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Nana Sefa
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Owner’s title insurance - to get or not?

Nana Sefa
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Posted Jan 3 2024, 13:02

Which of you get owner’s title insurance? And who doesn’t get owner’s title? Why do you get or not get? Thank you. 

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Replied Jan 15 2024, 10:42
Quote from @Shafi Noss:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Still Fannie Mae itself approves "Attorney Opinion Letters" as an alternative to title insurance to pair with their loans. 

"In recent years, widespread digitization of real estate records and technological advances have improved the process of confirming marketable title, but that has not translated to lower costs for borrowers. 

Fannie Mae research shows that low-income and first-time homebuyers pay disproportionally more in closing costs. Since beginning to accept AOLs under the Selling Guide in April 2022, savings to borrowers have been significant. On average, homebuyers have saved more than $1,000 when an AOL was used instead of a traditional lender’s title insurance policy. For purchase transactions, average borrower savings have been >$500, even when the borrower has elected to obtain an owner’s title policy."

...

"Fannie Mae has also purchased more than 10,000 loans with AOLs since 2009 and has not experienced losses from title claims on these loans."

https://singlefamily.fanniemae.com/media/37606/display

So is it always correct for everyone to get title insurance? FNMA doesn't seem to think so. 


I also think it's ironic that title insurance was developed to address short comings in AOLs.  I guess what's old is new again.


Different products for different use cases, each has it's pros and cons. Hopefully they can co-exist and serve consumers well by providing more options. 


 Hi Shafi/Peter:

Thanks for both your expert commentary. Reading from Shafi comment is intriguing for me.

I have question though. I like to digging property record/deed/title ; so my question would be, is there any difference of the output from what I can find out personally via internet search , and from title search that we pay ?? is there differences ?

For example, I could find a record of code issue in building I'm chasing , but the title company can't find out that. Are you guys literally only checking from the county or there's something else that I don't know ?

I think @Peter Walther would know this best, would be interested to hear his answer too. 


 Sorry in advance Peter if we dig into your job darkest secret LOL

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Peter Walther
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Peter Walther
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Replied Jan 15 2024, 15:37
Quote from @Shafi Noss:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Still Fannie Mae itself approves "Attorney Opinion Letters" as an alternative to title insurance to pair with their loans. 

"In recent years, widespread digitization of real estate records and technological advances have improved the process of confirming marketable title, but that has not translated to lower costs for borrowers. 

Fannie Mae research shows that low-income and first-time homebuyers pay disproportionally more in closing costs. Since beginning to accept AOLs under the Selling Guide in April 2022, savings to borrowers have been significant. On average, homebuyers have saved more than $1,000 when an AOL was used instead of a traditional lender’s title insurance policy. For purchase transactions, average borrower savings have been >$500, even when the borrower has elected to obtain an owner’s title policy."

...

"Fannie Mae has also purchased more than 10,000 loans with AOLs since 2009 and has not experienced losses from title claims on these loans."

https://singlefamily.fanniemae.com/media/37606/display

So is it always correct for everyone to get title insurance? FNMA doesn't seem to think so. 


I also think it's ironic that title insurance was developed to address short comings in AOLs.  I guess what's old is new again.


Different products for different use cases, each has it's pros and cons. Hopefully they can co-exist and serve consumers well by providing more options. 


 Hi Shafi/Peter:

Thanks for both your expert commentary. Reading from Shafi comment is intriguing for me.

I have question though. I like to digging property record/deed/title ; so my question would be, is there any difference of the output from what I can find out personally via internet search , and from title search that we pay ?? is there differences ?

For example, I could find a record of code issue in building I'm chasing , but the title company can't find out that. Are you guys literally only checking from the county or there's something else that I don't know ?

I think @Peter Walther would know this best, would  be interested to hear his answer too. 


A title policy generally only covers matters disclosed by a search of the public records.  Public records are generally defined as those designed to impart constructive notice to third parties.  Title searchers access the public records either directly or through a proprietary database consisting of the same docs purchased from the county.  Therefore, a search you do at the Clerk of the Courts office either in person or online should produce the same documents as a professional title searcher would find.  The trick is knowing how to search and what to search.  

