Source: https://store.ceb.com/california-title-insurance-practice
Timestamp: 2020-07-03 19:12:40
Document Index: 579981087

Matched Legal Cases: ['arts 6', 'arty 13', 'arty 13', 'arty 13', '§5', '§8', '§6', '§2071', '§11', '§6', '§6', '§12', '§6', '§6', '§6', '§6', '§6', '§6', '§6', '§8', '§8', '§8', '§8', '§11', '§11', '§11', '§12', '§14', '§14', '§14', '§14', '§14', '§15']

California Title Insurance Practice | Legal Resources | CEB | CEB
California Title Insurance Practice
Be prepared to advise your transactional and litigation clients on issues involving title insurance coverage.
Coverage provided by owner’s and lender’s policies
Chart and explanation of available owner’s and lender’s endorsements
The use of guaranties, commitments, and limited coverage policies
Procedures for filing and pursuing claims against title insurer
Methods of resolving title insurance claims
Litigation strategies and procedures
OnLAW RE94620
Print RE32620
2d edition, looseleaf, updated 6/19
Organization and Regulation of Title Industry
Oscar H. Beasley
A. Brief History of Title Insurance 1.1
B. What Title Insurance Does
1. Covers Past Events 1.2
2. Covers Matters Affecting Title 1.3
II. ORGANIZATION, OPERATION, AND REGULATION OF TITLE INDUSTRY
A. Organization and Operation of Industry 1.4
1. Underwritten Title Company or Title Agent 1.5
2. Approved Attorney 1.6
3. Attorney Agents 1.7
B. Regulation of Industry 1.8
1. Regulation of Title Insurance Companies 1.9
2. Regulation of Underwritten Title Companies 1.10
3. Concerns Regarding Closing by Underwritten Title Company 1.11
4. Regulation of Escrow Companies 1.12
III. PROHIBITION OF REBATES, KICKBACKS, AND COMMISSIONS
A. California Statutes 1.13
B. Federal Statutes; RESPA 1.14
IV. OTHER FORMS OF ASSURANCE IN OTHER PARTS OF UNITED STATES
A. Abstracts 1.15
B. Attorney’s Opinion 1.16
Advising Clients About Title Insurance
Alice L. Akawie
I. ADVISING CLIENTS
A. Determining Scope of Representation 2.1
B. Explaining Limitations of Title Insurance
1. Dispelling Misconceptions 2.2
2. Informing Clients That Certain Matters May Not Be Disclosed 2.3
II. ROLE OF ATTORNEYS IN SALES TRANSACTIONS
A. Ordering Preliminary Report 2.4
B. Reviewing Preliminary Report
1. Buyer’s Attorney 2.5
a. Reviewing Exceptions to Coverage 2.6
b. Comparing Underlying Documents With Summary of Exceptions 2.7
c. Confirming Vesting 2.8
2. Seller’s Attorney 2.9
a. Reconveying Deed of Trust 2.10
b. Transferring Subject to Deed of Trust 2.11
C. Removing Exceptions to Coverage 2.12
D. Arranging for Inspection and Survey of Property 2.13
E. Evaluating Need for Commitment or Binder 2.14
F. Determining Appropriate Coverage
1. Advising Buyer 2.15
a. Determining Buyer’s Knowledge of Off-Record Matters 2.16
b. Recommending Type of Policy 2.17
(1) Explaining ALTA Land Title Survey Requirement 2.18
(2) Addressing Options With Title Officer to Meet Buyer’s Needs 2.19
c. Recommending Endorsements 2.20
2. Advising Seller 2.21
G. Negotiating Coverage 2.22
1. Understanding Nature of Title Insurance 2.23
2. Resolving Title Issues 2.24
a. Contacting Title Company Underwriter 2.25
b. Appealing to Other Decision-Makers 2.26
c. Contacting Competitors 2.27
d. Possible Solutions 2.27A
H. Budgeting Costs 2.28
I. Establishing Authority to Act 2.29
1. Entities and Individuals
a. Partnerships 2.30
b. Corporations 2.31
c. Limited Liability Companies 2.32
d. Trusts and Estates 2.33
e. Individuals 2.34
2. Statutory Presumptions 2.35
J. Reviewing or Drafting Collateral Documents 2.36
K. Preparing Escrow Instructions 2.37
L. Reviewing Title Insurance Policy 2.38
M. Evaluating and Asserting Claims 2.39
III. ROLE OF ATTORNEYS IN LOAN TRANSACTIONS 2.40
A. Reviewing Exceptions to Coverage 2.41
B. Determining Appropriate Coverage
1. Recommending Appropriate Policy 2.42
2. Recommending Amount of Coverage 2.43
3. Recommending Endorsements 2.44
C. Drafting and Reviewing Documents 2.45
D. Confirming Authority to Borrow 2.46
E. Evaluating and Asserting Claims 2.47
IV. ROLE OF ATTORNEYS IN LEASEHOLD AND EASEMENT TRANSACTIONS 2.48
Selecting Title Insurer and Initiating Title Process
I. WHO SELECTS THE INSURER 3.1
II. TITLE INSURANCE COMPANIES AND UNDERWRITTEN TITLE COMPANIES
A. Differences Between Title Insurance Companies and Underwritten Title Companies 3.2
1. Underwriting Agreement 3.3
2. Distinctions in Liability 3.4
B. Use of Closing Protection Letter if Underwritten Title Company Is Involved in Transaction 3.5
III. FACTORS TO CONSIDER IN SELECTING INSURER 3.6
A. Financial Stability 3.7
1. Reinsurance
a. Why Reinsurance Is Used 3.8
b. How Reinsurance Works 3.9
c. How Insured Obtains Direct Access to Reinsurer 3.10
2. Coinsurance
a. Definition of Coinsurance 3.11
b. Forms of Coinsurance
(1) Straight or First-Dollar Coinsurance 3.12
(2) Excess Coinsurance 3.13
(3) Joint and Several Coinsurance 3.14
B. Premiums
1. Regulation of Pricing Practices 3.15
2. Factors in Setting Premiums 3.16
3. Endorsements 3.17
4. Methods of Reducing Premiums 3.18
a. Short-Term-Rate Premiums 3.19
(1) Definition and Coverage of Binders 3.20
(2) Using Binders in Resale Transactions 3.21
(3) Using Binders in Refinancing Transactions 3.22
c. Special Rates
(1) Planned Project or Special Project Rates 3.23
(2) Revamp Rates 3.24
(3) Reissue and Rewrite Rates 3.25
d. Credits for Existing Insurance 3.26
5. Quotes 3.27
C. Flexibility in Making Underwriting Decisions 3.28
IV. INITIATING TITLE INSURANCE PROCESS
A. Northern California 3.29
B. Southern California 3.30
C. Multistate Transactions 3.31
Title Search and Surveys
Marjorie Floyd Burchett
I. SEARCHING TITLES
A. Public Records Maintained in California 4.1
1. County Grantor/Grantee Indexes 4.2
2. State and Federal Judicial Records 4.3
3. Property Tax Records 4.4
4. State and Federal Land Office Records 4.5
5. Environmental Lien Records 4.6
6. Constructive Notice Imparted by Title Records 4.7
7. Recorded Documents That Do Not Impart Constructive Notice 4.8
8. Effect of Actual Notice of Prior Unrecorded or Defectively Recorded Documents 4.9
B. Records Examined by Title Companies—The Title Company Plant 4.10
1. Types and Scope of Records Maintained 4.11
a. Lot Books 4.12
b. “Arb” Books 4.13
c. General Index 4.14
d. Tax Records 4.15
e. Other Sources of Title Records 4.16
2. Use of Starter Reports or Policies 4.17
C. Title Company Searching Methods and Document Examination 4.18
