transferring title...what about title insurance?

Question

We own a few multifamily properties. Those that are 5+ doors we have titled in the name of our LLC. We have a duplex that we purchased under our name and we recently deeded it to the LLC (we were upfront with our bank and they told us that they don't care...it only becomes a problem if/when you decide to refi). My question, however, is how this affects the actual title insurance? From my research, it appears that doing this has essentially "eliminated" our title insurance on the property...and we are no longer covered.
Questions -

1. Obviously we want to have title insurance on the property, so what now?

2. How does one approach this with the title company without raising red-flags?

Jay Helms · Answer

Great question for your attorney @Stephanie Windemuth, but if the LLC is a sole-proprietor, you shouldn't have any issues, but great question for your attorney.

Tom Gimer · Answer

1. Definition of Terms

***

(d) “Insured": The Insured named in Schedule A.

(i) the term "Insured" also includes

(A) successors to the Title of the Insured by operation of law as distinguished from purchase, including heirs, devisees, survivors, personal representatives, or next of kin;

(B) successors to an Insured by dissolution, merger, consolidation, distribution, or reorganization;

(C) successors to an Insured by its conversion to another kind of Entity;

(D) a grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the Title

(1) if the stock, shares, memberships, or other equity interests of the grantee are wholly-owned by the named Insured,

(2) if the grantee wholly owns the named Insured,

(3) if the grantee is wholly-owned by an affiliated Entity of the named Insured, provided the affiliated Entity and the named Insured are both wholly-owned by the same person or Entity, or

(4) if the grantee is a trustee or beneficiary of a trust created by a written instrument established by the Insured named in Schedule A for estate planning purposes.

(ii) with regard to (A), (B), (C), and (D) reserving, however, all rights and defenses as to any successor that the Company would have had against any predecessor Insured.

Stephanie Windemuth · Answer

I would LOVE to have that language.  Thank you!  Not sure if it matters, but the property is in Washington State.  Thanks again!

Tom Gimer · Answer

Your 50/50 LLC should meet the definition of "the Insured" under a standard ALTA owners policy of title insurance issued to you and your husband as joint owners. I can send you the language in question if you need it.

Stephanie Windemuth · Answer

@Tom Gimer - My husband and I owned the property (we purchased it in cash, then did a delayed-financing loan with a 30% LTV I believe).  It is now in the LLC that is 100% owned by my husband and I (50/50).

The information I got was from an ALTA title seminar...

Tom Gimer · Answer

That is not necessarily true.

First -- who owned the property and in what % and who owns the LLC and in what %.