Mechanic’s Lien Indemnities - Title Insurance Centertitleinsurancecenter.com/Topics/BasicUnderwritingInfo.doc · Web viewMost of LandAmerica’s business is title insurance, but

Basic Underwriting Information

Introduction....................................................................................................................2

Contacts - West Region Underwriting Department.....................................................3

High Liability Approvals................................................................................................5REQUEST FOR POLICY APPROVAL.......................................................................5

Mechanic’s Lien Indemnities........................................................................................7MECHANIC’S LIEN INDEMNITIES INSTRUCTIONS................................................8MECHANIC’S LIEN LOSS OF PRIORITY QUESTIONNAIRE...................................9WAIVER OF LIEN PERIOD QUESTIONNAIRE.......................................................10MECHANIC’S LIEN INDEMNITY REQUEST FOR APPROVAL...............................11INDEMNITY AGREEMENT......................................................................................12MECHANICS’ LIEN COVERAGE - COMMERCIAL MORTGAGES.........................14

Secured Indemnities....................................................................................................15DEPOSIT/WITHDRAWAL REQUEST......................................................................16SECURED INDEMNITY REQUEST FOR APPROVAL............................................17INDEMNITY AGREEMENT......................................................................................18INTEROFFICE MEMORANDUM..............................................................................22

Underwriting Bulletins.................................................................................................27Bulletin No. 1 Trust Certificates................................................................................28Bulletin No. 2 California Community Property Rules................................................29Bulletin No. 3 Disclosure of Omitted Liens................................................................32Bulletin No. 4 Inspections on 1-4 Family Property....................................................33Bulletin No. 5 CC&R Notice......................................................................................34Bulletin No. 6 Judgment Liens - Expiration...............................................................36Bulletin No. 7 Indemnities from Title Companies......................................................37Bulletin No. 8 Streamlined Searching.......................................................................38Bulletin No. 9 Gramm-Leach-Bliley...........................................................................40Bulletin No. 10 GI Runs on Buyers (So. California)..................................................44Bulletin No. 11 High Risk Transactions.....................................................................45

Rev. 6-12-07

1

Introduction

This package provides some basic underwriting forms and information. It does not purport to be an exhaustive treatment of underwriting issues, which is better left to bodies of work such as the CLTA Manual.

The attached forms are the paper versions that are designed to be printed and filled out by hand. Versions of the forms that are designed to be filled out on a computer can be obtained from your friendly underwriter or on Roger Therien’s semi-official West Region web site at http://westregion.com

The Underwriting Bulletins describe matters that have arisen fairly recently, including modern procedures that are designed to increase the efficiency of title operations. Some of these new procedures involve assuming risks which we believe are outweighed by our increased efficiency and competitiveness.

2

http://westregion.com/

Contacts - West Region Underwriting Department

NOTE: You should first contact the underwriter for your county or state. If that person is unavailable (after a reasonable response time), you should try to contact another underwriter in the same underwriting office. Finally, you can contact any underwriter in any office.

Name Phone & Fax Email Primary Underwriting Responsibility

Glendale Office655 North Central Ave., Suite 2200, Glendale, CA 91203

Avi Miron Ph: 818-552-7240FAX: 818-265-0636

[email protected] New Century Title (underwriting & general legal)

Commonwealth: Kern & Los Angeles

Lorraine Casas Ph: 818-552-7232FAX: 818-265-0622

[email protected] Administrative Assistant

Pasadena Office55 S. Lake Ave., Suite 600, Pasadena, CA 91101

Ed Beierle Ph: 626-844-5177FAX: 626-304-9159

[email protected] HAWAII STATE COUNSEL Lawyers: Los Angeles HAWAII: All agents Regulatory & general legal

Bill Hunter Ph: 626-844-5154FAX: 626-304-9159

[email protected] NEVADA STATE COUNSEL Directs: Orange, San Bernardino,

Riverside, Ventura, El Centro NEVADA: Directs & agents:

Roger Therien Ph: 626-844-5176FAX: 626-304-9231

[email protected] Regional Counsel, West Region

Peggy Krutsch Ph: 626-844-5171FAX: 626-304-9231

[email protected] Administrative Assistant

San Francisco OfficeOne Market St., Spear Tower, Suite 1850, San Francisco, CA 94105

Laura Lowe Ph: 415-247-2409FAX: 415-520-0880

[email protected] WEST REGION AGENCY COUNSEL AZ Agents: Pima County, AZ CA Agents: All EXCEPT Orange

Coast – Inland Empire & San Diego, Home Connects, North American – Stanislaus & Fresno

3

mailto:[email protected]







San Diego Office3131 Camino Del Rio North, Suite 1400, San Diego, CA 92108

Tom Ruhrup Ph: 619-725-3229FAX: 619-374-7056

[email protected] So. Cal. Directs: San Diego, Santa Barbara, Gateway and Southland

No. Cal. Directs: All Default Services Builder Services Production Centers: No. & So. Cal. Agents: Orange Coast – Inland

Empire & San Diego, North American – Stanislaus & Fresno, Home Connects

Phoenix Office – Camelback Road2901 E. Camelback Road, Phoenix, AZ 85016

Larry Phelps Ph: 602-954-0222FAX: 602-954-0099

[email protected] Capital Title Agency, Inc.Underwriting Counsel

Susan Neff Ph: 602-954-0222 [email protected] Capital Title Agency, Inc.Legal Assistant

Maria Bueno Ph: 602-954-0222 [email protected] Capital Title Agency, Inc.Legal Assistant

Phoenix Office – Central Ave.1850 N Central Ave., Suite 1200, Phoenix, AZ 85004

Diane Flaaen Ph: 602-257-2768FAX: 602-282-3663

[email protected] ARIZONA STATE COUNSEL

Scott Peterson Ph: 602-282-6005FAX: 602-282-3663

[email protected]

ARIZONA Asst. State Counsel

Linda Hall Ph: 602-257-2682FAX: 602-282-3663

[email protected] ARIZONA Legal Secretary

The CLAIMS DEPARTMENT is not part of West Region Legal Resources, although they share office space with Legal Resources staff in the Pasadena office. Claims should be submitted to:

Steve Bauer, Claims Center Manager, Pasadena Claims Center55 S. Lake Ave., Suite 600, Pasadena, CA 91101Ph: [email protected]

Denise Franklin (Assistant)Ph: 626-844-5119Fax: [email protected]

4



mailto:scottppeterson@%0Blandam.com

mailto:scottppeterson@%0Blandam.com





High Liability Approvals

5

6

Mechanic’s Lien Indemnities

7

MECHANIC’S LIEN INDEMNITIESINSTRUCTIONS

Three forms for mechanic’s lien indemnity approvals are attached. The check boxes at the top of the forms are intended to make the forms self-explanatory. This allows a busy title or escrow officer to simply fax a questionnaire with minimal explanation. These forms are available in two versions, one which is designed to be filled out by hand and the other using form fields which are designed to be filled out on a computer.

Also attached are an indemnity form and a memo from John Rapp, LandAmerica’s Chief Underwriting Counsel.

1. Construction Loan Loss of Priority (LOP) Questionnaire

This form is intended to be filled out by the customer and needs to be user-friendly enough for a customer to deal with on his own. An employee who interviews a loan officer or the developer can also fill it out.

This questionnaire, along with the documents described next to the checkboxes, should be sufficient for 95% of our transactions. There is a note at the bottom of the form stating that additional information will be required for complex transactions.

2. Waiver of Lien Period (WOLP) Questionnaire

Like the LOP questionnaire, this is intended to be filled out by the customer and needs to be user-friendly enough for a customer to deal with on his own. An employee who interviews the developer can also fill it out.

3. Mechanic’s Lien Indemnity – Request for Approval

This is the approval form to be signed by the Title Officer, CTO and Underwriting Department. If the LOP and WOLP questionnaires were always filled out by employees, the approval could be made a part of those forms. But as I see it, we need to keep the questionnaires separate so that customers can complete them.

