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.
By Martin R. Ufford Member
Hinkle Law Firm,LLC
I’ve had the privilege of representing title insurance companies and their insureds for the past ten years.
Each claim represents a unique challenge. With the benefit of hindsight, I have reached some conclusions that may assist agents and local counsel in avoiding claims.
Looking to avoid title claims related to unpaid mortgages and deeds of trust? We offer 4 tips
Our Claims Team has received various claims related to unpaid mortgages and deeds of trust. Here are two scenarios we have seen arise in the context of a claim:
The agent receives a payoff statement from the seller. The seller sends an email requesting the payoff from the lender and copies the agent on the email.
The agent relies on the email and the payoff statement to wire funds to the lender.
Later, it is discovered that the email address for the lender is fake, and the bank account receiving the payment was held by the seller, not the lender.
The agent reaches out to the lender for a payoff statement. However, the closing date is approaching, and the lender has not responded.
The seller provides the agent with a printout showing a zero-balance owed on the account. The agent contacts the lender once again for a payoff statement.
The lender confirms over the phone that a zero balance is owed. The agent closes the transaction based on these representations.
Later, it is determined the original lender confirmed a zero-balance due because the loan had been sold to another lender.
An assignment of the mortgage had been recorded, and the current holder of the notes filed to foreclose.
Here are 4 tips to help you avoid these types of claims:
- Always obtain a payoff statement directly from the lender. Do not rely on payoff statements provided by other parties. Your request for a payoff should include a letter of authorization from the borrower, the loan number, the property address, the borrower’s name and your fax number or email address.
- Only rely on a payoff statement sent by the current holder of the note. Check the MERS system, (if the mortgage is a MERS loan), and the public records for the last assignee.
- Be mindful of working with hard money lenders – hard money lenders may assign their interests off the record. (See Bulletin 2017-02 and Claims Title Tip dated September 18, 2017 discussing hard money lenders .)
- Obtain separate payoff statements directly from each lender with an interest in the property being sold or refinanced. Do not rely on representations from the borrower or other institutions regarding the balance of a loan.
By Scott A. Malm
Many lawyers representing creditors record their money judgments and let escrow companies collect the judgment amount for them when the debtor sells real property.
But after a recent published opinion in Arizona applying its homestead protection laws, that practice may soon come to an end if the real property is protected by the homestead statutes.
In Pac. W. Bank v. Castleton, No. 1 CA-CV 17-0667, 2018 WL 6815531 (Ariz. Ct. App. Dec. 27, 2018), the Arizona Court of Appeals considered the effect of a $5.2 million recorded judgment on a subsequent conveyance of a personal residence by the judgment debtor to a third-party buyer.
After the close of escrow, the judgment creditor sought to collect its judgment against the buyer by filing a judicial foreclosure complaint.
Such action triggered coverage under a title insurance policy (not an Alliant National policy!) because the judgment was not listed in Schedule B.
The Arizona Court of Appeals had to decide the purely legal question: Is a recorded judgment a lien that encumbers homestead property? If so, the insured would lose its property.