April, 1972 A Message from the Chairman, Title Insurance and Underwriters Section

APRIL, 1972

The recent Mid-Winter Conference of the Association generated the largest registration of all mid­ year meetings to date. Obviously, many factors contributed to this manifestation of interest and de­ sire for participation in the affair of our Association, including the attractiveness of a dynamic eco­ nomic and cultural center such as the beautiful city of Atlanta. However, I rather suspect that the greatest motivating force that served to stimulate this mass migration of title men and women to Atlanta was their sincere concern over the unprecedented and undeserved attacks recently directed against our industry from the Capitol Hill scene, and their firm resolve to unite in its support and defense. Those of us who are cognizant of the substantive and meaningful contributions made by our in­ dustry to the general economic progress of this nation; who understand the complexities involved in the ownership, transfer and financing of interests in real estate and the consequent need for the precise and invaluable services and assurances afforded through our industry endeavors; and who are acquainted with the dedication and professional integrity that characterize the overwhelming majority of our individual members, should not hesitate to make our beliefs known and our voices heard. The current national interest in consumerism is sound and logical and is certainly compatible with the precepts and principles that have historically undergirded our industry. As a result, our past has been noteworthy with achievement, and our future is filled with countless opportunities for profitable growth and development.

Sincerely,

Robert C. Dawson FIRST MAJOR "BREAN-THROIJGH'1 IN 2S YEARS IN REAl ESTATE TABlES! NEW INTEREST RATES INCLUDED

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Write today for your complimentary copy PROFESSIONAL PUBLISHING CORPORATION 55 MITCHELL BOULEVARD • SAN RAFAEL, CALIFORNIA 94903 t was a proud and inspiring occasion. Hundreds were I assembled in Fairfax County, Virginia, March 12 to dedicate a magnificent new $8 million secondary school named in honor of Army Sgt. James W. Robinson, Jr., first Virginia resident to receive the Congressional Medal of Honor for Vietnam valor that in 1966 cost him his life. For those present-including ALT A Board of Governors Member James W. Robinson, Sr., and wife Alice-one thing was apparent that sunny March afternoon. By its name, the James W. Robinson, Jr., Secondary School already was endowed with a tradition of honor and leader­ ship for generations to come.

T lltle News thf:, vfftl1.Jf µutl11.cJf1t r AmeflL n land Title A c;.s Jr.1at1un

Association Officers Fe a tu res President John W. Warren Albright Title & Trust Company Outlook: HUD-VA Settlement Cost Regulation 4 Newkirk, Oklahoma

Vice President Price, Reiner, Struthers Star on Radio Spots for ALTA 6 James 0. Hickman Pioneer National Title Insurance Company 'Grassroots' Los Angeles, California to Northwest 7

Chairman, Finance Committee Part Ill: ALTA Judiciary Committee Report 9 Hale Warn Title Insurance and Trust Company Los Angeles, California

Treasurer James G . Schmidt Commonwealth Land Title Insurance Company Philadelphia, Pennsylvania

Chairman, Abstrncters and Title Insurance Agents Section James A. Gray Departments Fidelity Abstract & Guaranty Company Benton, Arkansas Names in the News 11 Chairman, Title Insurance and Underwriters Section Robert C. Dawson Meeting Timetable 16 Lawyers Title Insurance Corporation Richmond, Virginia

Immediate Past President Alvin W. Long Chicago Title and Trust Company Chicago, Illinois

Association Staff

Executive Vice President William J. McAuliffe, Jr. ON THE COVER: Sally Struthers and Bob Reiner (left), stars of CBS Television's "All in the Family", and Vincent Price, the interna­ Director of Research tionally-known actor, are featured on the 1972 ALTA home buyer Michael B. Goodin education radio announcements. For details, please see page 6. Director of Public Affairs Gary L . Garrity

Business Manager David R. Mclaughlin VOLUME 51, NUMBER 4, 1972 Association General Counsel TITL/o· NEWS is p11/Jlis!iC'd by American Land Title Association, Thomas S. Jackson 1828 L Strret, N.W., Jackson, Gray & Laskey Wa~liingt o n, D .C., 20036; (plwnc) 202-296-3671 1828 L Street, N.W. Washington, D.C. 20036 GARY L. GARRITY, Editor, ELLEN KAMPINSKY, Assistant Editor Robert Horn, Program Analyst Department of Housing and Urban Development

Outlook: HUD-VA Settlement Cost Regulation

1971. (Editor's note: This article is in evaluating the- recommendations ance or guaranty during March, adapted from an address presented at contained in our report. We were The data were transferred to a code designed the 1972 ALTA Mid-Winter Confer­ faced, at the outset of the study, sheet that was specifically ence in Atlanta.) with the need to define settlement for this study. Several computer pro­ costs. In line with our understanding grams were developed to analyze the * * * of the intent of Section 701 of the data. These programs included highly enabled appreciate your invitation to dis­ l 970 law, we defined "settlement sophisticated techniques that in sales cuss the problems of mortgage costs" for the purposes of this study us to adjust for differences I the effects of settlement costs and to describe the as " the sum of closing cost items, price and to analyze such as legislative and administrative actions loan discount payments or mortgage up to six variable conditions, and the that HUD and the VA plan to take points, prepaid items and sales com­ the location of the property in order to correct the serious abuses missions." "Closing costs"-which are kind of title assurance required. from that have arisen in this field. part of "settlement costs"-were de­ Settlement costs varied widely same As you are aware, our depart­ fined to include all charges paid at place to place, and even in the survey ment, together with the Veterans settlement for obtaining the mortgage locality. National data from our was sold Administration, has just completed loan and transferring real estate title showed that for a house that to $24,000 price and submitted to the Congress an including, among other items, the in the $20,000 costs paid by extensive study and report on the credit report, title examination and range, total settlement se ll er ranged subject of mortgage settlement costs. insurance, attorney fees and escrow both the buyer and to a This report was called for by Section fees. from a low of less than $200 Closing 701 of the Emergency Home Finance In developing the report we col­ high in excess of $5,000. range varied Act of 1970. lected data for over 25 separate cost costs in the same price First, I would like to summarize items. The data were compiled by all from less than $50 to nearly $2,000. data might how the settlement cost study was HUD and VA local offices on a Variations in national conducted since this will be helpful sample of cases submitted for insur- be expected, hut extreme variations

