spooky claims 2014 - stewart€¦ · • a contract was executed and sent to the title company. #3...

10/16/2014

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Spooky Claims 2014

Presented by:Victor A. Davis

Assistant Vice Present, Senior Claims CounselStewart Title Guaranty Company – Houston

4700 West Sam Houston Parkway North, Suite 100Houston, TX 77041

(713) 625-8767

October 16, 2014

For Escrow Officer Credit please email one time only the password, attendees names, and TDI Licensenumbers (if you have one) [email protected] for certificates (please dothis as soon as possible and make sure the correctspelling of the name(s) is included as to how it shouldappear on the certificate).

For this webinar, please include “Spooky Claims 2014”in the subject line of your e-mail.

Attorneys e-mail bar card number to the same e-mail forCLE credit.

Send to your training administrator if applicable.

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ADDITIONAL HOUSEKEEPING INFORMATION

Because of recent opinions expressed by the Texas Insurance Department concerning rebates, legal credit is available only to attorneys who own title agencies which are Stewart Title Guaranty Agents, are employed by a title insurance agent licensed with Stewart Title Guaranty, or a Stewart entity. Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or entity may also obtain CLE credit. We welcome any other lawyers to listen, but cannot provide continuing education credit to you. If you are claiming legal credit for this web conference, please provide in your email which category you are in. We regret any inconvenience but we must take reasonable steps to protect us and you from enforcement actions by the Texas Insurance Department.

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Please put: Spooky Claims 2014 - Online Presentation in the subject line of your email

email to: [email protected]

10/16/2014

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Spooky Claims 2014

Presented by:Victor A. Davis

Assistant Vice Present, Senior Claims CounselStewart Title Guaranty Company – Houston

4700 West Sam Houston Parkway North, Suite 100Houston, TX 77041

(713) 625-8767

October 16, 2014

Top 10 Spooky Claims

#10 Missed Easements

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• Developer purchased a lot in order to tear down an existing house and build a small commercial center.

• The lot had a driveway on the side of the property running from the street to the back.

• The insured demolished the building and tore up the driveway.



• Upon seeing the demolition, the neighbor contacted the new owner and complained.

• The neighboring lot had a small parking space at the back of its lot adjacent to the driveway that he could no longer access due to the demolition.

• Investigation revealed that the neighbor had an easement on the driveway to reach the back of his property.

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• What should be done?– Cure?

• Negotiate termination of easement

• Litigate termination of easement

– Deny?

– Tender Diminution in Value?

#9 Instructions Not Followed


• A contractor was the holder of a large note and lien on a property and was a little short on working capital.

• As a way to come up with some money quickly, the contractor agreed to sell the note and lien to an investor.

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• They brought the transaction to a title company for closing as a way to protect the investor.

• The closing went well and the contractor executed an Assignment of Note and Lien.


• A year and a half later the investor contacts the closer to say that the borrower paid the note and lien off to the contractor, not the investor, and that the contractor would not send the payoff funds to the investor.


• The Assignment of Note and Lien was not sent for recording.

• The borrower conveyed the property and as part of the sale, another title company paid the record title holder of the note and lien, the contractor, instead of the investor.

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#8 Fraud

#8 Fraud

• A closer has a builder customer who buys vacant lots in old neighborhoods, builds a nice house on the lot and then sells it.

#8 Fraud

• The builder brings a couple of executed, but unrecorded, deeds to the closer which puts title into the builder, and requests that the deeds be recorded as a courtesy. One of the deeds appears to be 20 years old.

• The closer thinks nothing of it and has the deeds recorded.

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#8 Fraud

• When the examination is done, title shows up in the builder and the file is closed.

• Everyone is happy.

• After the first successful closing, the builder continues to bring unrecorded deeds to the closer who continues to record the deeds.

#8 Fraud

• A couple of years go by when the happy homeowners receive letters from the District Attorney stating that the builder is being charged with forging deeds.

#8 Fraud

• The builder found vacant lots with a few years of delinquent taxes.

• It was cheaper and easier to forge a deed or two than to locate the owner and try to buy the lot.

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#7 Closing Procedures

#7 Closing Procedures

• Insured was served with a lawsuit seeking to set aside the conveyance of the property to the insured.

• The seller was a limited partnership.

• The plaintiffs were limited partners claiming that the general partner did not have authority to convey the property.

#7 Closing Procedure

• Investigation revealed that the agent did not have and did not review the limited partnership agreement to verify that general partner had authority to sell property.

• Counsel was retained to defend insured’s title to the property.

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#7 Closing Procedure

• Once discovery got underway and the limited partnership agreement was finally located, it was revealed that the general partner did in fact have authority to sell the property.

• The insured was dismissed from the lawsuit.

#6 Missed Mortgage

#6 Missed Mortgage

• A borrower had fallen on hard times and was unable to pay his ad valorem taxes.

• She reached out to a tax lender and received a property tax loan.

• A Transfer of Tax Lien was filed in the real property records.

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#6 Missed Mortgage

• The borrower was able to make ends meet a while longer, but fell behind again.

• This time the borrower was unable to make their mortgage payments and the lender foreclosed.

#6 Missed Mortgage

• When the lender sold the property out of REO it closed at a title company.

• The examiner missed the Transfer of Tax Lien.