1. Statement of Identity 4.19
2. Steps in Title Search 4.20
3. Steps in Title Examination 4.21
4. Computer Searches 4.22
D. Indexing Errors and Wild Documents
1. Effect of Wild Documents 4.23
2. Problems With Misspelled, Common, or Different Names 4.24
3. Effect of Search Revealing Wild Documents 4.25
II. UNDERWRITING DECISIONS 4.26
A. Limitations on Title Searches 4.27
B. Conflict Between Time Constraints and Thoroughness of Search [Deleted] 4.28
C. Decisions Affecting Specific Transactions 4.29
D. Economic Conditions, Competitive Pressures, and Claims Experience 4.29A
1. Creditors’ Rights Coverage
a. Historic Coverage 4.29B
b. Withdrawal of Coverage 4.29C
2. Mechanics Lien Coverage in the Face of a Loss of Priority 4.29D
a. Historic Approach 4.29E
b. Current Approach 4.29F
III. OFF-RECORD DUE DILIGENCE 4.29G
A. Different Types of Land Surveys 4.30
B. Extended Coverage Inspection and Survey Requirements 4.31
C. ALTA/NSPS Survey 4.32
D. Review of Survey by Title Company 4.33
E. Review of Survey by Insured’s Attorney 4.34
F. Aerial Photographs and Overlay Surveys 4.35
G. Inspection 4.36
Preliminary Reports and Commitments
I. PRELIMINARY REPORTS
A. Purpose 5.1
B. Contents 5.2
1. Cover Page 5.3
a. Explanation of Purpose and Scope; Disclaimer of Liability 5.4
b. “Plant Date” 5.5
c. The Estate 5.5A
d. Current Vesting 5.6
e. Legal Description 5.7
2. Exclusions and Preprinted Exceptions 5.8
3. Typewritten Exceptions 5.9
a. Easements 5.10
b. Encroachments 5.11
c. Covenants, Conditions, and Restrictions 5.12
d. Existing Voluntary Liens 5.13
e. Leasehold Interests 5.14
(1) Subordination and Attornment Clauses 5.15
(2) Rent Concessions [Deleted] 5.16
(3) Ground Leases [Deleted] 5.17
f. Tax Liens 5.18
g. Miscellaneous Exceptions 5.19
4. Notes 5.20
C. Negotiating Exceptions 5.21
1. Statutory Limitations on Enforceability of Ancient Instruments 5.22
2. Ancient Mortgages and Deeds of Trust 5.22A
3. Termination of Unexercised Options and Powers of Termination 5.23
4. Unperformed Contracts for Sale of Real Property 5.24
5. Mineral Rights 5.24A
D. Liability for Reports on Title 5.24B
1. Liability for Abstracts of Title 5.25
2. Liability of Preparer of Preliminary Report
a. Pre-1982 Preliminary Title Reports Treated as Abstracts 5.26
b. Post-1981 Preliminary Reports Treated as Offers to Insure 5.27
c. Title Insurer Is Not Insured’s Agent for Purposes of Constructive Notice 5.28
3. 2006 Preliminary Report Form 5.29
E. Issuer’s Duty to Issue Title Policy 5.30
II. COMMITMENTS
A. Purpose 5.31
B. Contents 5.32
1. Agreement to Issue Policy 5.33
2. Identifying Information 5.34
3. Requirements 5.35
4. Exceptions 5.35A
5. Conditions 5.36
C. Liability of Issuer of Commitment 5.37
D. Attorney’s Review on Receipt of the Policy 5.38
III. HANDLING TITLE DEFECTS 5.39
A. Bonds 5.39A
B. Indemnification of Buyer 5.40
C. Indemnification of Insurer 5.41
D. Secured Indemnities 5.41A
E. Disclosure of the Title Defect 5.41B
F. Holdback Agreement [Deleted] 5.42
G. Endorsements and Extended Coverage [Deleted] 5.43
H. Extension of Time 5.44
Structure and Coverage of Title Insurance Policy Forms
Dena M. Cruz
David V. Westcott
A. Interpretation of Title Insurance Policies 6.1
B. Scope of Title Insurance Coverage
1. Types of Policies Insuring Land 6.2
2. Definition of “Insurance” 6.3
3. Title Insurance Policy: Contract of Indemnity 6.4
4. Title Policy Is Not Representative of State of Title 6.5
a. When Transaction Is Fraudulent 6.5A
b. Allegations of Negligence; What Duty Is Owed? 6.5B
5. Insuring Over Known Risks 6.6
6. Additional Coverage 6.7
C. CLTA and ALTA Title Insurance Policy Forms 6.8
1. Standard and Extended Coverage Policies 6.9
2. Most Commonly Used Policies
a. CLTA Standard Coverage Policy 6.10
(1) Scope of Coverage 6.11
(2) Joint Protection Policy 6.12
b. CLTA Homeowner’s Policy 6.13
(1) Policy Coverage 6.14
(2) Table: ALTA/CLTA Homeowner’s Policy Deductibles and Limits of Liability 6.15
c. ALTA Loan Policy
(1) Extended Coverage Policy 6.16
(2) Controversial Provisions 6.17
d. ALTA Owner’s Policy
(1) Extended Coverage 6.18
(2) Need for Survey 6.19
3. Other Standard Policies 6.20
a. Decertification of 1987 ALTA Residential Policy 6.21
b. ALTA Withdraws 1992 Leasehold Policies and Issues Endorsements 13 and 13.1 6.22
c. ALTA Short Form Residential Loan Policies 6.23
d. Decertification of 1992 ALTA Construction Loan Policy; Mechanics Lien Endorsements 6.24
e. 2014 ALTA Residential Limited Coverage Mortgage Modification Policy 6.24A
4. International Policies and UCC Policies
a. International Policies 6.25
b. UCC Policies 6.26
II. ANATOMY OF TITLE POLICY 6.27
A. Face Page 6.28
1. Statement of Indemnification; Covered Risks 6.29
2. Table: Matters Insured 6.30
a. Vesting of Title 6.31
b. Defects, Liens, and Encumbrances on Title 6.32
c. Unmarketability of Title
(1) Definition of “Unmarketability” 6.33
(2) Factors That Do Not Affect Unmarketability 6.34
(3) Effect of Title Insurance Company’s Unwillingness to Issue Policy 6.35
d. Lack of Right of Access 6.36
e. Validity or Enforceability of Lien 6.37
f. Priority of Lien or Encumbrance 6.38
g. Lack of Priority Over Mechanics Liens 6.39
h. Assessments for Street Improvements 6.40
i. Validity or Enforceability of Assignment 6.41
j. The ALTA Expanded Coverage Residential Loan Policy and the ALTA Homeowner’s Policy: Additional Insuring Provisions 6.42
3. Statement of Defense Coverage 6.43
B. Exclusions From Coverage 6.44
1. Government Regulations, Powers, and Rights 6.45
a. Laws, Ordinances, or Government Regulations 6.46
b. Police Power 6.47
c. Judicial Interpretation of Exclusion 1 6.48
a. The CLTA Standard Coverage Policy and ALTA Loan and Owner’s Policies 6.49
b. The 2006 ALTA Policies, ALTA/CLTA Homeowner’s Policy, and ALTA Expanded Coverage Residential Loan Policies 6.50
3. Certain Defects, Liens, Encumbrances, and Adverse Claims
a. Matters Controlled by Insured 6.51
(1) Insured Created, Suffered, Assumed, or Agreed to Matter Giving Rise to Loss (Exclusion 3(a))
(a) Matters “Created” by Insured Claimant 6.52
(b) Matters “Suffered” by Insured Claimant 6.53
(c) Matters “Assumed” by Insured Claimant 6.54
(d) Matters “Agreed To” by Insured Claimant 6.55
(2) Insured Knew but Did Not Disclose Matter to Insurer 6.56
b. No Loss or Damage 6.57
c. Postpolicy Claims 6.58
d. Failure to Pay Value 6.59
