Changes to Land Title Survey

Effective Tuesday, February 23, 2016, the ALTA/NSPS group has adopted changes to the listing of items to be included in a standard survey (what used to be called an “ALTA/ACSM” survey). The ALTA/NSPS survey standards are the joint work product of the American Land Title Association (i.e., title insure companies) and the National Society of Professional Surveyors (surveyors). The “check the box” items on Table A have been updated in some ways that should be useful to you and will modify what will appear on a typical survey. A survey that meets the current standards will be referred to as an “ALTA/NSPS Land Title Survey.”

The following are the significant revisions to Table A for an ALTA/NSPS Land Title Survey:

1. HOW SHOULD YOU REFER TO THE NEW SURVEY? As noted above, it should be referred to as an ALTA/NSPS Land Title Survey. The change in name is intended to eliminate a need to say the “2016” version of these standards, since this is the first one using “NSPS”.
2. ITEM 5(B)(ii), WIDTH AND LOCATION OF ABUTTING PUBLIC AND PRIVATE ROADS. The standard provides that the ALTA/NSPS Land Title Survey show the width and location of any abutting public or private roads, included divided streets, unless the recorded documents provided to the surveyor under Items 5 and 6 disclose that there is no legal access to the road(s).
3. ITEM 5(C)(ii), BUSHES AND THINGS VEGETATIVE! This standard clarifies that the surveyor does not need to depict the location of trees, bushes, shrubs and other natural vegetation unless they are deemed by the surveyor to be evidence of possession. So, items that are planted that appear to be part of adverse possession by a neighboring owner, show – otherwise, not.
4. ITEM 6(b)(x), NEARBY RESTRICTED PHYSICAL ACCESS. This standard requires that the ALTA/NSPS Land Title Survey show if there are any areas on the boundaries of the surveyed property where physical access within five feet was restricted (e.g., a fence on the neighbor’s adjoining property).
5. ITEM 6(a) and 6(b), ZONING INFORMATION TO BE PROVIDED BY CLIENT, NOT TITLE COMPANY. Zoning information is now required to be provided by the surveyor’s client, and not the insurer (as was true in the 2011 changes to Table A). You, the surveyor’s client, are now expected to provide: (i) a zoning report or letter, (ii) a list of the applicable current zoning classification(s), (iii) setback requirements, (iv) the height and floor space area restrictions, and (v) parking requirements. You can hire someone to provide it, but it is no longer the responsibility of the title insurer.
6. ITEM 8, SUBSTANTIAL FEATURES OBSERVED BY THE SURVEYOR. In addition to parking lots, billboards, signs, swimming pools and landscape areas, the surveyor is now also required to depict on the ALTA/NSPS Land Title Survey any “substantial areas of refuse.”
7. ITEM 9, PARKING AREAS. The surveyor is required to show (only) striping of clearly identifiable parking spaces on surface parking areas and lots (and not the striping of parking spaces within a parking structure). The surveyor needs to show the number and type of clearly identifiable parking spaces on surface parking areas, lots and in parking structures, though.
8. ITEM 11, LOCATION OF UTILITIES. The surveyor is responsible for attempting to identify underground utilities. The surveyor will attempt to locate utility plans, or make an 811 utility locating request, or seek information or utility plans provided from the surveyor’s client. If the surveyor is relying on a private utility locating service (which are deemed by ALTA/NSPS to be the least reliable source), then the surveyor will note such on the survey.
9. ITEM 13, NAMES OF ADJOINING OWNERS BASED ON CURRENT TAX RECORDS. The ALTA/NSPS Land Title Survey should show the names of owners of adjoining parcels, based on the current (property) tax records.
10. ITEM 18, DELINEATION OF WETLANDS. The ALTA/NSPS Land Title Survey should show the location of wetlands as they are delineated in the field by a qualified specialist hired by the surveyor’s client. Basically, this change places the duty on the client to hire a specialist to make the determination and mark the areas in the field. The surveyor’s duty is only to show on the ALTA/NSPS Land Title Survey what the specialist marked in the field as the wetlands. If a specialist’s flagging of wetlands in the field has not been conducted at the time the surveyor does its field work, a note stating that no flags were observed will be noted on the survey.
11. ITEM 18, NO NEED TO SHOW CERTAIN ENVIRONMENTAL AREAS) ON THE SURVEY. The former 2011 Table A required the surveyor to show any solid waste dump, sump or sanitary landfill on the survey. Those requirements have been deleted. The duty to identify these areas is now with the environmental assessment firms, and are part of the ALTA/NSPS Land Title Survey.
12. ITEM 19, OFF-SITE EASEMENTS OR SERVITUDES. If there are plottable off-site (i.e., appurtenant) easements or servitudes, the ALTA/NSPS Land Title Survey should depict them if they are disclosed in documents provided or obtained as a part of the survey pursuant to Sections 5 and 6 of the Minimum Standards, along with Improvements, as defined in Sections 6 and 6 of the Minimum Standards. The client is responsible for obtaining permissions from the off-site land owners/tenants/etc. for the surveyor to have access to do the survey work on the offsite easements or servitudes. However, the 2016 Standards delete the requirement (in the 2011 Table A) that the surveyor place monuments at the major corners of the off-site easement or servitude.
13. ITEM 20, PROFESSIONAL LIABILITY INSURANCE. This standard now provides that the surveyor will NOT put on the survey what professional liability insurance the surveyor may carry. Clients should verify for themselves what professional liability insurance the surveyor carries.
14. HANDLING OF LEGAL DESCRIPTIONS AND CERTIFICATION. The 2016 specifications continue the revisions for ALTA/ACSM surveys in 2011, which state the survey shall bear only the specified certification and preparing a new legal description is to be avoided unless deemed appropriate by the surveyor and insurer.

