Fidelity National Title. How to Read a Preliminary Report

Transcription

1 Fidelity National Title How to Read a Preliminary Report A Preliminary Report (Prelim) is a report which shows the terms upon which the company may issue its policy. It is not a policy or a commitment to issue a policy. It is an application to issue a policy provided all terms are met. The Prelim shows exceptions to title, general reporting of recorded documents that describe the properly in question (PIQ), and requirements made by Fidelity National Title Company. The Prelim is issued after a search and examination procedure has been completed. The search is made of the public records, generally including the following public offices: The County Recorder of the County in which the real property is located. The taxing authority(s) that levy(s) taxes and assessments on real property. The clerks of the various courts in the State of Hawaii. The Clerk of the United States District Court. In addition to the above-mentioned public records, certain types of policies and endorsements to be issued by the Company require a survey or physical inspection of the property. This survey or inspection may disclose additional information that may be reflected on the policy. The Company reserves the right to include additional items or make further requirements after reviewing the survey, inspection or after reviewing any documentation that may have been requested. Following is a sample Prelim and a brief explanation of some of the more common items shown in a Prelim, together with an explanation of some of the preprinted items shown in a report. The following numbered paragraphs correspond to the numbers shown on the sample Prelim. 1. These 6 paragraphs are designed to inform the customer exactly what the Prelim is and what it covers. This page is standard for all Prelims that Fidelity National Title Company issues. You should always direct your client(s) attention to this cover page of the report and ask them to read it. 2. This is the address of either the Escrow Office of Title Office where all questions should be directed. 3. The information appearing in this area is provided as a quick reference for the customer(s). It references the property address, owner's names, order number as well as the Escrow Officer and Title Officer. This information should be referenced on any correspondence or conversations regarding the transaction.

2 4. This date is not the date the report was ordered, completed or mailed, but is the plant date. The plant date is the date and time to which the public records are current through. In other words, it is the date and time in which the public records have been posted to the title plant. The difference between the plant date and today's date is referred to as the gap. 5. This area shows the type(s) of policies that Fidelity has been requested to issue once the transaction closes. It is important to notify your Escrow Officer/Title Officer of any changes in the type of policy being requested or if information obtained during the course of the escrow discloses the possibility of construction or the need for an inspection. 6. This item indicates the type of estate that the vested owner holds in the real property. Estates in property may be: legal or equitable; real or personal; fee, easement or leasehold. The type of interest that a person has in a property, in most instances, is fee. However, leasehold estates are not uncommon. 7. This is the vesting and shows the name of the person or entity that holds title to the es t ate shown directly above and explained in paragraph 6, as of the effective date shown above and explained in paragraph 4. Also included is the status of the vestee (i.e. single, married, etc.), and the manner in which they hold title, also referred to as tenancy, (i.e. joint tenants, tenants in common, tenants by the entirety, etc.). It is very important for you to verify this information immediately upon receipt of the Prelim. 8. This is the legal description of the real property for which the Prelim was prepared. Fidelity requires that all documents to be recorded at the close of the transaction contain this exact legal description. Any discrepancy between the legal description in the Prelim and in the documents to be recorded should be discussed with the Title Officer as soon as possible to avoid any delay in the closing of the transaction. Included in the legal description is the derivation, or the document that puts our vested owners into title. Also listed is the Transfer Certificate of Title Number (if applicable) and the Tax Map Key (TMK or assessor's parcel number). 9. Matters that affect the real property will be shown following this paragraph. These matters, called items, exceptions or exclusions, will either be shown in the policy(s) to be issued, or must be cleared of prior to the issuance of the policy. The items, exceptions or exclusions to be removed from the policy, must be paid off, released or otherwise eliminated, prior to or concurrently with the recorded of the transaction in question. The usual matters shown here would by taxes, easements, CCR's, mortgages and involuntary liens. Look very carefully for items, exceptions or exclusions that require some action on the part of you or your customer. The transaction may not be able to close unless certain information is obtained or certain actions are taken. 10. Most real property is subject to property taxes assessed by the tax collector. Churches and government property are the most common exceptions. Tax information will always be shown as the first item in the Prelim as taxes have priority over all other matters. 11. A small percentage of properties are subject to assessments from improvement districts. These assessments are created when improvements are completed for the benefit of a certain area or neighborhood.