4. Liens Unenforceable Because of Failure to Comply With Certain Laws 6.60
5. Mechanics Liens 6.61
a. Excluded Mechanics Liens 6.62
b. Indemnity Requirement; Prestarts 6.63
6. Creditors’ Rights Exclusions 6.64
C. Schedule A 6.65
D. Schedule B (Exceptions to Title) 6.66
1. CLTA Standard Coverage Policy 6.67
2. ALTA Policies 6.68
a. Standard Coverage Policy 6.69
b. Extended Coverage Policy 6.70
3. Typewritten Exceptions 6.71
a. Liability for Description of Exception 6.72
b. No Obligation to Show Status of Lien 6.73
c. No Obligation to Show Matters That Do Not Affect Title 6.74
E. Conditions and Stipulations 6.75
1. Definitions 6.76
a. Definition of “Insured” 6.77
(1) Lender 6.78
(2) Owner 6.79
b. Definition of “Public Records” 6.80
c. Definition of “Land” 6.81
d. Definition of “Amount of Insurance” 6.82
e. Definition of “Indebtedness” 6.83
2. Continuation of Insurance 6.84
a. Loan Policy 6.85
(1) Loan Policy Does Not Become Owner’s Policy 6.86
(2) Reasons to Obtain Owner’s Policy 6.87
(3) Measure of Damages 6.88
b. Owner 6.89
(1) Partial Interest Retained 6.90
(2) Carryback Financing 6.91
(3) Covenants of Warranty 6.92
(4) Continuation of Coverage Under Expanded Coverage Owner’s Policies 6.92A
3. Making a Claim 6.93
4. Paying a Claim 6.94
a. Determination of Liability
(1) Measure of Damages 6.95
(2) Coinsurance if Property Is Underinsured (Owner’s Policy Only) 6.96
b. Apportionment (Owner’s Policy Only) 6.97
c. Limitation of Liability 6.98
d. Integration Clause 6.98A
e. Increase in Extent of Liability 6.99
f. Reduction of Insurance 6.100
g. Liability Noncumulative 6.101
h. Reduction or Termination of Liability 6.102
(1) Last-Dollar Issues (Loan Policy Only) 6.103
(2) Revolving Credit Loan 6.104
i. Subrogation 6.105
j. Arbitration 6.106
k. Limited to Contract Damages 6.107
6. Proof of Loss 6.108
James T. Straw
I. REASONS TO OBTAIN OWNER’S TITLE POLICY 7.1
A. Distinguishing Other Title Products 7.2
1. Preliminary Report 7.3
2. Loan Policy 7.4
3. Trustee’s Sale Guaranty 7.5
B. No Duty to Issue Title Policy 7.6
C. Counseling Owners on Policy Matters
1. Ascertaining Coverage and Reviewing Preliminary Report 7.7
2. Preparing Instructions on Title Insurance Coverage 7.8
3. Disclosing Known Title Matters 7.9
a. Insurer’s Election to Rescind 7.9A
b. Unfair Settlement Practices 7.9B
c. Bankruptcy Claims: Equitable Subordination 7.9C
4. Explaining Date-Down Matters 7.10
II. COMPARING EARLIER AND MORE RECENT OWNER’S POLICIES 7.11
A. CLTA Policy Compared to 1992 and 2006 ALTA Owner’s Policies
1. Summary of Basic Coverage 7.12
a. Access 7.13
b. No Express Coverage of Mechanics Liens 7.14
2. CLTA Joint Protection Policy 7.15
3. Summary of Exclusions 7.16
a. Environmental Liens 7.17
b. Creditors’ Rights Exclusion 7.18
(1) Avoiding Creditors’ Rights Exclusion by Using Pre-1990 Policy Form 7.19
(2) Withdrawal of Creditors’ Rights Endorsement 7.20
4. Preprinted and Regional Exceptions
a. Summary of Preprinted Exceptions 7.21
b. Standard Coverage Policy
(1) Record Title Policy 7.22
(2) Transactional Validity: Fraud, Forgery, or Failure of Delivery 7.23
c. Extended Coverage Policy 7.24
(1) Survey Requirement 7.25
(2) Commercial and Residential Use of Survey Compared 7.26
5. Typewritten Exceptions (Schedule B Exceptions) 7.27
6. Conditions and Stipulations 7.28
a. Important Definitions
(1) Insured 7.29
(2) Land 7.30
(3) Public Records 7.31
(4) Unmarketability of Title 7.32
b. Arbitration 7.33
7. Duty to Defend 7.34
8. Cost Distinctions [Deleted] 7.35
B. Comparing 1992 ALTA Owner’s Policy and 2006 ALTA Owner’s Policy
1. Expansion of “Covered Risks” 7.35A
2. Exclusions 7.35B
3. Arbitration 7.35C
4. Proof of Loss 7.35D
5. Expanded Definition of “Insured” 7.35E
6. Increase Regarding Extent of Liability 7.35F
7. Postpolicy or “Gap” Coverage 7.35G
8. Exclusion Regarding Liens for Real Estate Taxes 7.35H
C. Table: Comparison of Covered Risks in Owner’s Policies 7.35I
D. Table: Comparison of Exclusions in Owner’s Policies 7.35J
III. RESIDENTIAL TITLE INSURANCE POLICIES 7.36
A. Anatomy of ALTA/CLTA Homeowner’s Policy 7.36A
1. Owner’s Information Sheet; Table of Contents 7.37
2. Owner’s Coverage Statement 7.38
3. Covered Title Risks 7.39
4. Duty to Defend 7.40
5. Schedules A and B
a. Schedule A 7.41
b. Schedule B
(1) Exceptions 7.42
(2) Regional Exceptions [Deleted] 7.43
6. Exclusions 7.44
7. Conditions 7.45
B. Comparing CLTA Standard Policy With ALTA/CLTA Homeowner’s Policy
1. Advantages of Homeowner’s Policy
a. Expanded Coverage 7.46
b. Cost 7.47
2. Use of Endorsements 7.48
3. Limitation on Coverage 7.49
4. Basic Coverage 7.49A
a. Violation of Subdivision Law 7.49B
b. Building Permit and Zoning Violations 7.49C
c. Encroachment 7.49D
d. Access 7.49E
e. Restrictive Covenant Violations 7.49F
f. Automatic Coverage Increases 7.49G
5. Continuation of Coverage 7.49H
6. Postpolicy Event Coverage 7.49I
7. Restrictions on Policy 7.49J
IV. COVERAGE FOR OPTIONEES, VENDEES, TENANTS, AND OTHER OWNERS
A. Insuring Optionee
1. Insurable Interest 7.50
2. Desire for Coverage 7.51
3. Method of Insuring 7.52
4. Underwriting Criteria 7.53
B. Contract-of-Sale Vendee 7.54
C. Leaseholds 7.55
1. Underwriting Criteria 7.56
2. Calculating Amount of Loss 7.57
D. Mineral Rights 7.58
1. Scope of Coverage 7.59
2. Exceptions From Coverage 7.60
3. Calculating Amount of Loss 7.61
E. The 1991 and 2012 ALTA United States Policy
1. Scope of Coverage 7.62
2. Exclusions 7.63
V. POSTCLOSING REVIEW 7.64
Rebecca U. Litteneker
Edward S. Rusky
I. THE LENDING INDUSTRY AND ITS REQUIREMENTS
1. Lender’s Goals 8.1
2. Borrower’s Goals 8.2
3. Impact of Third Parties on Lender’s Title Insurance Requirements 8.3
B. FNMA/FHMC Requirements 8.4
C. Loan Pools, Participations, and Securitized Transactions 8.5
1. Packaging Loans 8.6
2. Securitizing Loans 8.7
3. Securitization Litigation—Wrongful Foreclosure 8.7A
a. Yvanova v New Century Mortgage Corp. 8.7B
b. Post-Yvanova Cases 8.7C
c. Lack of Clarity on Elements of Wrongful Foreclosure 8.7D
d. Use of Multiple Suits to Delay or Avoid Foreclosure 8.7E
e. Evolving Market 8.8
f. Establishing Title Insurance Requirements 8.9
(1) Rating Agency 8.10
(2) Underwriter of Bonds 8.11
(3) Issuers of Credit Enhancements 8.12
D. Priority of Deed of Trust
1. Recordation 8.13
2. Exceptions to Priority by Recordation
a. Actual Notice 8.14
b. Real Property Taxes and Certain Assessments 8.15
c. Mechanics Liens 8.16