from JDSupra Business Advisor February 26, 2016,  by David Green of Stoel Rives LLP

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 27

Volume 27

If there are escrow funds on the Closing Disclosure (CD) and we disburse them after closing, does a corrected CD need to be prepared and delivered?
 
The following excerpt from the Rule is very clear with the answer to the question in the last sentence.
 
“3. Escrows held by closing agent for payment of invoices received after consummation.
Funds to be held by the closing agent for the payment of either repairs, or water, fuel, or other utility bills that cannot be prorated between the parties at closing because the amounts used by the seller prior to closing are not yet known must be disclosed under § 1026.38(k)(2)(viii). Subsequent disclosure of the actual amount of these post-closing items to be paid from closing funds is optional. “ [emphasis added]  Section 1026.38(k)(2)viii-3.
 
We are directed in the CFPB’s “TRID Guide to the Loan Estimate and Closing Disclosure Forms” that the disclosure of any escrow funds should be made in Section N on page 3 of the CD.

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

Elements of Title

The job of searching the public records to identify existing rights and interests is not an easy task. The title searcher or abstracter reviews the public records to find all aspects of title, which can be seen and recognized. From the title search, the title examiner produces an opinion of title, from which the Company will issue its insurance.

In many areas, the title to a property can be traced back to a royal grant, charter, or the United States government. In many areas, titles are not traced back that far; instead, local custom or title insurance company requirements dictate a shorter search.

There are few titles, if any, that have a perfect history from their source, or root, to the present day. Each transfer of ownership is a “link” in what is referred to as the “chain of title.” As each transaction or link takes place, there is a potential for a problem. Even if the entire chain of title appears to be in order, the chain is still subject to interpretation. When searching a title, what we are trying to determine are the various rights and interests that make up each link in the chain as it has passed from one owner to another.

A “title” is composed of three basic elements.

• Rights and interests that are disclosed in the public records or by physical inspection of the property, i.e., deeds, mortgages, leases, etc., parties in possession, utility easements, etc.
• Rights and interests that are not recorded but exist, i.e., limitations imposed by laws and statutes, etc.
• Rights and interests that are hidden, i.e., forgeries, secret marriages and unknown heirs.

Every title is made up of many different “rights” and “interests” that may be owned by different people. The “owners” of the property own the most valuable of the property’s rights and interests, but other people may also have rights to the property, such as easements for utilities or mortgages, etc.

Each title can be compared to sticks in a bundle. The rights and interests are represented by the sticks. The “owners” own what we call a “fee simple” title, that is, they have purchased the most vital and valuable sticks including rights of possession, use, occupancy, enjoyment, inheritance, etc. Also, within the bundle are sticks that may be owned by other parties. These are called encumbrances and may consist of easements, mortgages, liens, etc.

