Department of the Treasury 

Executive Office for Asset Forfeiture 

Directive Number: 32 

(Revised February 18, 1999) 

DATE: MAY 20, 1.998 

SUBJECT: 	Use of Special Warranty Deed and Indemnification Agreement for 

the Sale of Real Property 

I. BACKGROUNQ 

It is the policy of the Department of the Treasury to sell forfeited real 

properties with title insurance to maximize the revenue from the sale. On 

occasion, some real properties have not been offered for sale for long 

periods of time while the seizing agency and the national seized property 

contractor endeavor to clear a "clouded" titled to the property as 

interpreted by the Title Company. This results in increased property 

management costs and the inherent liabilities of maintaining vacant real 

properties in inventory for long periods of time. 

Real property forfeited to the government in a judicial proceeding vests 

title in the United States. On occasion, Title Companies challenge the 

government's title for title insurance purposes because of perceived 

defects in notice, in the satisfaction of lienholder interests, or in the 

forfeiture process. As a result, these companies will not issue title 

insurance for the property. 

In order to expedite the disposition of properties with "clouded" titles, it is 

the policy of the Department of the Treasury to dispose of the property 

utilizing a Special Warranty Deed and, if necessary, an Indemnification 

Agreement as prescribed below. This procedure should expedite the sale 

of such properties, but may not encourage a Title Company to issue title 

insurance. 

II. PROCEDURES 

A. 	 Upon receipt of disposition instructions to sell real property, the 

national seized property contractor shall make all reasonable 

good faith efforts to secure a clear title and title insurance for 

real property, as prescribed by the contract. Directive No. 32 

Pg.1/2 - 1999 
B. 	 When it becomes evident that the Title Company will not issue a 

policy for an identified property, the seizing agency and the 

national seized property contractor will take the following step~ 

to expedite the sale of the property. 

1. 	 The seizing agency and the national seized property 

contractor will submit a recommendation to the Counsel 

for the Executive Office for Asset Forfeiture (EOAF) to 

sell a particular real property using the Special Warranty 

Deed (See Attachment A) and the Indemnification 

Agreement-Buyer Only (See Attachment B) and/or the 

Indemnification Agreement-Buyer and Title Company 

(See Attachment C). This recommendation shall include 

detail as to the reason for the reluctance of the Title 

Company to issue a policy and what efforts have been 

taken to date by the national seized property contractor 

to obtain title insurance. The use of the Indemnification 

Agreement-Buyer and Title Company (Attachment C) 

should be used only as a last resort and upon a written 

refusal from the Title Company to write title insurance 

unless they are indemnified along with the buyer. 

2. 	 The EOAF Director will notify in writing the concerned 

agency office and the national seized property contractor 

of the decision on the recommendation within thirty (30) 

days. If approved, the national seized property contractor 

will coordinate necessary action with the seizing agency. 

3. 	 The Special Warranty Deed and Indemnification 

Agreement will be prepared by the national seized 

property contractor after receipt of the approval by the 

EOAF Director to dispose of the property in this manner. 

Ill. COMMENT 

This policy is provided to address situations that may have resulted in 

the holding of real properties in the seized property inventory for long 

periods of time. 

While these procedures should expedite the disposal of real property, 

they do not take the place of conscientious handling of real property 

seizure cases, including appropriate pre-seizure planning, by all 

involved. Every effort should be made to ensure that pre-seizure 

analysis, case processing as well as seizure and forfeiture processing 

are accomplished in the most responsible manner to avoid incidents 

that may give rise to "clouded" titles. Directive No. 32 

Pg. 2/2 - 1999