Minnesota Title Insurance A to Z Commercial Partners Title, LLC Jeff Peterson Mark Goodman 612-643-1031

2. COMMERCIAL PARTNERS
T I T L E, L L C
Market Update
Title Insurance

3. COMMERCIAL PARTNERS
T I T L E, L L C
Market Update
Title Insurance
What’s happening at a national and local level that’s impacting
the way we conduct business?
1. Numerous title insurance claims in a down market both in
residential and commercial real estate.
a. title insurance premium rates are increasing
b. title insurance coverage is declining
2. Title agent defalcation has increased. Agents have gone out
of business and underwriters are cancelling agents.

4. COMMERCIAL PARTNERS
T I T L E, L L C
Title Insurance Premiums are going up
•Title Insurance underwriters have filed new rates with
Department of Commerce. Rates in general are up by 10%.
•The standard 40% reissue credit has been replaced by a
refinance rate.
•Other states have filed and regulated rates. Texas and Florida
are six times Minnesota’s rates.

5. COMMERCIAL PARTNERS
T I T L E, L L C
Title Insurance Coverage’s
are declining
•The Creditors Rights Endorsements has been withdrawn by two
major title insurance underwriters.
•Early Start coverage has become a national focal point.

6. COMMERCIAL PARTNERS
T I T L E, L L C
Creditor’s Rights
Endorsement
• Purpose: Insures against loss if
– Mortgagor or Predecessor in title files for
Bankruptcy Protection; AND
– Bankruptcy Trustee challenges validity of
transfer as either a “Fraudulent Conveyance”
or a “Preferential Transfer”

7. COMMERCIAL PARTNERS
T I T L E, L L C
Early Start

8. COMMERCIAL PARTNERS
T I T L E, L L C
•Statutory Priority
•What is Early Start

9. COMMERCIAL PARTNERS
T I T L E, L L C
Mechanic’s Liens and Priority
Statutory priority No priority
Project Concept Planning Construction Ongoing Construction Construction
Begins Process Completed
Idea to develop
Action is commenced. The bold line Any contractor, subcontractor,
property. The last work is
Either internal or Represents the or supplier who complies with
Owner or purchaser
outside resources are “first visible the statue’s requirement can file performed by the
considering action. last provider.
used in the process. Improvement” a lien against the property if they
are not paid.
May be preliminary Architect and/or
surveyor may be hired SOME EXAMPLES; Mechanic’s Lien Statement must
Conversation with Finished carpentry,
and begin work. These Any use of heavy be filed within 120 days after the
lender or other painting, carpet
professionals have the equipment. last day of work to the project by
investors. May be and other final
right to file a lien if Delivery of materials that provider. After a lien is filed,
purchase agreement or items are being
they are not paid. The or equipment to the the lien claimant has additional
option if land is not completed.
effective date of their job site. time to begin the process of
already owned.
lien is the date that Site Preparation. foreclosing their mechanic’s lien
they begin working on Excavation.
the project.
If a lien is filed during the Beware of items on
construction disbursing the punch list. If
At closing, these bills property, either the matter must someone comes
will need to be paid in be resolved or funds must be back, that becomes
GREY AREA:
full for all services escrowed. their last date of
Demolition
provided to date. work.

10. COMMERCIAL PARTNERS
T I T L E, L L C
Early Start Approval
1. Loan Amount Land Soft Loan Amount
Cost Costs
2. Construction Cost
3. Soft Costs
Construction
4. Land Costs Cost
General
Contractor
5. General Contractor
6. Current Value Current
7. Improved Value Improved
Value Value
Review of
8. Review of Borrower’s Borrower’s
Financials Financials

11. COMMERCIAL PARTNERS
T I T L E, L L C Early Start
Loan Commitment
•Financial Req’s
•Loan Terms
•Closing Time
Lender
Contractor
Borrower
Construction Contract Early Start Approval
•Work Start timing •Terms for Coverage
•Pay to GC/Subs •Pay Subs
•% Pay vs. Work •Pay for
completed completed work
Title •Lien Waivers
Company

12. COMMERCIAL PARTNERS
T I T L E, L L C
Knowing Your Partners

13. COMMERCIAL PARTNERS
T I T L E, L L C
Title Agent Title Insurance Company
Underwriter

14. COMMERCIAL PARTNERS
T I T L E, L L C
Agent Benefits Title Company Benefits
•Ability to “shop” coverage •Underwriting Authority
and pricing
• still subject to limits and
need to go up the chain
•Value of your business
•Deep Pockets
•Closing Protection Letter

15. Old Republic National Title Insurance Company
COMMERCIAL PARTNERS
T I T L E, L L C
Closing Protection
Letter

16. COMMERCIAL PARTNERS
T I T L E, L L C
What is Title?
Fee simple title: The owner is entitled to the entire property, with unconditional
power of disposition during his life, and descending to his heirs and legal
representatives upon his death intestate.
- Black’s Law Dictionary
Ownership of real property consists of a variety of rights
and interests which apply to different aspects of land.
Collectively, these rights are called “fee simple title”

17. COMMERCIAL PARTNERS
T I T L E, L L C
What is Title?
• Possession • Statutory Liens
• Easements • Vendee’s Interest
• Leases (term of under Contract for
years) Deed
• Life Estates • Licenses
• Security Interest Liens • Rights to mine rocks
(mortgages) or minerals