For example, are you aware that an easement can be created by inclusion in a deed?  Say I own 10 acres and convey the back half 1/2 to a buyer.  The buyer doesn't want to be landlock so in the deed I write "together with an easement over the front half of my remaining property."  Now I contract to sell the front half to a different buyer and the buyer elects to do his own search and not purchase title insurance.  He searches title to the front half and finds title clear.  He doesn't know he needs to search title to the back half in order to find the easement which burdens the front half.

As important as the search, if not more, is being able to examine the title and figure out what effects title and how.  For example, the back half buyer contracts to sell his property and his buyer decides to save a buck or two and do his own search and exam.  He finds the easement in his seller's deed and concludes he has legal access to his property and closes on the purchase.

The buyer of the front half takes a dislike to the new owner and erects a fence on the dirt road leading to the back half.  Wait a second the new owner of the back half says, I have an easement.  No way says the front half owner, the easement fails for lack of specificity, otherwise you could claim to have an easement over my whole property, including my house.  A court would never allow that.  Be that as it may says the back half owner, I have adverse possession over the dirt road I've been driving on.  Not so says the owner of the front half, I and the former owner allowed your seller to drive on the road.  Since the use was permissive, a claim for adverse possession fails, and I'm not giving you permission.  What about a way of necessity says the owner of the back half.  I don't think you meet the statutory requirements so sue me says the front half owner.  And on and on.

None of this is made up other than the lack of title insurance.  I can't tell you how many times I had to clear up this type of problem because an experienced title examiner made an error in judgment.  Nothing like trying to resolve a problem when the adverse parties don't like each other.

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Peter Walther
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Peter Walther
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Replied Jan 15 2024, 15:46
Quote from @Shafi Noss:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Still Fannie Mae itself approves "Attorney Opinion Letters" as an alternative to title insurance to pair with their loans. 

"In recent years, widespread digitization of real estate records and technological advances have improved the process of confirming marketable title, but that has not translated to lower costs for borrowers. 

Fannie Mae research shows that low-income and first-time homebuyers pay disproportionally more in closing costs. Since beginning to accept AOLs under the Selling Guide in April 2022, savings to borrowers have been significant. On average, homebuyers have saved more than $1,000 when an AOL was used instead of a traditional lender’s title insurance policy. For purchase transactions, average borrower savings have been >$500, even when the borrower has elected to obtain an owner’s title policy."

...

"Fannie Mae has also purchased more than 10,000 loans with AOLs since 2009 and has not experienced losses from title claims on these loans."

https://singlefamily.fanniemae.com/media/37606/display

So is it always correct for everyone to get title insurance? FNMA doesn't seem to think so. 


I also think it's ironic that title insurance was developed to address short comings in AOLs.  I guess what's old is new again.


Different products for different use cases, each has it's pros and cons. Hopefully they can co-exist and serve consumers well by providing more options. 


 Hi Shafi/Peter:

Thanks for both your expert commentary. Reading from Shafi comment is intriguing for me.

I have question though. I like to digging property record/deed/title ; so my question would be, is there any difference of the output from what I can find out personally via internet search , and from title search that we pay ?? is there differences ?

For example, I could find a record of code issue in building I'm chasing , but the title company can't find out that. Are you guys literally only checking from the county or there's something else that I don't know ?

I think @Peter Walther would know this best, would be interested to hear his answer too. 


Rereading my post, I realized I screwed up the easement description.  As drafted, I gave the back half buyer an easement over the front half of my property leaving out the back .  A pretty typical oversight (even for an attorney).  Hopefully a careful title examiner would spot the oversight an require a new easement clarifying the easement is over the entire East 15' of my remaining property before issuing a title policy.

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Replied Jan 15 2024, 15:47
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Still Fannie Mae itself approves "Attorney Opinion Letters" as an alternative to title insurance to pair with their loans. 

