presented by Dena Phillips Farling, Indiana Underwriting Counsel for the Fidelity National Title Group WHAT KIND OF INTEREST ARE YOU INSURING?

Transcription

1 LAND CONTRACTS presented by Dena Phillips Farling, Indiana Underwriting Counsel for the Fidelity National Title Group INSURING A LAND CONTRACT PURCHASER WHAT KIND OF INTEREST ARE YOU INSURING? Typical Land Contract: Vendor (Seller) - retains legal title (fee) Vendee (Purchaser) equitable title Present sale and purchase Similar to Mortgagor/Mortgagee relationship 1

2 ISSUING THE COMMITMENT Contract Purchasers Commitment 2

3 Contract Purchasers Policy Contract Purchasers Policy 3

4 Contract Purchasers Endorsement ENDORSEMENT Attached to Policy No. Issued By Fidelity National Title Insurance Company 1. The contract to purchase shown in Schedule B is an interest covered by this Policy vested in the Insured purchaser. The Company insures against loss or damage sustained by the Insured contract purchaser by reason of: A. The unenforceability of the right to receive a deed under the contract, unless the Insured contract purchaser does not fulfill the terms of the contract, and B. The refusal of a bankruptcy trustee, in the event of the seller s or record title owner s bankruptcy, to issue a deed under the terms of the contract, provided the Insured contract purchaser is in possession of the land. 2. This Policy does not insure against loss or damage sustained by the Insured contract purchaser by reason of: A. Matters that first affect the title to the land after the Policy Date. B. Failure of the Insured contract purchaser to do everything necessary: a. To secure proper deeds from the seller, seller s successor in interest or the record title owner, b. To secure releases from other persons having an interest in the title or a lien on the land, or c. To secure a final court order which determines the persons entitled to receive payment from the Insured. C. Costs, attorney s fees and expenses to enforce the contract or to secure the final court order referred to above in paragraph 2.B.c. This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements. Dated: Fidelity National Title Insurance Company Authorized Signatory UNRELEASED/UNFULFILLED CONTRACT IN THE CHAIN Mutual Termination Agreement Foreclosure Eviction/Forfeiture/Abandonment 4

5 LIENS AGAINST CONTRACT SELLER PRIOR TO CONTRACT Ex: A owns Land Judgment/mortgage/other lien attaches against Land A sells on contract to B. B takes title subject to liens that attached prior to date of contract. AFTER CONTRACT Cook v. City of Indpls, 559 NE2d 1201 (1990) Ex: A owns Land A sells on contract to B A then has judgment/tax warrant/mortgage which attaches to fee. LIENS AGAINST CONTRACT PURCHASER Contract purchaser s equitable interest IS an interest to which liens can attach. Examples: Contract purchaser has paid off most of the contract and is getting a loan to pay off the rest and will get a deed at closing. A $50,000 judgment shows up against contract purchaser. Liberty Parts Warehouse Inc. v. Marshall County Bank & Trust, 459 N.E.2d 738 (1984). Contract purchaser defaults on the contract and disappears. Meanwhile, a lien against contract purchaser attaches to his equitable interest. Fee owner is now trying to resell the property. See Skendzel. Contract purchaser default on the contract and wants to give a deed in lieu back to contract seller? There is a lien against the contract purchaser s interest. Contract seller/fee owner is now trying to resell the property. See Skendzel. 5