• The property tax lender, seeing the property sold without the tax loan being paid off, sent a demand to the new buyer.

#5 Incorrect Description Used

or Furnished

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#5 Incorrect Description Used or Furnished

• A builder purchased two adjacent lots and constructed a single house so that it rested on the boundary line between the two lots.

• The builder then sold the house to a purchaser.


• Subsequent to the sale of the house, the builder ran into financial difficulty and had judgments obtained against him and abstracted.


• An asset search revealed that the builder still owned a subdivision lot.

• The Abstract of Judgment was filed in the real property records and a Writ of Execution obtained.

• The collections attorney then contacted our insured.

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• Unfortunately, only one of the two lots on which the house was built was described in the deed conveying the property to our insured.

• The judgment creditor’s lien had priority over a correction instrument that was yet to be prepared.

• Negotiation with the judgment creditor was successful.

#4 Other Matters Purportedly Missed


• Title Company closed transaction wherein a three story building was conveyed.

• The building was immediately adjacent to another building.

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• The purchaser of the building demolished it to replace it with a nice new building.

• When the building was demolished it was revealed that the neighboring building shared a wall with the demolished building.


• The neighbor complained about his missing wall.

• It was at this time that a Party Wall Agreement surfaced after hiding in the real property records.

• Negotiations were successful without the need for litigation.

#3 Missed Ownership Interest

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• A church congregation was growing so a new acreage tract was located to build a larger church.

• A contract was executed and sent to the title company.


• The examination revealed that ten years ago title was obtained by Mr. Doe and Ms. Doe.

• Mr. Doe and Mrs. Doe got divorced and Mrs. Doe conveyed her interest in the property to Mr. Doe.

• The examiner placed title solely in Mr. Doe.


• The deal closed and construction began on the new church.

• Ms. Doe was driving by the property one day and saw the new construction.

• She wondered about the construction.

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• Ms. Doe contacted her lawyer.

• As the construction was nearing completion, the church received a letter from a lawyer.

• Ms. Doe claimed to own a half interest in the property and wanted to be compensated.


• As it turned out, Ms. Doe and Mrs. Doe were different people. Mrs. Doe was the daughter of Ms. Doe and the interest that she was conveying at the divorce to Mr. Doe was the community property interest.

#2 Failure to Follow Established Procedure

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•Borrower is tired of living in the big city and has dreams of living in the country.

•He finds a nice acreage tract that isn’t too expensive and is far away from the city.


•Rather than build, he decides to purchase a manufactured home and move it onto the site.

•The contracts are executed and forwarded to the title company for closing.


• The title examination goes well.

• The lender gets the documents in on time.

• The parties show up, execute all documents including MHU forms, and the closing appears to go smoothly.

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• Ten years go by and things fall apart for the borrower.

• He is no longer able to make his loan payments.

• The lender notifies the borrower that it intends to foreclose.

• The borrower files for bankruptcy protection.


• The bankruptcy trustee has a thoroughsearch performed of the borrower’sassets.

• The search reveals that the Statement ofOwnership and Location for theborrower’s manufactured home wasnever filed in the real property records.

• The bankruptcy trustee asserts that themanufactured home was not convertedto realty and is thus free of the lender’slien.

• The lender then asserts a claim under itstitle insurance policy.


• A review of the closing file revealed that forms for the Statement of Ownership and Location were never submitted.

• Choice to either retain counsel to defend the lien, or tender Diminution in Value for the loss of lien on manufactured home.

• Considering the cost of litigation, the loss of a 10 year old manufactured home seemed the least costly.

• An appraisal was obtained and the diminution in value was tendered to the lender.

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#1 Property Taxes

#1 Property Taxes

• George and Martha were an elderly couple and had enjoyed their life together.

• When they were making up their wills, they decided to give their house to their grandson.

• He was a nice young man and visited every Sunday.

#1 Property Taxes

• George and Martha did pass away.

• The grandson missed Grandpa George and Grandma Martha, but was happy to have their house even though he already owned his own house.

• Being of a sentimental nature, grandson held on to his grandparent’s house for a few years.

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#1 Property Taxes

• Times became a little tough for grandson, so he decided to sell his grandparents house after all.

• He found a buyer and the sale closed.

#1 Property Taxes

• A few months after closing the buyer received a notice of back taxes being due.

• The tax assessor collector, seeing the property sold, removed the Homestead and Over-65 exemptions for the last few years and assessed for the difference.

• Any Questions?

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THANK YOU!

For Escrow Officer Credit, please email the password, attendees names, and TDI License number (if you have one) to [email protected] for the certificate (please do this as soon as possible and make sure the e-mail includes the name(s) as it should appear on the certificate). Please be aware that due to TDI's strict policies on issuing credit, you must pay close attention to the password given at the end of the webinar as we are unable to give it out once the presentation has been terminated off of Webex.

For this webinar, please include “Spooky Claims 2014” in the subject line of your e-mail. Please make sure your request is submitted one time only. Submitting the same request multiple times and to multiple e-mail addresses will only delay the processing of your certificate.

Attorneys email bar card number to [email protected] for CLE credit. Questions/Comments? Email [email protected]

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spooky claims 2014 - stewart€¦ · • a contract was executed and sent to the title company. #3...

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