Transcript Slide 1

Oklahoma Abstracting and
Title Insurance Overview
Briana J. Ross, Vice President of
Commercial Underwriting / Attorney /
Agency Manager for American Eagle
Title Insurance Company
Residential Real Estate
Transactions
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Parties:
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Seller
Buyer
Lender
Listing Broker
Selling Broker
Attorney (rarely in
Oklahoma)
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Examples:
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Sale or purchase of
residence
Refinance of residence
Role of Attorney in Residential
Real Estate Transaction
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Attorneys rarely used in OK
Provide attorney’s title opinion
Prepare contract, review closing
documents and vesting documents
Perform title curative work
Perform settlement services
Commercial Real Estate
Transactions
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Parties:
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Seller
Buyer
Lender
Listing Broker
Selling Broker
Attorney(s) for Seller
Attorney(s) for Buyer
Attorney(s) for Lender
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Examples:
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Sale or Purchase of vacant
or developed land
Refinance of a commercial
property
Construction loan for future
development of commercial
property
Leases (e.g., office,
ground, occupancy in freestanding building)
Role of Attorney in Commercial
Real Estate Transaction
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Attorneys often used in OK
Negotiate terms of contract or lease
Prepare attorney’s title opinion or review of the
title insurer’s title commitment
Negotiate title insurance coverages
Review surveys
Prepare contract or lease, review closing
documents and vesting documents
Perform title curative work
Perform settlement services
What is “Title” to Real Property?
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Evidence of ownership, extent of interest,
and means for maintaining rights and
possession
How does one prove title?
The Recording System
Purpose:
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Preserve record of instruments of title and
evidence of their voluntary execution
Gives public notice of change of ownership of
property or existence of liens thereon
Prevents loss of documents by owners
Prevents non-owners from fraudulently selling
property owned by another
Recording System, cont.
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Real estate transaction is not binding upon
one with no actual knowledge, unless:
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Instrument is in writing
In consummation of such transaction
In legal form
Executed and acknowledged in compliance
with OK law
Is made a matter of public record
How to Record in Oklahoma
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Office of County Clerk in county where
real property is located
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Books, records, maps, papers, plats, etc.
affecting title to real property
Platted additions and subdivisions
Payment of recording fee
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$13.00 first page of document; $2.00 each
additional page of same document
Locating Title Documents in
Oklahoma
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Oklahoma uses a tract index system
Preserves history of title through
identification of transactions with a
particular tract
Must have legal description to search
records
Cannot search solely by owner’s name
Real Estate Contract
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Residential – www.ok.gov/OREC provides
a standard Residential Real Estate
Contract form
Commercial – Usually customized to the
transaction
Abstract of Title
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A compilation in orderly arrangement of
materials and facts of record, in office of
county clerk and court clerk, affecting title
to a specific tract of land issued pursuant
to a certificate certifying to matters
therein contained
Must be certified to by licensed and
bonded abstractor
Oklahoma Abstractor’s Board
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Regulates Oklahoma’s abstract industry
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Issues Certificates of Authority
Issues individual abstractor licenses and
permits to develop abstract plants
Offers bi-monthly testing to individuals
seeking abstractor’s license
Investigates consumer and industry
complaints concerning abstracting issues
http://www.ok.gov/abstractor
36 O.S. § 5001(C)
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No insurer shall issue, permit or cause to be
issued, either directly or by an agent, a binder,
commitment, or policy of title insurance until
either the title insurance company or its
authorized agent shall have obtained an opinion
of title by an attorney licensed to practice law in
the State of Oklahoma based upon an
examination of a duly certified abstract of title
prepared by a bonded and licensed abstractor.
Attorney’s Title Opinion
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Purpose: To determine whether title to subject
property is “marketable”
Generally addresses:
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Legal description of property
Identity of owner
Restrictions, liens and other encumbrances affecting
title
Requirements to make title insurable
Must be signed by attorney and state OBA #
Title Examination Standards
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Title Examination Standards Committee
New and revised standards presented at
OBA Annual Meeting for vote
If approved, they go into effect January 1
of following year
Encumbrances
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Interests held by persons other than owner
Two Kinds:
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Physical Encumbrances – may give others limited
rights to use or may limit rights of owner to make
unrestricted use of property
Encumbrances on Title – affect value of property;
may give rise to right of holder of encumbrance to
sell property to satisfy obligation
Found by attorney (title examination) or
surveyor
What is Title Insurance?
