order in which
documents affecting a property are recorded and also by the language
contained in those documents.
Public Records
the transcriptions in a recorder's office of instruments which have been recorded, including the indexes pertaining to them
Public Trustee
a public official to whom title to real setae may be conveyed by
trust deed to be held by him as security for repayment of a loan.
Purchase Money Mortgage
a mortgage given by a purchaser to a seller on the subject property to secure payment of part of the purchase price.
to some degree, almost, partially, somewhat.
Quiet Enjoyment
One of the common law warranties. Also, assurance that one's title,
possession, or use of real estate will not be disturbed or disrupted by
a legitimate cause or adverse right.
Quiet Title Suit
a lawsuit brought by an owner of real estate for the purpose of
canceling, wiping out, putting a quietus upon supposedly immaterial,
inconsequential, and unenforceable claims and interest which cloud his
final disposition, settlement, or elimination of a claim of debt.
Quit Claim Deed
a deed in which the grantor releases any claim he or she may have
on a property; most commonly used between spouses and in partnerships;
it contains no warranties.
Real Property
Term used to describe land and that which is permanently attached to the land; includes surface, subsurface and air rights.
transfer of title from the trustee back to the real owner of
property; occurs when a loan has been paid in full; releases the
trustor (borrower) from any further liabilities for that debt
process of placing a document on file with the county recorder for
everyone to see; said to give constructive notice of the document's
existence; claims against property usually are given a priority on the
basis of the time and date when they are recorded.
Recurring closing costs
costs and fees that will be paid monthly or annually, such as fire insurance, interest, property taxes and mortgage insurance.
reclaiming real property from someone who has taken legal title to it.
Redemption period
period of time in which borrower may redeem his or her property.
Release Clause
a stipulation allowing for the release of a specific piece of
property from a blanket lien that covers it and other property in
exchange for a specific payment
Release of Dower
the deed or other instrument by which a wife releases her inchoate dower rights in land.
Release of Lien
the instrument by which a lien is released from the real estate which it encumbers.
person who holds a future interest that exists in favor of a party
other than the grantor or his or her successors, as in a life estate
a particular right withheld by a grantor when conveying property.
provisions in a deed or other instrument whereby an owner of land
prohibits or restricts certain use, occupation, and improvement of the
the return of an estate or interest to a grantor or lessor after
the grant or lease has expired. Or, the interest retained by a fee
simple owner of real estate after granting a terminable estate or
interest in such property to another. For example, when a fee simple
owner gives a lease to a tenant, the interest which the owner has left
is known as the reversion. May also be a provision accompanying
restrictive covenants in a deed, which provision stipulates that in the
event the restrictions are violated, title to the property shall revert
to the grantor.
Right of Survivorship
a right created by joint tenancy that states that, upon the death
of one owner, the other immediately becomes the owner of the property.
Right of Way
the right to cross or pass over a parcel of land; may be a right to
use a road or driveway, a right to construct power lines through the
property, or a right to put pipes underground.
Right, Title, and interest
term used in deeds to denote that the grantor is conveying all claims to a property.
Riparian Owner
one who owns the upland bordering on a stream or other body of water.
Riparian Rights
the many rights of a person in, to, and over the banks, bed,
shallows, shore and water of a stream or body of water upon which his
land border.
the payment of a debt or fulfillment of an obligation. May be an
instrument executed by the holder of a lien, debt or obligation which
acknowledges payment or fulfillment
a careful exploration and perusal of the public records in an
effort to find all recorded instruments relation to a particular chain
of title.
property pledged to ensure payment of a debt; collateral
an old English term meaning legal possession or the right to legal possession of real estate under a freehold title.
Separate Property
property that is held singly by either a husband or wife, described on a deed as "sole and separate property."
Servient Estate
incident to an easement, the property upon or across which an easement exists.
a right or interest in a piece of real estate, which right or
interest serves or benefits another unrelated property. For example, an
easement across one piece of property which serves another piece of
property is said to constitute a servitude regarding the property upon which it is located.
the minimum distance a building or other improvement must stand
from property lines, in accordance with local zoning ordinances and
deed restrictions.
time at which property purchase is finalized, closing costs paid, deed exchanged and money disbursed; also called closing and close of escrow.
one who creates an inter vivos or living trust
Specific Lien
A lien filed against a specific piece of real estate that does not
impact other real estate or personal property of the lienee. For
example, a mortgage or deed of trust, or a mechanic's lien.
Specific performance
a legal doctrine that enables a court to compel someone to perform
according to his or her agreement.
Statement of Identity- form often required by title company from buyer
and seller to ensure that items found in the title search apply to the
individuals in question
Statue of limitations
law specifying time limits for initiating enforceable legal action.
a term applied to land or property lying contiguous to, but at a lower level than, another piece of property
Subject to
to take title without paying off the existing loan or deed of
trust; original borrower remains ultimately responsible for repaying
the loan; the buyer (new borrower) does not make a formal agreement
with the lender.
Subordination agreement
a written agreement that changes the priority of documents, making for example, one deed of trust subordinate to another.
an area of land lay out and divided into lots, blocks and building
sites, and in which public facilities are laid out, such as streets,
alleys, parks, and easements for public utilities
the legal doctrine under which the law substitutes one creditor or
claimant for another. When a title insurance company pays a claim under
a title insurance policy, it is entitled to step into the shoes of the
insured with respect to any rights the insured may have against parties
who warranted the title to him.
a person who agrees to be responsible for a debt or obligation of
another. Or, the pledge or agreement by which one undertakes
responsibility for the debt or obligation of another.
the map or plat drawn by a surveyor which represents the property
surveyed and shows the results of a survey. Shows the location,
boundaries, area, or the elevations of land and structures upon the
earth's surface by means of courses in relation to the North Pole, and
the measuring of angles and distances by using techniques of geometry
and trigonometry.