d. Simultaneously Recorded Deeds of Trust 8.16A
e. Subordination Agreement 8.16B
3. Prior Interests That May Be Advantageous to Lender 8.17
(1) Lender’s Considerations 8.18
(2) Lease Subordination 8.19
(3) Subordination, Nondisturbance, and Attornment Agreement 8.20
(4) Partial Subordination 8.20A
(5) Title Insurance 8.21
b. Covenants, Conditions, and Restrictions (CC&Rs)
(1) Lender’s Considerations and Priorities 8.22
(2) Title Insurance 8.23
c. Reciprocal Easement Agreements (REAs)
(1) Lender’s Considerations and Priorities 8.24
(2) Title Insurance 8.25
II. DIFFERENT FORMS OF LOAN POLICIES
A. Introduction to Loan Policies 8.26
B. CLTA Standard Coverage Policy 8.27
1. Coverage 8.28
2. 1973 and 1990 CLTA Policies Compared 8.29
C. 1992 ALTA Loan Policy
1. Coverage 8.30
2. Exclusions 8.31
3. Comparison of 1970 and 1992 ALTA Loan Policies
a. Creditors’ Rights Exclusion 8.32
(1) Avoiding Creditors’ Rights Exclusion by Using Pre-1990 Policy Form 8.32A
(2) Endorsement Coverage 8.32B
(3) Lender’s Response to Withdrawal of Endorsement 8.32C
b. Arbitration 8.33
4. Comparison of 1992 and 2006 ALTA Loan Policies 8.33A
a. Expansion of Covered Risks 8.33B
b. Exclusions 8.33C
c. Arbitration 8.33D
d. Proof of Loss 8.33E
e. Expanded Definition of “Insured” 8.33F
f. Definition of “Indebtedness” 8.33G
g. Increase Regarding Extent of Liability 8.33H
h. Postpolicy (“Gap”) Coverage 8.33I
5. ALTA Short Form Residential Loan Policies 8.33J
6. Table: Comparison of Covered Risks in Loan Policies 8.33K
7. Table: Comparison of Exclusions in Loan Policies 8.33L
8. The ALTA Expanded Coverage Residential Loan Policy 8.33M
9. Additional Exclusions to Expanded Coverage Residential Loan Policy 8.33N
10. 2012 Short Form Expanded Coverage Residential Loan Policy 8.33O
D. ALTA Construction Loan Policies 8.33P
1. 1992 ALTA Construction Loan Policy 8.34
a. Form A Endorsement 8.35
b. Form B Endorsement 8.36
c. Exclusions From Endorsements 8.37
d. Form C Endorsement 8.37A
e. Form D Endorsement 8.37B
f. ALTA Form 32–06 Endorsement 8.37C
g. ALTA Form 32.1–06 (Construction Loan—Loss of Priority—Direct Payment) 8.37D
h. ALTA Form 33–06 (Disbursement) 8.37E
2. Package Construction Loan Policies 8.38
E. Withdrawal and Replacement of 1992 ALTA Leasehold Loan Policy by Endorsement 13.1–06 8.39
F. Limited Coverage Policies 8.40
III. LENDER’S CONCERNS 8.41
A. Measure and Timing of Loss
1. Measure of Loss 8.42
2. Timing of Loss 8.43
a. Analysis of Timing of Loss in Karl v Commonwealth Land Title Ins. Co. 8.44
b. Benefit to Lender of Karl v Commonwealth Land Title Ins. Co. 8.45
B. Reduction of Coverage 8.46
C. Date of Policy 8.47
D. Insuring Lenders on Foreclosure or Deeds in Lieu of Foreclosure
1. 2012 Limited Pre-Foreclosure Policy for Residential Loans 8.47A
2. Alternatives for Non-Residential Loans—Acquiring Owner’s Policy 8.48
3. Validity and Enforceability of Notes 8.49
Paul E. Flores
I. WHAT IS AN ENDORSEMENT? 8A.1
II. LENDER AND OWNER ENDORSEMENTS
A. CLTA 100 Series Endorsements 8A.2
1. Terms of Basic Endorsement 8A.3
2. Modified CLTA 100 Endorsement; ALTA 9 Series 8A.4
3. Underwriting Criteria 8A.5
a. Covenants, Conditions, and Restrictions (CC&Rs) 8A.6
b. Easements 8A.7
c. Mineral Rights and Surface Entry 8A.8
d. Encroachments 8A.9
4. Variations of CLTA 100 Endorsement 8A.10
B. CLTA 101 Series Endorsements 8A.11
1. Scope of Coverage 8A.12
2. Protection Unavailable to Lessors 8A.13
3. Underwriting Challenge 8A.14
III. LENDER ENDORSEMENTS 8A.15
A. CLTA 111 Series Endorsements
1. Partial Reconveyances 8A.16
2. Subordination 8A.17
B. Truth in Lending CLTA 125 (ALTA Form 2) Endorsement—Decertified 8A.18
IV. OWNER ENDORSEMENTS 8A.19
A. Inflation Protection Endorsement 8A.20
B. Use of Commercial Endorsements for Residential Property 8A.21
V. ALTA ENDORSEMENTS
A. Overview 8A.22
B. Construction Loan and Mechanics Lien Endorsements 8A.23
1. Scope of Coverage 8A.24
2. Exceptions and Exclusions 8A.25
VI. TITLE INSURANCE COMPANY ENDORSEMENTS 8A.26
A. Owner Endorsements
1. Nonimputation Endorsements 8A.27
2. Fairway Endorsement 8A.28
B. Lender Endorsements
1. First or Contingent Loss Endorsement 8A.29
2. Last-Dollar Endorsement 8A.30
3. Nonimputation Endorsement 8A.31
4. Revolving Credit Loan, Optional or Obligatory Advance 8A.32
5. Shared-Appreciation Mortgage 8A.33
6. Tie-In Endorsement 8A.34
7. Usury 8A.35
8. Water 8A.35A
VII. TABLE: CLTA AND ALTA ENDORSEMENTS 8A.36
Guaranties and Limited Coverage Policies
I. DISTINCTIONS BETWEEN GUARANTIES AND POLICIES 9.1
II. BASIC GUARANTEE STRUCTURE
A. Face Page 9.2
B. Schedule A 9.3
C. Schedule of Exclusions 9.4
D. Conditions 9.5
III. COMMONLY ISSUED GUARANTIES
A. Trustee’s Sale Guarantee
1. Purpose 9.6
2. Assurances Given 9.7
3. Appropriate Issuer 9.7A
4. Informational Notes 9.7B
5. Limits on Liability 9.8
B. Litigation Guarantee
1. Purpose 9.9
2. Purpose of Litigation Must Be Accurately Described 9.10
3. Establishing Amount of Liability 9.11
4. Assurances Given 9.12
C. Lot Book Guarantee
1. Purpose 9.13
2. Assurances Given 9.14
3. Limitations 9.15
D. Recorded Document Guaranty
1. Purpose 9.16
2. Scope 9.17
E. Chain of Title Guarantee 9.18
F. Mechanics Lien Guarantee 9.19
G. Condition of Title Guarantee 9.20
H. Other Guaranties 9.21
IV. LIMITED COVERAGE POLICIES
A. Purpose 9.22
B. Scope 9.23
Title Instructions and Issuance of Title Insurance Policy
I. INTRODUCTION; SCOPE OF CHAPTER 10.1
II. ROLE OF ESCROW AGENT AND TITLE OFFICER 10.2
A. Escrow Closings 10.3
B. New York–Style Closings 10.4
C. Instructions on Coverage 10.5
III. ROLE OF ATTORNEY
A. Advise on Coverage 10.6
B. Advise on Coinsurance, Reinsurance, and Closing Protection Letters 10.7
C. Verify Ability/Commitment to Issue Coverage 10.8
1. Verification of Instructions 10.9
2. Commitments 10.10
3. Pro Formas 10.11
4. Form: Pro Forma Closing Instruction 10.12
D. Prepare Title Policy Instructions
1. Purchase and Sale Transaction 10.13
a. Supplemental Title Instructions 10.14
b. Form: Letter of Instructions for Purchase and Sale 10.15
2. Loan Transactions
a. Issuance of Loan Policy 10.16
b. Form: Letter of Instructions for Loan 10.17
3. Premium Payments 10.18
E. Certify That Requirements Satisfied 10.19
F. Review Title Insurance Policy Issued
1. Correct Mistakes in Policy 10.20
2. Advise Client on Adequacy of Policy Over Time 10.21
Theories and Defenses in Title Company Actions
Theodore R. Forrest, Jr.