3 12. The State of Hawaii has reserved rights for mineral and metallic mines on many properties in Hawaii. This is an exception on to title that your customers should be aware of. This exception will remain on the policy. 13. Covenants, conditions and restrictions, (CCR's), are limitations or qualifications on the use of real property. A developer, builder or large tract landowner usually imposes these CCR's. If requested, Fidelity will furnish a copy of the document imposing the CCR's so that any party to the transaction will be aware of what limitations are being imposed. A small fee may be assessed if the documents need to be ordered from the State of Hawaii or if there is a large volume of documents ordered. The Preliminary Title Report reflects that CCR's affect the property, but does not traditionally recite what limitations are being imposed. A title company excludes the CCR from coverage, but does not interpret said document. 14. An easement is where another individual(s) or entity has the right to utilize a portion of the land described in Exhibit One. These rights will be specifically excluded from the title policy unless said rights are released by the appurtenant (benefited) party. If it is necessary to own an easement across someone else's land in order to have access to the property in question, that would be shown in the legal description - Exhibit One. 15. In Hawaii, mortgages are used almost exclusively, not deeds of trust. A mortgage is an instrument that secures the terms of a note with real property. When a mortgage is paid off, a release is recorded in the public records. The lender has a statutory obligation to process a release on paid mortgages, but not to record the release. Sometimes a lender is reluctant or slow to process the release. Other times the release may be processed, but is lost before it gets recorded. In those instances, the mortgage is paid off, but still shows that it is outstanding in the public records. In order for the title company to issue a policy absent of the outstanding mortgage, said mortgage must either be released in the public records, or the company must be indemnified from any loss that may be incurred from the removal of said mortgage on the proposed policy. The title company that paid off the mortgage in question gives this indemnification. This is commonly referred to as a letter of indemnity (LOI). Your Escrow Officer will order the LOI. The title company who may issue the LOI has no obligation to do so. Issuing an LOI is done as a professional courtesy. The title company will only issue the LOI if they paid off the mortgage in question through an escrow. This issue must be resolved in order to close the transaction. 16. If this mortgage is to be paid off concurrently with the close of the transaction, the Mortgagee of record must be contacted in order to obtain the payoff demand for said mortgage. Said demand most be in writing. An updated demand must be obtained just before closing as payoff figures frequently change. Typically the processing of the release documents will be processed after the loan has been paid off. When the original Mortgagee sells the note to another lender, an Assignment of Mortgage is recorded disclosing the name of the new lender. 17. This item refers to Native Hawaiian rights, commonly known as the PASH. These are ancient rights affirmed by the Hawaii Supreme Court for customarily and traditionally exercised for subsistence, cultural, religious, access and gathering purposes. These rights are also provided for in the Hawaii Constitution and Hawaii

4 Revised Statutes. These rights are reserved on many properties, but not on all. Bare land, properties that border State lands, waterways, or ceded lands, properties with trails, streams or gravesites, properties that are a part of ancient Kulianas and properties that are "not fully utilized" will typically be subject to this exception. Unfortunately, the term "not fully utilized" was not defined in the PASH decision. This exception will typically remain on an Owner's policy. 18. Exceptions 11 & 12 refer to the terms and provisions of a trust. Trust documentation must be reviewed by the title department to make sure that the parties signing the document have the authority to do so. The title department must also review the trust to make sure that the pending transaction is allowed within the context of the trust agreement itself. Please have your customers provide a copy of the trust documentation to Escrow as soon as possible for review. 19. A legal document recorded in the Bureau of Conveyances, which gives constructive notice that an action has been filed in either a state or federal court affecting a particular piece of property. Lis Pendens is a Latin term which means action pending and is in the nature of a quasi-lien. A person subsequently acquiring an interest in the property takes it subject to any judgment that may be entered; that is, a purchaser is bound by the result of the lawsuit. A notice of Lis Pendens is not the same as placing a lien on or attaching real property. It is only notice of a pending action involving title or possession of real property. The end result of filing a Lis Pendens, however, is the same; that is, the property may not be freely sold or encumbered and title is thereby effectively rendered unmarketable during litigation. 20. The Financing Statement Report lists any Financing Statements that the owner(s) of the property have created and which attach to the property. These Financing Statements would need to be paid off through the escrow. 21. The Lien Report lists any involuntary liens, such as judgments, federal tax liens, state tax liens, etc., on the buyer(s). These liens will most likely need to be addressed if the transaction includes a loan. This is because involuntary liens attach to all property that the debtor owns, or will own and take priority over the new loan. 22. The last four pages address the general exclusions from coverage for the various title products that Fidelity National Title Company has available and also our Privacy Policy Statement. These last four pages are the same for all Prelims. Please have your customers read the area that corresponds to the type of policy that they will be receiving. This is a sample Preliminary Report and does not include every item or every variation of possible items that could appear. It is very important to remember that a Prelim must be read item by item. Please ask questions from your Escrow Officer and/or Title Officer.

