You can’t go wrong being educated, prepared, and mindful.
When writing about quality commitments we have two main goals: quality and excellence. Basically, we want to be sure we are producing superior commitments and policies.
But who decides whether or not we’ve attained these goals? The first answer is our underwriters. They’ll be looking to ensure that the quality commitment is written in a clear and unambiguous fashion so that all parties involved can easily see what’s covered by the policy and what isn’t.
Next up are the regulators. In my state of Texas, everything surrounding title insurance is regulated by the state, and the Texas Department of Insurance (TDI) routinely runs quality checks during audits.
However, our customers are the ultimate and most important judge of any of our business dealings, and it is up to us to ensure that the commitment for title insurance makes them feel reassured and enlightened rather than frustrated and confused. Buyers and lenders are looking for exceptions in a language that’s easy to understand, while owners want the language for requirements to be the clearest.
Let’s break down a commitment for title insurance. This step in the process comes after the receipt of a bona fide order and must be completed as soon as possible. The exception is when the company is unwilling to insure said order. In the event that the commitment is issued, liability and obligations end ninety days after the commitment’s start date.
When selecting the words to include in a commitment, it’s important to understand the distinction between language describing the insured land and language described as an exception from coverage. When describing an easement estate on Schedule A, we want the description to be as detailed as possible, because that limits liability. When describing an easement on Schedule B, we want to be as general as possible, because we limit our liability.
Requirements appear on Schedule C of commitments – and do not appear on policies. “Requirements” in this case reference items that must be resolved to the satisfaction of the underwriter before the policy can be issued. There may be instances when it’s necessary to tell a proposed insured something about the policy that will be issued. While there’s no standard way to give this type of information, the best practice would be to add a “note” – containing information. Remember, these “notes” are only used to include additional information about policies and never to provide information about the status of the title.
There are things that don’t belong on commitments. Some examples would be “affirmative” statements about what was found during the title search, instructions about how closing or escrow should be handled, information about transactions or policies outside of the outlined requirements, or details advising the insured about “rights of parties in possession” or amendments of the “area and boundary exception.”
With all of this information in mind, the question still remains: How do we achieve quality commitments and policies? The first step is education. Everyone in the organization must have appropriate training in the use of the escrow/closing and title production system(s). It’s critically important for each person to understand how the data they input is utilized by each process. The next step is the natural progression into preparation. Prep for quality starts with the setup process of the escrow/closing and the title production system.
At the end of the day, it’s about remaining mindful of the parties who will be reading your report or commitment and what it is they mean to do with it. If you go into the commitment process with that in mind and remain armed with the information you’ve gathered, you’re headed in the right direction.
Be educated in the process, be prepared for what you’re about to do, and be mindful of our clients and you can’t go wrong. If you would like to learn more about writing quality commitments, log onto our Alliant National Agent Resource Center and check out our Resource Center tab to view our new webinar on the topic.
Sure you know the ins and outs of title insurance, but it is likely buyers and sellers have limited knowledge of what title insurance covers and why they need it. You need to be able to respond to questions that will be asked, or have answers to some that should be asked, to be able to best serve your customers. Learn more about title insurance regulations, and other key points to explain to customers why the policy you provide is to protect their interests.
Title insurance agents face waves of continuous technological evolutions, all designed to ease the agent’s work, but which can be glitchy enough to tempt title agents to abandon new protocols in favor of old habits.
Technology shows up in our work lives in several ways. For example, the options below are but an “initial round-up” (if you will) of many title agent’s interactions with technology:
Production Software – Often used by title agents to manage files, create documents and commitments, handle disbursements, communicate and share information with clients.
Electronic Records – While still not yet available in every county or title plant, most urban areas now have electronic records. Title professionals no longer have to drive to a set location to research property records. They can do research from a computer anywhere with an internet connection.
E-Recordings – Rather than taking the original documents to the County Register of Deeds to be put of record, recordings can be submitted online through various providers.
E-Signatures – E- Notaries/RON (remote online notarization) – This a rapidly evolving space and can be a major convenience for consumers and increase productivity for title agents.
