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Retention of Title Records Training

IL Statute and IDFPR guidance

The Illinois Title Insurance Act requires title agents to maintain certain records for at least 7 years after issuance of the corresponding title insurance policy. Section 215 ILCS 155/21.3 provides that “evidence of the examination of title, if any, and determination of insurability for business written by a title insurance company or its title insurance agent … shall be preserved and retained by the title insurance company or its title insurance agent for as long as appropriate to the circumstances, but in no event less than 7 years after the title insurance policy has been issued … or as provided by applicable federal law.”

FNF Agency Contract

FNF currently requires its full-service agents to maintain all required records for the state-mandated duration of time and provide records to FNF in a timely manner upon request. These obligations are imposed through FNF’s standard written agency agreement, which also grants FNF the right to terminate the agreement of any agent that fails to comply with applicable record retention requirements.

Consistent with Illinois state law, our standard title insurance agency agreement requires title agents to prepare, preserve, and maintain a separate title file “containing all documents upon which Agent relied to make its determination of insurability, including, but not limited to: affidavits, maps, plats, lien waivers, surveys, title reports, searches, examinations, and work sheets, together with a copy of each commitment, policy, endorsement and other title assurance issued.” Such records “shall be preserved in accordance with applicable State document retention requirements, or in the case of a legal hold order, in accordance with instructions of Principal.”

Federal guidance

§1026.25 of Regulation Z provides Federal record retention requirements under the TILA-RESPA Integrated Disclosure Rule. There are three significant record retention requirements under the Rule:

  1. A creditor must retain copies of the Closing Disclosure (and all documents related to the Closing Disclosure) for five years after consummation.
  2. The creditor, or servicer if applicable, must retain the Escrow Closing Notice and the Post-Consummation Partial Payment Policy disclosure for two years. These requirements are derived from RESPA (Regulation X).
  3. Creditors must maintain “evidence of compliance” with the Integrated
    Disclosure to meet provisions of Regulation Z. While not very specific, this should include the Loan Estimate forms and all documents related to the Closing Disclosure.

Regulations X and Z permit, but do not require, electronic record-keeping. These records can be maintained by any method that reproduces disclosures and other records accurately, including computer programs.

Records required to be maintained

FNF agents must maintain all documents upon which agents relied to make its determination of insurability, including, but not limited to:

  • affidavits,
  • maps,
  • plats,
  • lien waivers,
  • surveys,
  • title reports,
  • searches,
  • examinations,
  • work sheets, and
  • copies of each commitment, policy, endorsement and other title assurance issued

 

Communications

FNF expects that all its agents take the requirements for records retention under state law and our agency agreements seriously. Statutorily required records must be available for regulators to review upon request. Additionally, both FNF and the Illinois Department of Financial and Professional Regulation expect that full-service agents will require the attorney agents they engage to likewise retain required records for the state mandated duration of time.

During routine audits of our agents, FNF will review agents for records retention compliance. If FNF finds during an agency audit that the agent has not maintained files properly, it may make recommendations in its audit report that the agent improve its file maintenance procedures.

Failure to comply with both Illinois and FNF requirements regarding records retention may result in adverse consequences, including termination of the agency relationship with FNF.

Questions

If you have any questions about these requirements or what documents are expected to be retained, please contact your FNTG agency underwriter.

(THIS MEMO IS INTENDED FOR THE AGENTS AND DIRECT OPERATIONS OF FIDELITY NATIONAL FINANCIAL AND IS NOT TO BE FORWARDED WITHOUT THE EXPRESS WRITTEN CONSENT OF FNF.)

Your Underwriting Team

Jeff York
Jeff.York@ctt.com
Direct: 312-223-2328

Dawn Godlewski
Dawn.Godlewski@ctt.com
Direct: 312-223-2338

Dan Johnson
Daniel.Johnson@ctt.com
Direct: 312-223-2727

 

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Cannabis Customer Memo

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Schedule B, Part I of all title commitments issued by Chicago Title Insurance Company (“Chicago Title”) now include the following:

      1. Notice: Please be aware that due to the conflict between federal and state laws concerning the cultivation, distribution, manufacture or sale of marijuana, the Company is not able to close or insure any transaction involving Land that is associated with these activities.

While a number of states have legalized the cultivation and distribution of marijuana at various levels, it remains recognized as a Schedule I controlled substance by the federal government. Further, the manufacturing, distribution, or possession of marijuana is punishable under the Controlled Substances Act (the “CSA”).  In the event of federal prosecution and when read with the Supremacy Clause of the Constitution, the CSA would govern and supersede any state law that does not agree.  Given the conflict between federal and state laws at this time, Chicago Title will not insure land that is associated with marijuana-based activities.