4 APRIL 1972 in costs also were found within lo­ back to the colonial period. As real personal search, is the most expen­ calities as well. For example, in Los estate became more valuable and the sive form of title search, averaging Angeles County, total settlement types of interests in real property almost twice as much in cost as ab­ costs for a house sold in the $20,000 more diverse the recording process stracting or personal search alone. to $24,000 price range varied from became more complicated. There arc The difference between the least ex­ less than $1,000 to nearly $4,400, approximately 3,000 counties or their pensive (abstracting or personal and closing costs ranged from about functional equivalents in the United search) and the most expensive (title $200 to almost $1,000. In Washington, States. This means that not only is insurance alone or title insurance D. C., closing costs on a $20,000 to administration of public records with personal search) is smallest in­ $24,000 house ranged from $487 to heavily decentralized but there are side SMSA's but still ranges from $1,030; in Cook County, Illinois, inevitable variations in details and less than one per cent of the sales they ranged from a low of $102 to caliber of administration. Some coun­ price to slightly more than 1.5 per a high of $723; and in Ramsey ties do a good job, some a very cent. County, Minnesota, from $154 to poor job; and the quality and meth­ Total settlement costs vary by $621. ods of operation tend to vary with geographical area primarily because population size, number of land par­ Similar variations were found in of differences in tax escrow require­ cels in the county, local real estate all of the areas that were studied m ments. transfer tax payments, pre­ activity, competence of local govern­ detail for the report. vailing sales commission rates and ment personnel and the nature of mortgage market conditions. The settlement procedures are Since state statutory provisions pertaining northeastern states of Maine, New governed by local custom, an analy­ to public land records. As is to be Hampshire, Vermont, Massachusetts, a thorough sis of these costs required expected, public recorders' offices Connecticut, and Rhode Island have of the underlying local knowledge differ greatly in the volume of docu­ the lowest average settlement costs. procedures. conditions affecting such ments handled and the size of their The remaining northeast area from HUD Jn order to gain this knowledge, document accumulations. Recording New York to Virginia has the highest and VA awarded a contract to the offices in sparsely settled rural com­ total settlement cost 'averages. American University in Washington, munities have relatively few land Total closing costs do not vary as D. C., to conduct an extensive in­ transactions. These offices may have costs; but do vestigation into real estate convey­ only a few document books. At the widely as settlement patterns. ancing methods and state and local other extreme, offices in the great display similar geographic Jersey, Pennsylva­ legislation affecting real estate in 11 metropolitan counties are vast and New York, New , West Virginia, Virginia, Mary­ counties in major metropolitan bu y places housing large staffs of nia Delaware, and the District of areas in diverse geographic regions, employees, the hundreds of thou­ land, Columbia 'again have the highest and in the District of Columbia. The sands of new recordings which come costs in all categories. Ac­ counties included the cities of Boston, in annually, and tremendous collec­ average the northwest area in Newark, Chicago, Indianapolis, St. tions of past recordings maintained companying the lowest cost category are the Paul, St. Louis, Jacksonville, San for public inspection. Searching the plains states of Nebraska, Kansas, Antonio, Los Angeles, Denver, and public records is a complicated and and Missouri. Total average Seattle. Th e complete American technical process. Under the current lowa, closing costs in these two regions University study was submitted to the system the method by which 'a pro­ are more than $450 below those in Congress as a supplement to the fessional title examiner establishes the highest cost area. HUD-VA report. that title is free from objectionable Our analysis of the data obtained encumbrances or restrictions is often Examination of buyer closing costs from the HUD and VA survey, the considered the cornerstone of a con­ shows different results. The north­ American University report, and our veyancing transaction. The four basic east area, although least expensive discussions with the law professors methods of title proof used through­ for total closing costs is the most and other experts and representa­ out the country are: expensive in the buyer closing cost tives of the various interest groups I. a commercial abstract plus a category. According to local custom led us to the realization that high lawyer's title opinion; in the area, the buyer is responsible for many more items of costs than settlement costs as well as other prob­ 2. a lawyer's opinion alone-often in any other part of the country. lems of settlement stem in no small called the personal search Conversely, the southwest is the least part from basic inefficiencies in method; the existing system of conveying, re­ expensive for buyer closing costs but 3. either the first or second method cording, and assuring the validity of is near the national average for total plus title insurance; title to parcels of real estate. closing costs. This variation is partly 4. title insurance alone. due to the larger proportion of Sec­ The system of recording real estate tion 235 cases reported in this region titles currently in use by most of the Our findings show that title insur­ counties throughout the country dates ance alone, or in combination with Continued on page 12

TITLE NEWS 5 ally Struthers and Rob Reiner, man of the Senate Housing Subcom­ S stars of CBS Television's top­ mittee, and Beverly Garland and Lloyd rated show, "All in the Family", and Nolan, television stars; and the pre­ Vincent Price, the internationally­ ceding year starring television's known actor, are featured in the Lorne G r e e n e-each have been 1972 ALTA home buyer education broadcast by hundreds of stations in public service radio announcement all states. package being placed in nationwide In the 1972 ALTA package, a distribution this spring. 60-second Struthers-Reiner spot is The announcements call buyer at­ acted in character as the young tention to the importance of learning married couple they portray on the the facts on purchasing real estate "All in the Family" show. It begins -including land title protection­ with Reiner, cast as an unemployed before closing. In each announce­ college student, proudly exclaiming ment, buyers are advised to write over his latest grades. Struthers ALTA for free information on agrees the marks are excellent and things to know in purchasing a home. suggests the couple begin plans to buy a home of their own. Reiner Besides the trio of celebrities, the reminds her that he has not grad­ PRICE, package also includes a 60-second uated and has no job. Undaunted, recording based on an original mu­ Struthers says she has been reading sical theme composed for ALTA. In that people should learn all about REINER, an easy-swinging, modern score, a home buying in advance and, if they talented male trio opens by musi­ start studying now, they should be cally advising home buyers to, "Find prepared when Reiner graduates and your place under the sun . . . a finds employment. Reiner agrees and STRUTHERS home is that special place . . . its suggests, while Struthers is learning charm and its grace . . . are part about mortgages, she check into her of the good life." An instrumental father's financing to see if he will group continues as an announcer ad­ loan them the down payment. STAR vises learning the facts on purchas­ ing a home in advance, and, writing Struthers and Reiner team on a ALTA for free information, before second, 30-second announcement to the trio closes by singing the letters, remind that purchasing a home is ON RADIO one of the most important things "A-L-T-A". that's "all in the family" and is the Also in the announcement pack­ largest investment most people ever SPOTS age, which was developed as a part make. They close by suggesting of the ALT A Public Relations Pro­ study of the details on purchasing gram, are a 30-second spot for coun­ real estate in the buyer's community try and western stations; a 10-second before closing. spot designed for larger stations with FOR ALTA In one 30-second spot, Price is crowded schedules; and a 30-second characterized in his familiar role as production spot that starts with a a master actor in horror movies. quote from the Constitution of the Against a background of eerie music United States, reminds that our free­ and with voice in an echo chamber dom as Americans includes the right effect, he reminds that all haunted to own land, and advises home buyer houses are not like the ones seen in protection against possible claims by his motion pictures. Price follows by others against a home a buyer may pointing out that a home about to be think he owns. purchased may seem quite attractive, The ALTA announcements, pro­ when it actually is threatened by land duced in conjunction with AAVP title hazards that could cost the buyer ADS Audio Visual Productions, Inc., money and perhaps even the real Fairfax, Va., are being distributed to estate itself. He closes by urging some 5,500 stations from coast to buyers to protect themselves, and coast. Similar ALTA radio spot pack­ suggests writing to ALTA for free ages-last year featuring Senator information. John Sparkman of Alabama, chair- Continued on page 14