Smart Contracts – SC’s are just beginning to become a reality. Self-executing contracts that follow an “if-this-then-that” protocol can streamline workflow and reduce errors.
Social Media – A powerful and ubiquitous vehicle that aids marketing and relationship efforts.
Technology is now a part of everything we do, and most every title agent recognizes the benefits of adopting some form of technology. Moving forward, technology is helping mitigate risks like wire fraud while helping us run more efficient businesses.
There can be a bit of tug-of-war over the adoption of new technology. The over 50-year-old work population has had to learn new technologies as adults, while Millennials grew up in the face of ever-evolving technology options, and the up-and-coming Generation Z has never known a life without the Internet.
Those from older generations have witnessed methods that were once industry best practices become obsolete in a brave new, technological world. In some cases, entire industries have had to evolve or risk becoming obsolete themselves.
The truth is the title insurance industry is behind, technologically speaking. Title insurance operates much like the check at the grocery store; although the check may remain an option for some time yet, it is not now, nor will it ever again be the dominate method of payment.
Yet our industry has been slow to adapt and embrace new technologies. Those who would drag their feet cite concerns about emerging technology, the validity of it and what the implications could be in the result of certain claims. These are valid concerns.
But a continued resistance is creating opportunity for those outside our industry to change it for us.
While the use of new technology does open doors to risk of claims or risk of being unintentionally negligent could increase, the waves of disruption don’t look to be letting up anytime soon.
To remain relevant, title agents must get on board and move full steam ahead.
The information provided by a land survey can make all the difference in ownership and use.
A land survey provides a visual reference to what your property looks like on the ground and who might make a claim to your ownership based upon their use or possession of part of your property.
There are many types of surveys, but to provide title insurance coverage, a “Boundary Survey” is required.
The Boundary Survey locates the property on the globe and in relation to the property surrounding it. It also shows the improvements located on the property including fences and evidence of occupation or use.
The survey determines what is physically present on the land to be insured and locates that land in relation to other properties in the area.
Why should you care?
Because who is in possession of all or part of the land you’re buying, determines who may have a claim to it.
Possession may not be nine-tenths of the law, but it is very important. If someone possesses part of the land you’re buying, they may have a claim to ownership of that area.
Choosing a quality surveyor is a challenge just like choosing any other professional to do work for you. Possession may not be nine-tenths of the law, but it is very important. If someone possesses part of the land you’re buying, they may have a claim to ownership of that area.
There is no magic formula, but pay attention to his or her credentials, reputation or even better, referrals from those you already know and trust.
The cost of a typical residential survey is minimal when compared with the investment in your home or property and cost ranges from a few hundred dollars to much more if dealing with commercial or large tracts.
I’ve personally spent $1,500 for a survey of ten acres by an excellent surveyor, and as little as $300 for a residential lot by an okay surveyor.
To better understand why a survey is important, there are two elements that affect ownership:
The land records maintained by the local government; and
The actual occupation of the property
For a title insurance policy to be issued, the insurer searches the land records. We don’t see the actual property, just paper describing it.
That search is examined to determine who owns the property and who has claims to it.
Since we cannot see the actual land, the title commitment and policy take exception for anything that would have been discovered with a visit to the property or with a proper survey done by a surveyor.
So, if you want coverage for what might not be in the records that could affect your ownership or rights, a survey is needed.
Parts II and III of our continuing discussion of land surveys will get further down in the weeds on land survey trip-ups and issues.
But a simple look-see at what a land survey can avoid is in this simple (yet very complicated) dilemma: A buyer agrees to buy Lot 3 – a 100-foot lot. Research of the records shows the seller owns it. No survey was done.
Later it is discovered that the lot is only 90 feet to the neighbor’s fence. The neighbor says that 10 feet is theirs. The exception in the title policy may prevent any claim under the policy.
(If a survey was done before closing, this issue could have been dealt with ahead of spending the money for the lot.)
Or you buy Lot 3 without a survey, but the house you were shown is really on Lot 2! No survey, maybe no loss paid under the policy since you do own Lot 3.
Stay tuned for Parts II and III – where reliability, defendability and who owes whom what gets sorted out.