UNDERWRITING DESKBOOK - NTIWeb

1 UNDERWRITING DESKBOOK Foreword Table of Contents fidelity national title Group, Inc. December 2012 FOREWORD PURPOSE OF THE UNDERWRITING DESKBOOK This DESKBOOK is prepared exclusively for the use of the employees and agents of the fidelity national title Group, Inc. family of title insurance companies ( Company ) which includes Alamo title Insurance, Chicago title Insurance Company, Commonwealth Land title Insurance Company and fidelity national title Insurance Company. It contains a series of monographs on a variety of UNDERWRITING subjects prepared by the members of the General UNDERWRITING Department. This DESKBOOK is not a replacement for any applicable UNDERWRITING bulletins or directives issued by any of the Companies which may be more comprehensive, but is designed to be an easy reference for some common areas of concern.

2 CONFIDENTIALITY OF THE DESKBOOK All materials contained in this DESKBOOK are confidential communications from the Company to you. Under no circumstances are the instructions or any other part of this DESKBOOK to be given or communicated to anyone who is not an employee or agent of the Company. Copyright 1999-2012 fidelity national title Group, Inc. All Rights Reserved. fidelity national title Group Table of Contents DESKBOOK 1999-2012 FNTG, Inc. All Rights Reserved TABLE OF CONTENTS ADVERSE POSSESSION 1 As a Basis for Insuring over Encroachments 2 As a Basis for Ownership 3 Exceptions AFFIDAVITS 1 Reliance Upon ANTECEDENT DEBT EXCEPTION (See CREDITOR S RIGHTS) ASSIGNMENT OF MORTGAGES 1 Estoppel Certificate from Borrower BANKRUPTCY 1 General 2 Proceedings Available 3 Fraudulent Conveyance 4 Creditor s Rights 5 Sale or Leases of Property 6 Automatic Stays 7 Abandonment and Exemptions 8 Executory Contracts and Leases 9 Judgment Liens 10 Appeals 11 Discharge, Conversion, Reopening Cases and Dismissal 12 Supreme Court: BFP v.

3 Resolution Trust Corporation CO-OWNERSHIP 1 Tenancy in Common 2 Joint Tenancy 3 Tenancy by the Entirety 4 Community Property CORPORATIONS (see also Limited Liability Companies and Partnerships) 1 title to Corporation Property 2 Signatory Authority Conveyancing and Mortgaging 3 Not-for-Profit Corporations 4 Religious Corporations 5 Publicly Regulated Corporations fidelity national title Group Table of Contents DESKBOOK 1999-2012 FNTG, Inc. All Rights Reserved CREDITORS RIGHTS 1 History 2 Antecedent Debt issues with the 2006 Policy form D OENCH DUHME DOCTRINE 1 FDIC/failed lending institutions EASEMENTS 1 Easements As Exceptions 2 Underground Utility Conduits 3 Insurance Of An Easement 4 Easements In Gross FDIC/FAILED LENDING INSTITUTIONS (See D OENCH DUHME DOCTRINE)

4 FEDERAL LIENS REVENUE 1 General Information 2 Insuring title Coming Through Levy and Sale Under Federal Tax Lien 3 Federal Estate Tax 4 Federal Gift Tax FEDERALMORTGAGE FORECLOSURE ACTS 1 Federal Single Family Mortgage Foreclosure Act 2 Federal Multi Family Mortgage Foreclosure Act FIXTURES AND CROPS 1 General Information FORECLOSURES 1 Foreclosure and Purchase of REO 2 Constructive or Equitable Redemption FORFEITURES 1 Guidelines for Sales HELOC LOANS (Home Equity Line of Credit) 1 Closing and Payoffs HOSPITALS AND HEALTH FACILITIES 1 Hill-Burton and other Government Grants INDIAN LANDS 1 General Information ISLAMIC FINANCING 1 General Information fidelity national title Group Table of Contents DESKBOOK 1999-2012 FNTG, Inc.

5 All Rights Reserved LEASES 1 Leases and Leasehold Insurance 2 Recording of Short-Form Leases 3 Reliance on Possession as Notice of Lessee s Rights Where Lease Not Properly Recorded 4 Basic Sale-Leaseback Transactions and Separation of Land From Ownership of Improvements 5 Options to Purchase 6 ALTA Leasehold Coverages 7 Synthetic Leases LIMITED LIABILITY COMPANIES AND LIMITED LIABILITY PARTNERSHIPS 1 General Information MARKETABLE title 1 General Information MERS (MORTGAGE ELECTRONIC REGISTRATION SYSTEM) 1 General Information MINERAL INTERESTS 1 Severed Mineral Interests 2 Form of Exception 3 Termination of Mineral Estates 4 Termination of Mineral Interests 5 Insuring Over Mineral Interests 6 Insuring Mineral Estates or Interests MORTGAGES (See ASSIGNMENT OF MORTAGES) PARTNERSHIPS 1 title to Partnership Property 2 Signatory Authority Conveyancing and Mortgaging 3 Changes of Partners or Dissolution 4 Limited Partnerships 5 Mergers of Partnerships with Other Business Entities POLICY AND COMMITMENT ISSUANCE 1 Approved Forms to be Used 2 Alterations of Standard Forms Not Permitted 3 Completion of Schedule A fidelity national title Group Table of Contents DESKBOOK 1999-2012 FNTG, Inc.