When a person purchases a parcel of real estate, it is not only the physical property itself that he or she acquires, but the sellers rights and interests, “the seller’s title,” in the property. It is essential for the prospective purchaser to know before the transaction takes place, precisely what rights or interests the seller can convey. The purchaser also needs to know who else may have rights or interest in the property, and about any encumbrances against the property that may affect the use or enjoyment of the land. The title search must cover all these rights and interests.

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 26

Volume 26

What are the procedures when something changes after closing?
 
Fee change: If a fee charged to the consumer becomes inaccurate within 30 days of closing and that inaccuracy results in a change to the amount actually paid by the consumer, the creditor must deliver or place in the mail a corrected Closing Disclosure (CD) within 30 days of knowledge of the inaccuracy.
Section 1026.19(f)(2)(iii).
 
Clerical change: If a clerical, non-numeric error is discovered the creditor must deliver or place in the mail a corrected CD within 60 days of consummation. Section 1026.19(f)(2)(iv). 
 
Tolerance level violation: If a tolerance level is violated, the creditor must refund the required amount to the consumer within 60 days of consummation and provide a corrected CD reflecting the refund within the same 60 day period. Section 1026.19(f)(2)(v).

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Old Republic National Title Insurance Company does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 25

Volume 25

Are title and escrow fees bundled on the Closing Disclosure (CD)?

Though we cannot give legal advice, we would like to share some of our observations taken from the TRID Rule regarding the bundling of fees on the CD.

On Page 25 of the Rule, the Bureau related the thought process used in developing the TRID disclosure forms, discussing the 2008 decision to prohibit itemization of certain fees. However, the Rule commentary states that the decision to combine fees caused confusion for consumers when comparing loan products and that many settlement agents were asked to breakdown the fees on separate addenda. The decision was then reached to require itemization once again. Of the CD the CFPB said, “The law further requires that the form conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement….”

Sections A (Services required by the lender for which the consumer cannot shop), B (Shop-able items required by the lender for which the consumer chose not to shop), C (Required services for which the consumer did shop) and H (Other) on the CD were reviewed as the sections where settlement and escrow services will be listed.

(1)    Origination charges. [Section A] An itemization of each amount paid for charges described in § 1026.37(f)(1), the amount of compensation paid by the creditor to a third-party loan originator along with the name of the loan originator ultimately receiving the payment…

(2)    Services borrower did not shop for. [Section B]  An itemization of the services and corresponding costs for each of the settlement services required by the creditor for which the consumer did not shop…

(3)    Services borrower did shop for. [Section C] An itemization of the services and corresponding costs for each of the settlement services required by the creditor for which the consumer shopped…

(4)    Other. [Section H] An itemization of each amount for charges in connection with the transaction that are in addition to the charges disclosed under paragraphs (f) and (g)(1) through (3) for services that are required or obtained in the real estate closing by the consumer, the seller, or other party,….

We offer this information to assist you in making a decision about combining fees for services required by the lender. The spirit of the Rule certainly leads one to believe that itemization of services is the preferred method of disclosure.

The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 24

Volume 24

Does an attorney fee for the consumer’s legal representation have to appear on the Loan Estimate (LE) and the Closing Disclosure (CD)?

When reading the Rule as it applies to the inclusion of attorney’s fees on the LE and CD we find that in order to meet the good faith requirement a lender must include an attorney’s fee “if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement…” Found in section 1026.19(e)(3)(iii) on page 1707.

Do I have to show the buyer’s purchase of the lawn mower on the CD?

As to the lawn mower and other such dealings, the Rule defines the items that must be shown in section H “other” on the LE and the CD as follows:

On the LE “an itemization of any other amounts in connection with the transaction that the consumer is likely to pay or has contracted with a person other than the creditor or loan originator to pay at closing and of which the creditor is aware at the time of issuing the Loan Estimate.” Found in section 1026.37(g)(4)  on page 1418.

On the CD “an itemization of each amount for charges in connection with the transaction that are in addition to [origination fees and lender required services] for services that are required or obtained in the real estate closing by the consumer, the seller, or other party… and the total of all such itemized amounts that are designated borrower-paid at or before closing.” Found in section 1026.38(g)(4) on page 1441.

