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our main presenters David public Nellie he is a nav af-s licensed private investor board of directors of meltia which is the National Association of land title examiners now instructors for the next row witness for the department justice so he's a really great expert in the field to help us out here so take it away thanks Dave good morning everybody appreciate you having the opportunity to talk to you each of you we're gonna go through some basics of what a title search is and most importantly why it's valuable to the insurance claims professional and then the last question is what do you look for on a title search what do you use the different aspects of a title search for and how it can be used on the claims process I'm gonna ask also Dave and Carol both you can mute your mics or some background noise that I'd like to eliminate absolute aving care of you both mute your microphones the first thing is what is a title search a title search in a professional use is not electronic search is not a database search it's actually a process of retrieving actual physical paper documents from land records offices title records are kept in paper format their hard copy documents each event in the history of that property a transfer a mortgage a lien as a piece of paper that signed evidencing debt events and it's recorded in different locations at the city county state and federal level and the title search is the process of retrieving each one of those pieces of paper and then creating the certified title abstract that's the official document of a title search it's done by a title abstract they're visiting all those physical locations in person and then creating that document so let's jump to the next line take a look what are the five most common reasons why a title search is performed for the insurance claims industry first is to verify ownership to make sure that the in word is the owner of the property has an insurable interest in that property in this day and age of short sales foreclosures and other even quitclaim deeds you're insured may have not had insurable interest or ownership in that property at the time of the law so verifying the dish still the owner making sure that if it's a commercial property that the right entity owns the property and it's not a different corporation number 2 is to see if there's any mortgage and conferences to see if there's any lenders that have a significant interest in a property that may be an additional insured at ditional lost baby on the policy and you want to make sure it's the same lender which is currently on title of a refinance would change the lender and that may not be reflected in underwriting even a mortgage release or mortgage assignments from one lender to another might change the additional insurance on a loss B so those are things that may be reflected at the original underwriting but over the course of ownership of that property might have had changes during the course of that that policy being in place number three is to discover liens are there any major lien holders that have claim to the property could be an IRS tax lien might be a mechanic's lien those are important items to consider in handling that claim may not change payment payout of the claim but it may involve if it's a significant enough lien the lien holder being part of that claims process to make sure that their interest is handled also if it's a mechanic's lien sometimes that might indicate recent repairs or recent work on the property we recent upgrades sometimes that affects the claim because it may be the origin of the claim number four is to look for third-party interests or there are other co-owners and the property people who have come on title during the ownership and I've had you know may have an interest in the property sometimes those third-party interests have their own policies on the property we've seen examples where additional owners have come on title since original underwriting they have their own insurance policies which may give an opportunity for subrogation or that insurance might be even in place on top of the covered policy that's being handled in the claim adjustment and number five evidence and fraud is there any recent activity that could indicate fraud of other significant judgments liens that may be expanding that claim where the original damage was a certain amount and the claim is expanded because of fraud the bottom line is that you want to avoid we're having to write that check twice where you write it to one party and then come to find out somebody else has an interest in the property I'm going to repeat two of daven care of you both check your microphones I'm getting background noise from somebody's office so if Dave and Kara both you could mute your microphones and make sure that stuff so we don't get that background noise that'd be great so this is what a title search looks like the official land records are paper documents and books the recorded in chronological order what that means is when a document is brought to the Land Records Office for recording it's put in the book in the order - its presented to that clerk so let's say a document is brought in for 12 Main Street it goes in a book on a certain page and then if five minutes later another document is brought in for 14 Oak Street that'll go in to the land records at the next page it won't be grouped by property it won't even be grouped by owner name it'll be grouped how it comes into the land records so to find the documents for particular property you start out with the name index and then find what books and pages have those documents we even have to go up and down these rows like you're seeing this picture of files and books until we can pull out all those records that may have included events in the history that property that's the first step so let's jump to the next slide which shows the title search process title search process is ten or fifteen steps and it starts with the incoming inquiry that's where you as a claim professional will submit to us the property address maybe the legal description something that identifies that particular piece of real estate and we start by preparing the investigation we determine what county is located in where the records are going to be held and we and we get an idea of where we start to describe that ownership you may have an insurance name now if not we can look up the ownership possibilities from the assessor's records from they're going to source the documents we're going to find out where are all the four or five locations that need to be visited for that property if it's in most states that's going to be at the county level there's four locations at the county level the tax assessor's the clerk of recorder the civil court judgment records and then the probate records each one is a separate courthouse at maximum sometimes it's in the same building but different offices but usually there's separate buildings all together in each one of those locations may have documents that could go into the title at the state level there's also the secretary of state which may have UCC records that may need to be looked at number five is document retrieval