4. Indemnity Agreement

5. Memo: Mechanic’s Lien Coverage - Commercial Mortgages

8

MECHANIC’S LIEN LOSS OF PRIORITY QUESTIONNAIRE

Issuing Office: ___________________________________ Date: _______________________

Project Name: ___________________________________ Order No.: ___________________

Please enclose the following: Signed Indemnity AgreementFinancial Statement (or Loan Application)Construction Cost Breakdown or Loan Budget

1. Describe the project: _____________________________________________________________

Describe the current stage of construction: ____________________________________________

Number of units: _________ Square footage of each unit: ___________________

Est. completion date: ____________________ Est. value on completion: $__________________

Built in phases? _______ If so: Number of phases: ______ Separate construction loans? _______

2. Name of owner or developer: ______________________________________________________

3. Name of general contractor, if any: __________________________________________________

4. Name of construction lender: ______________________________________________________

5. Cost of land: $______________ Date acquired: ______________ Current equity: $____________

6. What is the amount of the construction loan? $_____________________

Amount of construction loan for actual construction: $__________________

Amount of construction loan for loan fees, interest reserves and other fees: $_________________

Does the construction loan include a land draw? ______ If so, state amount: $________________

7. Is the loan amount sufficient to complete construction? ________ If not, describe funds to complete:

Amount: $________________ Source: _______________________________________________

8. Who will control the disbursement of construction funds? _________________________________

Describe the disbursement control for construction funds: ________________________________(e.g. vouchers, draws, etc.)

Prepared by: _______________________________________

Address: _______________________________________

_______________________________________

Telephone _______________________________________

For complex high-liability transactions additional documentation may be necessary, such as the construction contract, loan agreement, project proforma, price list, maps, market analysis, lender’s loan commitment, etc.

Rev. 2-19-03

9

WAIVER OF LIEN PERIOD QUESTIONNAIRE

Issuing Office: ___________________________________ Date: _______________________

Project Name: ___________________________________ Order No.: ___________________

Please enclose the following: Signed Indemnity AgreementFinancial Statement (or Loan Application)List of unpaid bills

1. Type of improvements: ___________________________________________________________

2. Is the project complete? _________

If so, has a Notice of Completion been recorded? _________

If not: What is the expected date of completion? ___________________

What is the source of funds to complete? ________________________________________

3. Amount of undisbursed construction loan funds: $__________________

4. Amount of unpaid bills: $__________________ (attach list)

5. What was the amount of the construction loan? $__________________

7. Name of construction lender: ______________________________________________________

8. What was the lender’s system of disbursement control? _________________________________(e.g. vouchers, draws, etc.)

9. Was there a loss of priority for the construction loan? _________

Prepared by: _____________________________ Address: _____________________________

Telephone: ____________________________ _____________________________________

Note: In some cases, the underwriter may require lien releases from contractors and suppliers.Rev. 2-26-02

10

MECHANIC’S LIEN INDEMNITYREQUEST FOR APPROVAL

Loss of Priority OR Waiver of Lien Period

Issuing Office: _________________________________ Date: ____________________

Title Officer: ___________________________________ Order No.: ________________

Telephone: _____________________ Fax: _____________________

Attach copies of: Indemnity AgreementLOP or WOLP QuestionnaireIndemnitors’ Financial Statement (or Loan Application)Preliminary Report or CommitmentConstruction Cost Breakdown (LOP only)List of Unpaid Bills (WOLP only)Additional Documentation

Policy Type Name of Insured Amount

______________________ __________________________________ $_______________

______________________ __________________________________ $_______________

Estimated Closing Date: _____________________________

Describe the transaction and any problems or unusual circumstances:

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

Approval Recommended: Title Officer: __________________________________

ATO/CTO: __________________________________

LandAmerica Financial Group, West RegionAPPROVED, subject to the following:

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

By___________________________________ Date: _____________________________

Rev. 2-26-02

11

Order No. __________________

Indemnity No. __________________

INDEMNITY AGREEMENT(Mechanics’ Liens)

This Indemnity Agreement is entered into by and between the undersigned (hereinafter referred to as “Indemnitor”) whose name is set forth on the signature page hereof, and [INSERT: Commonwealth Land Title Insurance Company, a Pennsylvania corporation OR Lawyers Title Insurance Corporation, a Virginia corporation] (hereinafter referred to as the “Company”) with reference to the following facts:

A. Indemnitor has requested Company to issue its policy of title insurance insuring an interest in or title to certain real property described in Exhibit A attached hereto, (hereinafter referred to as the “property”) without exception to or providing certain affirmative insurance against statutory liens for labor or material attaching to or gaining priority over the interest of the Insured, (hereinafter referred to as “mechanics’ liens”).

B. Company is unwilling to issue such policy unless indemnified by Indemnitor as hereinafter provided. Indemnitor has, as an inducement to Company, offered to indemnify Company against loss or damage which Company may become liable for by reason of providing affirmative insurance against loss sustained or incurred under such policy by reason of mechanics’ liens.

In consideration of the foregoing facts and of the issuance by Company of its policy of title insurance as aforesaid, Indemnitor hereby indemnifies and holds Company harmless from and against any and all claims, losses, damages, liabilities and expenses, including but not limited to attorneys’ fees and expenses of litigation suffered or incurred by Company under its policy or policies of title insurance or otherwise, on account of the omission or deletion of, or affirmative insurance against, mechanics’ liens.

Indemnitor further agrees as follow:

1. Indemnitor shall timely file Notices of Completion covering any works of improvement on the property if such notices are provided for by law in the state where the property is situated and in accordance with such law.

2. Company may at any time after any mechanic’s lien has been of record for thirty (30) days, or after a suit to foreclose any mechanic’s lien has been commenced, require Indemnitor upon ten (10) days’ written notice to record a statutory release of lien bond or surety bond or to otherwise release the property from any such mechanic’s lien. Company may, without notice to Indemnitor, pay, satisfy, compromise or do any other act necessary in its judgment to obtain a release or discharge of any such mechanic’s lien. Indemnitor hereby authorizes and empowers Company to advance and pay any sums necessary to obtain a release, discharge or satisfaction of any such mechanic’s lien. Notwithstanding anything herein which may be construed to the contrary, Indemnitor agrees that Company shall not have to pay, incur or sustain monetary loss in any amount before being entitled to call upon Indemnitor to provide to Company funds necessary to pay, satisfy, compromise or do any other act necessary to obtain a release or discharge of any mechanic’s lien or otherwise satisfy Company’s obligations under such policies; and Indemnitor agrees to reimburse Company for any amounts advanced by Company together with interest at the rate of ten percent (10%) per annum from the date of such advance.

3. Indemnitor shall diligently provide for the defense of any and all actions to foreclose any mechanic’s lien. Company shall have the right to select and approve any and all counsel who may be retained by Company or by Indemnitor to defend any such action and Indemnitor shall promptly pay all fees and expenses of the counsel so selected or approved by Company.

4. Company may rely upon this Agreement in issuing any policies whether or not Indemnitor is the person ordering the same, regardless of any change in ownership of or the title to the property or any portion thereof or any change in the nature of Indemnitor’s interest in the same. The issuance of any such policies in the manner desired by Indemnitor may cause Company to deem it necessary or expedient for practical business reasons to issue other policies covering the property without showing therein as matters not insured against mechanics’ liens or actions based thereon or to provide indemnities to other title insurers to induce them to issue such policies. Consequently, the obligations of Indemnitor hereunder shall not be limited to the policy initially issued on the property or portions thereof, but shall apply also to any policies of title insurance subsequently issued on the property or portions thereof

12

and to any indemnities provided to other title insurers. Nothing contained herein shall be construed as an obligation on the part of Company to issue any policy of title insurance. However, if Company does issue any policy of title insurance as requested by Indemnitor, then the Indemnitor gives the assurances and indemnities as provided by this Agreement.

5. Indemnitor warrants the accuracy and truthfulness of all financial statements and other information submitted to Company to induce Company to rely on this Agreement. Indemnitor shall promptly advise Company in writing of any material change in Indemnitor’s financial condition.

6. The term policy or policies of title insurance as used herein shall be deemed to include any binder, commitment, preliminary report, policy, guarantee or endorsement.

7. This Agreement shall be liberally construed in the interest of and for the protection of the Company. This Agreement shall be governed and construed in accordance with the laws of the state in which the property is situated and if any provision hereof is held to be void or unenforceable under said laws, this Agreement shall not be voided or vitiated thereby but shall be construed to be enforced with the same effect as though such provision were omitted.

8. The liability of the Indemnitor under this Agreement is direct and primary and is not conditioned or contingent upon prior pursuit of any remedies by Company. Indemnitor shall be liable and shall promptly pay to Company all costs, expenses and attorneys’ fees incurred by Company in enforcing any of its rights hereunder.

9. This Agreement shall be binding upon the Indemnitor and each of them, their heirs, assigns and legal successors and shall inure to the benefit of Company, its successors and assigns, including without limitation any other insurer involved in reinsuring in any manner any liabilities of Company under any policy or policies to which this Agreement relates and any agent or underwritten Company of Company which issued such policy or policies.

