Title Insurance: What Lies Ahead in 2017 and Beyond

1. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Title Insurance: What Lies
Ahead in 2017 and Beyond
JAMES A. LANDON, ESQUIRE
September 22, 2017

2. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
JAMES A. LANDON, ESQUIRE
• Partner at Morris James LLP in Wilmington, Delaware.
• Practiced real estate law since 2002
• Involved in real estate investment and construction for most of
my life.
• Represent individuals and privately and publicly held companies,
in the purchase, sale, leasing, financing, and development of real
property.
• Represents title insurance companies on commercial purchases
and refinancing transactions.
• Specific areas of practice are:
• Commercial Real Estate Transactions
• Delaware Legal Opinions

3. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Disclaimer
The contents of this presentation are intended to convey general information
only and not to provide legal advice or opinions. The contents of this
presentation, and the posting and viewing of the information contained herein,
should not be construed as, and should not be relied upon for, legal or tax
advice in any particular circumstance or fact situation. No action should be
taken in reliance on the information contained in this presentation and Morris
James LLP disclaims any and all liability in respect to actions taken or not taken
based on any or all of the contents of this presentation to the fullest extent
permitted by law. An attorney should be contacted for advice on specific legal
issues.

4. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Disclaimer cont’d
No Attorney-Client Relationship Created
Nothing on this presentation is an offer to represent you, and nothing
contained herein is intended to create an attorney-client
relationship. An attorney-client relationship may only be established
through direct attorney-to-client communication that is confirmed by
the execution of an engagement agreement. Any questions you may ask
and I answer will not create an attorney-client relationship and the
contents of shall not be considered confidential.

5. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
J. LANDON’S 3 TOPICS
• Parties in Possession exception
• What is it?
• How does it apply?
• Recent Trends in Mechanics Lien coverage
• Survey Exception
• What does it cover
• How to remove this exception

6. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
PARTIES IN POSSESSION
Schedule B of all title commitments should contain an exception for:
--”rights or claims of parties in possession not shown by the
public records”
--This standard exception is designed to protect from claims of
adverse possessors, claims of non-record interests and tenants
under unrecorded leases

7. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Parties In Possession cont’d
When a person, who does not appear in the chain of title, is found in possession of the
property it may indicate, for example, that he is making claim to the property by
adverse possession, or that he is claiming under an unrecorded deed. A title examiner,
however, seldom visits the land, the title which he is concerned with. Thus, both to
protect themselves and to put their client on notice of this state of affairs, title
examiners and title insurance companies generally exclude from their title opinions
and policies claims of parties in actual possession.” Cheverly v. Ticor Title Ins. Co., 642
A. 2nd 285 (Md. Ct. Spec. App. 1994) citing Guarantee Abstract and Title Insurance
Company v. St. Paul Fire and Marine Insurance Company, 216 So. 2nd 255, 257(Fla. Dist.
Ct. App.1968).

8. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Parties in Possession cont’d
Residential Property
Upon determination that the seller or mortgagor is in sole
possession of the property, this exception can be deleted
routinely from owner’s policies on owner-occupied residential
property, if the proposed insured so requests, by having them
execute an affidavit stating that they are the sole party(ies) in
possession.

9. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Parties in Possession cont’d
Farm Property
The exception can be deleted from rural or farm property upon
presentation of a recent survey. This survey must not show the potential
for boundary line disputes or other evidence of potential adverse
possessors.

10. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Parties in Possession cont’d
Commercial/investment Properties
The parties in possession exception may be deleted on commercial
property or residential investment property transactions with an
affidavit from the seller that there are no tenants holding unrecorded
leases.

11. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Parties in Possession cont’d
Why is this important?
The rights of parties in possession not shown by the public records
exception certainly addresses non-record leases, but it applies equally
to non-record contract purchases, optionees in possession, trails,
driveways and other possible easement claims, encroachments from
adjoining property and fences which do not follow the property
boundaries.

12. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
MECHANICS LIENS
Schedule B of all title policies should contain an
exception for:
“any lien or right to lien for services, labor, or material heretofore or
hereafter furnished, imposed by law and not shown by the public
records,”

13. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Mechanic’s Liens cont’d
• Lien placed on property for work performed for the benefit of the
property or structures thereon
• Reverts back to the time the work began

14. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Mechanic’s Liens cont’d
What is required to delete the exception?
• No work has been performed on the property whatsoever.
• The statutory period of time for filing a lien has elapsed
since the last work was performed.
• That pending construction will not commence until the
insured mortgage has been recorded

15. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Mechanic’s Liens cont’d
• In cases of recently completed work where the statutory lien period
has not expired
• Applicable releases, satisfactions or lien waivers must be obtained from all
applicable parties including contractors, subcontractors, labor/service
providers, and suppliers of materials.
• Proper and satisfactory indemnity agreements for unrecorded liens must be
obtained.

16. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Mechanic’s Liens cont’d
Recent Trends
Title insurer required the Borrower to indemnify and members to
personally indemnify to remove the exception

17. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Survey Exception
Schedule B of all title policies should contain an exception for:
• “Easements or claims of easements not shown by the public records.”
• “Encroachments, overlaps, boundary line disputes, or other matters
which would be disclosed by an accurate survey or inspection of the
premises.”
• Any encroachment, encumbrance, violation, variation, or adverse
circumstances affecting the Title that would be disclosed by an
accurate and complete land survey of the Land.

18. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Survey Exception cont’d
Removing the Exception
• Survey – Typically ALTA
• Survey Endorsement

19. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
Survey Exception cont’d
“Matters as shown on the survey prepared by ABC Survey Company,
Inc., being Job Number: 546739, dated April 2, 2017, specifically but not
limited to:
A) Encroachment of fence along the Northerly portion of the property.B)
Power pole without the benefit of an easement along the Southwest
corner of the property.
C) Driveway pavers located within the county right of way along the
Eastern portion of the property.”

20. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
INCORORATE INTO PRACTICE
• Schedule B of all title policies should contain an exception for…
• Representing the Borrower/Buyer
• Representing the Title Insurer

21. James A. Landon, Esquire l jlandon@morrisjames.com l 302.888.6836 l Morris James LLP l 500 Delaware Avenue l Suite 1500 l Wilmington, Delaware
www.morrisjames.com
QUESTIONS?