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Information on status of title to real property
Protection against adverse claims
Shifts risk of covered title defects from insured
owner or lender to title insurance underwriter
A contract to indemnify if loss is a covered
defect
Residential & Commercial
Title Insurance Differs From Other
Types of Insurance
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Relates to past rather than future
occurrences
Protects title as it stands when policy is
written
Coverage ends where other insurance
begins -- at the date of policy
Risks of Transferring Property
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Confusion from similarity
of names
Forged documents
Signatures of minors or
mentally incompetent
persons
Mistakes in recording
legal documents
Undisclosed or missing
heirs
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Fraud
Invalid divorces
Misrepresentation of
marital status
Unpaid taxes
Clerical errors in public
records
Errors in the examination
of title
American Land Title Association
(ALTA)
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Members include:
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Title Insurance Underwriters
Agents
Abstractors
Standard policy and endorsement forms
Most widely used forms in Oklahoma
Title Commitment
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Based on Attorney’s Title Opinion
Agreement of underwriter to issue title
insurance policy when requirements
properly satisfied
Only issued in Oklahoma after duly
certified abstract of title has been
examined by attorney licensed to practice
law in State of Oklahoma
2006 ALTA Commitment –
Schedule A
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File Number
Effective Date
Policies to be Issued
Estate or Interest in Land
Record Owner
Insured Property
2006 ALTA Commitment –
Schedules B-I and B-II
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B-I – Requirements
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Must be accomplished before title to real estate
pronounced marketable
Revealed by title examination; shown on attorney’s
title opinion
May include title curative matters or vesting
requirements
B-II – Exceptions
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Matters representing encumbrances on property
Excluded from coverage by title insurance policy
Pre-Closing
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Requirements must be satisfied
Closing documents prepared
Settlement statements prepared and
approved
Closing
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Procedure or event by which ownership
transfers from seller to buyer
All documents satisfying requirements are
presented at closing
Funds transferred
Closing Protection Letter
Post-Closing
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Original executed documents are recorded
at County Clerk’s office
Final title search
Types of Title Insurance Policies
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Estates:
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Fee Simple
Leasehold
Life Estate
Easement
Policies
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Loan
Owner’s
Owner’s Policy
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A contract of indemnity between insured owner and title
insurance underwriter
Insures title to real property subject to exceptions and
exclusions contained in policy and is used to insure fee
simple or lesser estate
Covers insured as long as insured has interest in
property
Coverage continues after insured sells if insured remains
liable for warranties of title
Nontransferable
New purchaser must obtain own title insurance policy
naming him as the insured
2006 ALTA Owner’s Policy –
Schedule A
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File Number
Policy Number
Date of Policy
Amount of Insurance
Name of Insured
Estate Insured
Owner of Property
Mortgage encumbering property
Insured Property
2006 ALTA Owner’s Policy –
Schedule B
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Title matters excluded from coverage
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Mortgages listed in Schedule A
Additional title exceptions not disposed of
prior to closing
Prior liens, easements, rights of way, roadway
reservations, mineral reservations, existing
leases, etc.
Owner’s Policy as Base Title
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36 O.S. § 5004(C)
Title examined from effective date of prior
owner’s policy
No need to locate abstracts certified to
prior to effective date of prior owner’s
policy
Loan Policy
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A contract of indemnity between insured lender
and title insurance underwriter
Insures validity and priority of a lien created in
favor of lender against specific property subject
to exceptions and exclusions contained in title
insurance policy
Provides lender protection as long as lender has
interest in property
Policy ends once mortgage is paid off
Also covers assignee of mortgage
2006 ALTA Loan Policy –
Schedule A
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File Number
Policy Number
Date of Policy
Amount of Insurance
Name of Insured
Estate Insured
Owner of Property
Insured Mortgage
Insured Property
2006 ALTA Loan Policy –
Schedule B
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Title matters excluded from coverage
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Title exceptions reflected in attorney’s title
opinion that would have priority over lien
being insured and that have not yet been
disposed
Prior liens, easements, rights of way, roadway
reservations, mineral reservations, existing
leases, etc.
Endorsements
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Riders modifying coverage of policy
Mostly used to expand coverage
Can be used to limit or interpret coverage
Wide variety available
Underwriting guidelines may vary from
company to company
Questions?
The End