10. In this Agreement wherever the context so requires, the singular number includes the plural, and where there is more than one person included as Indemnitor, the obligations of this Agreement shall be binding on all such persons jointly and severally. If any Indemnitor is not bound hereunder for any reason this Agreement shall still be binding upon the other Indemnitors.

Dated: ___________________________

INDEMNITOR

__________________________________________ _________________________________________

__________________________________________ _________________________________________

ADDRESS

__________________________________________ _________________________________________

__________________________________________ _________________________________________

PHONE NO. ( ) ________________________ PHONE NO. ( ) _______________________

13

MECHANICS’ LIEN COVERAGE - COMMERCIAL MORTGAGESJohn Rapp8/16/2000

Experience has shown that the following information will ensure that our evaluation of the risk is likely to result in an underwriting decision appropriate to both the customer and the Company. In other words, we will be able to substantially reduce the possibility of either rejecting a good risk or accepting a bad one. In no particular order of importance, the relevant factors for consideration are listed below:

1. Nature of Project - certain types of projects have historically been less likely to result in Mechanics’ Lien claims.

2. Identity of Developer – again, individuals or organizations possessing substantial experience in the construction of similar projects in the past are more likely to continue to do so successfully.

3. Identity of General Contractor and Construction Lender – frequently, if the developer is not the general contractor, prior projects may have involved the same general contractor and construction lender as the current project.

4. Build to Suit, Pre-Leasing or Purchase Contract – absent unusual circumstances, most successful construction projects will involve pre-leasing, build to suit, or contracts to purchase final product such as are common in cogeneration projects.

5. Evidence of Equity Investment – the greater the required percentage of equity investment the more likely it is that the project will be successfully completed.

6. Contractors Bonding Requirements – here, we are especially interested in whether Payment Bonds are required of the general contractor and/or major subcontractors. The absence of a bonding requirement is not necessarily a negative. It may suggest that the contractor’s track record warrants the elimination of such a requirement.

7. Construction Budget – the itemization of construction costs will confirm the adequacy of funds to complete the project. Further, it should disclose the amount of labor and materials already furnished and paid for at the time of closing. Finally, it should disclose the portion of funds to be used for the purchase of machinery and equipment. This latter item is of special significance in connection with the construction of cogeneration plants.

8. Identity of Indemnitor and Financials – to the extent that the developer and contractors have been involved previously in similar successful projects, we will remain flexible in our requirements with regard to the identity of the Indemnitor, as well as the contents of the balance sheet. However, it is appropriate to request the Indemnity from the same individuals or organizations required to provide guarantees to the lender.

9. Pending Disbursements Clause/Interim Waivers or Releases – in most instances we will require date downs of title prior to each advance in order to insure continuing priority over mechanics’ liens. Further, depending upon the circumstances of a particular case we may require production of waivers, releases, or affidavits of payment at the time of each draw.

10. Loan Commitment Letter – requirements imposed by the lender’s letter as a precondition to the making of the loan will normally address many of the Items listed above.

If the amount of the Loan Policy to be issued is less than $5 million the Underwriting review and approval process will be conducted within the Region according to high liability guidelines. Beyond $5 million, the relevant information must be submitted to the Headquarters Underwriting Department.

14

Secured Indemnities

15

DEPOSIT/WITHDRAWAL REQUESTSecured Indemnity

To: Karen Hyatt, Administrative Manager Date: _______________________LandAmerica Financial Group/West Region4 Hutton Center Drive, Suite 1050Santa Ana, CA 92707Phone: 714-560-8540 Fax: 714-560-0325

From: Name: ________________________________________

Company: ________________________________________

Office: ________________________________________

Phone: ________________________________________

File/Order No.: ________________________________________

Indemnity No.: ________________________________________

Title Officer: ________________________________________

Indemnitors: Names: ____________________________________________________________

Address for refund check: ________________________________________________

________________________________________________

DEPOSITPlease deposit these funds into an interest-bearing account pending resolution of the matters described in the secured indemnity agreement. The following items are enclosed:

Trust Account Check No. _______________in the amount of $_____________________(Make check payable to Commonwealth Land Title Company or Lawyers Title Company, as applicable)

W-9 signed by indemnitor(s) Copy of signed indemnity agreement

Signatures:

______________________________________Type name:

Approved by:

______________________________________Type name:

WITHDRAWALPlease release funds to this office from the above-referenced indemnity as follows:

1. Reason funds can be released: _________________________________________________________________________________________

2. Amount to release: All funds: $_______________________,

plus interest, OR Portion of funds: $___________________

Signatures:

______________________________________Type name:

Approved by:

______________________________________Type name:

16

SECURED INDEMNITYREQUEST FOR APPROVAL

Issuing Office: _________________________________ Date: ____________________

Title Officer: ___________________________________ Indemnity No.:_____________

Telephone: _______________ Fax: _________________ Order No.: ________________

Attach copies of: Indemnity AgreementIndemnitor's Financial StatementPreliminary Report or CommitmentAdditional Documentation

Policy Type Name of Insured Amount

______________________ __________________________________ $_______________

______________________ __________________________________ $_______________

Estimated Closing Date: _____________________________

Indemnitor(s): _______________________________________________________________

___________________________________________________________________________

Collateral: ________________________

Describe the transaction, the nature of the risk and Release Date, if any:

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

Approval Recommended: Title Officer: __________________________________

ATO/CTO: __________________________________

LandAmerica Financial Group, West RegionAPPROVED, subject to the following:

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

By___________________________________ Date: _____________________________

Rev. 6-21-02

17

Indemnity No. _________________

Order No. _________________

INDEMNITY AGREEMENTSecurity Agreement - Pledge

This Indemnity Agreement is entered into by and between the undersigned (hereinafter referred to as “Indemnitor”) whose name is set forth on the signature page hereof, and [INSERT: Commonwealth Land Title Insurance Company, a Pennsylvania corporation OR Lawyers Title Insurance Corporation, a Virginia corporation] (the “Title Company”), with reference to the following facts:

A. Indemnitor has requested Title Company to issue its policy of title insurance insuring interest in and/or title to real property described in Schedule A attached hereto (such property is hereinafter referred to as the “Insured Premises”) without exception to or providing certain affirmative insurance against the matter set forth as the Exception in Schedule A attached hereto (hereinafter referred to at the “Exception”).

B. Title Company is unwilling to issue such policy unless indemnified by Indemnitor as hereinafter provided. Indemnitor has, as an inducement to Title Company, offered to indemnify Title Company against loss or damage which Title Company may become liable for by reason of providing affirmative insurance against loss sustained or incurred under such policy by reason of the Exception.

In consideration of the foregoing facts and of the issuance by Title Company of its policy of title insurance as aforesaid, Indemnitor hereby indemnifies and holds Title Company harmless from and against any and all claims, losses, damages, liabilities and expenses, including but not limited to attorneys' fees and expenses of litigation suffered or incurred by Title Company under its policy or policies of title insurance or otherwise, on account of the omission or deletion of, or affirmative insurance in connection with, the Exception.

Indemnitor further agrees as follows:

1. Indemnitor shall take such action as is necessary to timely remove, satisfy or discharge the Exception prior to the Release Date, if any, set forth on the signature page hereof. If at any time Title Company deems it necessary in order to satisfy its obligations under such policy, it may, in its sole discretion, without notice to Indemnitor, pay, satisfy, compromise or do any other act, including but not limited to commencement of litigation, necessary in its judgment to obtain a release or discharge of the Exception. Indemnitor hereby authorizes and empowers Title Company to advance and pay any sums necessary to obtain a release, discharge or satisfaction of the matters set forth as the Exception. Notwithstanding anything herein which may be construed to the contrary, Title Company shall not have to pay, incur or sustain monetary loss in any amount before being entitled to call upon Indemnitor to provide to Title Company funds necessary to pay, satisfy, compromise or do any other act necessary to obtain a release or discharge of the Exception or otherwise satisfy Title Company's obligations under such policy and Indemnitor shall promptly furnish such funds so demanded. Indemnitor shall reimburse Title Company for any amounts advanced by Title Company pursuant to this Agreement together with interest at the rate of ten percent (10%) per annum from the date of such advance.

2. Indemnitor shall diligently provide for the defense of any and all actions referred to in or based upon the Exception. Title Company shall have the right to select and approve any and all counsel who may be retained by Indemnitor or Title Company to defend any such action and Indemnitor shall promptly pay all reasonable fees and expenses of the counsel so selected or approved by Title Company, or alternatively, Title Company shall have the option to use or apply all or any part of the collateral (defined below), or disburse proceeds of the collateral, to pay such fees, costs and expenses.