I. TITLE INSURER LIABILITY: INTRODUCTION
A. Scope of Chapter 11.1
B. Understanding the Basics
1. Compare Client Policy With Cases 11.2
2. Distinguish First Party and Third Party Claims 11.3
II. BREACH OF TITLE INSURANCE CONTRACT
A. Summary of Remedies 11.4
B. Liability Under Owner’s Policy 11.5
1. Cost of Removing Defect or Lien 11.6
2. Diminution in Value 11.7
3. Consequential Damages 11.8
4. Damages for Failure to Defend 11.9
C. Liability Under Loan Policy 11.10
1. General Measure of Damage or Loss 11.11
2. Split of Authority on Date for Establishing Loss 11.12
a. On Resale After Foreclosure 11.13
b. On Foreclosure Date 11.14
D. Actions for Declaratory Relief 11.15
III. BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING
A. Summary of Theory; Remedies 11.16
B. Applicability to Title Insurers 11.17
C. Examples: Bad Faith Established 11.18
1. Investigation of Facts or Coverage 11.19
2. Handling of Claims or Defense 11.20
3. Settlement of Claims 11.21
D. Examples: Bad Faith Not Found 11.22
1. Investigation of Facts or Coverage 11.23
2. Handling of Claims or Defense 11.24
3. Settlement of Claims 11.25
4. Miscellaneous Conduct 11.26
E. Bad Faith Handling of Claim During Litigation 11.27
F. Bad Faith Refusal to Quiet Title 11.28
G. Statutory Claims 11.29
H. Damages Recoverable 11.30
1. Emotional Distress Damages 11.31
2. Consequential Economic Loss 11.32
3. Prejudgment Interest 11.33
4. Attorney Fees and Litigation Expenses 11.34
5. Punitive Damages 11.35
a. Clear and Convincing Evidence 11.35A
b. Constitutionality of Punitive Damages 11.35B
(1) First Guidepost: Reprehensibility of Defendant’s Conduct 11.35C
(2) Second Guidepost: Disparity Between Harm Suffered by Plaintiff and Punitive Damages Awarded 11.35D
(3) Third Guidepost: Difference Between Punitive Damages Awarded and Penalties Authorized in Comparable Cases 11.35E
(4) Aggregate Disgorgement of Profits Theory Prohibited 11.35F
(5) Evidence of Defendant’s Net Worth Required 11.35G
c. Examples: Punitive Damages Allowed 11.36
d. Examples: Punitive Damages Denied 11.37
IV. OTHER THEORIES OF LIABILITY
A. Negligent Preparation of Abstract 11.38
1. Preliminary Report Distinguished 11.39
2. Duty of Due Care 11.40
3. Damages 11.41
B. Negligent Preparation of Preliminary Report 11.42
1. Claim on Reports Issued Before January 1, 1982 11.43
2. No Claim on Reports Issued After January 1, 1982 11.44
C. Unfair Business Practices 11.45
1. Remedies 11.45A
2. Bad Faith; Unfair Insurance Practices Act (UIPA) 11.45B
3. Standing 11.45C
D. Accommodation Recordings 11.46
E. Escrow Liability 11.47
F. Fraud 11.48
G. Slander of Title 11.49
H. Other Tort Claims 11.50
V. THIRD PARTY CLAIMS
A. Introduction 11.51
B. When to Assert Third Party Claims 11.52
C. Threshold Considerations 11.53
D. Insurer’s Duties 11.54
E. Categories of Third Party Claims
1. Mechanics Liens 11.55
2. Judgment Liens 11.56
3. Deeds of Trust 11.57
4. Other Encumbrances 11.58
VI. TITLE INSURER’S DEFENSES: INTRODUCTION 11.59
VII. POLICY-RELATED DEFENSES
A. Defenses to Coverage or Potential Coverage 11.60
1. Defenses Based on Insuring Language
a. Title Vested Other Than as Stated in Policy 11.61
b. “Marketable Title” Versus “Market Value” 11.62
c. Lien 11.63
d. Encumbrance 11.64
e. Lack of Access 11.65
f. Property Dimensions 11.65A
g. Covered Risks Under CLTA/ALTA Homeowner’s Policy and Decertified ALTA Residential Policy 11.65B
2. Lack of Proximate Cause 11.66
B. Exclusions 11.67
1. Law, Ordinance, or Government Regulation 11.68
2. Police Power 11.69
3. Eminent Domain 11.70
4. Defects, Liens, Encumbrances, Adverse Claims, and Other Matters
a. Matters Created, Suffered, Assumed, or Agreed to by Insured 11.71
b. Matters Neither Known to Insurer Nor Recorded in Public Records, but Known to Insured 11.72
c. Matters Resulting in No Loss or Damage to Insured 11.73
d. Matters Attaching or Created After Date of Policy 11.74
e. Loss That Would Not Have Occurred if Insured Had Paid Value 11.75
5. Unenforceability of Lien for Failure to Comply With Doing-Business Laws 11.76
6. Invalid or Unenforceable Lien for Violation of Usury, Consumer Credit, or Truth in Lending Laws 11.77
7. Claims Arising From Bankruptcy, Insolvency, or Creditors’ Rights Law 11.78
C. Standard (Preprinted) Exceptions 11.79
1. Taxes or Assessments, Public Agency Proceedings 11.80
2. Facts, Rights, Interests, or Claims Not Shown by Public Records but Ascertainable by Inspection of Land or Assertion by Persons in Possession 11.81
3. Easements, Liens, Encumbrances, or Claims Not Shown by Public Records 11.82
4. Information Not Shown in Public Records That Correct Survey Would Reveal 11.83
5. Unpatented Mining Claims and Water Rights 11.84
D. Nonstandard (Typewritten) Coverages, Exclusions, and Exceptions 11.85
1. Forced Removal Coverage 11.86
2. Exclusion of Government’s Claim of Title to Land in Lake Bed 11.87
E. Tender of Policy Limits 11.88
F. Late or Defective Claim Notice 11.89
G. Inadequate Proof of Loss 11.90
H. Two-Year Statute of Limitations 11.91
1. Generally Accrues on Date Loss Is Discovered 11.92
a. Equitable Tolling 11.93
b. No Accrual Before Delivery of Policy 11.93A
c. Contractual Tolling 11.94
d. Tolling by Estoppel 11.94A
2. Exception for Duty to Defend—Accrues on Termination Date of Third Party Suit 11.95
I. Full Credit Bid 11.96
J. Less Than Full Credit Bid 11.96A
K. Rescission—Fraud of Insured 11.97
1. Concealment 11.98
2. Misrepresentation 11.99
3. Warranties 11.100
4. Consequences of Rescission 11.101
L. Mechanics Liens Defenses 11.102
VIII. DEFENSES TO BAD FAITH AND PUNITIVE DAMAGES
A. Bad Faith Affirmative Defenses
1. Advice of Counsel 11.103
2. Genuine Dispute Doctrine 11.103A
3. Insured’s Breach of Contract 11.104
4. Comparative Bad Faith Affirmative Defense Abolished 11.105
5. Comparative Negligence 11.105A
6. No Reverse Bad Faith Cause of Action 11.105B
7. Fraud Cross-Complaint 11.105C
8. Settlement and Release 11.106
B. Defenses to Punitive Damages Claims 11.107
1. No Advance Knowledge, Conscious Disregard, Authorization, or Ratification 11.108
2. No Involvement of Officer, Director, or Manager of Corporation 11.109
3. Lack of “Clear and Convincing” Proof 11.110
4. Lack of Proof of Insurer’s Financial Condition 11.111
IX. DEFENSES TO OTHER TORT CLAIMS