Contact your compliance advisor when reviewing the above sections from the Rule before making a determination as to what you must disclose on the CD and when disclosure is not required.

This information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 23

Volume 23

How do I handle the situation if the consumer states that they never received the Closing Disclosure (CD)?

We answered this question in our FAQs some time ago but an interesting trend is starting to develop across the lending community.  Our original FAQ answer to the above question is in italics below:

Simply call the lender and tell them the consumer states that they did not receive the CD in advance and then inquire if the lender would like you to proceed. Remember, if the lender used the “mail-box method” of delivery (either mailing or emailing the CD seven days in advance); there is a presumption in the Rule that the consumer received the CD without requiring proof of receipt. Therefore, it is entirely possible that the lender met its obligation but the CD got lost in the mail/email.

Remember, it is not up to the settlement industry to police the delivery if made by the lender.

Since this FAQ was written, industry has heard that in order to make certain the three-day rule is met, some lenders may be issuing a CD soon after issuing the Loan Estimate (LE) at the onset of the mortgage process.  In some cases the initial CD is being delivered to the consumer 45 days in advance of settlement.  We find nothing in the written words of the Rule that prohibits this procedure though some may wonder how the inevitable changes and updates are handled. 

If the initial CD becomes inaccurate, the lender does not violate the Rule as long as the lender provides an accurate CD at the time of consummation. See §1026.19 (f)(1)(i)-1 on page 1718.If the APR becomes inaccurate (or a prepayment penalty is added or the loan product changes); however, the lender is required to meet the 3-day review requirement again. All other changes are permitted close to or at the time of consummation without triggering a new review period. 

What about tolerances?  Once the CD is issued, the lender may not revise the LE even with a changed circumstance; however, the lender, under certain circumstances, may avoid a tolerance violation by simply revising the CD.

Therefore, if the lender determines that there is a need for a change after the initial CD is delivered, the lender may send a revised CD reflecting the new fees and charges before or at consummation as long as the initial CD was delivered at least 3 business days in advance. How does the lender know what fees will be charged at consummation so far in advance?  Estimates are permitted as long as the lender has performed its due diligence to obtain the fees.  See 1026.19(f)(1)(i)-2(i)(B)(ii) on page 1720 where the Rule describes due diligence as “using the best information reasonably available even though the creditor knows that more precise information will be available at or before consummation.”

Specifically addressing the need to revise the CD after the initial was delivered without triggering a new three-day review period (except in the three circumstances mentioned above) is Section 1026.19(f)(2), page 1728  which states, “[I]f the disclosures provided under § 1026.19(f)(1)(i) become inaccurate before consummation….. the creditor shall provide corrected disclosures reflecting any changed terms to the consumer so that the consumer receives the corrected disclosures at or before consummation.”

Therefore when a consumer tells you they don’t recall receiving the CD, it is very possible they received it but it was so long ago they don’t remember. When confronted with this circumstance consider the FAQ recommendation (excerpted in italics in the second paragraph) before challenging the practices of the lender in front of the consumer.

This information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 22

Volume 22 – Updated Information Regarding Preparation of the Seller’s Closing Disclosure

Note: This information was originally published in TRIDBIT 19 on November 24, 2015. As implementation of the TRID Rule continues to evolve, we want to share additional information with you on this topic.

The lender insists on preparing the seller’s Closing Disclosure (CD). What do I do?

The Rule requires that the settlement agent provides the seller’s side of the CD.  If a lender is challenging the settlement agent’s right to provide the seller’s CD are they defining “provide” as handing it to the seller rather than preparing it?  One would think that the lenders would prefer to transfer the work involved to the settlement agent rather than do it themselves. 

If you are challenged with a lender insisting on preparing the seller’s CD, here are the pertinent sections in the Rule beginning on page 1740.