"In recent years, widespread digitization of real estate records and technological advances have improved the process of confirming marketable title, but that has not translated to lower costs for borrowers. 

Fannie Mae research shows that low-income and first-time homebuyers pay disproportionally more in closing costs. Since beginning to accept AOLs under the Selling Guide in April 2022, savings to borrowers have been significant. On average, homebuyers have saved more than $1,000 when an AOL was used instead of a traditional lender’s title insurance policy. For purchase transactions, average borrower savings have been >$500, even when the borrower has elected to obtain an owner’s title policy."

...

"Fannie Mae has also purchased more than 10,000 loans with AOLs since 2009 and has not experienced losses from title claims on these loans."

https://singlefamily.fanniemae.com/media/37606/display

So is it always correct for everyone to get title insurance? FNMA doesn't seem to think so. 


I also think it's ironic that title insurance was developed to address short comings in AOLs.  I guess what's old is new again.


Different products for different use cases, each has it's pros and cons. Hopefully they can co-exist and serve consumers well by providing more options. 


 Hi Shafi/Peter:

Thanks for both your expert commentary. Reading from Shafi comment is intriguing for me.

I have question though. I like to digging property record/deed/title ; so my question would be, is there any difference of the output from what I can find out personally via internet search , and from title search that we pay ?? is there differences ?

For example, I could find a record of code issue in building I'm chasing , but the title company can't find out that. Are you guys literally only checking from the county or there's something else that I don't know ?

I think @Peter Walther would know this best, would be interested to hear his answer too. 


 Sorry in advance Peter if we dig into your job darkest secret LOL


 Always happy to talk title.

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Jay Hinrichs#2 All Forums Contributor
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Jay Hinrichs#2 All Forums Contributor
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Replied Jan 15 2024, 16:56
Quote from @Account Closed:
Quote from @Peter Walther:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Pretty heady stuff so I'm not sure if this was covered. ;-)

What happens when an unrecorded Warranty Deed from an outside of escrow  "Subject To" sale gets involved? (I saw this occur and I don't know how it got resolved or if it did.) 

For instance, Seller sells on "Subject To" to "Buyer 1" who creates a Warrant Deed. Transaction was done on Seller's kitchen table, so no escrow was involved. They agree that the Seller can live there for one more year. The buyer puts the Warranty Deed in a drawer at his office, unaware of his obtuseness and it is never recorded. 

Then being the clever and odious individual the Seller is, he sells to a 2nd Buyer who actually is smart enough to have things done through title & escrow and the Warranty Deed gets recorded. Title naturally misses the unrecorded Warranty Deed.

The Seller gets paid, from escrow, moves out and goes back to his home in Central America, Buyer 2 starts his renovation of the property, Buyer 1 comes by and notices the commotion and discovers what has happened. Both Buyer 1 & Buyer 2 were as honest as investors are and didn't know the plot perpetrated by Seller.

How does this get settled out?


Civil litigation would be my take on it. I dont think a deed has to be recorded to be valid you just lose your priority ??? Seller who sold to two folks obviously did something illegal. But how are you going to get them in SA  ( your not ) just like trying to get Clayton Morris in Portugal. Now your first buyer goes and records his warranty deed and now you have a buggered up title.. I am sure this has happened in the past of course.. sounds like some sort of quiet title action to figure it out.
and another reason sub too is very dangerous  without title insurance for the buyer..

Now keep in mind I have taken these risk for years and years buying court house steps properties and tax sales and the 100 plus sub toos I bought.. However with our title company connections and in house staff we only got stuck about 3 or 4 times on stuff that title could not clear .. so just the cost of doing business on the sub too downpayments were low 10k to 50k  down that was the risk. the auction stuff higher risk but we never took a major loss there .  And we never got title insurance on our sub toos either.  We prepped our own deeds and recorded them ourselves.  UNLESS it was elderly and we needed to have them done with professional witness's IE Escrow officer or sellers attorney.

