MN Title Insurance A to Z
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MN Title Insurance A to Z

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Minnesota Title Insurance A to Z

Minnesota Title Insurance A to Z
Commercial Partners Title, LLC
Jeff Peterson
Mark Goodman
612-643-1031

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MN Title Insurance A to Z MN Title Insurance A to Z Presentation Transcript

  • COMMERCIAL PARTNERS T I T L E, L L C Market Update Title Insurance
  • COMMERCIAL PARTNERS T I T L E, L L C Market Update Title Insurance What’s happening at a national and local level that’s impacting the way we conduct business? 1. Numerous title insurance claims in a down market both in residential and commercial real estate. a. title insurance premium rates are increasing b. title insurance coverage is declining 2. Title agent defalcation has increased. Agents have gone out of business and underwriters are cancelling agents.
  • COMMERCIAL PARTNERS T I T L E, L L C Title Insurance Premiums are going up •Title Insurance underwriters have filed new rates with Department of Commerce. Rates in general are up by 10%. •The standard 40% reissue credit has been replaced by a refinance rate. •Other states have filed and regulated rates. Texas and Florida are six times Minnesota’s rates.
  • COMMERCIAL PARTNERS T I T L E, L L C Title Insurance Coverage’s are declining •The Creditors Rights Endorsements has been withdrawn by two major title insurance underwriters. •Early Start coverage has become a national focal point.
  • COMMERCIAL PARTNERS T I T L E, L L C Creditor’s Rights Endorsement • Purpose: Insures against loss if – Mortgagor or Predecessor in title files for Bankruptcy Protection; AND – Bankruptcy Trustee challenges validity of transfer as either a “Fraudulent Conveyance” or a “Preferential Transfer”
  • COMMERCIAL PARTNERS T I T L E, L L C Early Start
  • COMMERCIAL PARTNERS T I T L E, L L C •Statutory Priority •What is Early Start
  • COMMERCIAL PARTNERS T I T L E, L L C Mechanic’s Liens and Priority Statutory priority No priority Project Concept Planning Construction Ongoing Construction Construction Begins Process Completed Idea to develop Action is commenced. The bold line Any contractor, subcontractor, property. The last work is Either internal or Represents the or supplier who complies with Owner or purchaser outside resources are “first visible the statue’s requirement can file performed by the considering action. last provider. used in the process. Improvement” a lien against the property if they are not paid. May be preliminary Architect and/or surveyor may be hired SOME EXAMPLES; Mechanic’s Lien Statement must Conversation with Finished carpentry, and begin work. These Any use of heavy be filed within 120 days after the lender or other painting, carpet professionals have the equipment. last day of work to the project by investors. May be and other final right to file a lien if Delivery of materials that provider. After a lien is filed, purchase agreement or items are being they are not paid. The or equipment to the the lien claimant has additional option if land is not completed. effective date of their job site. time to begin the process of already owned. lien is the date that Site Preparation. foreclosing their mechanic’s lien they begin working on Excavation. the project. If a lien is filed during the Beware of items on construction disbursing the punch list. If At closing, these bills property, either the matter must someone comes will need to be paid in be resolved or funds must be back, that becomes GREY AREA: full for all services escrowed. their last date of Demolition provided to date. work.
  • COMMERCIAL PARTNERS T I T L E, L L C Early Start Approval 1. Loan Amount Land Soft Loan Amount Cost Costs 2. Construction Cost 3. Soft Costs Construction 4. Land Costs Cost General Contractor 5. General Contractor 6. Current Value Current 7. Improved Value Improved Value Value Review of 8. Review of Borrower’s Borrower’s Financials Financials
  • COMMERCIAL PARTNERS T I T L E, L L C Early Start Loan Commitment •Financial Req’s •Loan Terms •Closing Time Lender Contractor Borrower Construction Contract Early Start Approval •Work Start timing •Terms for Coverage •Pay to GC/Subs •Pay Subs •% Pay vs. Work •Pay for completed completed work Title •Lien Waivers Company
  • COMMERCIAL PARTNERS T I T L E, L L C Knowing Your Partners
  • COMMERCIAL PARTNERS T I T L E, L L C Title Agent Title Insurance Company Underwriter
  • COMMERCIAL PARTNERS T I T L E, L L C Agent Benefits Title Company Benefits •Ability to “shop” coverage •Underwriting Authority and pricing • still subject to limits and need to go up the chain •Value of your business •Deep Pockets •Closing Protection Letter
  • Old Republic National Title Insurance Company COMMERCIAL PARTNERS T I T L E, L L C Closing Protection Letter
  • COMMERCIAL PARTNERS T I T L E, L L C What is Title? Fee simple title: The owner is entitled to the entire property, with unconditional power of disposition during his life, and descending to his heirs and legal representatives upon his death intestate. - Black’s Law Dictionary Ownership of real property consists of a variety of rights and interests which apply to different aspects of land. Collectively, these rights are called “fee simple title”