A. Introduction 11.112
B. Slander of Title
1. Falsity Required 11.113
2. Absolute Privilege for Judicial Proceedings 11.114
3. Conditional Privilege of Rival Claimant 11.115
4. Statute of Limitations: Equitable Tolling 11.116
5. Good Faith Reliance on Advice of Counsel 11.117
6. Lack of Publication by Defendant 11.118
7. Lack of Actual Damages 11.119
8. Venue 11.120
C. Escrow Liability
1. Statute of Limitations 11.121
2. Interpleader 11.122
X. SUBROGATION
A. Definition; Authority 11.123
B. Applicability to Title Insurance
1. Contractual Subrogation 11.124
2. Equitable Subrogation 11.125
3. No Right to Subrogation Under the California Real Estate Recovery Fund 11.125A
C. Declaratory Relief 11.126
Claims Procedures Under Title Insurance Policies
I. INTRODUCTION 12.1
A. Reciprocal Duty of Good Faith and Fair Dealing 12.2
B. Overview of Claims Process 12.3
II. PROVIDING NOTICE OF CLAIM
A. Contents of Notice 12.4
B. Mandatory Written Notice 12.5
C. Delivery of Notice 12.6
D. Notice Providers 12.7
E. Denial of Claim Based on Inadequate Notice 12.8
1. Third Party Claims 12.9
2. First Party Claims 12.10
F. Waiver of Defects in Notice
1. Insurer’s Denial of Coverage 12.11
2. Insurer’s Failure to Object 12.12
III. TENDERING THE DEFENSE
A. Definition of “Tender” 12.13
B. Forfeit of Defense and Indemnity Rights Caused by Late Tender 12.14
C. Recoverability of Pre-Tender Fees 12.15
IV. PROVIDING PROOF OF LOSS
A. Definition of “Proof of Loss” 12.16
B. Contents of Proof of Loss 12.17
C. Use of Experts 12.18
D. Responsibilities of Insurer 12.19
E. Responsibilities of Insured
1. Best Evidence 12.20
2. Misstatements and Omissions 12.21
F. Waiver or Estoppel 12.22
G. Denial of Claim Based on Late or Inadequate Proof of Loss 12.23
V. INSURER’S DUTY TO INVESTIGATE
A. Source of Insurer’s Duty to Investigate 12.24
B. Scope of Insurer’s Duty to Investigate 12.25
C. Breach of Duty to Investigate 12.26
VI. INSURER’S DUTY TO DEFEND
A. Duty to Defend When Potential for Indemnity Exists 12.27
1. Comparing Complaint Allegations Against Policy Terms 12.28
2. Considering Extrinsic Facts 12.29
3. Considering Effect of Potential Amendment to Complaint 12.30
4. Analyzing Effect of Meritless, False, or Fraudulent Claims 12.31
B. Duty Limited to Nature and Kinds of Risks Covered by Policy 12.32
C. Duty Extends to Entire Action 12.33
D. Duty Arises Immediately 12.34
VII. INSURER’S TIME LIMITS TO RESPOND TO NOTICE OF CLAIM OR TENDER OF DEFENSE
A. Responding to Notice 12.35
B. Investigating the Claim 12.36
C. Accepting or Denying the Claim 12.37
D. Tendering Payment 12.38
VIII. RIGHTS AND DUTIES PENDING RESOLUTION OF CLAIM OR TENDER OF DEFENSE
A. Insured’s Duty of Good Faith and Fair Dealing 12.39
B. Insured’s Duty of Cooperation 12.40
1. Duty in Third Party Actions 12.41
2. Insurer’s Right to Examine Insured Under Oath 12.42
3. Insurer Must Conduct EUO in Good Faith 12.43
C. Breach of Duty of Cooperation
1. Grounds for Denial of Coverage or Termination of Policy Benefits 12.44
2. Insurer Must Show Prejudice
a. Question of Fact or Law 12.45
b. Elements of Proof 12.46
IX. INSURER’S OPTIONS IN RESPONDING TO NOTICE OF CLAIM OR TENDER OF DEFENSE 12.47
A. Defending the Insured 12.48
1. Defending With Reservation of Rights 12.49
2. Providing Independent Counsel 12.50
B. Rejecting Tender of Defense 12.51
C. Eliminating the Defect 12.52
D. Prosecuting Action to Establish Title 12.53
E. Paying the Policy Limit 12.54
1. When Litigation Pending Against Insured 12.55
2. When Insurer Acting in Dual Capacity 12.56
F. Purchasing the Indebtedness 12.57
G. Paying Loss or Damage 12.58
H. Payment Under Reservation of Rights 12.58A
I. Filing Declaratory Relief Action 12.59
Charles A. Hansen
I. INTRODUCTION AND SOURCES OF LAW 13.1
II. WHEN TO COMMENCE A TITLE INSURANCE LAWSUIT 13.2
III. COUNSELING THE INSURED
A. Review and Assess Client’s Expectations 13.3
B. Explain Nature and Limitations of Policy 13.4
IV. PARTIES TO ACTIONS ON INSURED CLAIMS
A. Procedural Distinctions Between First and Third Party Claims
1. No Privity Between Insurer and Third Party 13.5
2. Statute of Limitations 13.6
3. Lis Pendens May Be Required 13.7
B. Necessary Versus Related Parties
1. Interested Parties 13.8
2. Third Party Suits 13.9
3. First Party Suits 13.10
C. Permissive Joinder of Claims 13.11
V. JURISDICTION, VENUE, AND FORUM 13.12
VI. DISCOVERY STRATEGIES 13.13
A. Examination Under Oath
1. Admissibility in Evidence 13.14
2. Objections to Admissibility 13.15
B. Discovery Methods
1. Document Requests 13.16
2. Interrogatories 13.17
3. Depositions 13.18
C. Discovery Topics and Their Scope
1. How the Industry Functions 13.19
2. Insurer’s Relationship to Underwritten Title Company 13.20
3. Insurer’s Financial Condition 13.21
4. Insurer’s Claims Files
a. Relating to Insured’s Claim 13.22
b. Relating to Other Insureds’ Claims 13.23
c. Reserves 13.23A
5. Claims File of Attorney for Insurer 13.24
6. Other Discovery Areas 13.25
VII. EXPERT CONSULTANTS AND WITNESSES 13.26
A. Protecting Consultant Privilege 13.27
B. Categories of Experts 13.28
1. Coverage Experts 13.29
2. Claims Experts 13.30
3. Damages Experts and Appraisers 13.31
4. Experts on Collateral Issues 13.32
VIII. SUMMARY JUDGMENT AND SUMMARY DISPOSITION OF ISSUES 13.33
A. Insurer as Moving Party 13.34
B. Insured as Moving Party 13.35
IX. TRIAL OF TITLE INSURANCE DISPUTES
A. Jury Trials
1. Jury or Court Trial? 13.36
2. Motions in Limine 13.37
3. Special Verdicts 13.38
B. Attorney Fees as Damages 13.39
I. OVERVIEW 14.1
II. ISSUES SUBJECT TO ARBITRATION
A. “Broad Form” Arbitration Clause in Standard Title Policy 14.2
B. Arbitrable Issues Determined by Court Rather Than Arbitrator 14.3
C. Provisional Remedies Not Arbitrable 14.4
III. ENFORCING AND RESISTING ARBITRATION
A. Compelling Arbitration by Petition 14.5
B. Opposing Arbitration 14.6
1. Unenforceability of Arbitration Clause
a. Lack of Informed Consent 14.7
b. Adhesionary Contract; Unconscionability 14.8
c. Rescission Based on Fraud 14.9
d. Rescission Based on Other Grounds 14.10
2. Waiver of Agreement to Arbitrate 14.11
3. Pending Litigation With Third Parties 14.12
IV. PREHEARING ARBITRATION PROCEDURES
A. Applicable Rules 14.13
B. Fees and Expenses 14.14
1. Waiver of Fees 14.14A
2. Witness Fees 14.14B
3. Transcript 14.14C
