Articles from The Massachusetts Focus
Newsletter of Stewart Title Guaranty Company, Massachusetts Offices
Spring 2002, Volume 1, Number 1
by Pamela Butler O'Brien, Underwriting Counsel
and Rose Whelan, Administrative Assistant
Policy Preparation Pitfalls
"Together with" are two of the most dangerous words in a title insurance policy. A title insurance policy, subject to its terms and conditions, insures the insured against loss resulting from four things:
- Title to the estate or interest described in Schedule A being vested other than as stated therein;
- Any defect in or lien or encumbrance on the title;
- Unmarketability of the title;
- Lack of a right of access to and from the land.
The insured property is the property identified in Exhibit A of the policy as further described in Exhibit A. The description used in Exhibit A should not be merely a copy of the deed or the legal description used in the mortgage. It should contain either a metes-and-bounds description or a lot description on a recorded plan. It should never contain:
- clauses beginning with "subject to," as these belong in Schedule B
- clauses beginning with "together with"
- "being clauses"
The words "together with" in Exhibit A have the effect of adding additional property to the policy.
Deeds frequently incorporate appurtenant easements with the language "together with." For example, a deed may recite that the property is being conveyed "together with a right of way." Unless the title to the right of way has been examined in addition to the property being insured, it should not be included. A right of way to a beach or as a easier means of access to the property is often quite valuable to the owner of the dominant estate. What is the value of property with direct access to the beach as opposed to property where the nearest beach access is a mile down the road?
"Together with" is also frequently used in condominium deeds in reference to parking spaces. If Exhibit A of the policy includes that language, insurance has just been provided that title to that parking space is vested as stated in Schedule A. A title search should have been performed to determine whether there is an exclusive use easement for that parking space, or whether it is a deeded parking space and to determine whether the space still exists, and whether the insured still has the legal right to use and to transfer rights in that parking space. Condominium developers frequently retain the right to reassign parking spaces. If the Exhibit A is simply copied from the first deed out, and subsequently parking has been reassigned, the insured may have a claim under the policy.
Although it may take a few extra steps to amend your legal description to fit the requirements of Exhibit A on the title insurance policy, it is well worth it. Potential claims and embarrassment may be avoided with a carefully written Exhibit A.
Numbers and Internet Sites to Know
Bankruptcy Automated System 617-565-6025
Provides voice activated information by name, social security number, or docket number.
Used to locate banks through closings and mergers.
Helpful in providing information on name changes.
For a fee they will obtain your payoffs for you.
Question: How do I calculate the premium on a refinance when the old loan was for $124,000.00 and the new loan is for $157,000?
Answer: The refinance discount rate is 40%. You calculate the new rate as follows:
124 x 2.50= 310 (This is the non-discounted rate for the original mortgage amount.)
310 x .6 = 186 (This is the sixty per cent of the original premium and reflects the reduced rate.)
157 - 124 = 33 (This is the new amount being insured.)
33 x 2.50 = 82.50 (This is the premium for the additional coverage.)
186 + 82.50 = 268.50 The New Premium!
Question: I'm remitting my policy to Stewart. What information should I submit in addition to the schedules?
Answer: Although not a requirement, a copy of the face page of the policy jacket that has the number on it would be appreciated. This will allow us to correct minor errors without calling the agent.