Title Insurance

Mobile Home Claims Continue

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What do a hurricane, a tornado and a redneck divorce have in common?
Somebody’s fixin’ to lose a mobile home!

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That joke may be attributable to Jeff Foxworthy, Lewis Grizzard or some other Southern comedian.  Regardless, a large number of South Carolinians lost mobile homes during the economic downturn, most often as a result of foreclosures rather than the disasters in the joke. Foreclosures uncover title issues that lead to title insurance policy claims. Because our office continues to see mobile home claims on almost a weekly basis, this reminder might be in order for residential real estate practitioners.

When sales and mortgages of real estate including mobile homes are closed, titles to the mobile homes should be retired, and ALTA 7 series endorsements should be issued.

If a title examination reveals a recorded Manufactured Home Affidavit for Retirement of Title Certificate, it is advisable to request from the Department of Motor Vehicles a letter confirming that the title has been placed on the DMV’s list of retired vehicles.

If no Manufactured Home Affidavit has been filed locally, then follow our statutory process to retire the title. The Affidavit requires the owner to:

  • install the home on the real property;
  • remove the wheels, axles and towing hitch;
  • attach proof of ownership (the deed);
  • attach a copy of the certificate of occupancy; and
  • pay the recording fee.

Surrendering the certificate of title to the DMV requires:

  • a filed copy of the Manufactured Home Affidavit from the ROD;trailer duck
  • the original certificate of title with either releases of liens or consents of secured parties;
  • a copy of the most recent tax receipt for the manufactured home; and
  • payment of the DMV fee.

When the title is retired, it is safe to issue an ALTA 7 series endorsement. Your title company will appreciate compliance with these guidelines.

And here’s a practice tip. Our former boss, Nancy Booco, always said, “If it looks like a mobile home, it probably is one.”

The Keys to the Parsonage

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Ever handled a church closing? Oy vey! Never assume church properties make for simple closings. I grew up Baptist, where the congregation votes on real estate matters, but happily married a Methodist preacher’s kid and attend churches where real estate matters are usually handled more methodically.

churchMany transactional lawyers across the country were asked to handle closings of the Episcopal Church while those properties were in dispute, beginning in 2006 when Anglicans left the fold and sought title to church properties. The resulting litigation brought global attention and wound its way through the courts, until the Supreme Court ended the controversy in March of 2014 by declining to take up an appeal by the last remaining plaintiff. We had a dramatic case of our own in South Carolina involving All Saints Parish, Waccamaw in Georgetown County.* And I understand from talking to some lawyers in Myrtle Beach this week, that at least one of these cases is pending in lower court in South Carolina.

When handling church transactions in South Carolina, the first step is to determine the church’s form of governance. South Carolina has cases on point* which discuss two general forms of religious organization. The congregational church is an independent organization, governed solely within itself, either by a majority of members or by another local organism. The hierarchical church is organized as a body with other churches having similar faith and doctrine with a common ruling convocation or ecclesiastical head. The Baptist churches of my youth are congregational churches. The Methodist churches of my adult life are hierarchical.

Sales and mortgages of church properties must be properly authorized. A congregational church authorizes its own transactions, following its own formalities. The level of formality varies greatly. Some churches are incorporated and governed like a business corporation. The closing attorney will typically request a resolution passed in a business meeting, held pursuant to the bylaws of the corporation, authorizing the transaction and designating the appropriate church officers to sign the documents. Congregational churches may have other governing organizations. The closing attorney should pay careful attention to the governing documents and obtain written authorization.

If an independent church has no documented form of government, the closing attorney should assume the entire congregation must act. The typical title insurance old sheldoncommitment will require a resolution by the congregation passed at a special meeting convened after reasonable notice from the pulpit, authorizing the sale or mortgage. The documents will typically be signed by the trustees and the pastor pursuant to the resolution.

A transaction involving a hierarchical church will require written authorization from the ruling convocation. The United Methodist church must receive consent from the District Superintendent and the Conference.

Title insurance companies are familiar with most churches and will be able to assist in these transactions.

Be skeptical of anyone (pastor included) who says he or she can act alone in any church transaction. We have seen numerous claims where church transactions are not properly authorized.

*I’ll be glad to e-mail the citations to anyone who asks.

Georgia On My Mind

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GA Supreme Court takes a page from our playbook and prohibits “witness only” closings

On September 22, 2014, The Supreme Court of Georgia issued an opinion approving the State Bar’s Formal Advisory Opinion No. 13-1, which states that a Georgia licensed lawyer may not ethically conduct a “witness only” closing.

georgia with flagThe Court indicated a “witness only” closing occurs when an individual presides over the execution of closing documents but purports to do so merely as a witness and notary and not as someone who is practicing law. In order to protect the public from those not properly trained or qualified to render these services, lawyers are required to “be in control of the closing process from beginning to end,” according to the opinion.