that's where we will visit those five locations and pull all of the records that correspond with that name in that property usually at each location there's 50 or so documents need to be pulled it could be an old mortgage could be old liens every document every record that could pertain to that property is pulled to begin with and then from there we go to the abstracting phase that's where each one of those pieces of paper is read front to back each page is read to see what it actually means now what are the effects on title from that mortgage lien judgment deed whatever the case may be and then the certified title examiner will create that official title abstract that's where one mortgage is cancelled out by one release document or mien is canceled out by an assignment or whatever the case may be and then the official title abstract will list what is remaining on that property what has standing on that property and what is the order of priority for those claims once the certified title abstract is created it goes to quality review and the certified title examiner will take a look at it to make sure that all the important elements of the search are there that the legal description matches up on all the documents that the names have all been checked properly and then it's delivered to you the client it's scanned into a PDF file usually a title abstract is seven to nine pages and it scans a PDF file and then sent to you by email of course or follow-up we have a customer relations Department set up specifically for the professional claims industry so if you have a question when you receive your search you can call us up and we can pull it up on our screen what does it look like well here is an example of a title search it's got four main sections the first one is the ownership information next one is the tax information then you'll have open mortgages liens and other information and we'll go through those one by one let's look at the next slide the ownership section is important to look at for a claims use to make sure that the property address is the same that's on the policy we've had some where the address is similar but at the same address there are two legal parcels and we make sure that the legal parcel that is performed on the search matches up with now you can make sure it matches up with your claim we've had situations where we run a title search on the insured property and come to find out it's different from where the loss occurred the loss may have occurred on that property but not on the legal section where the coverage was in place is your insurance still currently on title was there a foreclosure or quit claim is the policyholder fully vested other other owners involved and if they are what is their interest in the property however any name variations in many cases if a person has been married divorced sometimes there's a trust that's been put as vested owner the property on commercial properties there may be different legal entities different LLC's different corporations that may own it and you can match that up with your underwriting to make sure that you're insured actually owns the property and along with that ownership information you're going to see that the current deed will be listed as backup that will show you when the owner took title what the date of that title transfer was the instrument booking page number and what type of deed it was was it a warranty d the quitclaim deed a sheriff's deed or some other type of instrument we'll also show you the completed date of that search so you know when the active date of that title occurred and also you'll see a day called the effective date and what that means is at each County when you bring a deed or mortgage or lean in for recording they have their update of the grantor granting index usually around the same time if you're bringing different recording they'll probably get in their system within a day or so but some counties if they get backed up will have some deeds and liens and mortgages that don't even get into their system for three or four days maybe a week there's the time during the foreclosure boom when some counties notoriously Wayne County in Michigan where Detroit is is eight months behind so we'll put the effective date so you'll know how active those documents are let's jump to the next slide this is the mortgage section this is a really important section to take a look at because not only will it show who the current mortgage holder is but it also show the mortgage assignments so if let's say Wells Fargo originally had a mortgage but they signed it the nation r2 Bank of America that will be reflected you may see Wells Fargo still as the mortgage holder on your underwriting and the policyholder may still be paying Wells Fargo but behind the scenes Bank of America might be the actual lien holder if it's been transferred through MERS the Mortgage Electronic Registration system will look into mur so we see if there's any assignments off title in that electronic system we'll also look to see is our second mortgage sometimes there'll be an additional mortgage done after the underwriting and maybe a line and credit maybe both and we also check to see if the mortgage priority has been changed that the second mortgage jump in front of the first mortgage because of the recording date and that mortgage assignment will also be reflected most important to see if there's any changes since the policy was underwritten now you'll know who the correct additional insurance or loss payee is if that's applicable let's take a look at the next line so on the bottom of that first title abstract page will be what else is reported you're going to see property taxes showing how much the taxes are when they're due and are they being paid sometimes you won't find a tax lien out of property until a tax account is not paid for one or two or three years now some counties don't record a lien for some period of time but the taxes may still be delinquent that might be an important thing to know I know that a lot of the siu departments will take a look at that to see if a claim is being inflated or expanded a lot of one of the red flags is are they paying their property taxes on that piece of real estate are there any recorded liens including federal tax liens that's an important thing to look at a federal tax lien for non-payment of income taxes is technically not a lien against the property it's actually a judgment against the person it's normally filed in the civil court section of the record system not as a lien against a property so if a title searcher is not familiar with what tax lien is going to be recorded they may just look at the recorder of deeds office and you all find a federal tax lien there in many counties you're going to find it at the civil court records office or some states of inflammatory Records or some third area to look at in the system are there any related civil judgments is there a small claims lawsuit pending or not are there any credit-card lawsuits or delinquencies we're going to look at UCC filings so then business fixtures on the property the business picture is important to know because it may indicate a business use of that property if somebody borrows money to buy