18

3. To secure performance of all of Indemnitor's obligations, duties, agreements and promises under this Agreement, Indemnitor delivers to Title Company the funds set forth on the signature page hereof (hereinafter referred to as “collateral”), together with all interest earned on the collateral, and any other money or property which Indemnitor is or may hereafter become entitled to receive on account of the collateral pursuant to the California Uniform Commercial Code (hereinafter referred to as the “UCC”). Title Company shall be entitled to all rights and remedies of a secured party under the UCC and any other California law. If Indemnitor provides a completed I.R.S. Form W-9, the collateral while held by Title Company shall be held in an interest bearing account in the name of Title Company in a bank insured by the FDIC. Income and risk of loss to the collateral while on deposit in such interest bearing account shall accrue to Indemnitor. Title Company may, at any time, without notice, and at Indemnitor's expense, compromise or settle any claims affecting Title Company's rights in the collateral or Title Company’s rights under this Agreement. In the event of Indemnitor’s breach or default under the terms of this Agreement, Title Company shall have the right to use or apply all or any part of the collateral, or disburse proceeds of the collateral, to obtain a release or discharge of the Exception. Indemnitor further authorizes Title Company, without notice or demand and without affecting Indemnitor’s liability under this Agreement, from time to time, to (a) hold as additional security any profits or increases in the collateral and apply the additional security to the discharge or release of the Exception; (b) apply the collateral or other security and direct the order or manner of disposition as Title Company in its discretion may determine; (c) release or substitute the Indemnitor or any other person obligated under this Agreement; (d) pay reasonable attorneys’ fees and legal expenses incurred by Title Company; and (e) disburse the balance of the collateral, the balance of the interest accrued on the collateral, and the balance of the additional security, if any, to Indemnitor. Indemnitor waives any right to require Title Company to (a) proceed against any person; (b) proceed against or exhaust any collateral; or (c) pursue any other remedy in Title Company’s power.

4. Title Company may rely upon this Agreement in issuing any policies whether or not Indemnitor is the person ordering the same, regardless of any change in ownership of or the title to the Insured Premises or any portion thereof or any change in the nature of Indemnitor's interest in the same. The issuance of any such policies in the manner desired by Indemnitor may cause Title Company to deem it necessary or expedient for practical business reasons to issue other policies with respect to the Insured Premises without showing therein as matters not insured against the Exception or actions based thereon or to provide indemnities to other title insurers to induce them to issue such policies. Consequently, the obligations of Indemnitor hereunder shall not be limited to the policy or policies initially issued with respect to the Insured Premises or portions thereof but shall apply also to any policies of title insurance subsequently issued with respect to the Insured Premises or portions thereof and to any indemnities provided to other title insurers. Nothing contained herein shall be construed as an obligation on the part of Title Company to issue any policies of title insurance. However if Title Company does issue any policies of title insurance as requested by Indemnitor then the Indemnitor gives the assurances and indemnities as provided by this Agreement. The term policy of title insurance as used herein shall be deemed to include any binder, commitment, preliminary report, policy, guarantee or endorsement.

5. Indemnitor warrants the accuracy and truthfulness of all financial statements and other information submitted to Title Company by Indemnitor to induce Title Company to rely on this Agreement. Indemnitor shall promptly advise Title Company in writing of any material adverse change in Indemnitor's financial condition.

6. This Agreement shall be liberally construed in the interest of and for the protection of the Title Company. This Agreement shall be governed and construed in accordance with the laws of the state in which the Insured Premises is situated and if any provision hereof is held to be void or unenforceable under said laws, this Agreement shall not be voided or vitiated thereby but shall be construed to be enforced with the same effect as though such provision were omitted.

7. The liability of the Indemnitor under this Agreement is direct and primary and is not conditioned or contingent upon prior pursuit of any remedies by Title Company. Indemnitor shall be liable and shall promptly pay to Title Company all reasonable costs, expenses and attorneys' fees incurred by Title Company in enforcing any of its rights hereunder.

19

8. This Agreement shall be binding upon the Indemnitor its successors and assigns and shall inure to the benefit of Title Company, its successors and assigns, agents and underwritten title companies, including without limitation any other insurer involved in reinsuring in any manner any liabilities of Title Company under any policy or policies of title insurance to which this Agreement relates.

9. All notices to be given hereunder shall be in writing and mailed postage prepaid by certified or registered mail, return receipt requested, or delivered by personal delivery, to Indemnitor's address and Title Company's address which are set forth herein, or to such other place as Indemnitor or Title Company may designate in a written notice given to the other party. Notices, if personally delivered, shall be deemed received upon delivery, and if mailed, shall be deemed received three (3) days after the date of mailing.

10. In this Agreement wherever the context so requires, the singular number includes the plural, and where there is more than one person included as Indemnitor, the obligations under this Agreement shall be binding on all such persons jointly and severally. If any Indemnitor is not bound hereunder for any reason, this Agreement shall still be binding upon the other Indemnitors.

Release Date: ______________________

Collateral: $________________________

NOTE: You must provide Title Company with a completed I.R.S. Form W-9 in order for funds to be placed in an interest-bearing account.

Dated: _____________________________

INDEMNITOR:

_______________________________________ _____________________________________

TELEPHONE: _____________________________

ADDRESS: ________________________________________

________________________________________

_____[Insert name of underwriter]_____Attn: Indemnity Department4 Hutton Centre Drive, Suite 1050Santa Ana, CA 92707-5707TEL: 714-560-8540FAX: 714-560-0325

Rev. 6/21/02

20

Schedule A

Order No. _________________

Indemnity No. _________________

The Insured Premises is described as follows:

Exception:

21

55 South Lake Avenue, Suite 600Pasadena, CA 91101TEL: 626-844-5177

INTEROFFICEMEMORANDUM

DATE: June 21, 2002

TO: All West Region Branches, Underwritten Title Companies and Agents

FROM: Edward R. BeierleCounsel, Western Region

RE: Indemnities

This Memorandum sets forth the procedures to be followed and forms to be used in connection with the acceptance and reliance upon indemnities when issuing policies of title insurance or endorsements thereto. All LandAmerica branches, agents and underwritten title companies are required to submit all Requests for Indemnity Approval to the West Region Underwriting Department unless authority to approve indemnities has previously been delegated to someone else. The procedures and forms referred to herein will become effective on July 1, 2002 and all requests for indemnity approval submitted on and after said date must conform to these procedures. The changes to the indemnity process involve new forms of Request for Indemnity Approval and Indemnity Agreements as well as new procedures for handling collateral which the Company holds to secure obligations under indemnity agreements. Copies of this Memorandum should be given to all persons involved in preparing and submitting Requests for Indemnity Approval as well as all title officers and escrow officers.

Indemnities are not the appropriate basis for assuming all types of risks or resolving all types of problems. Risks involving liens or other matters which may be eliminated by the payment of a sum of money and which will be resolved within the foreseeable future (within 3 to 4 years) lend themselves to being resolved through the use of indemnities more so than other types of risks. This does not mean, however, that we will never accept indemnities as the basis for insuring against other types of risks. Furthermore, indemnities should not be considered as the only means of addressing requests for insurance against mechanics' liens, tenant's rights, etc., to the exclusion of obtaining evidence of payment, subordination or waiver of lien rights, examining copies of leases or other forms of documentation of the termination or nonexistence of such matters.

22

NEW FORMS

Attached are copies of the following new forms to be used in connection with indemnities:

Indemnity Agreement (Mechanics’ Liens)Commonwealth Land Title Insurance CompanyLawyers Title Insurance CorporationTransnation Title Insurance Company

Indemnity Agreement, Security Agreement - PledgeCommonwealth Land Title Insurance CompanyLawyers Title Insurance CorporationTransnation Title Insurance Company

Request for Indemnity Approval-GeneralRequest for Indemnity Approval-Mechanics’ LiensLoss of Priority QuestionnaireWaiver of Lien Period Questionnaire

MAINTENANCE OF INDEMNITY FILES AND NUMBERING SYSTEMS

Separate files should be maintained for each indemnity request for approval. The files should contain the original indemnity agreement, request for indemnity approval and supporting documentation. Copies of the indemnity agreement and request for indemnity approval should also be placed in each title file to which the indemnity relates. Indemnity files should be retained for 5 years after the expiration or elimination of the risk for which the indemnity was given. Each office in the West Region should establish an indemnity numbering system (if they do not already have one) for all indemnities The indemnity number should be assigned at the time the indemnity agreement is prepared and should be typed on the indemnity agreement, all schedules and addenda thereto and on the Request for Indemnity Approval form. Each indemnity submission should be assigned its own indemnity number even though the indemnity may not be approved or the transaction is cancelled.