The opinion also requires the closing attorney to review the closing documents, resolve errors in the paperwork, and detect and resolve ambiguities in title and title defects, indicating, “A lawyer conducting a real estate closing may use documents prepared by others after ensuring their accuracy, making necessary revisions, and adopting the work.”

The closing lawyer must “review and adopt” the work used in a closing, even if he or she didn’t prepare that work.  Georgia law allows title insurance companies and others to examine title records, prepare abstracts and issue related insurance.  And other persons may provide attorneys with paralegal and clerical services, so long as “at all times the attorney receiving the information or services shall maintain full professional and direct responsibility to his clients for the information and services received.”

The obligation to review, revise, approve and adopt documents used in closings applies to “the entire series of events that comprise a closing.”

I’m a South Carolina dirt lawyer, so I don’t have the background to comment at length on this opinion, but from my bank of the Savannah River, it seems this opinion places closing lawyers in a precarious position, not unlike the position of our Bidding on a homepractitioners. We don’t necessarily have to perform all aspects of closings, but we do have to supervise and take professional responsibility for the entire closing.  We have learned how difficult it is to supervise third parties and take responsibility for their work.  The Georgia Bar asked for this opinion.  I hope they like it!

Surely Dave Whitener is smiling down from heaven at this effort to rein in the unauthorized practice of law!

Who Will Get On the Wells Fargo Wagon?

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Wells Fargo announces it will generate and deliver the Closing Disclosure

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Wells Fargo announced on September 24, 2014 that it will generate and deliver the borrower’s Closing Disclosure when the TILA-RESPA Integrated Disclosure Rule becomes effective on August 1, 2015.

Software companies, title insurance companies and closing attorneys have been speculating about this for many months. Now we have an answer, at least as to this mega-lender. Whether other lenders will fall in line remains to be seen.  The stated rationale is that the process will allow Wells Fargo to consistently meet compliance and regulator expectations.

The announcement stated that Wells will continue to collaborate with closing attorneys to determine fees and other content required for the Closing Disclosure and to ensure that the lender has accurate information.

For purchase transactions, the closing attorney will continue to be responsible for the seller’s information and will prepare and deliver the seller’s Closing Disclosure. A copy must be provided to Wells Fargo.

The Closing Disclosure must be delivered three business days prior to the closing, and Wells Fargo anticipates this requirement will require that all the parties work together more than ever on scheduling closings.

Conducting closings will continue to be the responsibility of closing attorneys, but with increasing focus on compliance with the lender’s closing instructions, according to this announcement.

This announcement has a huge impact on the closing process. The closing attorney will continue to be responsible for gathering information required to generate the document that replaces the HUD-1 Settlement Statement, but Wells Fargo, not the closing attorney’s office, will actually generate and deliver the form.

Please recall that Wells Fargo is the lender that endorsed ALTA’s Best Practices. My best advice for residential closing attorneys in South Carolina who want to remain in the game after August, 2015?  Get your office in compliance with Best Practices now so you will be prepared to implement the hardware/software changes this announced “collaborating” with lenders will require.

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Embrace ALTA’s Best Practices

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 BestPractices2Some real estate practitioners are furiously bringing themselves into compliance with ALTA’s Best Practices, while others are furiously ignoring the entire topic or, at best, waiting until they hear marching orders from lenders. I propose that we all step to the plate and embrace Best Practices.

Residential practitioners can and should use compliance as a marketing tool. Some commercial practitioners are assuming that when lenders become educated and begin demanding compliance from residential practitioners, they will naturally ask for the same or similar compliance from commercial practitioners. Striving for compliance is an opportunity for all practitioners to demonstrate to their clients, to real estate agents and to lenders their value in real estate transactions.

ALTA is now encouraging practitioners to conduct a self-assessment of their adoption of Best Practices by September of 2014. Time may be of the essence because a practitioner may first hear marching orders from a lender in connection with a specific real estate closing. If it is impossible to demonstrate compliance quickly, that closing will likely be lost to someone who is better prepared.Best-Practice-processes

I am convinced that the numbers of residential real estate practitioners in South Carolina will be drastically reduced in the next year or two. Attorneys approaching retirement age may decide to retire rather than to learn how to use the new forms. Large law firms  who handle commercial transactions may decide that residential transactions are no longer worth the effort. Left standing will be the practitioners who embrace this change and tackle it now. There is opportunity for growth for those who act wisely in the face of change.

Title insurance companies are willing and able to help and have resources that can ease the pain. But no outsider can do the actual work. Each pillar requires careful consideration from a management standpoint, and only the closing attorneys themselves can make the necessary decisions for implementation. Each pillar will require on-going demonstration of compliance. Files must be papered. Calendars must be tickled. Software and hardware must be kept current. Compliance will not be a matter of establishing written procedures and continuing business as usual. We should establish a culture of compliance and make it the responsibility of all employees.

I can’t say this strongly enough: At some point, practitioners will either have to embrace compliance or get out of the game. The time to act is now.

If you want to continue to handle residential real estate transactions, call your title insurance company today and ask for assistance in nailing down each pillar.