Wednesday, November 16, 2011

insurable title

Two title agents, an underwriting attorney and a real estate agent had a chat yesterday concerning insurable title.

Back in 2004 we issued an owner policy - insuring over an unsatisfied mortgage.  We had discovered the mortgage and requested a release.  It was a hefty developer's line of credit.  We were offered indemnification and accepted it.

Our insured owner is now selling his property and the buyer's title agent had a big freak out over the unsatisfied mortgage and had the real estate office contact me.  I looked at the file,  noticed that our underwriter at the time is now a part of the underwriter who had issued the indemnification and figured there was a good chance that the new insurance was being written under the same company.  I faxed over the indemnification letter.

The response was that they are writing through a different underwriter who will NOT accept indemnification, so I requested a copy of their title commitment.

I emailed the title commitment, the indemnification letter, and the owner policy to the underwriting attorney who had issued the indemnity in 2004.  She responded that they would issue a new indemnification or would offer to insure the buyer through any of their companies.

The real estate agent responded with a question:
"Your indemnification will only be for the current owner’s policy amount, which was $110,000.00, correct?" 

The underwriting attorney responded:
"Yes, that is correct.  Your proposed commitment indicates that you will be insuring for $108,500.00 so I’m not understanding why your underwriter will not accept an indemnity letter."

The real estate agent responded:
"They might be okay but the buyer might have a concern.  I’ll  let you know.  Thank you."

I responded:
"I'm sure your buyer has a copy of their sales contract.  The definition of marketable title being granted by the seller in the PAR contract is premised on insurability by a reputable title company at regular rates.  You have that so I am hopeful this closing will move forward."

No comments: