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Patricia Paruch, Kemp Klein Law Firm
Title Insurer Can Tender Deed to Insured Lender
By Phillip J. Neuman, Taubman, Nadis & Neuman, P.C.
The primary purpose of a lender’s policy of title insurance is to indemnify a mortgage holder from any losses it may suffer if it is unable to obtain good title to the mortgaged property at the conclusion of the foreclosure process. In JPMorgan Chase Bank, N.A. v. First American Title Insurance Company, 2010 WL 2720911 (Case 09-14891, ED Mich 2010), the title agent failed to record the mortgage for a mansion on Grosse Ile and there were other problems with title to the property. First American ultimately acquired title to the property and sought to convey it to Chase. Chase refused to accept title and both sides filed complaints for declaratory relief.
The District Court decided that the case “turns on whether First American can satisfy its obligations under the title policy by conveying title to the property to Chase” where the title policy did not explicitly provide for this remedy. The Court held that the title insurer satisfied the plain meaning of the title policy’s limitation of liability provision by transferring good title to the insured. The court disagreed with Chase’s argument that “establishing the title” meant establishing title in the borrower rather than the lender. Chase’s petition for interlocutory review is currently pending before the Sixth Circuit Court of Appeals.
This case has particular significance in the current economic climate. Under JPMorgan Chase, a lender’s policy of title insurance does not constitute a guarantee of value or collection of the loan proceeds. Accordingly, a lender may have to accept title to the property even if it has a lower than expected value and the borrower does not have the means to pay any deficiency after sale of the property.
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November 4, 2010
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January 13, 2011
New Broker Lien Law: Pay Me Now or Pay Me LaterBy Ingrid Szura , Jaffe Raitt Heuer & Weiss PC
On October 5, 2010, Governor Granholm signed the Commercial Real Estate Broker’s Lien Act (the Act), which enables licensed real estate brokers to attach liens for unpaid broker fees against commercial real estate if the broker has a written commission agreement and records the lien before the property’s conveyance.
Attorneys representing buyers and tenants must be especially vigilant against unpaid seller and landlord broker liens since the buyer or tenant may be forced to pay the lien to avoid loss of the property or eviction.