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Shafi Noss
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Shafi Noss
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Replied Jan 15 2024, 19:03

@Peter Walther I thought easements were recorded on both the dominant and servient property deeds, or maybe sometimes separately in county records, why would it not be recorded on the servient property, seems like that's the one place it should be recorded if anywhere. Otherwise I could sell a property to you and just write in that you have an easement over one of Jay's parcels without his permission?

Also after that back and forth, how could there be a landlocked property that wouldn't be granted an easement by necessity? 

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Jay Hinrichs#2 All Forums Contributor
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Jay Hinrichs#2 All Forums Contributor
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Replied Jan 15 2024, 19:44
Quote from @Shafi Noss:

@Peter Walther I thought easements were recorded on both the dominant and servient property deeds, or maybe sometimes separately in county records, why would it not be recorded on the servient property, seems like that's the one place it should be recorded if anywhere. Otherwise I could sell a property to you and just write in that you have an easement over one of Jay's parcels without his permission?

Also after that back and forth, how could there be a landlocked property that wouldn't be granted an easement by necessity? 


Easement by necessity is state to state each has their own rules and its not cut and dry as I have found out over the years.. but I will let Peter answer  he is the expert.

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Replied Jan 16 2024, 04:42
Quote from @Peter Walther:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Still Fannie Mae itself approves "Attorney Opinion Letters" as an alternative to title insurance to pair with their loans. 

"In recent years, widespread digitization of real estate records and technological advances have improved the process of confirming marketable title, but that has not translated to lower costs for borrowers. 

Fannie Mae research shows that low-income and first-time homebuyers pay disproportionally more in closing costs. Since beginning to accept AOLs under the Selling Guide in April 2022, savings to borrowers have been significant. On average, homebuyers have saved more than $1,000 when an AOL was used instead of a traditional lender’s title insurance policy. For purchase transactions, average borrower savings have been >$500, even when the borrower has elected to obtain an owner’s title policy."

...

"Fannie Mae has also purchased more than 10,000 loans with AOLs since 2009 and has not experienced losses from title claims on these loans."

https://singlefamily.fanniemae.com/media/37606/display

So is it always correct for everyone to get title insurance? FNMA doesn't seem to think so. 


I also think it's ironic that title insurance was developed to address short comings in AOLs.  I guess what's old is new again.


Different products for different use cases, each has it's pros and cons. Hopefully they can co-exist and serve consumers well by providing more options. 


 Hi Shafi/Peter:

Thanks for both your expert commentary. Reading from Shafi comment is intriguing for me.

I have question though. I like to digging property record/deed/title ; so my question would be, is there any difference of the output from what I can find out personally via internet search , and from title search that we pay ?? is there differences ?

For example, I could find a record of code issue in building I'm chasing , but the title company can't find out that. Are you guys literally only checking from the county or there's something else that I don't know ?

I think @Peter Walther would know this best, would be interested to hear his answer too. 


 Sorry in advance Peter if we dig into your job darkest secret LOL


 Always happy to talk title.


 So pls let us know the answer , thanks in advance

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Shafi Noss
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Shafi Noss
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Replied Jan 16 2024, 05:53

Maybe the necessity easement would be granted on a different piece of land than the front 5 acres

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Valerie Kerste
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Valerie Kerste
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Replied Jan 16 2024, 07:11

@Nana Sefa Always, always get it. I had a situation with one of my properties just a couple months ago where there was a mistake. When the title company did all of the closing, they forgot to pay off one of the lien holders at the time that I purchased this building. That lien holder came to me via an attorney wanting their money back, which they are legally entitled to. If I did not have title insurance, I would have had to pay off that outstanding debt or they would have foreclosed on my property.

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Jordan Ray
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Jordan Ray
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Replied Jan 16 2024, 07:42
Quote from @Nana Sefa:

Which of you get owner’s title insurance? And who doesn’t get owner’s title? Why do you get or not get? Thank you. 