6 APRIL 1972 Gary L. Garrity AL TA Director of Public Affairs

'Grassroots' to Northwest

ederal legislators and regulators was initiated in December, 1969, Title Co., Roseburg, Ore.; Lane F looking for examples of effective and since has included ALTA staff County Title Insurance Company, state regulation of the land title indus­ v1s1ts to Association members in Eugene, Ore. ; Transamerica Title In­ try should visit Oregon and Washing­ Florida, Texas. Oklahoma. Missouri, surance Company, Albany, Ore.; Un­ ton, ALTA members in those states Kansas, Arkansas, Iowa, Minnesota, ion Title Division, Commonwealth told this writer during an early Feb­ North Dakota, Colorado, Utah, Idaho, Land Title Insurance Company, ruary "Operation Grassroots" visit to and Montana. Plans for additional Salem, Ore.; Wasco County Title of the northwest. "Grassroots" activity now are in Oregon, Ltd.. The Dalles, Ore.; Ten ALT A member offices were progress. On the next trip, Michael Transamerica Title Insurance Com­ visited on this latest "Grassroots" 8. Goodin of the Association staff pany, Portland, Ore.; Pioneer Na­ trip, scheduled as a means for de­ will talk with members in Nebraska, tional Title Insurance Company, veloping an up-to-date picture of in­ Wisconsin, Michigan, and Indiana. Longview. Wash. ; Transamerica Title dustry needs and trends as viewed Companies visited on the recent fnsurance Company, Chehalis, Wash.; locally. The "Grassroots" program northwest swing are Douglas County Pioneer National Title Insurance

index Among title plant improvements observed during the February AlTA Wash. In the plant, all but the past seven years af the general reader staff "Operation Grassroots" visit to member company offices in have been placed on microfilm served by a quick retrieval face O regon and Washi ngton is the attractively remodeled focility serving and acreage information records have been refined. The facilities as headquarters of Commonwealth Tit le Insurance Campany, Tacoma, two different street levels at front ond rear.

TITLE NEWS 7 Company, Olympia, Wash.; and Com­ According to ALT A members in requesting ALTA policy mechanics monwealth Title Insurance Company, Oregon, that state's legislature in its lien coverage prior to construction Tacoma, Wash. last session took action to eliminate and thus placing title insurers in a the Oregon Torrens system effective surety position; insured not specify­ January 1, 1973, for reasons includ­ ing how they wish claims to be han­ ing its inefficiency and a lack of dled; ALTA policy liability for fi­ funding for its coverage. A new nancially-distressed builders; and lo­ Oregon law places title insurance cal county method of assessing a agent escrow activities under regu­ title plant for tax purposes. lation of the state insurance com­ Among plant and system improve­ missioner effective January 1, 1973; ments encountered during the north­ this includes licensing, performance west trip are updating title plant bonds, and being subject to state in­ records by filing microfilm frames of ROBERT HARRIS ROBERT BEARDSLEY surance department audit. single documents in computer-num­ Douglos County Title Members visited in the northwest bered envelopes for benefits that in­ Roseburg, Ore. agree that current ALT A Congres­ clude reduced posting time; removing sional and federal agency liaison are maps from tract books and storing of great importance to the land title them in separate books or specially industry, and request that Associa­ folding them into binders to improve tion public relations activity to im- accessibility and save space; and placing all but the past seven years of the general index on microfilm served by a quick retrieval reader. All 10 operations place major em­ phasis on personal contact and su­ perior service in business develop­ ment. Jn one, the chief executive, BOYD STEELE JAMES MALLARD all Lone County Title Transamerica male employees, and three of five Eugene, Ore. Albany, Ore. female employees are responsible for direct customer contact; this has con­ On both the Oregon and Wash­ ROBERT SMITH PAT McLOUGHLIN tributed to obtaining a larger share ington segments of the trip, ALTA Commonwealth Wasco County Title of the available market. Regarding members generally expressed the Salem, Ore. The Dalles, Ore. Continued on page 14 view that regulation of title insur­ ance under the insurance commis­ sioners of those states is satisfactory. Jn Oregon, the insurance commis­ sioner works with a title insurance rating bureau. Kickbacks are illegal in both states and, according to ALTA members, present no problem to the public. Both Oregon and Washington have state title plant laws, RALPH HILLIER RYLAND ROBINSON meaning it requires a substantial fi­ Transamerica Pioneer MERRILL CRONK GEORGE FINNEY nancial commitment to purchase or Portland, Ore. Longview, Wash. build a plant with acceptable records. Transamerica Pioneer Chehalis, Wash. Olympia, Wash. The real estate seller typically pays prove public understanding of the for the buyer's mortgagor title in­ industry be continued. Also men­ surance in Oregon and Washington tioned as of particular importance home transactions, while the buyer are ALT A research, and endeavor typically pays a small additional including standard forms, bar fund amount for mortgagee title insurance activity, and liaison with affiliated for the lender on simultaneous issue. associations. Seller and buyer typically split the Among specific problems men­ e crow cost in both states. In Oregon, tioned by those visited in Oregon the buyer typically pays $25.00 for and Washington are taxes missed in mortgagee title insurance and, searching for reasons in including hard­ DAVID FOGG Washington, the buyer typically pays to-read electronic equipment in the Commonwealth $12.50 for this coverage. courthouse; submerged lands; lenders Tacoma, Wash.

