Stewart Information Services Corporation · NYSE:STC
Stewart Information Services — Investor Presentation (November 2019)
51 slides from Stewart Information Services's investor presentation, Nov 21, 2019
Slide 1: A Walk Through the Typical Objection Letter
Welcome to today’s webinar! A Walk Through the Typical Objection Letter Charles Craig November 21, 2019 1
Slide 2: CE Requirements
CE Requirements • Log on to WebEx for at least 55 minutes. • Call into the conference line for at least 55 minutes. • Provide 4 passwords given throughout webinar in exact order stated. 2
Slide 3: CLE Requirements
CLE Requirements • Provide final password given at conclusion of webinar • Notate affiliation with Stewart Title – We welcome any other lawyers to listen, but cannot provide continuing education credit to you. 3
Slide 4: A Walk Through the Typical Objection Letter
A Walk Through the Typical Objection Letter Charlie Craig Associate General Counsel Senior Underwriter Stewart Title Guaranty Company Austin, Texas (512) 236-0405 [email protected]
Slide 5: Nature of Title Insurance, Objection Letters
Nature of Title Insurance, Objection Letters Unlike property casualty insurance, which can be reviewed periodically and its terms changed by the insurer, Title Insurance is a contract of indemnity that is usually final once issued. Prior to policy issuance, the proposed insured Buyer or Lender may s
Slide 6: Texas Title Insurance is Regulated
Texas Title Insurance is Regulated • Creature of Title XI of the Texas Insurance Code and Texas Dept of Insurance (“TDI”) Regulations • Under Ins. Code, Section 2551.003, Basic Manual, including – Procedural Rules on what can and cannot be done to insure – Rate Rules on premiums charged – Promulgate
Slide 7: The Commitment: Period of Review
The Commitment: Period of Review Reviewing the Commitment TDI Procedural Rule P-1 cc., the Commitment: • The form through which the Title Insurer offers to issue a title policy in the future subject to the terms and conditions of the commitment and the stated exclusions, exceptions and requirements.
Slide 8: Typical Objection Letter
Typical Objection Letter • Sent by Buyer’s Legal Counsel on Owner’s Policy; or, • Sent by Lender’s Legal Counsel on Loan Policy • Typically addressed to the Seller/Borrower and the Title Company and/or Surveyor closing the matter – Not every objection is addressed to the Title Company. Some or most
Slide 9: Not your Typical Objection…
Not your Typical Objection… “Please remove all exceptions from Schedule B and cure all conditions and requirements in Schedule C” “Remove [all sch.B.10 exceptions] upon approval of survey” • Not reasonable objections – Objections need to be made to specific matters/issues in the commitment – Find ou
Slide 10: The Proposed Insured: Successors and/or Assigns
Schedule A Objections The Proposed Insured: “Successors and/or Assigns” • Commitment involving a Loan Policy – Mortgages are sold, assigned on secondary market; lenders will want to modify the policy to cover assignees/successors in interest of lender • Procedural Rule P-7: requires promulgated lang
Slide 11: Who is Vested in Title
Who is Vested in Title Recorded documents may show persons/entities in title that are different than the Seller listed on the contract. • Can be caused by many title issues: non-probated estates of present/prior owners; transfers to trustees of owner-created trusts; transfers from individual owners
Slide 12: Legal Description
Legal Description Legal Descriptions are to lots and blocks in subdivisions or to metes and bounds. Descriptions should be created by a surveyor. • Description should include all land being insured, be correct, “close” and match the legal description on the survey and the legal description in the co
Slide 13: Typical Objections to Schedule B Exceptions
Typical Objections to Schedule B Exceptions Promulgated Standard Exceptions 1- 9 of Schedule B 1. restrictive covenants 2. boundaries, shortages in area, encroachments, protrusions, or overlapping of improvements 3. homestead and community property rights – Owner’s Policy 4. waterfront issues / wate
Slide 14: Schedule B-1: Restrictive Covenants
Schedule B-1: (Restrictive Covenants) • As per Procedural Rule P-4, you must disclose restrictive covenants by specific reference to the volume and page where each appears of record. Only remove these items as allowed by rule. • Buyer may object to one or more specific Restrictions contained in reco
Slide 15: Schedule B-2: Area and Boundary Amendment
Schedule B-2: Area and Boundary Amendment B-2 excepts to discrepancies, conflicts, shortages in area or boundary lines, encroachments, protrusions, or overlapping of improvements. ➢ Procedural Rule P-2 allows for deletion of all of B-2 except “shortages in area” (under Company guidelines) in both th
Slide 16: Password #1
One Moment Please… Password #1
Slide 17: Schedule B-5 Tax Assessments
Schedule B-5 Tax Assessments “This policy does not insure against loss or damage . . . that arise by reason of . . . the following matters: 5. Standby fees, taxes and assessments by any taxing authority for the year ______ and subsequent years; and subsequent taxes and assessments by any taxing auth