  • COMMERCIAL PARTNERS T I T L E, L L C What is Title? • Possession • Statutory Liens • Easements • Vendee’s Interest • Leases (term of under Contract for years) Deed • Life Estates • Licenses • Security Interest Liens • Rights to mine rocks (mortgages) or minerals
  • COMMERCIAL PARTNERS T I T L E, L L C What is Title? Marketable Title - Black’s Law Dictionary Title which could be sold readily to a reasonably prudent purchaser or mortgagee Title which would be acceptable to a reasonable purchaser who is informed as to the facts and their legal meaning, willing to perform his contract, in the exercise of that prudence which business men usually bring to bear on such transactions. Title under which a purchaser may have quiet and peaceful enjoyment of the property, free of material defects or grave doubts, and reasonably free from litigation
  • COMMERCIAL PARTNERS T I T L E, L L C What is Title Insurance? An Indemnity Contract between the Insurance Company and the owner of an Interest in Real Property, in which the Title Insurer agrees to insure the Insured against financial loss or damage that may arise from defects in the title as insured, including the assertion of liens and claims against the property that are not otherwise excepted from policy coverage. - Rande Yeager, ALTA President April 26, 2006
  • COMMERCIAL PARTNERS T I T L E, L L C What is Title Insurance? The Title Insurer will protect the insured against financial losses caused by title to the insured interest being other than as shown in the policy. Insurer may cure the problem OR Pay the insured the value of the loss, up to the face value of the policy.
  • COMMERCIAL PARTNERS T I T L E, L L C ALTA Policy Forms ALTA 2008 ALTA 1992 ALTA Homeowner’s Expanded Short Form Policy ALTA 1992 Coverage Residential Loan PolicyLoan Policy 2006 Residential ALTA ALTA 1996 Loan Policy Residential ALTA 1970 Owner’s Policy 2008 ALTA Limited Loan Policy Short Form Coverage ALTA 2006 Expanded Junior Loan Policy 1992 ALTA Coverage ALTA Master Loan Policy Residential Owner’s Policy Residential ALTA 1987 ALTA Loan ALTA 1992 Loan Policy Residential Short Form Policy Construction Title Residential Loan Policy Insurance Loan Policy ALTA U.S. Policy Limited ALTA 2000 ALTA 1970 Policy Residential Coverage – Owner’s Policy Loan Junior Loan Policy Certificate
  • COMMERCIAL PARTNERS T I T L E, L L C ALTA Policy Forms ALTA 2006 Loan Policy
  • COMMERCIAL PARTNERS T I T L E, L L C Title Policy • Schedule A: What is Insured – Effective Date – Amount of Coverage – Interest Insured – Fee ownership of Real Estate – Description of Real Estate • Schedule B: What affects that land that burdens the insured interest – “Standard” Exceptions – Easements – Restrictions – Covenants – Senior security interests – Leases • Schedule B – Part II: What affects the land, but is subordinate to the insured interest – Subordinate Debt, Leases, etc.
  • COMMERCIAL PARTNERS T I T L E, L L C O&E – Proceed with Caution
  • COMMERCIAL PARTNERS T I T L E, L L C O&E Owner’s & Encumbrance Report • Limited Report ONLY • DOES NOT REFLECT • Abstractor finds last – Whether last deed is good recorded deed vested title – Whether there are any • From that point forward easements, etc. that have pulls in unsatisfied been filed during the monetary encumbrances search period (mortgages, judgments) – Whether any matters (monetary liens or easements, etc.) from before the last deed continue to affect the property
  • COMMERCIAL PARTNERS T I T L E, L L C Junior Lien Policy
  • COMMERCIAL PARTNERS T I T L E, L L C “Junior Lien” Policy • CANNOT be used for commercial property – Anything other than a 1-4 family residence • DOES NOT insure against loss from easements, encroachments, covenants, c onditions, restrictions • DOES NOT insure that title is properly vested in the borrower
  • COMMERCIAL PARTNERS T I T L E, L L C Date Down Endorsements Modifies information on all parts of the Title Policy to make it current
  • COMMERCIAL PARTNERS Date Down T I T L E, L L C Endorsement • Provides coverage from the original policy date through the date and time the insured modification is recorded – Reflects what has occurred in the meantime – Reflects how these items relate to your mortgage
  • COMMERCIAL PARTNERS T I T L E, L L C Date Down Endorsements • Extends coverage • Critical When: date to recording of – Additional Money modification – Interest Rate Changes – Reflects what has – Ownership of property occurred in the changed in meantime meantime – Assumption – Reflects how these Agreement (borrower items relate to your changes) mortgage • Appropriate at other times as well
  • COMMERCIAL PARTNERS T I T L E, L L C Date Down Endorsements
  • COMMERCIAL PARTNERS T I T L E, L L C Piggyback Date Down Endorsement Endorsement issued by a Title Insurer to Policy issued by a different Title Insurer
  • COMMERCIAL PARTNERS T I T L E, L L C Piggyback Date Down Endorsement Modifies information on all parts of the Title Policy to make it current
  • COMMERCIAL PARTNERS T I T L E, L L C Piggyback Date Down Endorsement Coverage start date is effective date/time of original policy (or last date down endorsement)