8 APRIL 1972 Part Ill: ALTA Judiciary Committee Report

(Editor's note: Members of the Where a materialman was the or­ builders to buy in the property at ALTA Judiciary Committee have sub­ iginal contractor who furnished build­ foreclosure. mitted over 400 cases to Chairman ing materials to builder, materialman Held: Judgment for builders. John S. Osborn, Jr., executive vice had six months after last item of Builders did not refuse to lend full president and general counsel, Louis­ material was furnished to file its amount of note to Flato. Guarantors vi lle Title Insurance Company, for statement of materialmen's lien and were officers of Flato, Inc. and did consideration in the preparation of the had six months after maturity of the not object prior to foreclosure sale annual Committee report. Chairman entire indebtedness secured by the to any irregularity or defect in the Osborn reports that 82 cases have lien to file suit for enforcement. note, or failure of the corporation to bee n chosen for the report. Other in­ draw down the full amount. This Flato Brothers, Inc. v. Builders Loan stallments may be found in the Feb­ was not an alteration of the guar­ Co., 457 S. W. 2d 154 (Tex. 1970) ruary and March, 1972, issues of Title antee agreement. News.) Flato corporation executed note Inadequacy of price will not void and deed of trust and Flato brothers a foreclosure sale unless there is also executed * * * written guarantee thereof to evidence of irregularities in connec­ builders. Builders actually disbursed tion with the sale. MORTGAGES AND LIENS to Flato less than the total amount of the loan. Flato made a payment Paramount Insurance, Inc. v. Rayson Southern Sash of Huntsville, Inc. vs on the loan and obtained release of & Smitley, 472 P. 2d 530 (Nev. 1970) Jean, et al, 235 So. 2d 842 (Ala. parts of the real property from the Holder of a note and trust deed 1970) lien. The balance due on the note instituted judicial foreclosure against Bill in Equity by materialmen was not paid at the time of maturity. the security. In addition, other prop­ against builder and vendors of lot to Builders had the property posted for erty of the defendants was attached establish the materialmen's lien on foreclosure and, at foreclosure sale, on the grounds the security had di­ the lot. builders bought in property for less minished in value to less than sums Held: Where builder entered into than the remaining balance on the due the plaintiff. The lower court an oral agreement with vendors for note. The balance due was $77,500; granted a motion to discharge the the purchase of a lot, builder ob­ the purchase price at foreclosure was attachment on the authority of Mc­ tained possession of the lot and be­ $50,000. Builders filed suit for de­ Millan v. United Mortgage Co., 82 gan construction of dwelling house ficiency. Flato filed cross-action for Nev. 117, 412 P. 2d 604 (1966). and paid earnest money to vendors, damages for wrongful foreclosure or Held: Affirmed. The one-action builder was "owner or proprietor" of to set aside the foreclosure sale. rule of the McMillan case should be the lot for notice purposes within Flato's agent was present at the fore­ limited to sale of security property the materialmen's lien statute. closure sale and allowed the agent of under trust deed and is not appli-

TITLE NEWS 9 he cable to judicial foreclosure proceed­ trust for the benefit of the Small for the amounts he paid before ings. Business Administration was gov­ received actual notice. erned by federal law and a Nevada Cleveland Housing Authority v. Lin­ judg­ statute regarding deficiency Lumber & Supply Co. v. Sub­ coln Property, 22 Ohio App. 2d 157, Master ments had no application. urban Builders, Inc., 269 At!. 2d 252 259 N. E. 2d 512 (1970). (Del. 1970) The city of Cleveland demolished Inc. Thrifty Supply Co. of Seattle, A provision in a purchase money a building upon the premises, subject vs Deverian Builders, Inc., 3 Wn. mortgage subordinating such mort­ to a prior mortgage lien. The statute App. 425, 475 P. 2d 905 (Wash. gage to any subsequent construction provided that costs of demolition are 1970) mortgage which the mortgagor shall a lien upon lands from and after In this case an owner made a execute was held to be strictly con­ date of entry and "shall be collected check payable jointly to a contractor strued and, therefore, a construction as other taxes." The city claimed and his materialman. The material­ mortgage made by an assignee of the that demolition lien was superior to man endorsed the check, but al­ purchase money mortgagor was not the lien of the mortgage antecedent lowed the contractor to take it and superior to the purchase money in time. cash it and subsequently take the mortgage in that it was not executed Held: Demolition liens being col­ money. The material man th e n by the purchase money mortgagor; lectible as "other taxes" are similar claimed a lien, and the owner al­ therefore, a foreclosure proceeding to special assessments for improve­ leged that the endorsement consti­ on the construction mortgage was ments and have the traditional prior­ tuted payment. This is a fairly com­ subject to the purchase money mort­ ity over all liens accorded to general mon practice with owners trying to gage. taxes. Therefore, since every property protect themselves from the subcon­ owner takes his property subject to tractors of the general contractor. the taxing power of the state, a demo­ W. 2d 666 The court said that the simple mat­ Dillard v. Earnhart. 457 S. lition lien, being a tax, is superior to ter of endorsement was not determi­ (Mo. 1970) a prior mortgage lien. native, but the fact of the intention Plaintiff brought an action to set United States v. Thompson, 438 F. in making the endorsement was. In aside a deed of trust, or, in the al­ 2d 254 (Arkansas 1971) this case. the court found no inten­ ternative. for damages for breach of encumbrances. The Arkansas statute requiring tion that the endorsement would con­ warranty against grantee had the in­ foreclosure sales to be for credit and stitute payment. Held: Where release deed of trust, but not for cash need not be applied to tention to to produce the note se­ federal foreclosures, that is, those Downs v. Ziegler, 13 Ariz. App. 387, was unable deed of trust, as required foreclosures where the security in­ 477 P. 2d 261 (1971) cured by by statute, the existence of outstand­ terest is held ;n some manner by the The mortgagor conveyed mort­ ing deed of trust constituted technical United States government. Therefore, gaged property to third persons in breach of warranty deed covenant the Arkansas statute did not apply exchange for funds used to bring against encumbrances, and the pur­ to a foreclosure by the Federal Hous­ current various indebtednesses and chaser was entitled to recover nomi­ ing Authority of a mortgage it had with a repurchase ngreement. The nal damages only. guaranteed. mortgagees, in their foreclosure suit, named the third parties as defendants Lynch v. McCann, 478 P. 2d 835 and claimed a right to a deficiency Ceritano Brickwork Inc. vs Kirkwood (Alaska l 970) judgment against them. The court Industries Inc. , 276 Atl. 2d 267 The Alaskan supreme court held held thnt the conveyance constituted (Del. 1971) that an addition to an existing build­ a mortgage and thus. as second Where the owner of property was ing, which was about one seventh the mortgagees, the third parties were not simultaneously developing two adja­ size of the existing building and liable for any deficiency. cent sections of an apartment com­ which could not be removed without plex, one located in the city and the greatly damaging the existing build­ Tucson Federal Savings & Loan Assn. other outside of the city, and the ing was not "original construction" v. S11ndell, 106 Ariz. 137, 472 P. 2d complaint for a mechanic's lien de­ within the statute giving priority to 6 (1970) scribed by metes and bounds the mechanic's lienors who furnish labor continues to pay property in the city but the claimant or material for building or other im­ Where a vendee under his con­ had performed its services on the provement in its original construc­ out purchase money real estate, without building in the sections outside of the tion, and liens were inferior to ear­ tract to purchase of a recorded mortgage city, it was held that the complaint lier trust deed. actual notice held by a mortgagee who took with was fatally defective and was inop­ U. S. A. vs MacKenzie, et al, 322 F. notice of the vcndee's rights under erable to obtain a mechanic's lien. Supp. 1058 (Nev. 1971) his contract, the vendec is entitled on page 14 Held that foreclosure of a deed of to priority as against the mortgagee Continued