Tacking On
beginning a subsequent title examination, in point of time, at the end of a previous title examination
Take Off
an abbreviated copy of the principal features of recorded
instruments, required for the purposes of indexation in an abstract
plant or for purposes of making abstracts or examining titles
Tax Deed
the instrument of conveyance when a government body sells a property to pay for arrears of taxes
Tax Deferred Exchange
a method of postponing capital gains when disposing of real property by trading one property for another of like kind
Tax Lien
the lien which is imposed upon real estate by operation of law which secures the payment of real estate taxes.
Tax Sale Number
a number assigned to a property when property taxes are not paid on time; identifies that property on the delinquent tax roll.
Tax Service
a reporting service that notified the lender in the event the borrower does not keep the property taxes current
Tenancy in Common
a form for taking title when two or
more people buy property and own it together with either equal or
unequal shares; if any one of the tenants in common dies, his or her
interest passes to his or her heirs, not to the remaining tenants.
Tenant at Sufferance
one who continues to hold possession of real estate after his authorized term of occupancy has expired
Tenancy at will
a tenant who occupancy of real estate is subject to the will of the owner
having made a legally valid will and leaving it at death
Third Party
usually applied to persons who are not principal parties to a
contract or other instrument, but who have some right, interest or duty
which such contract or instrument affects. For example, where a sale
contract between buyer and seller provides for the money and comments
involved to be deposited with a title company pending the closing of
the transaction, the title company becomes a third party in the deal.
partial interest in a property allowing exclusive use for a specific time period.
evidence of a person's right to property
Title Agent
A representative of a title underwriter, one who "writes" the policies of the actual insurer or underwriter.
Title Commitment
A document that reflects all of the title research done on
property. Its purpose is to inform all parties of any encumbrances
affecting the property and to commit to insure property, subject to
certain stated requirements.
Title Covenants
covenants inserted in conveyances and in transfer of title to real
estate for the purpose of giving protection to the purchaser against
possible insufficiency of the title received.
Title Defect
any possible or patent claim or right outstanding in a chain of
title which is adverse to the claim of ownership. Or, a material
irregularity in the execution or effect of an instrument in the chain
of title.
Title Insurance
A policy of indemnity issued by a title insurance underwriter or
its agent that insures a buyer or lender against monetary loss or
damage due to errors in the title as described in the policy and
undeterminable facts that affect title such as fraud, forgery,
unrecorded documents, unknown heirs, and many other factors.
Title Insurer
a company which insures the title to real estate
Title Plant
a geographically filed assemblage of title information which is to
help in expediting title examinations, such as copies of previous
attorneys' opinions, abstracts, tax searches, and copies or take-offs
of the public records.
Title search
a search and perusal of the public records for recorded instruments which affect the title to particular piece of land.
Title Searcher
one who searches titles
Title Underwriter
The title insurer who holds a statutory premium reserve and is responsible for claims on title under a title insurance policy.
Torrens System
a governmental title registration system that uses certificates of
title issued by a public official (the registrar of title) as evidence
of title
Trust Deed
an instrument in the nature of a mortgage which secures the payment
of a debt. Distinguished from a mortgage in that the title is
transferred to, and held by, a trustee for the benefit of the holder of
the debt.
an insurance company which issues insurance policies either to the
public or to another insurer. The actual company that holds reserves to
pay losses on title policies, as opposed to an agent, who sells the
policies of the underwriter. Also, can be the person responsible for
evaluating risk of title defects and determining conditions to the
commitment to insure.
the analysis completed by a lender to determine the worthiness of a requested loan.
Undivided interest
unsegregated interest of a co-owner in a whole property owned in common.
identification number for a specific property; also called assessor's tax parcel number, account number, or folio number.
charging an interest rate above the maximum allowed by state law.
the purchaser under a sale contract of real estate.
the seller, one who disposes of something.
to bestow or confer upon, as in the expression, "Title shall vest in ..."
current recorded owner
Vested Interest
an interest that if fixed or determined.
the manner in which title to real property is held.
Voluntary Lien
Any lien placed on property with consent of, or as a result of, the voluntary act of the owner.
the release of a right to require something to take place, such as the waiver of a contingency found in the purchase agreement.
Warranty Deed
deed with written guarantees of title.
the temporary funding and holding by a lending institution of
mortgages originated by a mortgage broker until such time as the
mortgage market improves or until the mortgage broker accumulates a
sufficient amount of mortgages to interest a permanent mortgage
Way of Necessity
an easement for a roadway which the owner of a landlocked tract is
entitled to acquire across adjoining land in order to provide a means
of ingress and egress with respect to landlocked property.
a formal legal document issued by a court ordering or prohibiting the performance of some action.
Writ of Execution
a direct command from the court to the sheriff to carry out the action required by the write.
city or county regulations governing the use of property.
Zoning Ordinances
laws passed by local governments regulating the size, type,
structure nature and use of buildings. Often referred to as zoning laws
and zoning regulations, and divided into those which regulate the
height or bulk of buildings within certain designated zones or
districts and those which prescribe the type of buildings which may be
constructed, and the use to which buildings within certain designated
zones or distracts may be put.
Sourse: http://www.escrowhelp.com/glossary_title.html