“19(f)(4)(i) Provision to seller.
1. Requirement. Section 1026.19(f)(4)(i) provides that, in a closed-end consumer credit transaction secured by real property that involves a seller, other than a reverse mortgage subject to § 1026.33, the settlement agent shall provide the seller with the disclosures in § 1026.38 that relate to the seller’s transaction reflecting the actual terms of the seller’s transaction.“
“19(f)(4)(ii) Timing Requirement. Section 1026.19(f)(4)(ii) provides that the settlement agent shall provide the disclosures required under § 1026.19(f)(4)(i) no later than the day of consummation.“

It’s important to make sure we know what the lender is saying in their communication as they may not be saying they want to prepare the seller-only CD in its entirety.  Remember, the lender is required to disclose any seller-paid fees that are in connection with the origination of the loan on the consumer’s CD; therefore, even in the bifurcated format some seller fees may show on the consumer-only CD.  The Rule requires the disclosure of all costs related to the borrowing of the money no matter who pays those costs:  the consumer, seller, mortgage broker, lender, etc.  As an example, if the appraisal fee is borne by the seller then it must show on the consumer’s CD in the seller’s column. The vast majority of lenders are not looking to prepare the entire seller-only CD; rather, they need to reflect the fees in accordance with the TRID Rule.

The liability for the accuracy of the numbers on the seller’s CD rests with the settlement agent. If the lender insists on preparing the entire document, be certain to obtain this instruction in writing. It would be prudent to establish a review and approval system with the lender so that the final seller’s CD is accurate.

Have the conversation with the lender early in the transaction.

This information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 21

Volume 21

When a transaction has two simultaneous mortgages are one or two Closing Disclosures used?

When conducting a transaction with two simultaneous mortgages, the primary lender will make the decision as to whether they will prepare one Closing Disclosure (CD) or two. The Rule discusses the disclosure and placement of the proceeds from the subordinate loan on the primary loan’s CD when two CDs are being utilized. 
 
Form H-25(C) shows the placement of the net proceeds from the subordinate loan in Section L on Page 3. The Rule specifically states if the subordinate lien is being credited as net proceeds, the principal amount should be listed on the same line. On Page 1073 of the Rule at § 1026.38(j)(2)(vi)(2) the following is cited:
 
“2. Subordinate financing proceeds. Any financing arrangements or other new loans not otherwise disclosed pursuant to § 1026.38(j)(2)(iii) or (iv) must also be disclosed pursuant to § 1026.38(j)(2)(vi). For example, if the consumer is using a second mortgage or note to finance part of the purchase price, whether from the same creditor, another creditor, or the seller, the principal amount of the loan must be disclosed with a brief explanation. If the net proceeds of a second loan are less than the principal amount of the second loan, the net proceeds may be listed on the same line as the principal amount of the second loan. For an example, see form H-25(C) of appendix H to this part.”
 

 
If the lender chooses to show both the primary and subordinate loan on one CD, the lender will determine how to disclose the costs associated with the subordinate loan. The spirit of the Rule for transparency leads us to believe that all fees will be set out separately with descriptive designations; however, your lender will decide.

This information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 20

Volume 20

If the borrower/buyer declines purchasing an Owner’s Title Insurance Policy, is there a way I can protect my company from the buyer later denying they were offered such coverage?
 
This is a very important question.  In areas of the country where the buyer pays any portion of the Owner’s Title Insurance premium, there is a requirement in the Rule to use the modifier “optional” on the Closing Disclosure when the premium is listed in Section H.  Remember, cash and commercial transactions do not fall under the provisions of the Rule; therefore, no modifier is required. Be prepared to discuss the benefits of an Owner’s Title Insurance Policy, which is the only protection consumers could receive for their interest in the property, as the Lender’s Title Insurance Policy is protection for the lender only.

Waiver

Some states currently have a statutory requirement that buyers must sign a waiver if they decline coverage; however, even if the state does not require it, you may want to consider having the consumer sign a hold harmless letter for you and your company/firm. Note: if your state has required waiver language, please check with state counsel to make sure your state doesn’t have a statutorily mandated waiver. If your state requires specific waiver language or a different waiver form, please disregard this new form.

Old Republic Title created a waiver template which can be printed or used in fillable PDF (with customizable fields – Date, Property Address, File Number, Premium Amount, and Agent Company Name). Please note that only the editable areas of the waiver can be modified. The “Waiver – Owner’s Title Insurance Policy” can be found in the following places on StarsLink:

1) Agent Services → Underwriting Practices Resource in ORT Bulletins or ORT/ALTA Forms & Endorsements sections; and
2) OR Title Guide → Bulletins or Forms sections.



The information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.