Bulletin: VA000007

Dear Associates:

When issuing title insurance in connection with a real estate transaction, you may find yourself attempting to satisfy the demands of many parties -- the lender, the closing attorney, the mortgagor/purchaser, the source of your business, and Stewart Title Guaranty Company. If, at the same time, you are also serving in some other capacity in the transaction -- e.g., closing attorney, subsidiary of a party, etc. -- you will have additional conflicting interests with which to deal. Please be aware of all these conflicts. Should such a situation exist in which your ability to exercise judgment in the best interests of Stewart is impaired when underwriting a title policy, remember that you must refer such decision making to your Stewart representative and that you must fully disclose the facts which impact your judgment as a policy issuing agent of Stewart.

Below are some examples of situations to which you should be sensitive. These are by no means exhaustive.

1. If your agency is or becomes a controlled business entity, you must immediately disclose this to Stewart in writing. That is, a substantial portion of your title business is referred by a parent, affiliate, or sibling organization that is also involved in the real estate industry -- e.g., a builder, realtor, developer, or lender. Note that in such circumstances you probably have an affirmative duty of disclosure of your charges and the existence of such relationship to your customer(s) under the Real Estate Settlement Procedures Act, which is in addition to your obligation to advise Stewart of the facts. Stewart reserves approval of a controlled business entity as a policy issuing agent to Houston senior underwriting personnel.

2. Employees or owners of your agency have a direct or indirect stake in a real estate transaction, whether such stake arises as seller, buyer, lender, guarantor, or an interest in a developer, realtor, builder, or lender customer.

3. Any situation in which you are providing other services to one or more parties to the transaction, which services put you in a professional relationship with the customer(s) which conflicts with your agency relationship with Stewart (or your agency relationship with Stewart may impact your professional responsibility to your customer). Particularly sensitive will be matters involving secrets/communications that are privileged.

4. Executing affidavits, indemnities, settlement statements, escrow agreements, etc. for parties to a transaction as "agent for" or "attorney for". Unless you are in a position to produce the instrument giving you such authority to execute such documents for your customer(s), such documents may not be enforceable against the party and, ultimately, Stewart may suffer a loss under a policy. In such circumstances the proximate cause of Stewart's loss may be your unauthorized execution of such document(s).

You will be asked to wear many hats by different parties in a real estate transaction. Remember, you should only represent one client and only if that does not conflict with your representation of Stewart's best interests. In the event that you are trying to put on too many hats that feel a tad too small or are so big that they keep falling down over your eyes, do not cut off the flow of blood to your brain or be blind. Give your local underwriter a call ad review the facts, so that Stewart can assist you in the transaction.