1972 JO APRIL es . _..._. _____ ~~) 1n t he news mes

Fred H. Benson, Jr., and Wil­ Robert J. Meyer has been ap­ liam B. Conn have been named pres­ pointed regional vice president in ident and vice chairman of the charge of Westchester, Putnam and board, respectively, for both the St. Dutchess (N.Y.) counties for USLife Paul Title Insurance Corporation and Title Insurance Company. He was Burton Abstract and Title Company. formerly vice president in charge of Benson also was elected a director the White Plains office. of Burton Abstract and Title, along * * * with William L. Robinson and Wil­ First American Title Insurance liam F. Richardson, vice presidents of Company BENSON CONN has announced several pro­ both companies. Benson formerly was motions. south central division vice president Harry L. Paulsen has moved from of St. Paul Title and a member of the the presidency of First American advisory board of Burton. Title Company of Nevada to the Conn has been chief executive of­ same position at First American Title ficer of Burton since 1969. Company of Colorado, Denver, and * * * has been appointed regional vice American Title Insurance Com­ president of the parent company, with pany has announced several promo­ jurisdiction in both states. Lynn R. tions, including the election of Frank Cooper, former vice president and B. Glover, director of the company's manager of the San Luis Obispo agency operation, to senior vice pres­ GLOVER HOFFMAN (Calif.) branch, succeeds Paulsen as ident. president in Nevada. Cooper is suc­ Newly-named vice presidents in­ ceeded at San Luis Obispo by Larry clude: associate counsel Frederic L. Meek, former vice president. Hofmann; Frank T. Finch of the Regional vice president, W.G. agency division; Don W. Stuart of Blackstone, former head of the Riv­ underwriting and reinsurance; and erside (Calif.) county branch, takes James W. Jones, Pinellas county di­ charge of the San Diego county fa­ vision manager. In addition, American cilities while retaining California re­ has named its treasurer, John A. gional duties as supervisor of oper­ Mueller, Jr., a vice president and ations in Riverside, Alameda, Contra Hamilton J. Balke as his assistant vice Costa, Santa Clara FINCH STUART and Santa Cruz. president and controller. A.W. Smith, former vice president Newly-elected second vice presi­ and manager of the Santa Barbara dents include Miss A.B. Cale and Fred (Calif.) county branch, succeeds J. Tamer of the Michigan division, Blackstone at Riverside. and Richard A. Knight, who con­ Calvin H. Flynn, former vice pres­ tinues assisting James W. Robinson, ident and manager at San Diego, has senior vice president, in developing moved to the parent company offices and servicing national ·accounts. in Santa Ana as director of lender Mrs. Georgina Esteva of greater relations. Miami division was elected an as­ Robert M. Bowen moves from the sistant vice president. Tulare County (Calif) subsidiary to * * * MUELLER BALKE Santa Barbara as manager, where he