REQUEST FOR INDEMNITY APPROVAL

The attached form of Request for Indemnity Approval must be completed and submitted for all indemnity requests. List all policies to be issued in reliance on the indemnity and include policy type, name of insured and amounts of insurance. If the indemnity is to be secured indicate the type and amount of collateral. If unsecured, set forth "none" under collateral. Under "Description of Transaction and Nature of Risk" set forth a brief description of the transaction, the nature of the risk and how and when the risk will expire and/or be eliminated.

23

The Request for indemnity Approval form should be submitted with copies of financial statements (unless indemnity is fully secured), a current preliminary report or commitment, the completed indemnity form and such other documentation which will assist in the evaluation of the risk. For mechanic’s lien risks use the Request for Indemnity Approval-Mechanics’ Liens and attach either the Loss of Priority Questionnaire or the Waiver of Lien Period Questionnaire depending on the nature of the mechanic’s lien risk. These forms of questionnaire may be completed either by the customer or by issuing office personnel after obtaining the information from the customer, loan officer or other source.

INDEMNITY FORMS

The form of indemnity agreement to be used should be the one for the particular LandAmerica Financial Group, Inc. title insurer (i.e. Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation and Transnation Title Insurance Company) whose policy(ies) is/are being issued in reliance on the indemnity. The Indemnity Agreement, Security Agreement - Pledge form is a general form of indemnity agreement which may be either secured or unsecured and which provides indemnity against loss with respect to the matter(s) set forth as the Exception on Schedule A. If the indemnity is to be secured by cash collateral, the amount should be indicated in the blank after the Collateral following paragraph 10. If the collateral is anything other than cash, such as a letter of credit or a deed of trust, contact the West Region Underwriting Department for the form of indemnity. If the indemnity is to be unsecured, type "None" under the collateral on the signature page. The date by which the Indemnitor is to obtain the removal or release of the Exception should be set forth after the "Release Date" on the signature page or if there is no such date enter "N/A". Generally a Release Date should be set forth unless the time for obtaining the removal or release of the Exception cannot be determined in advance as in the case of pending litigation. The legal description of the Insured Premises and the Exception must be set forth on Schedule A. The Exception should describe all matters against which the indemnity protects. This should be broadly stated to cover all eventualities.

The Indemnity Agreement (Mechanics’ Liens) form is an unsecured indemnity agreement to be used in connection with mechanic’s lien risks involving either a loss of priority in connection with loan policies or a waiver of lien period in connection with owners and/or loan policies. The legal description of the real property must be set forth on an attached Exhibit A to this form. If there are recorded mechanics' liens to be insured against in reliance on an indemnity, use general form of indemnity and set forth the recorded liens under the Exception on Schedule A. If unrecorded liens are also to be covered, also include the following exception under the Exception:

Any lien or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records.

Care must be taken in the preparation of these forms so that they form binding contractual agreements upon execution. All indemnity agreements should contain the

24

complete name of all indemnitors, both on the first page and in the signature lines, their addresses and telephone numbers and the date of execution. The signature page should be completed by typing the name of each indemnitor with appropriate signature lines. The names of individual indemnitors should be typed under their signature lines and the word "By" should only precede the signatures of persons signing in an agency or representative capacity. The names of corporate, limited liability company and partnership indemnitors should be typed above the signature lines of the persons signing on their behalf in the same manner as on a deed. For example, corporate and partnership indemnitors' signatures should appear as follows:

XYZ Corporation ABC, a General Partnership By: __________________ By: ______________________ President General Partner

By: __________________ By: ______________________ Secretary General Partner

If corporate officers, limited liability company members or partners will also be executing the indemnity in their individual capacities, their names and "Individually and as (title of signatory)" should be typed under their signatures or separate signature lines may be used for them to sign in their individual capacity. The same evidence of authority to execute an indemnity agreement should ordinarily be obtained as would be the case for execution of a deed or other contract.

APPROVALS

Approval of an indemnity request will be on the attached Request for Indemnity Approval form. Following approval and closing of the transaction or transactions to which the indemnity relates, the issuing office must monitor the file until the risk in question is eliminated. There is no need to send original indemnity agreements to the West Region Underwriting Department unless specifically requested. If any liens or actions arise which are the subject of the indemnity the issuing office must contact the indemnitor and advise the West Region Underwriting Department of the situation and what action the indemnitor intends to take.

COLLATERAL

All cash collateral held under indemnities will be held in the name of the Title Company. Whenever an Indemnity Agreement is to be secured with a deposit of cash collateral, a From W-9 (a copy of which is attached) should be sent with the Indemnity Agreement. Copies of the Form W-9 and the Instructions for Form W-9 can be down loaded from the Internal Revenue Service website at www.irs.gov. If a completed Form W-9 is submitted with the collateral, it will be invested in an interest bearing account in the

25

name of the Title Company as secured party of the Indemnitor. All cash collateral must be sent to the West Region office of LandAmerica Financial Group, Inc., Attention Indemnity Department, 4 Hutton Centre Drive, Suite 1050, Santa Ana, CA 92707-5707 (Tel: 714-560-8540), together with a copy of the fully executed indemnity, the completed form W-9 and the Request for Indemnity Approval. All requests to release or disburse the collateral must be approved by the West Region Underwriting Department unless authority to approve indemnities and release of collateral has previously been delegated to someone else. Such requests should explain the reason for the release or disbursement of the collateral, the name of the person(s) to whom funds are to be paid, their addresses and telephone numbers and any other information necessary to disburse the funds. Copies of any releases or other documents evidencing a release, satisfaction or discharge of the Exception should also be included. Such requests should also include the wire transfer information of the Issuing Office. The balance of the collateral plus any accrued interest will be disbursed to the Issuing Office via check or wire transfer for disbursement to the Indemnitor or other party to whom payment is to be made.

MONITORING

The issuing office is charged with monitoring all files closed in reliance on an indemnity until expiration of the risk covered by the indemnity agreement. In the event of any action or attempt to enforce or assert the matter which is the subject of the Exception, the issuing office shall advise the West Region Underwriting of such action or attempt as soon as possible. Whenever an indemnity is secured by collateral the issuing office shall advise the person responsible for approving the indemnity when the Exception has been satisfied or removed or has expired by the expiration of time. After review and approval by the person who approved the indemnity the Indemnity Department shall be advised to release the collateral as set forth above.

26

Underwriting Bulletins

27

Bulletin No. 1Trust Certificates

DATE: May 25, 1999

TO: Branches and Underwritten Companies, West Region

FROM: Roger TherienSenior Underwriting Counsel, Western Region

SUBJECT: Trust CertificatesBulletin No. 99-01

Reliance on Certification of Trust

Where the original trustee(s) are executing a deed or deed of trust, we will rely on a Certification of Trust under Probate Code Section 18100.5 (which is retained in the title file, but not recorded). Obtaining a copy of the trust agreement is not necessary unless the trust certification is being signed by a successor trustee (i.e. the person signing does not appear of record) or there is anything unusual about the transaction.

Reason: Probate Code Section 18100.5 provides adequate protection

Waiving requirement of Certification of Trust

Where all of the original trustees/settlors who originally conveyed title to themselves as trustees of their own family trust are conveying or encumbering residential property as trustees of the same trust, we will not require any documentation regarding the trust.

Reason: We will rely on the bona fide purchaser protection of Probate Code Section 18100.

28

Bulletin No. 2California Community Property Rules

How to use this outline:Each of these three pages describes a different situation. First, determine which page

contains the applicable situation, then read the rules and exceptions on that page.

Community PropertyI.

Situation

1. Title was acquired before marriageOR

2. Title was obtained by a decree of distribution (before or after marriage)

AND (in addition to either 1 or 2)

3. We are insuring a subsequent sale or loan

Rules

1. A quitclaim deed from the spouse of the titleholder is not necessary.

2. Liens against the spouse may be ignored.

3. These rules apply even if subsequent documents show that the titleholder is a married person (e.g. the titleholder executed a deed from “titleholder as a single person” to “titleholder as a married person”).

Exceptions

1. Document executed by spouse : If the chain of title contains a document executed by the spouse, usually a deed of trust, quitclaim deed or homestead, this might indicate an assertion of an interest in PIQ. Show all liens affecting the spouse and obtain a quitclaim deed from the spouse, unless approved by counsel.