Definitely get title insurance! If you are questioning this... the title company is not doing a good job explaining this & is not experienced enough and probably cant give a scenario on when its useful. I would get another title company...

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Peter Walther
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Peter Walther
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Replied Jan 16 2024, 07:42
Quote from @Account Closed:
Quote from @Peter Walther:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Carlos Ptriawan:
Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Pretty heady stuff so I'm not sure if this was covered. ;-)

What happens when an unrecorded Warranty Deed from an outside of escrow  "Subject To" sale gets involved? (I saw this occur and I don't know how it got resolved or if it did.) 

For instance, Seller sells on "Subject To" to "Buyer 1" who creates a Warrant Deed. Transaction was done on Seller's kitchen table, so no escrow was involved. They agree that the Seller can live there for one more year. The buyer puts the Warranty Deed in a drawer at his office, unaware of his obtuseness and it is never recorded. 

Then being the clever and odious individual the Seller is, he sells to a 2nd Buyer who actually is smart enough to have things done through title & escrow and the Warranty Deed gets recorded. Title naturally misses the unrecorded Warranty Deed.

The Seller gets paid, from escrow, moves out and goes back to his home in Central America, Buyer 2 starts his renovation of the property, Buyer 1 comes by and notices the commotion and discovers what has happened. Both Buyer 1 & Buyer 2 were as honest as investors are and didn't know the plot perpetrated by Seller.

How does this get settled out?


In my opinion, it depends on what state the property is in and whether Buyer 2 had actual knowledge of the deed to Buyer 1.  In a race state like NC, knowledge doesn't matter.  First to record has title so Buyer 1 is out of luck.  In a race notice state such as FL, if Buyer 2 had actual knowledge, then Buyer 1 has title, if not then Buyer 2 has title and in an interesting twist, even if Buyer 1 finds out about the deed into Buyer 2 and runs down to the courthouse and records before Buyer 2.  As long as Buyer 2 accepted his deed and paid consideration before Buyer 1 records his deed.  Of course, the same thing applies if the Seller then conveys to Buyer 3 and neither Buyer 1 nor 2 has recorded.

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Peter Walther
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Replied Jan 16 2024, 07:58
Quote from @Shafi Noss:

@Peter Walther I thought easements were recorded on both the dominant and servient property deeds, or maybe sometimes separately in county records, why would it not be recorded on the servient property, seems like that's the one place it should be recorded if anywhere. Otherwise I could sell a property to you and just write in that you have an easement over one of Jay's parcels without his permission?

Also after that back and forth, how could there be a landlocked property that wouldn't be granted an easement by necessity? 


 I think you thought wrong.

Of course, only the actual owner of the burdened property can create an easement.  That's why in my example the seller owned the whole 10 acres.

A suit for a way of necessity in not a panacea.  Plaintiff must meet the statutory requirements and there are in fact landlocked properties.  I'm not saying that the owner of the landlocked parcel isn't entitled to either a common law or statutory easement, only that he will bear the cost of proving entitlement and owning an inaccessible parcel if he loses.

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Peter Walther
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Peter Walther
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Replied Jan 16 2024, 08:02

Here's an article on ways of necessity in Florida for anyone whose interested.

Easements by Way of Necessity – The Florida Bar

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Peter Walther
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Peter Walther
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Replied Jan 16 2024, 08:12
Quote from @Shafi Noss:

@Peter Walther I thought easements were recorded on both the dominant and servient property deeds, or maybe sometimes separately in county records, why would it not be recorded on the servient property, seems like that's the one place it should be recorded if anywhere. Otherwise I could sell a property to you and just write in that you have an easement over one of Jay's parcels without his permission?

Also after that back and forth, how could there be a landlocked property that wouldn't be granted an easement by necessity? 


Here's something you might not be aware of.  Let's say the buyer of the rear 5 acres then acquires the front 5 so now he owns all 10.  He then sells the rear 5 to a third party.  That buyer finds the easement in the chain of title to the property he's buying and assumes he has an easement for access.  Unfortunately, because of the doctrine of merger, the easement was extinguished, and a new one would need to be created, if you don't want to have to sue for a way of necessity.