4. Arbitrators’ Fees 14.14D
5. Deposits/Advance Fees 14.14E
6. Award of Fees and Costs to Prevailing Party; Attorney Fees 14.14F
7. Other Fees and Expenses 14.14G
C. Initial Pleadings
1. Commencing Arbitration
a. Demand for Arbitration 14.15
b. Submission by Stipulation 14.16
2. Response to Demand 14.17
3. Counterclaim 14.18
4. Amendments to Claim 14.19
D. Selecting the Arbitrator
1. Appointment and Vacancy 14.20
2. Disclosures; Disqualification 14.21
E. Prohibition on Communication With Arbitrator 14.22
F. Joining Additional Parties 14.23
G. Consolidation of Arbitrations
1. Grounds 14.24
2. Consolidation Procedure Under 1987 TIARs 14.25
H. Conferences and Preliminary Hearings 14.26
I. Discovery 14.27
J. Summary Judgment and Involuntary Dismissal 14.28
V. ARBITRATION HEARING
A. Time and Place 14.29
B. Transcript of Hearing 14.30
C. Subpoenas 14.31
D. Evidence 14.32
E. Order of Proceedings 14.33
F. Close of Hearings; Supplemental Briefs and Evidence 14.34
G. Expedited Procedures 14.35
H. Procedures for Large, Complex Commercial Disputes 14.35A
I. Right of Representation 14.36
VI. ARBITRATION AWARD
A. Time for Award 14.37
B. Content and Scope of Award 14.38
C. Delivery of Award 14.39
D. Enforcement of Award 14.40
E. Challenging the Award 14.41
1. Grounds to Vacate Award 14.42
2. Grounds for Correcting Award 14.43
VII. COMPARISON OF ARBITRATION AND LITIGATION 14.44
A. Permissive Joinder of Parties and Claims 14.45
B. Discovery 14.46
1. Judicial Review; Optional Appellate Arbitration (OAA) Rules 14.47
2. Key Provisions of OAA Rules 14.47A
D. Right to Jury Trial 14.48
E. Available Remedies 14.49
Additional Title Company Services
I. INTRODUCTION 15.1
II. INFORMATION SERVICES
A. Providing Title Data 15.2
1. The Property Profile 15.3
2. Customer Service 15.4
3. Online Resources 15.5
B. Training and Information on Current Topics 15.6
C. Serving as a De Facto Member of the Principals’ Due Diligence Teams 15.7
III. TRANSACTIONAL SERVICES
A. Escrow Services 15.8
B. Escrow Instructions 15.9
C. Illegal Practice of Law 15.10
D. Preparation of Form Documents
1. Commonly Prepared Documents 15.11
2. Subordination Agreements 15.12
E. Ethical Problems for Escrow Holders
1. “Silent” Liens 15.13
2. Deposits 15.14
3. Broker’s Commissions 15.15
F. Accommodation Recordings 15.16
G. Acting as Trustee on Deeds of Trust 15.17
1. Reconveyance of Deed of Trust 15.18
a. Problems Obtaining a Reconveyance 15.19
b. Release of Obligation to Clear Title 15.20
c. Failure to Locate Original Note or Deed of Trust 15.21
d. Return of the Original Documents 15.22
e. Unauthorized Reconveyance 15.23
2. Foreclosure of Deed of Trust
a. Substituting Trustee 15.24
b. Nonjudicial Foreclosure 15.25
c. Conducting the Sale 15.26
H. Trust Company Services 15.27
I. Qualified Intermediary Exchange Services 15.28
IV. OTHER SERVICES 15.29
Policies and Endorsements:
The American Land Trust Association (ALTA) published new closing protection letters for single and multiple transactions in December 2018.
The decertification date of the ALTA Commitment Form (6/17/06) and the ALTA Plain Language Commitment Form (6/17/06) were rescheduled from December 31, 2017, to August 1, 2018. A new consolidated ALTA Commitment Form was released in 2016. See §5.31.
In 2018, ALTA and CLTA made changes (mostly technical) to a number of endorsements. See chart in §8A.36.
Wildfire safety assessments. In 2018, the California legislature adopted the Wildfire Safety Improvements Finance Act (SB 465), which expands the provisions of the 2007 Property Assessed Clean Energy (PACE) Programs (AB 811) to authorize certain legislative bodies to designate an area for contractual assessments to finance the installation of wildfire safety improvements. See §6.40.
Standard form fire policy. In 2018, the standard form fire policy set forth in Ins C §2071 was amended to extend the limitation period on claims to 2 years for losses related to a declared state of emergency. See §§11.93, 11.94A.
Unfair Business Competition Law and rate filing. Villanueva v Fidelity Nat’l Title Co. (review granted Dec. 12, 2018, S252035; superseded opinion at 26 CA5th 1092). See §§6.8, 11.45.
Duty to defend.
Yahoo! Inc. v National Union Fire Ins. Co. of Pittsburgh, PA (ND CA Oct. 12, 2018, No. 5:17-cv-00489-EJD) 2018 WL 4962033; Yahoo! Inc. v National Union Fire Ins. Co. of Pittsburgh, PA (2017) 255 F Supp 3d 970. See §§6.43, 7.34.
Liberty Surplus Ins. Corp. v Ledesma & Meyer Constr. Co. (2018) 5 C5th 216. See §12.27.
Conduct of the insured. Captiva Lake Invs., LLC v Fidelity Nat’l Title Ins. Co. (8th Cir 2018) 883 F3d 1038; Moser v Fidelity Nat’l Title Ins. Co. (ED TX 2018) 2018 US Dist WL 1413346. See §6.52.
Who is insured? Aries Invs., LLC v First Am. Title Ins. Co. (Aug. 2, 2016, A-0501-14T3; not certified for publication) 2015 WL 11237041; PennyMac Holdings, LLC v Fidelity Nat’l Ins. Co. (Nev. 2018) 423 P3d 608. See §6.93.
Timing of claim and statute of limitations. Grill v Ticor Title Ins. Co. (Jan. 24, 2017, No. C070730) 2017 WL 344326. See §§6.1, 6.3.
Insurer not responsible for voluntarily assumed losses and damages of insured. Amco Ins. Co. v Morfe (9th Cir, Sept. 20, 2018, No. 17-55383) 2018 WL 4520952 (unpublished opinion). See §6.98.
Parole evidence and policy integration clause. IIG Wireless, Inc. v Yi (2018) 22 CA5th 630. See §6.98A.
Insurer’s right to compel arbitration. Von Becelaere Ventures, LLC v Zenovic (2018) 24 CA5th 243. See §§6.106, 7.3.
Insurance Commissioner’s enforcement rights. PacifiCare Life & Health Ins. Co. v Jones (2018) 27 CA5th 391. See §6.34.
Wrongful foreclosure litigation. Turner v Wells Fargo Bank (In re Turner) (9th Cir 2017) 859 F3d 1145; Karunaratne v U.S. Bank (9th Cir 2018) 719 Fed Appx 637 (unpublished opinion). See §8.7A.
Post Yvanova cases. Wasjutin v Bank of America (9th Cir 2018) 732 Fed Appx 513; Yagman v Nationstar Mortgage, LLC (9th Cir 2017) 699 Fed Appx 634; Jean-Louis v J.P. Morgan Chase Bank, N.A. (9th Cir 2017) 676 Fed Appx 717; Hacker v Homeward Residential, Inc. (review granted and transferred July 18, 2018, to Second Appellate District Court of Appeal, S249902; superseded opinion at 23 CA5th 111). See §8.7C.
Competing deeds of trust. MTC Fin., Inc. v Nationstar Mortgage (2018) 19 CA5th 811. See §8.16A.
