Welcome to today’s webinar! Master Indemnities and Other Kinds John Rothermel and Heidi E. Junge April 19, 2018 The webinar will begin shortly. Phone | 1-800-619-3315 Passcode | 4597908
Your phones are muted. This allows a better recording. Q&A Process Ask questions in two ways: 1. Use online chat feature during webinar 2. Send question via email to presenter or favorite Texas Underwriter In order to obtain a CE Certificate or CLE Credit, you must listen to the webinar for a minimum of 55 minutes obtain the password (provided at the end of the presentation) follow the instructions as given 2
ATTORNEY INFORMATION Because of opinions expressed by the Texas Department of Insurance (TDI) concerning rebates, legal credit is available only to: Attorneys who own title agencies that are Stewart Title Guaranty Agents Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity We welcome any other lawyers to listen, but cannot provide continuing education credit to you. 3
Per the TDI and the State Bar, in order to obtain a CE Certificate or CLE Credit you must: – listen to the webinar for a minimum of 55 minutes – obtain the password (provided at the end of the presentation) – follow the instructions as given 4
Master Indemnities & Other Kinds John Rothermel Senior Vice President Regional Underwriting Counsel Senior Underwriter Heidi E. Junge Assistant Vice President Underwriting Counsel Senior Underwriter SW Regional Underwriting Office Stewart Title Guaranty Company
Basis for Thinking about the Texas Master Indemnity: Our Obligations to the Consumer P- 11 “Insuring Around” “Insuring Around' is defined as the willful issuance of a title binder or title insurance policy showing no outstanding enforceable recorded liens while the Title Insurance Company knows that in fact a lien or liens are of record against the real property, and shall be prohibited, except under circumstances as the commissioner under his or her rulemaking powers shall approve. Why do we care?
P- 11 “Insuring Around” continued… A title insurance company knows that an outstanding enforceable recorded matter exists if it determines that the matter is valid and enforceable based on the examination of the title pursuant to which the title binder or title insurance policy is issued. Take Away: ‒ title insurance company KNOWS ‒ enforceable and recorded ‒ valid
P- 11 “Insuring Around” continued… “In its discretion, the title company may determine the insurability of title and those matters which it considers to be insurable under the title binder or title insurance policy; provided, however, that insuring around enforceable recorded liens shall be prohibited except as allowed by regulation.” The rest of the rule goes on to define “willful issuance” and what is and isn’t “insuring around”.
P-11b(6) Same Title Insurer is both the Prior Issuing Title Insurer and the Current Issuing Title Insurer 6. Where a title insurance company has previously issued a policy without taking exception to a specific lien and is called upon to issue a new policy and is already obligated under such prior policy, and will not increase its liability or exposure to the lien by the issuance of such new policy; provided the written consent of the Insureds (owner and mortgagee) shall be delivered to the title insurance company and retained in its files; (Emphasis added)
P-11b(7) Different Title Insurers – Specific Indemnity 7. Where a title insurance company has erred as in (6) above, and another title insurance company discovers the error in preparing to make a subsequent issuance, the second title insurance company may rely upon an indemnity agreement and/or an agreement to defend by the first company, and insure against such lien; provided the written consent of the Insureds (owner and mortgagee) shall be delivered to the title insurance company and retained in its files; (Emphasis added)
P-11b(10) Same Title Insurer – Master Indemnity T-29 10.When a title insurance company previously issues a policy without taking exception to matters covered by the Master Indemnity Agreement (T-29) and is called upon to issue a new policy and is already obligated under such prior policy, and will not increase its liability or exposure to some matter by the issuance of such new policy. Notice: NO requirement for written consent of the Insured.
P-11c Different Title Insurers — TX Master Indemnity c. "Texas Master Indemnity Agreement (T-29)" A title insurance company may, in lieu of the execution of separate transaction specific indemnity letters or agreements, indemnify another title insurance company in accordance with P-11b(7) and/or P-11b(10) above by executing the Texas Master Indemnity Agreement (T-29). If a title insurance company elects to provide another title insurance company with a master indemnity agreement, the Texas Master Indemnity Agreement (T-29) must be used if the master indemnity agreement is intended to cover the liens and other matters set forth in the Texas Master Indemnity Agreement (T-29).
Texas Master Indemnity – What is it? An agreement in the form of promulgated T-29 Who is the Agreement Between? Prior Issuing Title Insurer – has issued a prior Owner’s Policy to the current title holder OR a Loan Policy to a Lender who later acquires the Insured land (becoming the Owner) Current Issuing Title Insurer – now has a transaction to insure and seeks indemnification of Potential Defects from the Issuing Title Insurer that didn’t take an exception in the prior policy Who does Stewart Title Guaranty Company share a T-29 with?
Who is covered by Indemnities? Title Insurers – NOT agents or direct ops Why? – The Title Insurer has rights of subrogation under the policy.
Back story of the Texas Master Indemnity: A long time ago, in a galaxy far, far away… • Back in the late 1990s, Fidelity created a form of Master Indemnity used in Florida • Stewart was getting 10-20 requests for Letters of Indemnity each week • TLTA underwriter members considered whether to adopt a Master Indemnity in Texas • But it needed to be simplified and tailored to Texas specific potential defects
TEXAS MASTER INDEMNITY AGREEMENT FORM (T-29)
[Insert Name of Indemnifying Title Insurance Company] (hereinafter called in this Agreement "We"), subject to the terms, provisions, and conditions of this Agreement, agree to indemnify [Insert Name of Title Insurance Company Requesting the Indemnity] (hereinafter called in this Agreement "You") against loss, cost damage or expense You may suffer by relying on this Texas Master Indemnity Agreement (called in this Agreement "Agreement") because of those "POTENTIAL DEFECTS" described below, if:
1. We previously have issued: (i) an owners policy to the current title holder; or (ii) a mortgagee policy to a lender who subsequently has acquired the insured land and is the seller or mortgagor in the current transaction and remains an insured under the mortgagee policy following foreclosure or a deed in lieu of foreclosure (hereinafter called in this Agreement "Our Policy"); 2. Our Policy covers some or all of the land insured under Your Policy (hereafter called in this Agreement the "Land"); and 3. Our Policy did not take exception to the POTENTIAL DEFECTS.
POTENTIAL DEFECTS I. Questions as to a Homestead interest in the Land II. Questions as to whether a recorded Abstract of Judgment Lien, Federal Lien or State Tax Lien applies to a prior owner or has been satisfied or released. III. Questions as to whether a recorded mortgage or other consensual lien, including but not limited to a vendor's lien, deed of trust, mechanic's lien contract, home equity lien, reverse mortgage, or owelty lien (hereinafter called in this Agreement a "Mortgage") has been satisfied or released;
POTENTIAL DEFECTS (cont.) IV. Questions as to whether a trustee or attorney in fact had the proper authority to convey the title to the Land to the current insured owner or a predecessor in title; V. Questions as to the authority of an executor/executrix, or administrator/administratrix to convey the title to the Land to the current insured owner or a predecessor in title.
HOMESTEAD Item I above applies when a deed in the chain of title to the Land, prior to or contemporaneously with Our Policy, does not contain either: 1. Joinder by the spouse of the grantor; or 2. A statement on the deed that the grantor is a single person; or 3. A statement on the deed or other recorded instrument that the Land conveyed by the deed is not the homestead of the grantor; or 4. A statement that the property is community property under the sole management and control of the grantor.
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