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Shafi Noss
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Shafi Noss
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Replied Jan 16 2024, 08:53

@Peter Walther Yes I did not know that thanks for explaining. 

But doesn't it seem like a bad system to not record an easement on the servient deed / a separate easement agreement searchable in public records? If only recorded on the dominant deed it just creates the potential for confusions like this with no upside. 

Maybe there's something I'm missing about the inclusion? I'm not sure what the difference is between conveying the back half through inclusion and just selling it like normal if there are only 2 parcels. Using this definition or did you mean something else: https://legal-lingo.com/inclusive-grant

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Tom Gimer
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Replied Jan 16 2024, 15:30
Quote from @Peter Walther:
Quote from @Tom Gimer:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs Maybe so. I'm happy to drop that theory if the numbers aren't behind it.

Still Fannie Mae itself approves "Attorney Opinion Letters" as an alternative to title insurance to pair with their loans. 

"In recent years, widespread digitization of real estate records and technological advances have improved the process of confirming marketable title, but that has not translated to lower costs for borrowers. 

Fannie Mae research shows that low-income and first-time homebuyers pay disproportionally more in closing costs. Since beginning to accept AOLs under the Selling Guide in April 2022, savings to borrowers have been significant. On average, homebuyers have saved more than $1,000 when an AOL was used instead of a traditional lender’s title insurance policy. For purchase transactions, average borrower savings have been >$500, even when the borrower has elected to obtain an owner’s title policy."

...

"Fannie Mae has also purchased more than 10,000 loans with AOLs since 2009 and has not experienced losses from title claims on these loans."

https://singlefamily.fanniemae.com/media/37606/display

So is it always correct for everyone to get title insurance? FNMA doesn't seem to think so. 


I also think it's ironic that title insurance was developed to address short comings in AOLs.  I guess what's old is new again.

I was just thinking it would be interesting to hear what happens in the context of AOLs when fraud or forgery (impossible to identify when examining title) is discovered.

IMO there would be no breach or proximate cause and thus no attorney liability. Of course this would be covered with title insurance.

Who pays?


 From the Fannie Mae guidelines:

provide the following statement: We [I] agree to indemnify you and your successors in interest in the [mortgage] [deed of trust] opined hereto, to the full extent of all losses attributable to a breach of our [my] duty to exercise reasonable care and skill in the examination of the title and giving of this opinion.

I think the threshold for proving a breach is pretty high. The indemnification also excludes losses from mis indexed docs. That's one of the reasons I find it hard to believe there have been no losses. Also not mentioned is what happens when the indemnifying attorney dies or goes out of business and doesn't bother to get a tail rider for his E&O?

The attorney opinion letter framework must be limited to refinances. It just doesn't make sense in any other context.

Of course that means a couple pages of this discussion were pointless... 

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Bob Floss II
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Bob Floss II
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Replied Jan 16 2024, 15:57
Wow, there is a lot of misinformation being thrown around here and I don't have time to respond to it all, but here are a few things I noticed:

Yes, attorneys are paid a portion of the title premium because we are the ones doing the title examination and we underwrite the title policy (at least in Illinois). The title insurer reviews our work and generates the policy.

No, the statistics on the rate of title policy claims are not correct. Generally policy claims are made when there is a large mistake. I small mistake will be paid out of pocket by the title company to avoid filing a claim. There's also a risk the title company could hold the attorney responsible to pay for an error they made in the title exam or clearing title. The rate of errors at closing are much higher than reported.

Yes, you can try to research the property and avoid paying for title insurance. Keep in mind I do this for a living and I would never buy a property without title insurance. There's a bit of ego in this thread to assume you know better than the people who this for a living.

Yes, there is a lot that goes into a title policy beyond checking taxes and the recorders website. It covers you for boundary line disputes, it verifies the person who is selling you the property is actually the owner (that out of state seller you are dealing with may not be the seller and presented fraudulent documents), title does a name search to verify the parties do not have liens against them personally, lawsuits, bankruptcy, probate, or something else that could prevent the buyer from having full ownership of the property.