TITLE NEWS 11 had previously been an assistant nature of state statutory provisions among manager. Daryl M. Farnsworth, for­ pertaining to land transfers effect merly assistant manager at Tulare other things have significant costs county, has been named vice presi­ on the level of settlement Jn ad­ dent and manager. within any given jurisdiction. dition our study found that: * * * 1. Settlement costs and practices Two new business development vary widely even within the representatives have joined Title In­ area. Company in Cali­ same geographic surance and Trust KNIGHT MEYER fornia assignments. 2. Costs are unreasonably high in Speed Smith Fry, formerly with many areas, but not in all. Pacific Fidelity Life Insurance and many specialists be­ Remington Rand Office Systems, rep­ 3. Whenever come involved in the con­ resents the Beverly Hills and Cen­ veyancing process, and services tury City area. Robert E. (Rob) are fragmented among them, Canfield, formerly with New York costs are significantly higher. Life Insurance Co., represents the San Gabriel Valley, where he covers 4. State regulation of title insur­ the Pomona and La Puente area. ance and other title-related costs is largely ineffective. * * * Commonwealth Land Title Insur­ FRY CANFIELD 5. Jn most cases, competition in ance Company has appointed Clar­ the conveyancing industry is di­ ence A. Dockens, a former Phila­ rected toward other partici­ delphia Commissioner of the Depart­ pants in the industry and not and mountain states from Iowa and ment of Records, and Commissioner toward the home-buying public. Missouri to Utah. The low cost areas of the Department of Licenses and Frequently this competition rely extensively on abstracting or ab­ inspections, to assistant vice president takes the form of an elaborate stracting with title insurance as a in the business development depart­ system of referral fees, kick­ predominant form of title proof; ment. backs, or commissions as in­ whereas, the high cost areas are states indi­ Commonwealth also has promoted ducements to firms and using title insurance alone or title place­ Jane F. Snyder to assistant title of­ viduals who direct the insurance combined with personal ficer and manager of the Ardmore ment of business. search. In general, regional rank­ (Pa.) office; and F. Russell Curtis to ings of title related costs remain un­ 6. Charges for services relating to assistant title officer and assistant changed for comparisons of new settlement often are not based manager of the Philadelphia branch. units, inside SMSA's, or outside on factors related to the cost of Further promotions both at the SMSA's. providing the services. Fre­ Philadelphia home office, include quently, they are based on the re­ John G. Keidel to title officer in the Analysis of transfer taxes and sales price of the property. We national agency division, and William cording fees produces the widest found that the overall level of G. Anderson, assistant treasurer in variation of all groupings of costs charges tends to be lower when , the cost accounting department, to tested. North and South Dakota the charge for a service is not assistant vice president. Montana, Wyoming, Colorado and directly related to the sales Utah report the lowest statutory cost price of the property. of any regions, averaging just over $15. ] n Pennsylvania, Delaware, 7. The minimum or recommended SETTLEMENT COST-Continued from page 5 Maryland , Virginia, West Virginia, fee schedules of local bar as­ and the District of Columbia these sociations and local real estate average almost $256. Costs are groups often do not reflect the than elsewhere. The buyer of a Sec­ costs in Washington state, Ore­ actual work done. The use of tion 235 home frequently contributes also high Idaho, and Alaska, a veraging such schedules to determine as little as $200 in total for the pur­ gon, general, statutory costs are fees tends to increase settle­ chase of a home. $126. Jn lowest in the south and midwest and ment costs. costs are highest in Title-related highest in the urbanized northeast. Pennsylvania, W e s t Virginia, Vir­ 8. Most public systems of keeping be im­ ginia, Maryland, Delaware, the Dis­ The condition of the mortgage land records need to facilitate trict of Columbia, California, Ne­ market, the predominant method of proved in order to vada and Arizona. The lowest title title proof utilized, the efficiency of title search. If title search were tend to related costs are found in the plains the county recorders' offices, the simplified, this would

12 APRIL 1972 reduce title-related and other be given in the affected locality be­ mortgage transactions. Under settlement costs. fore limits are made effective. this proposal the payment of a "kickback" by a mortgagee ap­ It is evident from these findings No attempt will be made to con­ proved by HUD for holding that serious problems exist in the trol costs, such as transfer taxes and and servicing mortgages insured conveyancing industry and that such recording fees, fixed by state or lo­ by the department would con­ problems demand immediate atten­ cal law. We will deal with the prob­ stitute a cause for withdrawal tion in order to assure that the public lem of loan discounts, not in this of such approval. The proposed is not charged more for settlement context, but in the context of our regulation, recently published costs than is reasonable. dual interest rate proposal incorpor­ in the Federal Register for com­ HUD and VA have the author­ ated in the Housing Simplification ment, is aimed at prohibiting ity under Section 701 (a) of the and Consolidation Act (S. 2049) the payment by the mortgagee Emergency Horne Finance Act of and such administrative measures of fees to real estate brokers 1970, to take immediate action with as our GNMA Tandem Plan. Gov­ and others who refer or place respect to HUD-insured and VA­ ernment insurance or guaranty will the loan with the lender. The guaran teed housing loans: "to pre­ not be issued in any case in which buyer or seller indirectly pays scribe standards governing the settlement charges exceed the maxi­ such fees when they are in­ amounts of settlement costs allow­ mums established. cluded in the transaction. HUD able in connection with the fi­ In addition to establishing maxi­ has received a number of com­ nancing of such housing" in any geo­ mum allowable charges, HUD and ments and suggestions with re­ graphic area. VA plan to take a number of spect to the proposed "kick­ Accordingly, HUD and VA are other steps- back" regulation. These are planning to take action to establish currently being analyzed and maximum settlement costs to be paid 1. HUD and VA will develop and evaluated and a final draft of by both buyer and seller in all geo­ require the use of a single uni­ the regulations will be com­ graphic areas in transactions in­ form settlement statement for pleted and published in the volving HUD-insured and V A-guar­ HUD and VA insured or guar­ Federal Register shortly. anteed housing loans. anteed transactions. This state­ Under our current plans, maxi­ ment will separately itemize 3. HUD and VA will also require mum allowable costs for each geo­ buyer and seller costs in order that buyers and sellers receive graphic area having significantly dif­ to provide full disclosure and detailed estimates of probable ferent settlement costs will be es­ help assure that costs reported individual settlement costs well tablished on an item-by-item basis. were actually incurred. in advance of the closing. We expect to start with information Certifications will be re­ obtained from the March, 1971 , sur­ quired indicating that each par­ 4. HUD and VA plan to regulate vey. Using these data, each local of­ ty to the transaction has not re­ the amounts of escrow deposits fice in a selected area will be re­ ceived or paid a charge other that may be demanded by lend­ quested to contact interested parties than the itemized costs which ers at mortgage settlements and determine the appropriateness of are within the maximums au­ and to require that only mini­ tentative maximums derived from thorized by HUD and VA. mum deposits may be col­ the March, 1971 , survey data. After lected which are considered The uniform settlement state­ these consultations, detailed justifi­ necessary to pay taxes, hazard ment will let the buyer and the cations will be prepared concerning premiums, special assessments seller know the settlement each item for which a maximum is (if any), and the HUD mort­ charges paid by each other, so established. gage insurance premium when they can avoid duplicate pay­ Within 120 days, HUD and VA due. will begin publishing in the Federal ments. This procedure will also enable state and local govern­ Register for comment specific set­ Although these actions will be ments, as well as the private tlement cost maximums being con­ limited to cases involving mort­ conveyancing industry, to moni­ sidered on an area-by-area basis. gages insured by HUD or guaranteed tor specific costs more efficient­ Ample time will be allowed for re­ by VA, I believe they will also help ly. It will provide a continuous ceiving and considering suggestions to eliminate unreasonable settlement and reliable source of nation­ made by all interested parties be­ costs for conventional cases. The wide data of settlement costs fore final adoption of any maximum maximum charges for settlemtnt for further study and action. allowable charges. costs established for HUD and VA After HUD and VA have re­ 2. HUD has initiated action to cases can provide a useful guide to viewed the comments, revised limits prohibit the payment of "kick­ participants in conventional mort­ will again be published in the Federal backs" by mortgagees in con­ gages which are originated without Register and wide publicity will also nection with HUD-insured HUD or VA assistance.