2. Lis Pendens : If a lis pendens appears of record pertaining to dissolution of marriage, a quitclaim deed from the spouse is required.

29

Community PropertyII.

Situation

1. Title is being acquired by a person in his/her own name during marriage

AND

2. We are insuring the initial acquisition

Loan Policy Rules.

1. A quitclaim deed from the spouse is required. A separate property recital in this deed is not needed for this policy, but may be desirable for future transactions.

2. Judgment and tax liens do not need to be shown, regardless of whether they are against the spouse or the titleholder. Exception: Federal judgment (not tax) liens against either the spouse or titleholder must be shown.

3. Note: These rules apply only to the typical situation where all the loan proceeds are used to acquire the property. If any proceeds are used for another purpose, follow the rules below under “Owner’s Policy”.

Owner’s Policy Rules.

1. Show all judgment and tax liens against both the titleholder and spouse, and

2. Show the community interest of the spouse as an exception unless a separate property recital appears in a quitclaim deed executed by the spouse.

3. Note: These rules also apply to a loan policy where any of the proceeds are used for a purpose other than to acquire title.

Definition: “Separate Property recital” means a statement in a deed that says the property is the “sole and separate property” of the spouse of the grantor.

30

Community PropertyIII.

Situation1. The titleholder previously acquired title in his/her own name during marriage

AND2. We are insuring a subsequent sale or loan

Separate property recital appears in a previously recordedquitclaim deed executed by the spouse.

Rules1. A new quitclaim deed from the spouse is not necessary.

2. Liens against the spouse and titleholder must be shown, whether recorded prior or subsequent to the quitclaim deed from the spouse.

On a case-by-case basis, counsel may decide to eliminate liens against the spouse recorded subsequent to the spouse’s quitclaim deed.

Exceptions1. Bankruptcy : Run the spouse, in addition to the titleholder, on the General Index. If

either party has filed bankruptcy, refer the file to counsel.

2. Document executed by spouse : If the chain of title contains a document executed by the spouse who is not in title, such as a deed of trust or homestead, this might indicate an assertion of an interest in PIQ. Show all liens affecting the spouse and obtain a quitclaim deed from the spouse, unless approved by counsel.

3. Lis Pendens : If a lis pendens appears of record pertaining to dissolution of marriage, a quitclaim deed from the spouse is required.

Separate property recital does not appear in a previously recordedquitclaim deed from the spouse.

1. Show all judgment and tax liens against both the titleholder and the spouse (loan and owner’s policies).

2. Sale : A new quitclaim deed from the spouse is required.

3. Loan : We require either 1) another quitclaim deed from the spouse or 2) that the spouse joins in the execution of the deed of trust.

Definition: “Separate Property recital” means a statement in a deed that says the property is the “sole and separate property” of the spouse of the grantor.

31

Bulletin No. 3Disclosure of Omitted Liens

DATE: May 25, 1999



SUBJECT: Disclosure of omitted liens – loan policiesBulletin No. 99-03

Situation:

Occasionally, we show a lien as an exception in an owner’s policy and omit it from the concurrent purchase-money lender’s policy. Normally, the lien is a tax or judgment lien and is omitted from the lender’s policy based on Civil Code Section 2898, which gives priority to purchase-money deeds of trust. Other times the validity of the lien is questionable and is omitted on the basis of an indemnity or a risk decision by the Chief Title Officer or Counsel.

Requirements:

Tax liens and judgment liens (except judgments in favor of the United States) which are not shown in Schedule B, Part I of a loan policy because of the purchase money nature of the insured loan, in reliance on an indemnity or pursuant to a risk decision, may, but do not need to be, shown in Schedule B, Part II. It is also not necessary to otherwise disclose that such a lien has been omitted. Other matters, such as liens that are subordinated pursuant to a subordination agreement, must be shown in Schedule B, Part II. Also, if a lender expresses a concern about this procedure, the lien should be shown in Schedule B, Part II.

Reason:

Trying to make some kind of disclosure about a lien we have already determined to be ineffective or in junior position usually confuses and delays a transaction at the last minute. A title policy should not be used as a credit report. It is a contract of indemnity and is not a representation that the risk insured against will not occur.

32

Bulletin No. 4Inspections on 1-4 Family Property

DATE: July 1, 1999



SUBJECT: Inspections on 1-4 Family Residential PropertyBulletin No. 99-04

Underwriting Rule:

An inspection is not required for the issuance of a:1. A Homeowner’s Policy,2. An ALTA Residential Policy, or3. An ALTA loan policy on one to four family residential property.

Exceptions

An inspection is required where:

1. We receive information about a specific potential problem, such as possible encroachments or building permit violations,

2. Access is by means of a “Parcel 2” easement or is otherwise uncertain,3. We have reason to believe there is a risk of unrecorded mechanics’ liens,4. The local office has made a determination that the risk is particularly high for a certain

geographic area or type of property. (Be careful not to overuse this exception.)

Background

Inspections are an important part of many title orders and often provide information that is critical in making underwriting decisions. On the other hand, they can be over-used, particularly in residential transactions. The cost of inspections very often is not justified by their effectiveness in detecting encroachments and, we expect, in detecting building permit problems.

The Homeowner’s Policy should be issued as our “default” policy on residential property improved with a 1-4 family residence. The expanded coverage of this policy has caused some underwriters to require inspections in virtually every transaction. Instead, we should rely on the built-in nature of the deductibles to keep losses at an acceptable level and, at the same time, provide the insured with value and peace of mind.

33

Bulletin No. 5CC&R Notice

DATE: September 18, 2000



SUBJECT: Notice Provided With CC&R’s and Certain DeedsAB 1493 (Ch. 291, Stats. 2000)Amended Government Code Section 12956.1

This bulletin replaces Underwriting Bulletin No. 99-05 dated November 30, 1999.

As you will recall, on January 1, 2000 Government Code Section 12956.1 went into effect requiring a notice to be attached to copies of CC&R’s and deeds provided to customers. The statute has now been amended. The key changes are that the wording of the notice has changed, the type size has been reduced and it no longer needs to be printed in red. Please discard your supply of the old forms. Starting immediately, you must include the attached notice as the first page of all copies of covenants, conditions and restrictions, and copies of deeds containing restrictions, which you provide to anyone.

These are the basic rules:

1. The notice must be in at least 14-point, boldface type. Since it does not need to be in red, you can now prepare the notice on your own computers, then make photocopies. Be sure the word processing program uses the correct type size and boldfacing.

2. The notice must be a cover page or a stamp on the first page.

3. The notice must be provided with faxed or hard copies of all covenants, conditions and restrictions and declarations of restrictions. This also applies to any document, regardless of its title, that accomplishes the same purpose as CC&R’s.

4. The notice must also be provided with faxed or hard copies of all deeds that set forth restrictions. Literally, the statute applies to all deeds. However, we will not require it with the typical deed containing only a granting clause and a legal description, simply because it makes no sense to do so.

5. Be sure these guidelines are followed, regardless of whether the document is provided by customer service, as part of a property profile, by a title unit, by an escrow unit, etc.

6. The statute does not specifically mention underwritten title companies. We require compliance by direct operations operating as underwritten companies. Underwritten title companies are free to make their own decision since providing copies of documents is the act of the underwritten company and not the underwriter.

34

This notice is to be attached when you provide copies of CC&R’s or deeds containing restrictions.

NOTICE

(This notice is required by California Government Code Section 12956.1.)

If this document contains any restriction based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.1 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status.

35

Bulletin No. 6Judgment Liens - Expiration

DATE: September 12, 2000

TO: Branches and Underwritten Companies, California


SUBJECT: Judgment liens that do not expire after 10 years

Do not eliminate a judgment lien after 10 years if any of the following situations applies:

Judgments for child, family or spousal support

Under Family Code Section 4502, judgments for child, family or spousal support last forever (until paid).

In the case of In re Marriage of Cutler 79 Cal.App. 4th 460 (2000), a judgment lien for child support recorded in 1966. The court held, 34 years later, that the judgment lien was still valid and would remain valid until the judgment was paid in full. Note that the obligation to pay child support ended long ago when the children turned 18, but that the lien continued to secure payment of past unpaid amounts.

Judgments in favor of the United States

Under 28 U.S.C. §3201 a judgment lien in favor of the United States is valid for 20 years (and can be renewed). For purposes of this law, the term “United States” means a) a Federal corporation, b) an agency, department, commission, board or other entity of the United States or c) an instrumentality of the United States.