At the end of the day, you want someone else to have the liability if something goes wrong with your closing.

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Shafi Noss
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Shafi Noss
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Replied Jan 16 2024, 17:37

@Bob Floss II That's a good point about the unreported payouts. 

Do you know if there are statistics on losses sustained by owners that don't buy policies? I wouldn't be surprised if not but that compared with the paid claims + losses of owners who do buy title insurance would be a good indicator of how much risk is being removed per dollar spent. 

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Peter Walther
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Peter Walther
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Replied Jan 17 2024, 06:45
Quote from @Shafi Noss:

@Peter Walther Yes I did not know that thanks for explaining. 

But doesn't it seem like a bad system to not record an easement on the servient deed / a separate easement agreement searchable in public records? If only recorded on the dominant deed it just creates the potential for confusions like this with no upside. 

Maybe there's something I'm missing about the inclusion? I'm not sure what the difference is between conveying the back half through inclusion and just selling it like normal if there are only 2 parcels. Using this definition or did you mean something else: https://legal-lingo.com/inclusive-grant


It's neither good nor bad, it just is. It’s no different than creating an easement in a separately recorded instrument known as an Easement. It’s just a matter of knowing where to look and understanding what it means.

I believe the reference is to a deed that describes the property being conveyed as a particular property, less and except certain parts of it the have previously been conveyed though I’ve never heard it being a deed of inclusion. For example: All of the NE ½ of the SW ¼ of the SW ¼ of Section 5, Twp 12, Rgn 15, Duval County, FL less and except the property described in ORB 1234, Pg 15, Public Records of Duval County, FL. Then you just have to figure out what the 1st parcel less the 2nd parcel leaves behind.

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Peter Walther
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Peter Walther
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Replied Jan 18 2024, 07:44

For anyone whose interested, here's a link to a recent paper that compares one flavor of AOL to traditional title insurance, prepared for the MBA.  My brief read found two thing that really jumped out at me.  The $50k cap on liability and a failure to identify who is going to be responsible for clearing any title defects identified in the AOL. 

In my experience, $50k is not much to spend to cure a title problem and I didn't see where its defined, if the E&O carrier spends $40k trying unsuccessfully to cure the problem, does the assured only collect the remaining $10k as the recoverable loss?

Also, with traditional title insurance, the settlement/policy issuing agent does much of the curative work, part of the reason the agent keeps a portion of the premium.  There's no charge for title clearance on the settlement statement.

Lastly, there's a large body of law the defines a title insurer's rights and responsibilities under a policy.  there's none for AOLs that I'm aware of.  Raise your hand if you want to be on the bleeding edge of the law.

blank_rome_whitepaper_on_attorney_opinion_letters.pdf (mba.org)

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Tom Gimer
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Replied Jan 18 2024, 10:12
Quote from @Peter Walther:

For anyone whose interested, here's a link to a recent paper that compares one flavor of AOL to traditional title insurance, prepared for the MBA.  My brief read found two thing that really jumped out at me.  The $50k cap on liability and a failure to identify who is going to be responsible for clearing any title defects identified in the AOL. 

In my experience, $50k is not much to spend to cure a title problem and I didn't see where its defined, if the E&O carrier spends $40k trying unsuccessfully to cure the problem, does the assured only collect the remaining $10k as the recoverable loss?

Also, with traditional title insurance, the settlement/policy issuing agent does much of the curative work, part of the reason the agent keeps a portion of the premium.  There's no charge for title clearance on the settlement statement.

Lastly, there's a large body of law the defines a title insurer's rights and responsibilities under a policy.  there's none for AOLs that I'm aware of.  Raise your hand if you want to be on the bleeding edge of the law.

blank_rome_whitepaper_on_attorney_opinion_letters.pdf (mba.org)


Fannie purchased 45 AOL loans in 2022.