Validity of service of notice to quit. Dr. Leevil, LLC v Westlake Health Care Ctr. (2018) 6 C5th 474. See §8.19.
Insured’s declaratory relief action. Montrose Chem. Corp. v Superior Court (review granted Nov. 29, 2017, S244737; superseded opinion at 14 CA5th 1306). See §11.15.
No bad faith in settlement of claim. Dorroh v Deerbrook Ins. Co. (9th Cir 2018) 751 Fed Appx 980 (unpublished opinion). See §11.25.
Punitive damages. Pacific Gas & Elec. Co. v Superior Court (2018) 24 CA5th 1150. See §11.35A.
Independent counsel. Centex Homes v St. Paul Fire & Marine Ins. Co. (2018) 19 CA5th 789. See §12.50.
What is arbitrable? Arnold v Homeaway, Inc. (5th Cir 2018) 890 F3d 546. See §14.3.
Adhesionary contracts; unconscionability. Ramos v Superior Court (2018) 28 CA5th 1042. See §14.8.
Waiver of arbitration. Lewis v Fletcher Jones Motor Cars, Inc. (2018) 205 CA4th 436. See §14.11.
Joining additional parties to arbitration. Benaroya v Willis (2018) 23 CA5th 462. See §14.23.
Challenge to arbitration award. Sheppard, Mullin, Richter & Hampton, LLP v J-M Mfg. Co., Inc. (2018) 6 C5th 59. See §§14.41–14.42.
Incorrect release of title obligation. SMS Fin. XXIII, LLC v Cornerstone Title Co. (2018) 19 CA5th 1092. See §15.20.
ALICE L. AKAWIE, A.B., 1975, University of California, Berkeley; J.D., 1979, University of California, Hastings College of the Law. Ms. Akawie is a principal at Marshall Akawie & La Piedra, P.C., Oakland.
OSCAR H. BEASLEY, B.A., 1949, University of Omaha; J.D., 1950, University of Iowa. Mr. Beasley is Senior Vice President and Senior Title Counsel with First American Title Insurance Company, Santa Ana.
MARJORIE FLOYD BURCHETT, B.A., 1981, University of California, San Diego; J.D., 1985, University of California, Hastings College of the Law. Ms. Burchett is a partner at Luce, Forward, Hamilton & Scripps, San Diego.
DENA M. CRUZ, B.A., 1979, University of California, Santa Barbara; J.D., 1985, Santa Barbara College of Law. Ms. Cruz is senior counsel with Bryan Cave LLP, San Francisco.
PAUL E. FLORES is vice president and underwriting counsel for the Fidelity National Title Group (FNTG) of title insurers and the Fidelity National Title Insurance, Chicago Title Insurance, and Commonwealth Land Title Insurance companies. He also serves as the National e-Recording Legal Counsel for the Fidelity National family of title insurers. Mr. Flores has served as senior claims counsel and as an underwriter since 1982. He manages Fidelity’s Underwriting Office in Irvine and is an underwriter covering Fidelity’s title operations in Arizona, California, and Nevada. He is Chairperson of the Forms Section of the California Land Title Association (CLTA) Forms and Practices Committee. He has also been featured as a panelist at seminars sponsored by CLTA, CEB, and FNTG. Mr. Flores received his B.A. from the University of California, Santa Barbara, and his J.D. from the University of Southern California in 1978.
THEODORE R. FORREST, JR., B.S., 1973, Northeastern State College; J.D., 1977, San Joaquin College of the Law. Mr. Forrest practiced with Forrest & McLaughlin, Fresno.
CHARLES A. HANSEN, B.A., 1973, University of California, Los Angeles; J.D., 1977, University of California, Berkeley, School of Law. Mr. Hansen is a partner with Wendel, Rosen, Black & Dean, Oakland.
REBECCA U. LITTENEKER, B.S., 1979, University of Utah; J.D., 1983, University of California, Hastings College of the Law. Ms. Litteneker is Special Counsel with Severson & Werson, San Francisco.
ROD PASION, B.A., 1978, San Jose State University; J.D., 1981, Santa Clara University. Mr. Pasion is Vice President and Associate Regional Counsel with Chicago Title Company, San Francisco.
EDWARD S. RUSKY, B.A., 1968, University of California, Los Angeles; J.D., 1971, University of California, Berkeley, School of Law. Mr. Rusky is Vice President and Associate Regional Counsel with Chicago Title Company, San Francisco.
JAMES T. STRAW, B.A., 1973, University of California, Los Angeles; J.D., 1977, Southwestern University. Mr. Straw is a partner with Bardellini, Straw & Cavin, San Ramon.
TIMOTHY R. SULLIVAN, B.A., 1983, and J.D., 1986, University of Missouri, Columbia. Mr. Sullivan is a partner with McLaughlin Sullivan LLP, Fresno.
DAVID V. WESTCOTT, B.S., 1974, Pacific Union College; J.D., 1977, University of California, Berkeley, School of Law. Mr. Westcott is Vice President and Regional Counsel with First American Title Insurance Company, Sacramento.
GERALD W. CHALMERS, update author of chapter 8A, is Vice-President and Assistant General Counsel with Placer Title Company and Mother Lode Holding Company in Roseville. Mr. Chalmers has a wealth of title and escrow knowledge. He also has experience as an underwriter with Westcor Land Title Insurance Company.
DENA M. CRUZ, update author of chapters 6–8, is a litigator in Berding Weil LLP’s Walnut Creek office. Ms. Cruz worked for over 15 years in the title insurance industry. Her practice is primarily focused on real estate and insurance disputes. She is a former Chair of the International Law Section of the California State Bar, a former Vice Chair of the Council of State Bar Sections, and a former Vice Chair of the Real Property Section of the State Bar. She is also a former president of Commercial Real Estate Women of San Francisco (CREWSF) and is currently a Regent of the American College of Mortgage Attorneys. She is a coauthor of a treatise on international real estate finance and has written numerous articles for the journals of the Real Property and International Law sections of the State Bar. She has been selected by her peers as a real estate Super Lawyer from 2010 to the present. Ms. Cruz received her undergraduate from the University of California, Santa Barbara, in 1979 and her law from Santa Barbara College of Law in 1985.
JOANNE L. DUNEC, update author of chapters 4, 5, 9, and 15, is Vice President and underwriting counsel with Old Republic Title Company, San Francisco. Prior to that, she was a shareholder at Miller Starr Regalia in Walnut Creek, where she specialized in real property transactions and land use regulation and development, with an emphasis on public and private partnership transactions. She is a frequent speaker and serves as an annual panelist and moderator of CEB’s program, Real Property Law Practice: Year in Review. Ms. Dunec was an advisor to CEB for California Easements and Boundaries: Law and Litigation (Cal CEB) and Ground Lease Practice (2d ed Cal CEB). She received her J.D. from the University of California, Hastings College of the Law, in 1990 and her B.S. from the University of Arizona in 1977.
TIMOTHY R. SULLIVAN, update author of chapters 11–14, is a partner with McCormick, Barstow LLP, Fresno. Mr. Sullivan has been selected for inclusion as a Super Lawyer in Insurance Coverage each year since 2008, and he was named one of the “Top 100 Insurance Lawyers in California” for 2013 and 2014 by the American Society of Legal Advocates. He is also a member of the American Board of Trial Advocates (ABOTA). He was elected President of the Fresno County Bar Association in 2011 and served on its Board of Directors from 2005 to 2012. He served on the Executive Committee of the Real Property Law Section from 2007 to 2010 and currently serves on the CEB Real Property Advisory Committee. Mr. Sullivan received the “Spirit of CEB” Award in 2011 and is a coauthor of chapters regarding insurance coverage and bad faith litigation for five other CEB books. He received his B.A. and J.D. from the University of Missouri at Columbia.
California Mortgages, Deeds of Trust, and Foreclosure Litigation
Foreclosures, loan modifications and workouts, and borrower bankruptcies—all in one book. Avoid costly mistakes with clear and concise direction from Roger Bernhardt, Chuck Hansen, and other experts; negotiate the best workouts with the commercial forms.