Extension of the 10-year lien period when the debtor files bankruptcy

Under 11 U.S.C. §108(c), if the 10-year lien period expires while the debtor is in bankruptcy, the time to renew the judgment is extended until “30 days after notice of the termination or expiration of the [automatic] stay…” (See In re Spirtos, 221 F.3d 1079 (9th Cir.2000) and In re Morton, 866 F.2d 561 (2d Cir.1989.))

Renewal of the judgment

A judgment may be extended for an additional 10 years by recording an application for renewal pursuant to Code of Civil Procedure Section 683.180.

36

Bulletin No. 7Indemnities from Title Companies

DATE: January 19, 2001

TO: California Direct Operations; California Underwritten Companies


SUBJECT: Indemnities for liens prior to full value sale transactions

Obtaining indemnities from other title companies is burdensome. There are times when doing so is critical, but very often this is simply a time-consuming endeavor where we are already convinced that a loan secured by a deed of trust was paid off. Our intent with the following procedure is to stop requesting title company indemnities when we reasonably believe a loan secured by a prior deed of trust (which will be referred to as the “prior TD”) was paid off.

You may eliminate a prior TD without obtaining an indemnity from the title company that issued subsequent insurance if the following requirements are met:

1. You are handling a sale or refinance transaction for property containing a single family residence, and

2. The prior TD precedes a sale:

a. where documentary transfer tax was computed based upon the full value of the land, andb. with a concurrent deed of trust in favor of a financial institution in an amount equal to at

least 80 - 90% of the sale price (i.e. it must be a first deed of trust), andc. which was insured by a title insurance company, and

3. The prior TD did not secure a construction loan, and

4. There is no other information indicating that the prior TD was not paid off.

Note: Such information may come directly from the parties to the escrow or from recorded documents such as an assignment, modification, notice of default, etc. pertaining to the prior TD.

5. This rule may also be applied to any prior monetary lien against the grantor in a full-value deed if all of the above requirements are met (except #3 which makes no sense for other kinds of liens). You must obtain an indemnity to eliminate an unreleased lien against the grantee since many title companies are not doing General Index runs on buyers.

This procedure does not apply to commercial property. If you believe a prior lien was paid off, but it does not fall within the above rules, you may refer the file to the Chief Title Officer for a determination on a case-by-case basis as to whether the requirement of an indemnity can be waived.

37

Bulletin No. 8Streamlined Searching

DATE: February 8, 2001 (Updated August 21, 2002)

TO: California Direct Operations; California Underwritten Companies


SUBJECT: Streamlined Searching for Refinance and Equity Loan Transactions

This bulletin authorizes a streamlined searching procedure for certain refinance and equity loan transactions on residential property. It is not mandatory, but may be used when you believe it will expedite your production process, as long as it is acceptable to customers. It will be the responsibility of each office to monitor customer acceptance of this procedure. Some lenders may accept the generic exceptions described below and others may not. Some customers have requested it and some competitors have implemented similar procedures. You should use standard searching procedures when necessary to meet customers' requirements.

The policy being issued is the same as always, usually an ALTA loan policy. Endorsements are available under the same circumstances as in any loan transaction, including a CLTA 103.3**.

Under this procedure, you do not need a starter, so the search process will be simplified. The main items contained in a starter that you cannot obtain by this streamlined process are CC&R’s and easements. These are covered by generic exceptions for all recorded CC&R’s and easements.

The theory is that refinance and equity lenders simply do not care about the details of CC&R’s and easements, which are very standard on residential property. Property taxes will be handled in the usual manner. Escrow procedures remain the same.

Type of transaction:

1. Refinance or equity loan transaction, and2. The property contains an existing one-to-four family residence (including a

condominium).

You may omit using a starter and begin the search with a deed (which will be referred to below as the “starter deed”) if the following criteria are satisfied:

1. The starter deed shows that documentary transfer tax was computed based upon the full value of the land, and

38

2. The starter deed recorded with a concurrent deed of trust in favor of a financial institution in an amount equal to at least 80 - 90% of the sale price (i.e. the transaction was an ordinary purchase-money transaction financed by a financial institution), and

3. The starter deed transaction was insured by a title insurance company, and4. Neither our transaction nor the transaction accompanying the starter deed involves a

construction loan, and5. Run the General Index on grantees in the starter deed and any subsequent owners, and6. Show an Office Information note on the policy issued in our transaction stating that it

cannot be used as a starter in a subsequent sale transaction (although it is O.K. for a subsequent refinance or equity loan transaction).

Show the following exceptions in Schedule B of both the Preliminary Report and the Policy:

1. Covenants, conditions and restrictions, if any, appearing in the public records.2. Any easements or servitudes appearing in the public records.

**Note: This is off the subject, but is being noted since the 103.3 endorsement was mentioned. Lenders sometimes request a 103.1 for any easement shown as an exception. It is the wrong endorsement for an easement which is still in use, such as a utility easement. The 103.1 is intended for an easement, such as an old floating easement for ditches, which is no longer being used. However, since lenders do not like listening to this explanation, and since the risk under a loan policy on residential property is minimal, we often accommodate the lender by issuing a 103.1 instead of a 103.3. We need to be aware that this is not the correct procedure, and that it is being done only in low risk situations in order to avoid customer relations problems.

39

Bulletin No. 9Gramm-Leach-Bliley

DATE: October 1, 2001

TO: West Region Direct and Agency Operations


SUBJECT: Gramm-Leach-Bliley Privacy Law

Direct operations should have already received an email from Headquarters with three attachments: 1) Privacy Notice Distribution Guidelines, 2) Summary of Privacy and security Provisions of Gramm-Leach-Bliley and 3) LandAmerica Privacy Policy Notice. The new procedures described in those attachments are effective July 1, 2001.

Since business is conducted differently in different areas of the country, this memo will explain how we will implement these procedures in the West Region.

The LandAmerica Privacy Policy Notice is a separate 2-page document (a single 2-sided page is suggested for hard copies). This will be delivered:

1. With each Owner’s Policy covering residential property;2. With each Loan Policy issued to an individual seller of residential property who carries

back a purchase money mortgage or deed of trust.3. To the seller and buyer (or borrower) in an escrow on residential property.

If you are unsure whether or not the notice is required in a particular situation or it is impractical to make the determination, go ahead and send the notice. No harm results from sending too many notices.

In addition, the following boilerplate notices are to be included, as applicable, in Preliminary Reports and Commitments, and in Escrow General Provisions (not in title policies).

Include in Preliminary Reports and Commitments:

Privacy Notice (15 U.S.C. 6801 and 16 CFR Part 313):

We collect nonpublic personal information about you from information you provide on forms and documents and from other people such as your lender, real estate agent, attorney, escrow, etc. We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law. We restrict access to nonpublic personal information about you to those employees who need to know that information in order to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with federal regulations to guard your nonpublic personal information.

40

Include in Escrow General Provisions:

Privacy Notice (15 U.S.C. 6801 and 16 CFR Part 313):

We collect nonpublic personal information about you from information you provide on forms and documents and from other people such as your lender, real estate agent, attorney, title company, etc. We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law. We restrict access to nonpublic personal information about you to those employees who need to know that information in order to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with federal regulations to guard your nonpublic personal information.

Commercial property and financial institutions

The notices need to be given to individuals who obtain services primarily for personal, family or household purposes. For example, the notices are not necessary for commercial transactions or policies insuring financial institutions or corporations. We figure that it is better to send a notice when it is not needed than to omit a required notice. Accordingly, the notices should be automatic unless someone makes a conscious decision that the notice is not necessary for a particular transaction.

Why send a separate notice when one is already included in the Preliminary Report, Commitment and Escrow Instructions?

Our direct offices and agents are different corporations than the title insurers. Each corporation must provide notice.

What about starter exchanges?

Some questions have been raised about whether an additional notice called an “opt-out” notice is required in connection with starter exchanges. It is standard practice in the title industry to exchange title policies with other title companies in order to accommodate a customer’s subsequent transaction. As long as starters are exchanged for this purpose, it is my opinion that the exception in 16 CFR 313.14 applies, which provides: “The requirements for [opt-out and other more extensive notices] do not apply if you disclose nonpublic personal information as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes . . .”

What about the requirement of shredding documents containing personal information?

The law requiring documents containing personal information to be shredded is an entirely separate California State law. Coincidentally, both our state and federal legislators are passing laws on related subjects as fast as they can. I am attaching a separate memo dated June 5, 2001 pertaining to this state law. It is an update of a previous memo on the same subject. Those of you in other states are not subject to this separate law. However, shredding documents containing personal information, rather than tossing them in the trash, is a good idea even without the law.

