Scott Hoen, ePro, MBA

Are you in the dark about Short Sales and Title Issues? First American Title can shine the light on issues that might delay your closing. Our goal is to be proactive by monitoring your Short Sale files and reduce the risk of title issues delaying the close of your escrow.

How many times have you worked a transaction for months and at the last minute items are discovered that affect title that complicate the process and even delays the closing?

We have implemented a NEW Short Sale Assistance Department with specific tracking tools that allow our Title Sales Professionals to work with you on your files. After you have you have opend the title order and received the preliminary report, we track Foreclosure activity on a WEEKLY basis. We specifically look for Notice of Defaults, Trustee Sale and even recissions. Too many times your client lists the property with you, you are in contract with the buyer and yet the foreclsoure process begins and you would want to know that if it occurs.

We also look at the preliminary report on a monthly basis and not just wait until the end when your ready to close -- Southern California uses a form called the Statement of Information that we require of a seller that allows us to not only check the property but the individual for issues that might affect the closing.

Check us out today -- We have truly implemented a very detailed tracking system to notify you about issues that might affect your closing -- we have hundreds of properties in our system that we are tracking and it is helping our Real Estate Professionals make the closing a more pleasant one.

There are two types of title insurance: owner's title insurance, called an Owner's Policy, and lender's title insurance, called a Loan Policy. Most lenders require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender's interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases as you pay down your loan and eventually disappears as the loan is paid off.

An Owner's Policy is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you have an interest in the property. Only an Owner's Policy protects the buyer should a covered title problem arise. Possible hidden title problems can include:

• Errors or omissions in deeds
• Mistakes in examining records
• Forgery
• Undisclosed heirs

An Owner's Policy provides assurance that your title insurance company will stand behind you-monetarily and with legal defense if needed-if a covered title problem arises after you buy your home.

Understand what Title Insurance is so you can better communicate with the consumer the need for title insurance when working with the buyer of a home. Reach out to a Title Professional if you have more questions.

Q: What is title insurance?

A: An insurance policy--protecting against loss should the condition of title to land be other than as insured.

Q: Why do I need title insurance?

A: When you buy a home, or any property for that matter, you expect to enjoy certain benefits from ownership. For example, you expect to be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance is designed to cover these rights you bargain for.

Q: What if I have a problem? Do I have to lose my property to make a claim?

A: Not at all. At the mere hint of a claim adverse to your title, you should contact your title insurer or the agent who issued your policy. Title insurance includes coverage for legal expenses which may be necessary to investigate, litigate or settle an adverse claim.

Q: What does this cost?

A: The cost varies, depending mainly on the value of your property. The important thing to remember is that you only pay once, then the coverage continues in effect for so long as you have an interest in covered property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property.

Q: If my lender gets title insurance for its mortgage, why do I need a separate policy for myself?

A: The lender's policy covers only the amount of its loan, which is usually not the full property value. In the event of an adverse claim, the lender would ordinarily not be concerned unless its loan became non-performing and the claim threatened the lender's ability to foreclose and recover its principal and interest. And, in the event of a claim there is no provision for payment of legal expenses for an uninsured party. When a loan policy is being issued, the small additional expense of an owner's policy is a bargain.

Q: Can you be a little more specific about the types of claims, or risks, covered by title insurance?

A: Sure. First understand there are basically three different levels of coverage: Standard coverage, extended coverage, and our most comprehensive "EAGLE Policy" coverage.

Standard coverage handles such risks as:

• Forgery and impersonation;
• Lack of competency, capacity or legal authority of a party;
• Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
• Undisclosed (but recorded) prior mortgage or lien;
• Undisclosed (but recorded) easement or use restriction;
• Erroneous or inadequate legal descriptions;
• Lack of a right of access; and
• Deed not properly recorded.

An extended coverage policy may be requested to protect against such additional defects as:

• Off-record matters, such as claims for adverse possession or prescriptive easement;
• Deed to land with buildings encroaching on land of another;
• Incorrect survey;
• Silent (off-record) liens (such as mechanics' or estate tax liens); and
• Pre-existing violations of subdivision laws, zoning ordinances or CC&R's.

Subject to availability in your locale, First American's EAGLE Policy covers all of the risks listed above, plus:

• Post-policy forgery;
• Forced removal of improvements due to lack of building permit (subject to deductible);
• Post-policy construction of improvements by a neighbor onto insured land; and
• Location and dimensions of insured land (survey not required).

As with any insurance contract, the insuring provisions express the coverage afforded by the title insurance policy and there are exceptions, exclusions and conditions to coverage that limit or narrow the coverage afforded by the policy. Also, some coverage may not be available in a particular area or transaction due to legal, regulatory or underwriting considerations. Please contact a First American representative for further information.

Here are over 70 Ways you could lose your property and why you need Title Insurance when purchasing a home. This is good reference material when discussing with consumers why they need the insurance and what the expense of the policy covers.

Pay particular attention to the last few that are covered by the BEST policy -- our First American Title San Diego Eagle Policy.

You don't want problems from prior ownerships to interfere with your rights to your property. And you don't want to pay the potentially ruinous cost of defending your property rights in court.

A title insurance policy is your best protection against potential title defects, which can remain hidden despite the most thorough search of public records and the most careful escrow or closing.

For a one-time premium First American agrees to reimburse you for loss due to defects existing prior to the issue date of your policy, up to the policy amount. And, should it be needed, the policy also provides for the cost of legal defense of your title.The standard coverage policy protects you against such potential defects as:

Forged deeds, mortgages, satisfactions or releases.

Deed by person who is insane or mentally incompetent.