Slide 18: Current Year Taxes
Current Year Taxes Rule P-20 (A)(1)(a) : Current-year taxes due and payable must be shown as an exception under Schedule “B” in Owner’s Policies, Loan Policies and Interim Construction Binders unless those taxes are Paid or Collected at Closing. Seller: “I paid those taxes already….” For insuring pu
Slide 19: “Not Yet Due and Payable” Coverage
“Not Yet Due and Payable” Coverage See Rule P-20 (C)(1) • Available for Loan Policies and Interim Construction Binders only – Not available for Owners Title Policies Review of Ad Valorem/Property Taxes Tax Valuation Statements come out in April each year. Tax Bills come out usually the first week of
Slide 20: “Not Yet Due and Payable” Coverage
“Not Yet Due and Payable” Coverage When every taxing unit’s taxes for the current year have not yet been billed (Jan – Sept/Oct) you can add to your B-5 tax assessments exception the following: “Company insures that standby fees, taxes and assessments by any taxing authority for the year [current ye
Slide 21: Partial “Not Yet Due and Payable” Coverage
Partial “Not Yet Due and Payable” Coverage Partial coverage under Rule P-20(C)(2) When some (but not all) taxing units’ taxes for the stated year have been billed you can add the following to your tax exception: “Company insures that standby fees, taxes and assessments by any taxing authority for th
Slide 22: Rollback Tax Coverage
Rollback Tax Coverage Exception B-5 … “and subsequent taxes and assessments by any taxing authority for prior years due to change in land usage or ownership;…” Review: Special Use-designations that result in reduced valuation for tax- appraisal purposes under the Texas Tax Code: §23.51(1): “Qualifie
Slide 23: Rollback Tax Coverage
Rollback Tax Coverage See Rule P-20(B)(1) What Produces the Rollback tax liability? Change of Use or Ownership of the Land Why is it a big deal? TAX CODE §23.55(a): Land-use change results in additional tax for each of five years preceding the year when the change in use occurs; amount of tax is the
Slide 24: Rollback Tax Coverage
Rollback Tax Coverage What does it mean when Lender asks for insurance against Rollback Taxes? • means deleting the phrase in B-5: “and subsequent taxes and assessments by any taxing authority for prior years due to change in land use or ownership” … from the Sch. B tax exception. Deletion is allowe
Slide 25: Rollback Tax Coverage
Rollback Tax Coverage Rule P-20 (B)(2): Deletion of the rollback tax exception is allowed only when: 1) the title company has proof in its GF File that the property is NOT subject to either Open-Space or Agricultural* tax valuation for the current tax year; (* includes Wildlife Management designatio
Slide 26: Rollback Tax Coverage
Rollback Tax Coverage Making the deletion once P-20 (B)(2) requirements are met in qualifying Loan Policies or Interim Construction Binders is done by: --by box check-off (on the T-2 and T-2R Loan Policy forms), --lining through the phrase, --by producing an electronic form omitting the phrase, OR -
Slide 27: And now a brief word from our sponsor… Password #2
And now a brief word from our sponsor…. Password #2
Slide 28: Schedule B-8: Subordinate Liens and Leases
Schedule B-8: Subordinate Liens and Leases Applies only to the Loan Policy (T-2). Review: When a Loan Policy is issued to insure the validity and priority of a lien, the title insurer is not usually required to itemize all subordinate liens and leases that affect the title, unless requested to do so
Slide 29: Schedule B-8: Subordinate Liens and Leases
Schedule B-8: Subordinate Liens and Leases When insuring that a lien or lease is subordinate to the lien of the insured mortgage, the Company must also state after the specific exception(s): "Company insures the insured against loss, if any, sustained by the insured under the terms of the Policy if
Slide 30: Schedule B-10: Specific Exceptions
Schedule B-10: Specific Exceptions Matters found by the title company that affect title to the specific property are listed under this exception or as separately numbered exceptions. If there are no additional matters affecting title, the title company must delete this exception… Rare…! Typical Spec
Slide 31: Parties in Possession Exception
Parties in Possession Exception Under Rule P-3: This exception may be removed: 1) upon inspection by a licensed escrow officer; – Company may charge a reasonable fee for the inspection. OR, 2) the Proposed Insured can waive the inspection in writing and accept the exception in Schedule B; OR, 3) che
Slide 32: Survey Matters
Survey Matters Commitment may except to specific encroachments of building setback lines, easements (utilities) and boundaries found on survey, or recorded of record. • “All visible and apparent easements/rights of way.” • To consider removing each exception, review an “acceptable” survey, history o
Slide 33: Lenders may also ask for a “clean” T-19 endorsement
Lenders may also ask for a “clean” T-19 endorsement • Review: T-19 for Loan Policy; T-19.1 for Owner’s Policy insures against: (1) violations of restrictions, including setback requirements (2) encroachments of easements, improvements to or from adjoining land, and (3) damages by reason of mineral d