5 Fidelity National Title Insurance Company 1 PRELIMINARY REPORT In response to the application for a policy of title insurance referenced herein, Fidelity National Title Insurance Company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage of said Policy or Policies are set forth in Exhibit A attached. Copies of the Policy forms should be read. They are available from the office which issued this report. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. The Policy(s) of title insurance to be issued hereunder will be policy(s) of Fidelity National Title Insurance Company, a California corporation. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects and encumbrances affecting title to the land.

6 Fidelity National Title Insurance Company 201 Merchant Street, #2100, Honolulu, HI (808) FAX (808) PRELIMINARY REPORT ESCROW OFFICER: ANY ORDER NO.: 1 TITLE OFFICER: ANY 2 TO: ABC Mortgage 123 This be the place 3 Honolulu, HI ATTN: Mr. Loan PROPERTY ADDRESS: 2020 Anywhere Street, Kailua, Hawaii EFFECTIVE DATE: FEBRUARY 22, 2012, 08:01 AM 4 The form of Policy or Policies of title insurance contemplated by this report is: ALTA Homeowner's Policy 5 ALTA Loan Policy 1. THE ESTATE OR INTEREST IN THE LAND HEREINAFTER DESCRIBED OR REFERRED TO COVERED BY THIS REPORT IS: A Fee, Land Court 6 2. TITLE TO SAID ESTATE OR INTEREST AT THE DATE HEREOF IS VESTED IN: 7 Joe Owner and Jane Owner, Trustees of the Joe Owner and Jane Owner Revocable Trust dated January 1, 2001, with full power to sell, convey, mortgage, lease, and other powers as more fully set forth in said trust instrument. 3. THE LAND REFERRED TO IN THIS REPORT IS SITUATED IN THE COUNTY OF HONOLULU, STATE OF HAWAII, AND IS DESCRIBED AS FOLLOWS: 8 SEE EXHIBIT "ONE" ATTACHED HERETO AND MADE A PART HEREOF KP/KP 09/07/05

7 Order N o. 1 9 E X H I B I T " O N E " All of that certain parcel of land situate at Kailua, District of Koolaupoko, City and County of Honolulu, State of Hawaii, described a follows: Lot 000, area 10,000 square feet, more or less, as shown on Map 000, filed in the Office of the Assistant Registrar of the Lard Court of the State of Hawaii with Land Court Application No of Damon Chong. TOGETHER WlTH a perpetual easement for any and all purposes to be used and enjoyed in common with others legally entitled across Easement 40 feet wide, as shown on Map 1 of said Application. Being all the property conveyed by the following: Warranty Deed Grantor: Arlie Smith, Jr. and Nancy Lilo, husband and wife Grantee: Joe Owner and Jane Owner, Trustees of the Joe Owner and Jane Owner Revocable Trust, dated January 1, 2001, with full power to sell, convey, mortgage, lease, and other powers as more fully set forth in said trust instrument Dated: January 1, 2001 Recorded; January 1, 2001, in the Office of the Assistant Registrar of the Land Court of the Court of the State of Hawaii, Document No Being all of the property described in and covered by Transfer Certificate of Title No. 000,000. Tax Map Key: , CPR 0000