HAHAHAHAHA

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Bubba McCants
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Bubba McCants
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Replied Jan 18 2024, 19:55
Quote from @Shafi Noss:

@Bob Floss II That's a good point about the unreported payouts. 

Do you know if there are statistics on losses sustained by owners that don't buy policies? I wouldn't be surprised if not but that compared with the paid claims + losses of owners who do buy title insurance would be a good indicator of how much risk is being removed per dollar spent. 


 Excellent point, did not think of that angle however I will add it to my memory. Thanks

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Bubba McCants
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Bubba McCants
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Replied Jan 18 2024, 20:00
Quote from @Account Closed:
Quote from @Jay Hinrichs:
Quote from @Peter Walther: @Tom Gimer

Quote from @Shafi Noss:
Quote from @Peter Walther:
Quote from @Shafi Noss:

@Jay Hinrichs 

Well first Jay I know you are extremely experienced and I suspect Carlos is as well so let me start by saying you both have my respect. 

Here is the nuance I am trying to distinguish: yes of course when you refi or sell a lender or buyer will want title insurance (unless Iowa). 

But what about the 6 weeks that I own the property before the sale or refi? 

I know this is a bit techincal  but same thing applies when your doing a DIL  or a defaulted borrower just wants to deed the property back or to one of Morbys gator sub to folks via quit claim.

You said "I know this is a bit techincal but same thing applies when your doing a DIL or a defaulted borrower just wants to deed the property back or to one of Morbys gator sub to folks via quit claim."

Interesting comment.

Pace Morby says that if the "Due on Sale" gets called, just Deed it back to the Seller to “Stop the Due on Sale” and buy it back again with an Executory Contract. Other than the fact the DOS says using an executory contract violates the DOS in and of itself,

Oftentimes he uses a 2nd "unsophisticated" (investor) lender to pay some $$ to the seller and cover rehab costs. So, he has at least, a promissory note with the 2nd. I believe it's often unrecorded. He brags he has zero out of pocket.

Where does that leave title?

Is it no longer under the title insurance bought by the borrower?

Can the title even be insured since it was sold on Subject To, deeded back to the seller and then sold again on Land Contract?

When he goes to sell after the rehab, is title insurance possible?


 Title insurance is "just about" always possible. (I do not care for absolutes for the sake of argument) However, with that question, I would refer to a title agent in the area you are doing the rehab. It is a good question however in my opinion, the question begs the answer. Personally, my group always (absolute- because I know it to be true) purchases title insurance. Just a cost of doing what we consider to be, good business and peace of mind. 

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Peter Walther
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Peter Walther
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Replied Jan 19 2024, 07:02
Quote from @Tom Gimer:
Quote from @Peter Walther:

For anyone whose interested, here's a link to a recent paper that compares one flavor of AOL to traditional title insurance, prepared for the MBA.  My brief read found two thing that really jumped out at me.  The $50k cap on liability and a failure to identify who is going to be responsible for clearing any title defects identified in the AOL. 

In my experience, $50k is not much to spend to cure a title problem and I didn't see where its defined, if the E&O carrier spends $40k trying unsuccessfully to cure the problem, does the assured only collect the remaining $10k as the recoverable loss?

Also, with traditional title insurance, the settlement/policy issuing agent does much of the curative work, part of the reason the agent keeps a portion of the premium.  There's no charge for title clearance on the settlement statement.

Lastly, there's a large body of law the defines a title insurer's rights and responsibilities under a policy.  there's none for AOLs that I'm aware of.  Raise your hand if you want to be on the bleeding edge of the law.

blank_rome_whitepaper_on_attorney_opinion_letters.pdf (mba.org)


Fannie purchased 45 AOL loans in 2022.

HAHAHAHAHA


Don't laugh too hard, AOL's seem to be getting some traction.  ALTA better get a better response out.

Many Homebuyers Are Losing Thousands at Closing — but It's Avoidable (businessinsider.com)

How homebuyers could save $1,000 on closing costs this year (nypost.com)