Deed by minor (may be disavowed).

Deed from corporation, unauthorized under corporate bylaws or given under falsified corporate resolution.

Deed from partnership, unauthorized under partnership agreement.

Deed from purported trustee, unauthorized under trust agreement.

Deed to or from a "corporation" before incorporation, or after loss of corporate charter.

Deed from a legal non-entity (styled, for example, as a church, charity or club).

Deed by person in a foreign country, vulnerable to challenge as incompetent, unauthorized or defective under foreign laws.

Claims resulting from use of "alias" or fictitious namestyle by a predecessor in title.

Deed challenged as being given under fraud, undue influence or duress.

Deed following non-judicial foreclosure, where required procedure was not followed.

Deed affecting land in judicial proceedings (bankruptcy, receivership, probate, conservatorship, dissolution of marriage), unauthorized by court.

Deed following judicial proceedings, subject to appeal or further court order.

Deed following judicial proceedings, where all necessary parties were not joined.

Lack of jurisdiction over persons or property in judicial proceedings.

Deed signed by mistake (grantor did not know what was signed).

Deed executed under falsified power of attorney.

Deed executed under expired power or attorney (death, disability or insanity of principal).

Deed apparently valid, but actually delivered after death of grantor or grantee, or without consent of grantor.

Deed affecting property purported to be separate property of grantor, which is in fact community or jointly-owned property.

Undisclosed divorce of one who conveys as sole heir of a deceased former spouse.

Deed affecting property of deceased person, not joining all heirs.

Deed following administration of estate of missing person, who later re-appears.

Conveyance by heir or survivor of a joint estate, who murdered the decedent.

Conveyances and proceedings affecting rights of service-member protected by the Soldiers and Sailors Civil Relief Act.

Conveyance void as in violation of public policy (payment of gambling debt, payment for contract to commit crime, or conveyance made in restraint of trade).

Deed to land including "wetlands" subject to public trust (vesting title in government to protect public interest in navigation, commerce, fishing and recreation).

Deed from government entity, vulnerable to challenge as unauthorized or unlawful.

Ineffective release of prior satisfied mortgage due to acquisition of note by bona fide purchaser (without notice of satisfaction).

Ineffective release of prior satisfied mortgage due to bankruptcy of creditor prior to recording of release (avoiding powers in bankruptcy).

Ineffective release of prior mortgage of lien, as fraudulently obtained by predecessor in title.

Disputed release of prior mortgage or lien, as given under mistake or misunderstanding.

Ineffective subordination agreement, causing junior interest to be reinstated to priority.

Deed recorded, but not properly indexed so as to be locatable in the land records.

Undisclosed but recorded federal or state tax lien.

Undisclosed but recorded judgment or spousal/child support lien.

Undisclosed but recorded prior mortgage.

Undisclosed but recorded notice of pending lawsuit affecting land.

Undisclosed but recorded environmental lien.

Undisclosed but recorded option, or right of first refusal, to purchase property.

Undisclosed but recorded covenants or restrictions, with (or without) rights of reverter.

Undisclosed but recorded easements (for access, utilities, drainage, airspace, views) benefiting neighboring land.

Undisclosed but recorded boundary, party wall or setback agreements.

Errors in tax records (mailing tax bill to wrong party resulting in tax sale, or crediting payment to wrong property).

Erroneous release of tax or assessment liens, which are later reinstated to the tax rolls.

Erroneous reports furnished by tax officials (not binding local government).

Special assessments which become liens upon passage of a law or ordinance, but before recorded notice or commencement of improvements for which assessment is made.

Adverse claim of vendor's lien.

Adverse claim of equitable lien.

Ambiguous covenants or restrictions in ancient documents.

Misinterpretation of wills, deeds and other instruments.

Discovery of will of supposed intestate individual, after probate.

Discovery of later will after probate of first will.

Erroneous or inadequate legal descriptions.

Deed to land without a right of access to a public street or road.

Deed to land with legal access subject to undisclosed but recorded conditions or restrictions.

Right of access wiped out by foreclosure on neighboring land.

Patent defects in recorded instruments (for example, failure to attach notarial acknowledgment or a legal description).

Defective acknowledgment due to lack of authority of notary (acknowledgment taken before commission or after expiration of commission).

Forged notarization or witness acknowledgment.

Deed not properly recorded (wrong county, missing pages or other contents, or without required payment).

Deed from grantor who is claimed to have acquired title through fraud upon creditors of a prior owner.

An extended coverage policy may be requested to protect against such additional defects as:

Deed to a purchaser from one who has previously sold or leased the same land to a third party under an unrecorded contract, where the third party is in possession of the premises.

Claimed prescriptive rights, not of record and not disclosed by survey.

Physical location of easement (underground pipe or sewer line) which does not conform with easement of record.

Deed to land with improvements encroaching upon land of another.

Incorrect survey (misstating location, dimensions, area, easements or improvements upon land).

"Mechanics' lien" claims (securing payment of contractors and material suppliers for improvements) which may attach without recorded notice.

Federal estate or state inheritance tax liens (may attach without recorded notice).

Pre-existing violation of subdivision mapping laws.

Pre-existing violation of zoning ordinances.

Pre-existing violation of conditions, covenants and restrictions affecting the land.

The EAGLE Policy is our most comprehensive coverage. Subject to availability in your area, the Eagle Policy covers all of the risks listed above, plus these:

Post-policy forgery against the insured interest.

Forced removal of residential improvements due to lack of an appropriate building permit (subject to deductible).

Post-policy construction of improvements by a neighbor onto insured land.

Damage to residential structures from use of the surface of insured land for extraction or development of minerals.