Slide 34: Minerals Surface Damage Endorsements T-19.2 and T-19.3
Minerals Surface Damage Endorsements T-19.2 and T-19.3 Lenders may ask for the T-19.2 or T-19.3 – Rate Rule R-29.1 – no charge on Loan Policy, $50 on Owner’s Policy • T-19.2 insures against loss due to damage to present or future “improvements (excluding lawns, shrubbery, or trees)” resulting from m
Slide 35: Minerals Surface Damage Endorsements T-19.2 and T-19.3
Minerals Surface Damage Endorsements T-19.2 and T-19.3 • T-19.3 insures against loss due to damage to present or future “permanent structures” resulting from mineral exploration or production; • Applies to “other” real property; could include farm and ranch land, access easements, conservation easem
Slide 36: General Minerals Exception
General Minerals Exception Procedural Rule P-5.1 provides that the Company may take an exception for minerals using the following language: On Schedule A: "Subject to and the Company does not insure title to, and excepts from the description of the Land, coal, lignite, oil, gas and other minerals, t
Slide 37: General Minerals Exception
General Minerals Exception Our Guidelines: • Unless you have already fully searched the mineral title in the past, you will need to search back to the land patent or otherwise be satisfied that either the patent is pre- 9/1/1895 or that you have verified whether 100% minerals were reserved. • A 60 y
Slide 38: Specific Minerals Exceptions
Specific Minerals Exceptions • Always include in Schedule B any specific grant, reservation, or lease of minerals or other substances (such as caliche, gravel, rock, coal, lignite, uranium etc.) that your search reflects. • You should also add the following at the end of any such specific exception
Slide 39: One more time... Password #3
One more time... Password #3
Slide 40: P-8 Construction Exceptions
P-8 Construction Exceptions “Please provide Mechanic’s Lien Coverage by removing the following exceptions”… When Policy is issued in an amount to include the cost of immediately contemplated improvements, under Rule P-8 the Company must include in Schedule B: Mechanic’s Liens Exception – excepts to
Slide 41: P-8 Construction Exceptions
P-8 Construction Exceptions When can these exceptions be deleted? P-8 a.2. (Owners Policy) and P-8 b.2. (Loan Policy): Upon the completion of the improvements on said property, the owner's acceptance thereof, and satisfactory evidence to the Company (affidavit) that all bills for labor and materials
Slide 42: Schedule C Matters
Schedule C Matters Common Conditions requested to be removed: • Unreleased Liens: What type of lien? Age of Lien? Proof of Payment of underlying debt? – Can you proceed under P-11 (proof of payment, time-barred) or – Master Indemnity Agreement with prior insurer? Deeds of trust, over $500,000 not co
Slide 43: Schedule C Matters
Schedule C Matters • Joinder of Borrower’s Spouse on DOT – Skelton v Wash. Mut. Bank case – Husband buys homestead alone under his sole management, not relying on wife’s credit for the loan. Held: creates a valid purchase money lien (including deed of trust lien) upon the property without the partic
Slide 44: Pro Formas
Pro Formas Lender/Buyer may request a Pro Forma Policy • Pro Forma is not a valid commitment nor an active policy • Shows what the title policy will look like with the agreed exceptions in Schedule B and all Conditions of Schedule C are satisfied • Includes the proposed insured in Schedule A • May i
Slide 45: Stewart Texas Underwriting Manual
Stewart Texas Underwriting Manual Texas Underwriting Manual Direct Address https://www.vuwriter.com/en/underwriting manuals.html?state=TX&docType=manuals Pathway to Texas Bulletins https://www.vuwriter.com, then choose Bulletins, select a State (Texas)
Slide 46: Be Careful Out There
Be Careful Out There Charlie Craig Associate General Counsel Senior Underwriter Stewart Title Guaranty Company Austin, Texas (800) 292-5712 [email protected]
Slide 47: Credit Requests
CREDIT REQUESTS Submit individual request to [email protected] CE CLE Include: Include: – Your Name – Your Name – Subject Line— – Subject Line— A Walk Through the Typical A Walk Through the Typical Title Objection Letter Title Objection Letter – 4 PASSWORDS provided – FINAL PASSWORD provided
Slide 48: And now for the final time… Password #4
And now for the final time… Password #4
Slide 49: Recorded Material
Recorded Material Current and expired webinars are available via the Texas TIPS page. – Current Courses – Expired Courses This webinar will be available within 10 business days. 49
Slide 50: Credit Requests
Credit Requests Processing CE/CLE requests can take up to 30 calendar days. Contact [email protected] if you haven’t received attendance confirmation after 30 days have passed. 50
Slide 51: Search and Exam
Join us for the next Texas TIPS webinar! December 19, 2019 Search and Exam John Rothermel For Questions/Comments Email [email protected] or [email protected] 51
Stewart Information Services — Investor Presentation (November 2019) on 6ix