equipment or tools and there's a UCC filing for those at that property address that may indicate a business use easements on a property are a form of transfer of a right of use it's not a transfer of the property but for example if somebody has a landlocked parcel that's not a budding a road and they negotiate to use a right-of-way over another property that creates an easement and that easement is recorded in the land records it's important to know because we actually discovered for a client that there was a loss which occurred because of a vehicle which impacted a structure on a property and of course you know that was a payable claim and it was investigated and handled but as part of the title search we discovered that the driveway where this vehicle entered from was part of an easement to use by an adjacent property owner it created an opportunity to subrogate against that property owner because their use of the eastman actually created the circumstances that caused that damage the looking for easements is an important thing to know and who maybe be dressing and in dressing that property are there any divorce or probate records that create co-owners or heirs to the property that might be important to know for the claims process and any evidence of fraud other recent mortgages mortgage increases liens judgments or even pay downs that happen recently on the property might be important to know about federal tax liens and state tax liens are are very very common on properties let's take a look and see if we have any questions Dave I don't know if you see any questions from the panelists I need to leave they're some of the common questions we see but are there any other ones before I get to these yeah there are actually a couple of people asked on the same topic so I guess it's just a further plain if you would what MER is a good question in the late 1990s many of the popular lenders they were big at the time discovered that they were very frequently transferring mortgages amongst themselves so if one lender had a portfolio of loans that they wanted to sell to another lender they would have to do a mortgage assignment document for each one of those loans and a mortgage assignment is like any other recording is like a deed or lien it has to be executed signed notarized brought down to the courthouse recorded in the land records which incurs a fee and it's a very complicated process so they came up with this system of an electronic registration system where they record the original mortgage under the name of MERS Mortgage Electronic Registration system that's what goes on the official title and then behind the scenes this MERS system can transfer these mortgages back and forth between lenders without having to do a second mortgage assignment in the land records and to save them millions of dollars in fees for recording these mortgage assignments the complication it creates is you never know who the actual mortgage lender is behind the scenes so on the official title records if it'll show MERS but of course MERS isn't really a bank they don't lend money they don't collect payments it's hard to find that out so that Mortgage Electronic Registration system had good intentions but it did create some complications if you're in a position of needing to know who the mortgage lender is such as in an example of the claims claims handling adjustment process hopefully that helps once you've got I do want to open it up and keep it keeps no one else has any more questions please do just type them in on the right hand side one that just came in right now is why would the owner of the property be different from our and insurer yeah that's a really good question that comes up occasionally where we run a title search and the name that's showing on title is different from what the insured is in some cases it may be that there was a transfer a quitclaim deed to a family member or relative in some cases it may be that there was a somebody got married in their name change or divorce than the name change the most common reason is that there was a recent on unknown property transfer of let's say a foreclosure or short sale and it may have occurred after the the claims event or after the the damage occurred but if there was that transfer and it had reached underwriting yet now the question comes in was there coverage on the day of transfer that's why in that ownership section we'll show the date and type of transfer so you as a claims professional can match it up and underwriting to see was there coverage at place was there an insurable interest by your client in place at the time if I can interject also the other time I see that often is with commercial property where it could be on the policy is gonna be you know John Smith is who they're insured is but he's opened up a company which is 1 2 3 Main Street LLC and that that company owns that property on the on the deck page it's gonna show him as an individual so I see that comes up from time to time as well and then it looks like we have one last question then this is again about mortgages who owns a mortgage assignment yeah that's a good point let's say when Bank of America assigns a mortgage to Wells Fargo officially Wells Fargo owns that mortgage now in some cases the transferring lender will retain servicing rights so they are still receiving the payments they still send out invoices on the surface as far as the borrower or the homeowners and takes into account they're still with that same original lender but behind the scenes they actually ownership of that mortgage is officially who is the assignee of that document and they own that asset that mortgage asset 100% even if the payments are going to somebody else but that happens very frequently perfect I think as far as the questions go that's all that we have that came in so I wanted to thank you Dave for taking time to present today and share your knowledge with everybody and everybody who joined us on the webinar thank you for your time and interest in this we have on this last slide is there some kind of common questions people ask us for the webinar so just wanted to put them up there now that just the basic things that how the reports are turned back at the PDF attachment standard turn on time things that's all on on the slide so thank you guys so much for your time and joining us if you have any additional questions we didn't have a chance to get to please feel free to email me I think most of you have my contact information if not it's on the slide there I'm happy to answer any questions you might have or we also like to get feedback from you on when you get the reports from us there anything we can do to help make it more beneficial to you whether it just be something as simple as formatting the method we get it to you the order of the information is just anything any feedback like that were always open to so thank you all again for your time and thank you David for for presenting thing I appreciate everybody showing up and like Dave said if there's anything in the use of the reports that we can help with or make it easier for you to process that claim certainly let us know we really love helping out you know our colleagues in the claims adjustment industry