8 Order No. 1 AT THE DATE HEREOF, ITEMS TO BE CONSIDERED AND EXCEPTIONS TO COVERAGE IN ADDITION TO THE PRINTED EXCEPTION AND EXCLUSIONS IN SAID POLICY FORM WOULD BE AS FOLLOWS: 1. Property taxes, including any personal property taxes and any assessments collected with taxes, for the fiscal year , Tax Map Key(s) , CPR st Installment: $ Paid 2nd Installment: $ Delinquent 2. Assessments: 11 Improvement District No.: 0000 Assessment Lot No.: Reservation in favor of the State of Hawaii of all mineral and metallic mines Covenants, conditions and restrictions (deleting therefrom any restrictions indicating any preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin) as set forth in the following: 13 Deed Dated: January 1, 1985 Recorded: in the Office of the Assistant Registrar of the Land Court of the State of Hawaii, Document No Easement(s) for the purpose(s) shown below and rights incidental thereto as set forth in a document; 14 In favor of: Hawaiian Electric Company, Inc., a Hawaii corporation, and Hawaiian Telephone Company, a Hawaii corporation (nka Verizon Hawaii Inc.) Purpose: utility Recorded: in the Office of the Assistant Registrar of the Land Court of the State of Hawaii, Document No , dated June 10, Affects: land herein described 6. Covenants, conditions and restrictions (deleting therefrom any restrictions indicating any preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin) as set forth in the following: Deed Dated: January 1, 1957 Recorded: in the Office of the Assistant Registrar of the Land Court of the State of Hawaii, Document No Covenants, conditions and restrictions (deleting therefrom any restrictions indicating any preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin) as set forth in the following:

9 ITEMS (Continued) Order No. 1 Declaration of Restrictive Covenants Dated: January 5, 1976 Recorded: in the Office of the Assistant Registrar of the Land Court of the State of Hawaii, Document No A mortgage to secure an indebtedness as shown below, and any other obligations secured thereby 15 Amount: $95,000,00 Dated: January 1, 1999 Loan No.: Mortgagor: Arlie Stitch, Jr. and Nancy Lilo, husband and wife Mortgagee: Recorded: Slow to Process Releases Bank, a California Corporation January 1, 1999, in the Office of the Assistant Registrar of the Land Court of the State of Hawaii, Document No While it appears that the forgoing Mortgage should have been satisfied upon a subsequent sale or financing transaction, we still find it not released of record. Reference is hereby made to Reluctant to issue LOI Title Company, Order No apparently closed on January 1, A mortgage to secure an indebtedness as shown below, and any other obligations secured thereby 16 Amount: $100, Dated: January 1, 2001 Loan No.: Mortgagor: Joe Owner and Jane Owner, Trustees of the Joe Owner and Jane Owner Revocable Trust, dated January 1, 2001 Mortgagee: Recorded: ABC Loan Company, a Hawaii corporation J a n u a r y 1, 2001, in the Office of the Assistant Registrar of the Land Court of the State of Hawaii, Document No The mortgagee's interest thereunder has been assigned, by mesne assignments, to: Assignee: Loan No. : Recorded: DEF Loan Company, a Delaware corporation None Shown January 1, 2002, in the Office of the Assistant Registrar of the Land Court of the State of Hawaii, Document No Claims arising out of rights customarily and traditionally exercise for subsistence, cultural, religious, access or gathering purposes as provided for in the Hawaii Constitution or the Hawaii Revised Statutes Terms, provisions, conditions and restrictions and the failure to comply with said t erms, contained in that certain Joe Owner and Jane Owner Revocable Trust, dated January 1, 2001, to which reference is hereby made. 18

10 ITEMS (Continued) Order No The requirement that a Statement of Trust Certification be executed stating that the trust(s) referred to herein has not been amended, modified, supplemented or revoked A pending Court Action as disclosed by a recorded notice: Plaintiff: ABC Loan Company, a Hawaii corporation Defendant: Joe Owner County: Maui Court: Circuit of the Second Circuit Court Case No.: Nature of Action: Foreclose on Mortgage Attorney: Foreclosing Attorney and Associates Address: 12 Fifth Street Kahului, HI Recorded: March 22, 2013 in the Bureau of Conveyances of the State of Hawaii, as Document No Notice of Defect of Title By: Janice Doe Re: Defect in Grantee s Title in Document No Recorded: September 2, 2011 in the Bureau of Conveyances of the State of Hawaii, as Document No E N D O F I T E M S

11 Order N o FINANCING STATEMENT REPORT Fidelity National Title Insurance Company hereby reports that the following names were checked for Financing Statements: Joe Owner and Jane Owner, Individually and as Trustee And the following matters were found of record, to-wit: None Found EFFECTIVE DATE: FEBRUARY 22, 2012, 08:01 AM

12 Order N o LIEN REPORT Fidelity National Title Insurance Company hereby reports that the following names were checked for Liens: Mike Buyer and Michelle Buyer And the following matters were found of record, to-wit: None Found EFFECTIVE DATE: FEBRUARY 22, 2012, 08:01 AM