Outside of the above, we have received inquiries concerning Chicago Title’s stance on insuring land that is used for the production, distribution and/or sale of hemp products and hemp-derived products such as Cannabidiol (CBD).  While it is important that you reach out to your Chicago Title, NCS Chicago account manager to begin conversations concerning our willingness to insure land involving any such related uses, the following shall serve as basic guidelines in these areas:

Hemp

Under the recently passed Agriculture Improvement Act of 2018 (the “2018 Farm Bill”), the production of hemp has been legalized on a federal level, subject to the conditions contained therein.  Chicago Title is willing to insure land containing hemp facilities, provided we are able to determine that such facilities exist legally under both state and federal law—with all necessary permits/licenses issued by the appropriate authorities.

CBD

CBD and other hemp-derived products are likewise legal under the 2018 Farm Bill, provided the hemp from which they are derived is produced in accordance with the Bill.  As a result, Chicago Title is willing to insure land containing retail establishments being used for the sale of such hemp-derived products.

Since the regulation of the above remains in a state of fluctuation, it is important that all specific questions concerning Chicago Title’s position be directed to your Chicago Title, NCS Chicago account manager.  We strongly encourage that our customers have conversations with their clients about the planned use(s) of land and address questions as to Chicago Title’s willingness to insure as early as possible.

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How Residential Surveys Affect Title Insurance and the Closing Process

To download the article, click HERE.

Surveys are an important part of both residential and commercial real estate transactions, both to the parties involved in the transaction and the title company insuring the land. Surveys provide many important pieces of information needed for the closing including, but not limited to, confirming the correct property is being sold or mortgaged and insured; confirming the dimensions of the property; showing any easements of record such as for utilities and access; and showing any encroachments that affect the property. Parties to the transaction rely on surveys, and the title company reviews them to confirm any exceptions of record are properly platted against the property along with any easements.

There are several types of surveys typically used, depending on the nature of the transaction. The most common surveys are as follows:

  • A Boundary Survey is acceptable for residential transactions as it accurately locates the boundaries of the land in question.
  • A Land Title/ ALTA Survey is acceptable for commercial transactions as it conforms to standards adopted by the American Land Title Association (referred to as an “ALTA” survey) and done to exacting requirements.
  • A Condominium Survey is surveying cubes of air, dimensions bound by floors, ceilings and walls of the living space. A condominium plat is part of the condominium declaration. A survey is not needed for subsequent transfers for a condominium unit as the original plat of survey for the condominium is attached to the recorded Declaration.

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Easements 101

To download the article, click HERE.

Easements may burden or benefit a parcel of real estate. In either event, easements may affect the value and use of the land. For this reason, it is important to consider whether the property is either burdened or benefitted by an easement. This article will discuss the different types of easements and the ways in which easements can be created and terminated; it will also discuss title company requirements for insuring easements.

An easement is a right acquired by a landowner to use the land of another for a special purpose.  This right may be for such purposes as access, driveway, party wall, drainage, public utilities and other purposes. Easements are divided into 2 general categories: an appurtenant easement or an easement in gross.

An appurtenant easement operates for the benefit of one tract of land and burdens another, usually adjoining tract. Thus, there must be two tracts of land owned by different parties, that is, a separation of title. The benefitted parcel is referred to as the dominant estate (or dominant tenement), and the burdened parcel is referred to as the servient estate (or servient tenement). Because an appurtenant easement is regarded as being so closely connected to the dominant tenement, it is regarded as “running with the land”. This means that once the easement has been properly created, the easement will pass upon a conveyance of the dominant tenement to the grantee of the deed, even if the deed does not mention it.

An easement in gross does not specifically benefit another parcel of land. It runs in favor of a party who does not own the property adjoining the easement. A utility easement given to a utility company such as the phone, gas, cable or electrical company is the most common type of easement in gross. Easements in gross may not be considered interests in real property; they are generally not insured by title companies.

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Karlen’s Korner Special Edition: A Revised Limited Liability Act

By Douglas M. Karlen, Regional Counsel, Chicago Title Insurance Company

On July 28, 2016, Governor Rauner signed into law a massive re-write of the Limited Liability Company Act, 805 ILCS 180/1-1 et seq. See Public Act 99-637 (HB 4361), effective July 1, 2017.  This comprehensive revision of the Limited Liability Company Act (LLC Act) is based in large part on the Revised Uniform Limited Liability Company Act, a model act written by the National Conference of Commissioners on Uniform State Laws.  Although P.A. 99-637 amends many sections of the LLC Act merely to match the language of the model act, the new law makes some substantive changes and adds some new concepts.  Attorneys who intend to form limited liability companies and draft operating agreements and related documents should study all 112 pages of P.A. 99-637.  For a starting point in analyzing the new law, practitioners may consult M. Hector, Proposed legislation makes sweeping changes to the Illinois LLC Act, July 2016 Illinois Bar Journal, Vol. 104., pp. 12-13.  The following provisions of the new law should be of interest to real estate practitioners.

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