TITLE NEWS 13 HUD and VA will also work on will get to the root of the problem, receiving or holding partnership prop­ a federally-sponsored, computerized and thereby satisfy the Congression­ erty as collateral security is limited land parcel recording system to be al mandate of reducing settlement in effect to cases in which the part­ tested in selected jurisdictions to de­ costs both for federally-insured and nership assets at the time are not termine if it would be feasible and conventionally financed home mort­ sufficient to discharge partnership if it would simplify procedures and gage transactions. We expect, that, liabilities to persons not claiming as result in reduced costs. over time, our actions combined with general or limited partners. those taken by the states will result Although HUD and VA are in the elimination of excessive taking immediate action to reduce charges paid by both buyer and sel­ Partnerships Section and standardize settlement costs. the ler for services rendered in connec­ responsibility for improving and tion with real estate settlements. modernizing local conveyancing sys­ To Be Continued tems rests with the states. Excessive settlement costs arc symptomatic of the much more serious problem dis­ RADIO-Continued from page 6 cussed earlier. The federal proposals 'GRASSROOTS'-Continued from page 8 that I have outlined can reduce set­ Price uses a second 30-second tlement costs only to a level that still spot to remind that learning the de­ exacts the price of inefficient con­ tails on buying real estate ahead of service, another operation offers de­ veyancing systems. Our report, there­ purchase will help assure enjoyment livery to volume customers; deliver­ fore, recommends state actions that of a home with peace of mind and ies are made by an employee trained are designed to attack the underlying advises writing ALT A for free in­ to obtain feedback on customer prob­ causes of inefficiencies and waste. formation. lems. Another business development For example, the states should con­ tool reported to be effective is 24- sider- hour service on normal transactions. JUDICIARY REPORT - Continued from pa ge 10 Nine of the operations report talks I. Improving systems for record­ by title company personnel before ing and indexing deeds, mort­ customer and other local groups as Port City Construction Co. v. Adams gage , and other title records, part of their public relations activity. & Douglass Inc., 273 At!. 2d 121 260 particularly th rough using tract Six report they use title plant tours Md. 585 (J 971) or plot indexing. rather than the as a public relations endeavor. Also public cumbersome grantor-grantee in­ It is clear that there is no mentioned are use of educational dex system; policy against the waiver of the right literature, giveaway items, newspa­ luding a to file a mechanic's lien, inc per publicity, and occasional insti­ 2. Enacting legislation that would by a waiver to a prime contractor tutional advertising. Executives at quiet old title defects or that Mary­ subcontractor and the law of one office say customer awareness would cure minor technical de­ land contemplates with approval that fects; of an excellent escrow man and an there will be waivers. excellent draftsman working there is effective regulation 3. Establishing PARTNERSHIPS a public relations asset. Another ex­ of title insurance rates and ecutive schedules individual meetings practices; and A .T.E. Financial Services, Inc. v. with customers to discuss rate Corson, 268 A. 2d 73 (N. J. 1970) 4. Prohibiting referral fees, com­ changes and specific problems. A limited partner of a New Jersey missions and fee-splitting which All I 0 of the offices use the on­ limited partnership loaned money to approach; are not justified on the basis of the-job employee training the partnership, taking back a mort­ meet­ the performance of some eco­ three report this includes staff gage on the partnership's property con­ nomic or professional function. ings and/ or internal classes to secure the repayment of the loan. ducted by company personnel. Also In summary there are a number Default occurred and P instituted a mentioned are use of the Land Title of factors that have a definite effect mortgage foreclosure action, and D, Institute extension courses and the on settlement costs. Urbanization, the apparently another secured creditor Bill Gill land title course book, along nature of state statutory provisions of the partnership, moved for sum­ with enrolling employees in appro­ pertaining to land records and trans­ mary judgment, contending that the priate courses at local educational fers, geography, the existence of Uniform Limited Partnership Act institutions. "marketable title" acts, and the con­ proscribed a limited partner from When asked what subject areas dition of the public record keeping the taking of the security in question. would be of greatest interest to them system all have a significant impact The court agreed with Hughes v. at an ALTA Annual Convention, on settlement costs. We believe that Dash, 309 F. 2d 1, that the Uniform those visited in Oregon and Wash­ the combined federal and state ap­ Limited Partnership Law provision ington mentioned reports on recent proach HUD and VA arc proposing prohibiting a limited partner from land title technical developments, leg-

