Stealing the Empire State Building

The New York Daily News tried to show that it is easy to "steal" property by filing fake deeds. The story is rather foolish, but if you want to read it: It took 90 minutes for Daily News to 'steal' the Empire State Building.

The reporters think that by filing a forged deed, they somehow could control the building and get a mortgage. Sure it is possible to try to steal money by going through this exercise. Of course you are just leaving a paper trail that makes it easy to figure out what happened and get caught. I could also jump into a car and drive off. That is stealing too.

What is wrong with the story? The property manager is unlikely to turn over the bank accounts to some unknown person just because they have a deed. Tenants are unlikely to redirect rent payments without more evidence of a transfer. A mortgage lender is not going to turn over loan proceeds based on mere deed. One reason to insert lawyers into the real estate conveyance process is to prevent scams like this.

Mortgage lenders demand lots of documentation because they try to avoid scams like this. Mortgage lenders get title insurance to protect against fraud and scams.

It was a stunt and created an interesting headline. However, someone is likely to pay a fine or go to jail for it. I am not a New York lawyer but I would guess that there is a law against filing fake documents.

Disclaimers
Image is by David Shankbone from Wikimedia Commons

Not Not Creating a Title Insurance Behemoth

The off and on combination of Land America Financial Group with Fidelity National Title Title is back again. LandAmerica press release: LandAmerica Signs Stock Purchase Agreement for Underwriters.

The two signed a merger, then Fidelity terminated, now they restructured the transaction again. This time, Fidelity is purchasing the Lawyers Title and Commonwealth Land Title subsidiaries.

The parent holding company and its 1031 exchange company are filing for bankruptcy. That sounds like bad news for anyone with cash sitting in a LandAmerica 1031 account. It turns out that the company had $290 million invested in auction rate securities as part of the its 1031 business.[Fitch Downgrades LandAmerica's IFS to 'BB'; on Watch Negative] Perhaps that is what Fidelity saw during its diligence and decided to cancel the original deal.

That means Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation will combine with Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title.

Its unclear how the transactions will impact employees and agents of LandAmerica, Lawyers Title and Commonwealth Title. David Stejkowski of the The Dirt Lawyer's Blog thinks it will be good for agents to "have the backing of the 800 pound gorilla in writing policies."

The combined company will have almost half of the real estate title insurance market, based on the Demotech Performance of Title Insurance Companies 2008 Edition.

See my prior posts:

• Not Creating a Title Insurance Behemoth
• Creating a Title Insurance Behemoth
  

Disclaimers

Not Creating a Title Insurance Behemoth

Fidelity National Financial, Inc. (NYSE: FNF - News) canceled its plans to acquire LandAmerica Financial Group, Inc. (NYSE: LFG - News) . The combination would have created a behemoth that controlled almost half of the title insurance market.

Under the agreement, Fidelity National had discretion to terminate the merger on or before Nov. 21 under its contractual due diligence termination right. Fidelity exercised that termination.

LFG's stock price plunged over 80% today on that news. On Nov. 10, LandAmerica reported in its third-quarter results that it was no longer in compliance with financial debt covenants and hadn't yet obtained waivers, putting into a growing list of companies with "growing concern doubts."

See also:

• Busted Deal Slams LandAmerica - Wall Street Journal
• So Much For That Merger - David Stejkowski of The Dirt Lawyer's Blog
• LandAmerica Moves Forward - LandAmerica Investor Relations
  

Disclaimers

Creating a Title Insurance Behomoth

Fidelity National Financial, Inc. (NYSE: FNF - News) and LandAmerica Financial Group, Inc. (NYSE: LFG - News) today announced the signing of a definitive merger agreement under which FNF will acquire LFG. [Press Release]

That means Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation will combine with Fidelity National Title, Chicago Title, Ticor Title, Security Union Title and Alamo Title.

The combined company will have almost half of the real estate title insurance market, based on the Demotech Performance of Title Insurance Companies 2008 Edition.


Disclaimers

Closing Protection Letters - New Forms

The American Land Title Association (ALTA), recently approved three new form closing protection letters. These new forms took effect on January 1, 2008.

• Closing Protection Letter
• Closing Protection Letter - Limitations
  
• Closing Protection Letter - Single Transaction Liability

Jon Anderson, Senior Title Counsel for CATIC wrote an article on these new forms and how they clarify the underwriter's liability.

The Closing Protection Letter is the broadest form. The Closing Protection Letter - Limitations imposes a specified dollar limit on the liability, although this limitation is not applicable to mortgage loan transactions for individual one-to-four family residential properties. The Closing Protection Letter - Single Transaction Liability is limited to a single transaction with funds not in excess of a specified dollar amount.

I always ask for a closing protection letter when using an agent to issue the title policy and handle funds (as opposed to using an officer of the the title company.)

The trouble with these new forms is that they limit the protection to damages relating to the status of title to an interest in the land or the validity, enforceability or priority of the lien of the mortgage. You are protected if the deed or mortgage is not recorded.

With these new forms, you are not protected for the closing or settlement services being provided by the title agent. Clearly, an over-funding of the purchase price will not fall under the protection of these new closing protection letters.