liens survive forclosure

Working on a file, a purchase transaction, with property that passed through foreclosure before my seller acquired it. Four liens survived the foreclosure and though, in this case, I'm fairly certain they can be resolved, the resolution may take time.

I noted that a local attorney handled the conveyance. I'm pretty certain he is not a title agent but he is the solicitor for the municipality and that helps because two of the liens are municipal liens. I called the municipality and they will satisfy the liens for us.

Municipal liens are not divested by foreclosure. Keep that in mind. If the attorney had known that he would have insisted that the REO lender pay the liens when they sold the property. They weren't huge liens, but the municipality might have been happy to receive about $2,000.

The other two surviving liens are federal tax liens and they survive because the USA was not named as a defendant in the foreclosure action. That's the proper way to give notice to the USA.

So, I am hoping this won't take too long to resolve. I'm fairly certain we'll have an argument from the attorney who handled the last transaction but if he issued title insurance to our seller, the underwriter will assist.

Consumers should remember that attorneys and non-attorney title agents make mistakes. They are human and that is why you must always purchase an owner policy from a reputable and solvent title company. Title insurance is your safety net.

Well, I am totally beat.

Long day at the public hearing which, BTW was a richly rewarding experience. Will be back with more. It was really nice to see everyone who was there.

Here's a big hello to

everyone doing their research for the public hearing in Harrisburg next week. See you there. ;)

new federal entity being born? will it cover insurance?

The discussions are in flux but at an advanced stage. It is unclear if the administration will propose creating a new federal agency or place new powers within an existing agency. The scope of the new powers also isn't settled, including whether they would cover insurance, which isn't currently regulated at the federal level. Read more...

Wow, this was a surprise. Jim Maher died.

James Robert Maher, 59, a retired executive with the American Land Title Association, died May 5 of kidney cancer at his home in McLean.

Mr. Maher joined the American Land Title Association, the trade association for the abstract and title insurance industry, as general counsel in 1984 and was promoted to executive vice president four years later. He was responsible for managing the association's legislative, legal and research activities, as well as its education and public relations work. He retired from ALTA in 2007 but continued working as secretary and counsel of the Title Industry Assurance Company and the Title Reinsurance Company. He also was a board member of Mortgage Electronics Registration Systems.

Read more....

Good job to our reader and good job to his title company!

Hello Ms. Cipa,

I replied a few weeks ago to your "how_to_file_claim" post on your Title Insurance Talk blog. You replied and recommended writing a certified letter. I did and it seemed to have worked, as I finally received a response:

I received the following letter from my title company yesterday regarding my claim:

XYZ Title Company has finished our review of the aforesaid claim. As you know, you submitted a claim after receiving your 2008 tax bill and noticing you were billed for both an HOA and a CID assessment. While the HOA assessment was disclosed to you prior to your closing, you maintain you were not aware of the CID and the document creating the CID. It is noted the contract you signed for this transaction points out the “BUYERS acknowledges that the Property may be subject to recorded declarations, maintenance or other documents that place certain restrictions on building materials and uses of the Property, require maintenance of the area and assess homes association dues. BUYERS are responsible for obtaining a copy of any such recorded declarations and other documents and for reading and understanding them prior to closing. Buyers agree to abide by all of the provisions of such recorded declarations and documents. At closing, Buyers shall directly pay or reimburse Builder for any homes association dues paid or payable for the period after closing. BUYERS recognize that homes association dues are approximately $360.00 per year.” While you acknowledge the yearly homeowner’s association dues which you acknowledge in the contract could only have been assessed pursuant to a recorded instrument, you are now claiming you have no knowledge of such instrument and have submitted a claim for reimbursement of the CID assessment of $505.00 for this tax bill as well as future years.

XYZ Title Company has investigated the matter and determined that the CID document was not listed on your commitment and policy and should have been. However, you were aware that such a document had to exist. Furthermore, in reviewing other purchases of other homes affected by a similar restriction, we can not find any transaction in which the proper disclosure by the title company resulted in any change in the purchase price. The buyers proceeded to purchase these other properties without decreasing the amount they were willing to pay. Furthermore, in reviewing the contract we find that you would have been obligated to close and purchase subject land whether or not the CID was disclosed to you. That being the case, there is no loss that is covered by your title insurance policy since such loss is limited to the “difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy” (See policy Conditions and Stipulations 7 (a) (ii). However, we also recognize the unfair surprise this assessment has caused you if you were not aware of the existence of this resolution, and we are therefore, willing to pay this year’s installment.