41

PRIVACY POLICY NOTICE

Dear LandAmerica Customer:

The Financial Services Modernization Act recently enacted by Congress has brought many changes to the financial services industry, which includes insurance companies and their agents. One of the changes is that we are now required to explain to our customers the ways in which we collect and use customer information.

The statement attached to or on the reverse side of this letter is the privacy policy of the LandAmerica family of companies. The three largest members of the family – Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation, and Transnation Title Insurance Company – may issue policies and handle real estate closings in virtually every part of the country. A number of other companies in the family provide other real estate services, and some operate more locally. You may review a list of LandAmerica companies on our website (www.landam.com). You may also visit our website for an explanation of our privacy practices relating to electronic communication.

Our concern with the protection of your information has been a part of our business since 1876, when the company that is now Commonwealth Land Title Insurance Company issued its first policy. We will continue to protect the privacy, accuracy, and security of customer information given to us.

No response to this notice is required, but if you have questions, please write to us:

LandAmerica PrivacyP.O. Box 27567Richmond, VA 23261-7567.

LandAmerica CompaniesLandAmerica Insurance Companies: Commonwealth Land Title Insurance Company, Commonwealth Land Title Insurance Company of New Jersey, Industrial Valley Title Insurance Company, Land Title Insurance Company. Lawyers Title Insurance Corporation, Title Insurance Company of America, Transnation Title Insurance Company, Transnation Title Insurance Company of New YorkLandAmerica Title Agents (wholly-owned): American Title Company of Dallas and Fort Worth, Austin Title Company, ATACO, Inc., Albuquerque Title Company, Atlantic Title & Abstract Company, Capitol City Title Services, Inc., Commercial Settlements, Inc., Commonwealth Land Title Company; Commonwealth Land Title Company of Austin, Dallas, Fort Worth, Houston, Puget Sound, and Washington; Congress Abstract Corp., Gateway Title Company, Gulf Atlantic, Lawyers Title Company; Lawyers Title of Arizona, El Paso, Nevada, and San Antonio; New Mexico Title Co., Partners Title Company, Pikes Peak Title Services, Property Title Ins. Co., Rainier Title Company, Southland Title Corporation, Texas OneStop, Texas Title Company, Title Transfer Service, Inc., Transnation Title & Escrow, Wilson Title CompanyLandAmerica Title Agents (partially owned): Bankers Alliance Title Agency, Biltmore Abstract, CFS Title Insurance Agency, Charleston Title Agency, Charter Title Company of Fort Bend, Chatham Settlement, E. Title Agency, First Growth-Commonwealth Title Agency, First Title & Escrow, Inc., Four Star Title Agency, HL Title Agency, Jones & Tatom Title & Trust, Land Canada LTD., Land Title Associates, Lawyers Title Galveston, Lion Abstract, Longworth Insured, M/I Title Agency, M and M Title Services, National Land Transfer (NJ and PA), NIA/ Lawyers Title Agency, RE/Affirm Title Agency, Residential Abstract, Residential Title, Sibcy Cline Title Agency, Title Affiliates of Central Florida, Naples, Clearwater, Graham, Indian River, Orlando, Polk County, Tampa Bay, and West Central Florida; TransOhio Residential Title Agency, TRI Title Agency, TRI-County Title Agency-Michigan, Tri-State Title Agency, University Title Services,Inspections, Appraisals, Mortgage Servicing, and Ancillary Services: Inspectech, Inc., LandAmerica OneStop, Inc., LandAmerica Account Servicing, Inc., LandAmerica Default Service Co., REalitics, TransAccount Services, Inc.

Form 3391-6 (September 2002)

42

http://www.landam.com/

LANDAMERICA PRIVACY POLICY

What kinds of information we collect. Most of LandAmerica’s business is title insurance, but there are companies in our family that provide other real estate services to consumers. We collect information about you, (for instance, your name, address, telephone number), and information about your transaction, including the identity of the real property that you are buying or financing. We obtain a copy of any deeds, notes, or mortgages that are involved in the transaction. We may get this information from you or from the lender, attorney, or real estate broker that you have chosen. Our title insurance companies then obtain information from the public records about the property so that we can prepare a title insurance policy. When we provide closing, escrow, or settlement services, mortgage lending, or mortgage loan servicing, we may get your social security number, and we may receive additional information from third parties including appraisals, credit reports, land surveys, escrow account balances, and sometimes bank account numbers to facilitate the transaction. If you are concerned about the information we have collected, please write to us.

How we use this information. The company giving or specifically adopting this notice does not share your information with marketers outside its own family. There’s no need to tell us to keep your information to ourselves because we share your information only to provide the service requested by you or your lender, or in other ways permitted by law. The privacy laws permit some sharing without your approval. We may share internally and with nonaffiliated third parties in order to carry out and service your transaction, to protect against fraud or unauthorized transactions, for institutional risk control, and to provide information to government and law enforcement agencies. Companies within a family may share certain information among themselves in order to identify and market their own products that they think may be useful to you. Credit information about you is shared only to facilitate your transaction or for some other purpose permitted by law.

How we protect your information. We restrict access to nonpublic personal information about you to those employees who need the information to provide products or services to you. We maintain physical, electronic, and procedural safeguards that comply with law to guard your nonpublic personal information. We reinforce the company’s privacy policy with our employees.

Agents that may be covered by this policy. Often, your transaction goes through a title insurance agent. Agents that are part of the LandAmerica family are covered by this policy. Agents that are not part of the LandAmerica family may specifically, in writing, adopt our policy statement.

43

Bulletin No. 10GI Runs on Buyers (So. California)

DATE: June 24, 2003

TO: Southern California Direct and Agency Operations


SUBJECT: General Index Runs on Buyers

You are not required to do a General Index run on the buyers in sale transactions where the conditions set forth below are met. Running GI’s on buyers is still the preferred practice, but you can stop doing it if it helps you to meet competitive pressure or to increase efficiency.

Our Production Centers do not necessarily need to change what they are presently doing. Adopting this practice in a Production Center should be done in consultation with the affected County Managers, but I want to make you aware of the option in case you receive requests to adopt this practice or you believe it will increase the efficiency of your operation.

It is not necessary to run the General Index on the buyer, for either the buyer’s policy or the purchase-money lender’s policy, if the following three conditions are met:

1. The transaction is for the sale of one-to-four family residential property, and

2. The purchase money deed of trust from the buyer to the lender is recorded simultaneously with the deed to the buyer, and

3. The financing is only for purchase money and normal closing costs.

(NOTE: You may treat a buyer’s equity loan, recorded simultaneously with the purchase, as a purchase money loan.)

NOTE:

1. Where this practice has been adopted, starters are not reliable for General Index purposes, so you need to run the General Index on all owners shown in a starter. Of course, you also need a GI run on anyone else appearing in the chain of title subsequent to the starter.

2. Always run the GI on the borrower in a refinance transaction.

3. In Northern California we are still studying this issue and have not adopted this practice.

44

Bulletin No. 11High Risk Transactions

DATE:January 10, 2004

TO: West Region Direct and Agency Operations


SUBJECT: High Risk Transactions

Issuing title insurance in the types of transactions listed below involves an unusually high incidence of claims, mainly due to the involvement of distressed property or situations that do not involve normal sale or loan transactions. These are high-risk situations requiring the approval of Management.

EXCEPTION: Occasionally, management pre-approves regular customers who are engaged in transactions such as insuring through tax and foreclosure sales, or insuring deeds in lieu of foreclosure. However, these are limited to situations where management makes a determination in advance that the risks are low for particular customers.

Note that this list is not exhaustive, but represents the most common high-risk situations that often appear, on the surface, to be simple transactions.

High Risk TransactionsRequiring Management Approval

1. Any transaction where there is no formal escrow (a lender handling its own closing is O.K.).

2. Insuring a grantee or lender where we were not involved in the initial sale or loan transaction (i.e. an uninsured deed or mortgage).

3. Insuring a purchaser at a foreclosure, execution or tax sale.

4. Insuring when a tax deed or sheriff’s deed appears in the chain of title and there has been no subsequent owner's insurance.

5. Insuring a grantee named in a deed in lieu of foreclosure.

6. Any transaction which is not a bona-fide, arms-length transaction.

7. Insuring a “hard money” mortgage in favor of individuals (or their trusts), or in favor of a lender who can be expected to assign to individuals. Often, but not always, these are “multiple-beneficiary” loans.

45

Documents

Mechanic’s Lien Indemnities - Title Insurance Centertitleinsurancecenter.com/Topics/BasicUnderwritingInfo.doc · Web viewMost of LandAmerica’s business is title insurance, but