18. COMMERCIAL PARTNERS
T I T L E, L L C
What is Title?
Marketable Title - Black’s Law Dictionary
Title which could be sold readily to a reasonably prudent purchaser
or mortgagee
Title which would be acceptable to a reasonable purchaser who is
informed as to the facts and their legal meaning, willing to perform
his contract, in the exercise of that prudence which business men
usually bring to bear on such transactions.
Title under which a purchaser may have quiet and peaceful
enjoyment of the property, free of material defects or grave doubts,
and reasonably free from litigation

19. COMMERCIAL PARTNERS
T I T L E, L L C
What is Title Insurance?
An Indemnity Contract between the Insurance
Company and the owner of an Interest in Real
Property, in which the Title Insurer agrees to
insure the Insured against financial loss or
damage that may arise from defects in the title
as insured, including the assertion of liens and
claims against the property that are not
otherwise excepted from policy coverage.
- Rande Yeager, ALTA President
April 26, 2006

20. COMMERCIAL PARTNERS
T I T L E, L L C
What is Title Insurance?
The Title Insurer will protect the insured
against financial losses caused by title to
the insured interest being other than as
shown in the policy.
Insurer may cure the problem
OR
Pay the insured the value of the loss, up to
the face value of the policy.

21. COMMERCIAL PARTNERS
T I T L E, L L C ALTA Policy Forms
ALTA 2008 ALTA 1992
ALTA
Homeowner’s Expanded
Short Form
Policy ALTA 1992 Coverage
Residential
Loan PolicyLoan Policy 2006 Residential
ALTA
ALTA 1996 Loan Policy
Residential ALTA 1970 Owner’s Policy 2008
ALTA
Limited Loan Policy Short Form
Coverage ALTA 2006 Expanded
Junior Loan Policy 1992
ALTA Coverage
ALTA Master
Loan Policy
Residential Owner’s Policy Residential
ALTA 1987 ALTA
Loan ALTA 1992 Loan Policy
Residential Short Form
Policy Construction
Title Residential Loan Policy
Insurance Loan Policy ALTA U.S.
Policy Limited ALTA 2000
ALTA 1970 Policy Residential
Coverage –
Owner’s Policy Loan
Junior
Loan Policy Certificate

22. COMMERCIAL PARTNERS
T I T L E, L L C ALTA Policy Forms
ALTA 2006
Loan Policy

23. COMMERCIAL PARTNERS
T I T L E, L L C Title Policy
• Schedule A: What is Insured
– Effective Date
– Amount of Coverage
– Interest Insured
– Fee ownership of Real Estate
– Description of Real Estate
• Schedule B: What affects that land that burdens the insured interest
– “Standard” Exceptions
– Easements
– Restrictions
– Covenants
– Senior security interests
– Leases
• Schedule B – Part II: What affects the land, but is subordinate to the
insured interest
– Subordinate Debt, Leases, etc.

24. COMMERCIAL PARTNERS
T I T L E, L L C
O&E –
Proceed with Caution

25. COMMERCIAL PARTNERS
T I T L E, L L C O&E
Owner’s & Encumbrance Report
• Limited Report ONLY • DOES NOT REFLECT
• Abstractor finds last – Whether last deed is good
recorded deed vested title
– Whether there are any
• From that point forward easements, etc. that have
pulls in unsatisfied been filed during the
monetary encumbrances search period
(mortgages, judgments) – Whether any matters
(monetary liens or
easements, etc.) from
before the last deed
continue to affect the
property

26. COMMERCIAL PARTNERS
T I T L E, L L C Junior Lien Policy

27. COMMERCIAL PARTNERS
T I T L E, L L C “Junior Lien” Policy
• CANNOT be used for commercial property
– Anything other than a 1-4 family residence
• DOES NOT insure against loss from
easements, encroachments, covenants, c
onditions, restrictions
• DOES NOT insure that title is properly
vested in the borrower

28. COMMERCIAL PARTNERS
T I T L E, L L C
Date Down
Endorsements
Modifies information on
all parts of the Title Policy
to make it current

29. COMMERCIAL PARTNERS Date Down
T I T L E, L L C
Endorsement
• Provides coverage from the original policy
date through the date and time the insured
modification is recorded
– Reflects what has occurred in the meantime
– Reflects how these items relate to your
mortgage

30. COMMERCIAL PARTNERS
T I T L E, L L C
Date Down
Endorsements
• Extends coverage • Critical When:
date to recording of – Additional Money
modification – Interest Rate Changes
– Reflects what has – Ownership of property
occurred in the changed in meantime
meantime – Assumption
– Reflects how these Agreement (borrower
items relate to your changes)
mortgage
• Appropriate at other
times as well

31. COMMERCIAL PARTNERS
T I T L E, L L C
Date Down
Endorsements

32. COMMERCIAL PARTNERS
T I T L E, L L C
Piggyback Date
Down Endorsement
Endorsement issued by
a Title Insurer
to Policy issued by
a different Title Insurer

33. COMMERCIAL PARTNERS
T I T L E, L L C
Piggyback Date
Down Endorsement
Modifies information on
all parts of the Title Policy
to make it current

34. COMMERCIAL PARTNERS
T I T L E, L L C
Piggyback Date
Down Endorsement
Coverage start date is
effective date/time of original policy
(or last date down endorsement)