Therefore, enclosed please find our check for $505.00 for payment of said CID and complete settlement of this claim. Future payments of said CID will be your responsibility as previously discussed under the terms of your policy.

In your opinion, does the title company have its butt covered, or is their letter full of fluff and attempting to avoid paying the $505 for the next 16 years? They DID admit failing to list the CID document on our policy. If we truly had no claim, why would they pay us the $505 check?

Or do we have a better case against our builder (or their law firm that drew up the CID documents), for disguising the CID as an HOA and never stating the words "community improvement district" in the contract, or its potential assessment amount?

During our research late last year, we received word from the law firm that drew up the CID documents that the recorded document "specifies the formation of the CID and that it will act as an HOA and assess the property within its boundaries...." We also learned from the Missouri Department of Economic Development that an HOA and a CID are different legal entities. It appears that the builder was trying to hide the CID, portraying as an HOA. The contract only mentions an HOA with dues of $360; why would we reasonably expect to also be part of a CID with additional assessments on top of this?

Thanks again; I really appreciate your time!

The title company was generous. I'd cash that check and be grateful.

Whether you have recourse with others, well, I think you need to pose that question to an attorney.

Glad you were able to find some relief and clarity on the issue. Thank you for the follow up. I will post this as it will be helpful for others. Take care!

Diane

Angelo Mozilo to face fraud charges.

Staff at the SEC have decided to recommend filing civil fraud charges against Angelo Mozilo, the co-founder of Countrywide Financial, according to people familiar with the investigation. The potential charges include alleged violations of insider-trading laws as well as failing to disclose material information to shareholders, according to one person familiar with the matter.

Read more...

Did you happen to catch the story of the family who built their dream home on the wrong lot?

And now you know why you should have a survey performed before you build your dream home. The surveyor should mark out the location of the foundation so you avoid easements and setback lines and, most important of all, get the house on the right lot!

Pennsylvania Insurance Department to Hold May 28 Public Hearing on Title Insurance

HARRISBURG, Pa., May 7 /PRNewswire-USNewswire/ -- Insurance Commissioner Joel Ario today announced that the Insurance Department will hold a public informational hearing on title insurance at 10 a.m. on Thursday, May 28, in Hearing Room 4 of the Keystone Building, 400 North Street, in Harrisburg.

Topics discussed at the hearing will range from the basic structure of the product, the pricing of the product and the relationships between the title insurance companies and those who sell the product. Consumers and those from the title industry who are interested in testifying are encouraged to attend.

The department is charged with overseeing the title insurance business in Pennsylvania, including rates and policy forms, licensing of companies and title agents and market practices relating to title coverage. At the present time, an overall rate level increase of 4.1 percent is pending on behalf of the Title Insurance Rating Bureau of Pennsylvania.

Information about the upcoming hearing and related materials are available for review on the department's Web site. Interested parties should visit www.insurance.state.pa.us, go to "Topical Information" on the right side of the site and click on "Title Insurance Hearing."

query: what does instructions are at title mean

I think it means that the mortgage lender has delivered their formal closing instructions to the title agent/company and that parties are awaiting a HUD-1 and closing.

That's reading a bit into your query but in my title world, that's the meaning of those words. ;)

tax claim bureau certificate was wrong

We recently had a title insurance claim, now resolved, over delinquent property taxes. Our insured owner had received notice of delinquent property taxes and contacted our office for help. I checked the file and found that we had a clear tax claim bureau certificate.

I immediately did three things. I sent letters to the seller and the tax claim bureau, then opened a claim with the title underwriter.

Response from tax claim - not sure what happened but taxes are owing, pay up!

Response from seller - knew the taxes were owing and mistakenly thought they had been paid during closing. Doesn't have the money anymore but will try to send some in a few months.

Response from title underwriter - contacted the director of the tax claim bureau and successfully made the case that the tax claim bureau system must be reliable. Tax claim researched the matter and found that it had been a software malfunction. The director of tax claim got the software company to pay the tax.

YEAH! Good job, title underwriter [Old Republic] and director Samuel Runco of Cambria County. Nicely done.

query: can I sue the title company for using the wrong lot number

Well, I guess you can sue anybody for any reason if you so desire. Will you win? That's another matter. Have your attorney carefully review your owner policy. If you have suffered a loss due to the error, you may have a basis for a title insurance claim.

When a typographical error is discovered, such as an incorrect lot number, the title agent or title company would normally prepare and file corrective instruments at no charge to you.

If you are getting the run around from a title insurance provider, go up the chain. Use certified mail and send a letter to the title company you see named on the title policy jacket. If an address is provided, use that address. Copy your state insurance regulator.