14 APRIL 1972 islation, automation and equipment, to the homebuyer and home builder: exist. Eight banks hold mortgages bar funds, employee benefits, oper­ real estate and construction, Jife­ on Jots in the tract where the defects ations, public relations, and customer property-casualty insurance, financ­ are reported. needs. ing, marketing, information services, A computer analysis of title lines Information obtained on the north­ architecture and design. of the two maps has been donated west "Grassroots" visit is being ana­ to the town by Security Title and lyzed and will be available for plan­ Guaranty Company and Chicago Ti­ ning new ALTA activity. Apprecia­ tle Insurance Company. The presenta­ tion is extended to the Association Insurers Assist tion was made to Ridgefield First members in Oregon, Washington, Selectman Joseph McLinden by and the other previously-mentioned In Title Tangle Thomas Ferraro, Chicago Title as­ states for their assistance in making sistant vice president, and by T. "Operation Grassroots" a successful Two title insurers have joined in Raymond Pearson, Security Title and exercise in developing significant lo­ the effort to unsnarl a mass of title Guaranty vice president. cal input for the future. defects that has brought the titles to 59 properties in a Connecticut The analysis shows that the peri­ town under cloud. meter boundaries of both maps According to the title insurers, a coincide, but overlapping affects all U. S. Financial, developer-in an attempt to avoid 59 Jots. With the aid of the analysis, prospective zoning - filed an ap­ attorneys are at work to correct this Commercial Combine proved subdivision map in Ridge­ situation and bring land title field, Conn., showing lots of at marketability back to the subdivi­ U . S. Financial of San Diego has least one acre. A later map was sion. consolidated its title operations into made with more accurate lot lines, the Commercial Standard Title In­ which was never approved or filed. surance Company with combined The lot dimensions varied consid­ assets of $40 million and reserves of erably on each map. over $34 million, it was announced today by Robert H. Walter, USF Conveyances were made referring chairman of the board. to both maps. Overlapping Jot lines, William B. Moeser, USF senior enroachment of driveways and septic vice president, has been named pres­ systems, and possible zoning viola­ ident of Commercial Standard Title tions, came painfully close to Insurance Company. reality. USF title operations, which were When the situation in this subdivi­ consolidated into the new company, sion became known to the public, the include the Commercial Standard alarm brought two immediate re­ T. Raymond Pearson, vice president, Security group of insurance companies of sults: exchanges of quit claim deeds Title and Guaranty Company, left, and Fort Worth, Tex., acquired in Sep­ were made before the facts were ful­ Thomas Ferraro, assistant vice president, Chi­ cago Title Insurance Company, right, (both tember, 1971, and 33 title offices in ly known, and some owners stopped of Stamford, Conn., branches) present Ridge­ California. payment of taxes. When informed field First Selectman Joseph Mclinden with a During 1971, California opera­ of the situation, one attorney in­ computer analysis donated by their com­ volved in the conveyancing was panies for use in solving the town's extensive tions expanded from 15 offices in land title tangle. nine counties to 33 offices in 11 quoted by local news media as stat­ counties as the result of the pur­ ing: "The 3-year statute of limita­ chase of Financial Title Company, tions has run out and I am no longer Marin Title Company and Pacific responsible for any possible er­ Land Title Company in the San roneous certification." Francisco Bay area. Another attorney, in an attempt The emerged company is presently to solve his client's problem, obtained licensed to operate in 18 states a boundary line agreement executed through its offices and independent by 10 lot owners of a section. When agency offices. Operating authority asked by title company personnel in additional states now is being about the mortgagees, the attorney sought, said Moeser. said he had no intention of having them sign. Title insurance is one of the seven operating groups of U. S. Financial Title policies insuring mortgages which provide the following services on three individual Jots are known to

TITLE NEWS 15 meeting t.. metable

April 17-18, 1972 June 9-10, 1972 September 8-9, 1 972 California Land Title Association South Dakota Title Association Kansas land Title Association Mark Thomas Inn Rapid C:ty, South Dakota Ramada Inn Monterey, California Topeka, Kansas

June 15-17, 1972 Land Title Association of Colorado September 15-16, 1972 April 27-29, 1972 Stanley Hotel North Dakota Title Association Arkonsas Lond Title Associotion Estes Park, Colorado Townhouse Motel Sheraton Motor Hotel Fargo, North Dakota Little Rock, Arkonsos

June 16-17, 1972 Wyoming Land Title Association September 1 5-17, 1972 April 27, 1972 Saratoga Inn Missouri land Title Association New England Land Title Association Saratoga, Wyoming Stouffer's Riverfront Inn Sheraton Islander St . Louis, Missouri Newport, Rhode Island June 1 8-20, 1972 Michigan Land Title Association Grand Hotel September 20-22, 1972 Wisconsin Title Association April 27-29, 1972 Mackinac Island, Michigan lakelawn lodge Oklahoma Land Title Associotion Delavan, Wisconsin Lincoln Plaza Motel Oklahoma City, Oklohomo June 22-25, 1972 Idaho Land Title Association Sun Valley, Idaho September 2 3, 1 972 April 30-May 2, 1972 Nebraska land Title Association Iowa Land Title Association Holiday Inn Kearney, Nebraska Julian Motor Inn June 22-24, 1972 Dubuque, Iowa Oregon Land Title Association Village Green Cottage Grove, Oregon October 1-4, 1972 ALTA Annual Convention May 4-6, 1972 Astroworld Complex Texas Land Title Associotion June 23-25, 1972 Houston, Texas Fairmont Hotel Dallas, Texas Illinois Land Title Association Chase Park Plaza Hotel St. Louis, Missouri October 25-29, 1972 Florida Land Title Association Convention May 11-14, 1972 King's Inn Washington Land Title Association July 6-8, 1972 Freeport, Grand Bahamas The Hanford House New Jersey Land Title Insurance Association Richland, Washington Seaview Country Club Absecon, New Jersey October 2 9-31, 1972 Indiana land Title Association May 18-20, 1972 August 9-12, 1972 Ind ianapolis Hilton New Mexico Land Title Association New York Stole land Title Association Indianapolis, Indiana Kachina Lodge and Motel The Greenbrier Taos, New Mexico White Sulphur Springs, West Virginia

November 3-4, 1972 Land Title Association of Arizona May 19·20, 1972 August 1 0-12, 1972 Tucson, Arizona Tennessee Land Title Association Montana land Title Association Nashville, Tennessee Holiday Inn Bozeman, Montana

June 4-6, 1972 December 6, 1972 Pennsylvania Land Title Associotion August 24-26, 1972 Lou isiana land Title Association Pocono Manor Inn Minnesota land Title Association Royal Orleans Pocono Manor, Pennsylvania Winona, Minnesota New Orleans, Louisiana

16 APRIL 1972 Tell Your Story More Effectively . with these ALT A Educational Aids (All orders plus postage; write Business Manager, ALTA, 1828 L Street, N.W., Washington, D.C. 20036)

Closing Costs And Yolr Plrcllase DI A Home

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(CENTER ) PERSPECTIVE : AMERICA'S LAND TITLE INDUSTRY . A collection of six articles by experts that comprehen· sively explain the land title industry and its services. This attractive book­ let is available at 35 cents per copy for 1-48 copies and 30 cents per copy for 49 or more copies. (RIGHT) THE AWARD-WINNING ALTA FILM, " A PLACE UNDER THE SUN." Eye-catch­ ing color animation and an excellent LAND TITLE lf\C) , tr. script bring the story of the land title industry and its services to life in this highly-praised 21 -minule sound film . Prints may be obtained for $135.00 each. American Land Title Association