I've reported from time to time over the past year about Title Insurance Companies that have closed up shop; fallout from the overall collapse of the real estate markets.
Title Insurance provides critically important protection for property owners. Savvy Buyers insist that sellers provide a policy of insurance as part of every purchase transaction. It affords indemnity insurance against financial loss from defects in title to real property. It protects an owner's financial interest in real property against loss due to title defects, liens or other matters. The insurer will defend against lawsuits attacking the title. or reimburse the insured for actual monetary losses incurred, up to the dollar limit of the insurance policy.
Problem is, what happens when the title insurance company shutters its doors?
Contracts that are "in process" grind to a halt. Mortgage payoff checks or other checks issued from closings that are "in the mail" or otherwise un-cashed may no longer be good. Loans can go unpaid. Claims and Liens may not get released. If the company did not re-insure risks, policy holders may lose their insurance protection.
Past blawg reports detailed the demise of PLM Title, Guaranty Title & Trust, and LandAmerica. Now joining the on the scrap heap, are the late great local title agencies Absolute Title and LaSalle Title. Not quite ash-canned, (still fully operational) but certainly of note is a late-breaking announcement from Professional National Title Network. Details follow below.
Appears to have closed down operations, without announcements of any sort or advance warnings. It was, at one time, the largest issuing agent for Stewart Title Guaranty Company in the state of Illinois. Based in Schaumburg, it serviced a great many north-west suburban real estate lawyers, and had a strong market niche providing insurance for smaller condominium developers. According to one insider I spoke with, Absolute may have fallen victim to numerous instances of closings involving mortgage frauds.
LaSalle Title's phone number is disconnected and appears to have closed hastily in the wake of last week's federal indictments in which the US Department of Justice alleges that LaSalle and three other businesses allegedly schemed to obtain more than $10 million in loans on 70 residential properties in Chicago, resulting in losses totaling about $5.8 million to various mortgage lenders.
Professional National Title Network
PNTN is NOT CLOSED and is not in financial trouble (that I am aware of anyway), but its underwriter, The Florida based Attorney's National Title Fund may have been. attorney-agents were notified this week that the Florida Fund has formed a "joint venture" with Old Republic Title Insurance Company and that, going forward, they must all sign new agency agreements with Old Republic. As "the Fund" operates primarily in Florida, which was one of the epicenters of the recent real estate bubble. Apparently is suffered a substantial decline in surplus funds and was unable to continue operations. It will continue to cover claims on existing policies, but will not sell new insurance as an independent underwriter. The Fund's press release announcing the joint venture is here.
It has long been my practice to do business with only large, well capitalized title insurance companies to minimize the risks associated with a title insurer's collapse. My Seller-clients are assured that the insurance purchased for their Buyers is strong and can be reasonably relied upon. My long-standing practice has been to demand that other Sellers likewise provide my clients with insurance from reputable companies.
Please let me know if you have questions or concerns about your title insurance provider or your Chicago area closing. I will be happy to be of service