6 All Rights Reserved 4 Schedule B Purpose 5 General Exceptions 6 Deletion or Omission of General Exceptions 7 Special Exceptions 8 Insuring Over General or Special Exceptions 9 Endorsements 10 Advancement of Policy by Date Down Endorsement 11 ALTA Plain English title Insurance Commitment POLICY AMOUNT LIMITATIONS 1 Requirements POWERS OF ATTORNEY 1 Required Procedures PRO FORMA POLICIES 1 Required Procedures RAILROAD TITLES 1 General Information RESTRICTIVE COVENANTS AND PROTECTED CLASSES 1 Requirements for CCRs based on race, color, religion, sex, handicap, familial status or national origin or other protected classes RISKS 1 The Nature of Basic UNDERWRITING Risk 2 Non-Disclosed Risks 3 Extra-Hazardous Risks SHORT SALES 1 Required Procedures SUBORDINATION AGREEMENTS 1 General Requirements 2 Subordination and Non-Disturbance Agreements UCC FILINGS (see FIXTURES AND CROPS) UCC POLICY 1 UCCPLUS Policy TRANSFER FEE COVENANTS 1 General Information DESKBOOK 1999-2012 FNTG, Inc.

7 All Rights Reserved fidelity national title Group Adverse Possession 1 Adverse Possession As Basis for Insuring Over Encroachments AFTER VERY CAREFUL CONSIDERATION, ADVERSE POSSESSION MAY BE USED AS THE BASIS FOR INSURING AGAINST LOSS ARISING FROM THE FORCED REMOVAL OF A BUILDING OR OTHER IMPROVEMENT LOCATED ON THE LAND WHICH ENCROACHES ON NON-GOVERNMENTALLY OWNED ADJOINING LAND, OR WHICH ENCROACHES UPON A NON-GOVERNMENTAL SURFACE EASEMENT IN USE OVER THE LAND. SPECIAL STATUTES OR PARTICULAR CIRCUMSTANCES MAY FORM THE BASIS FOR SUCH INSURANCE. A final non-appealable judgment, as described in Section Adverse Possession 2, is necessary before we are willing to insure that the ownership of land occupied by an encroaching building has been acquired by the owner of that building.

8 You should distinguish, however, the acquisition of the ownership of the land from the possible acquisition of the right to maintain the building in its present location for so long as the building exists. Under appropriate circumstances, you are authorized to extend this type of insurance, which is to be phrased to insure against loss or damage occasioned by the forced removal of the building. Note that this should not extend to loss or damage arising from the absence of the right to construct a new building to replace the existing building in the same location. Insurance against forced removal may be possible in the absence of such a judgment in four circumstances. The first circumstance is where the encroachment is de minimis, usually considered to be less than an inch.

9 The second circumstance is where the encroachment has existed for the required period for adverse possession. The third circumstance is where a special local statute protects a particular type of encroachment up to a given distance, usually in inches, in those jurisdictions wherein these statutes apply. The fourth is where you believe that unusual circumstances, such as might arise when the building has been erected with the encroachment known to the adjoining owner and without any complaint on part of that owner, would preclude the forced removal. Review the Endorsement Manual Section 28 for further guidelines for issuing these coverages for encroachments. DESKBOOK 1999-2012 FNTG, Inc. All Rights Reserved fidelity national title Group Adverse Possession 2 Adverse Possession As a Basis for Ownership DO NOT ISSUE A POLICY WHERE THE BASIS OF OWNERSHIP IS ADVERSE POSSESSION WITHOUT THE PRIOR APPROVAL OF THE COMPANY S UNDERWRITING ADVISER UNLESS THE VESTING OF title BY VIRTUE OF SUCH POSSESSION HAS BEEN JUDICIALLY DETERMINED.

10 title through adverse possession is obtained by a person who is not the record or legal owner because the legal owner has failed to bring an action for ejectment of an adverse possessor within the time allowed by the law of the state where the Land is located. To qualify under this law, the adverse possession must be hostile and under claim of right, actual, open and notorious, and exclusive and continuous. All of these elements must be shown or proved. In most instances, it is not possible to establish all of these facts through deed recitals, affidavits, etc. Consequently, a policy should not be issued where the ownership is based upon adverse possession unless there has first been obtained a final non-appealable court judgment based on credible evidence as to each of the above elements with all necessary proof of service on all parties whose interests are barred by the adverse possession.