Bulletin: NY000136

Dear Associates:

On two prior occasions, this office has issued Underwriting Bulletins (Nos. NY000106, dated November 28, 1995 and NY000107 , dated December 13, 1995) with respect to the above-mentioned subject. The fact that this third Bulletin has now been issued should eliminate any doubt that "No Consideration" deed transactions continue to be a serious problem and are the source of many recent claims made against Stewart Title Insurance Company.

You will recall that in the original Bulletin (NY000106 ), the Company took the position that it would not insure a fee or mortgage transaction unless there had been at least one transaction, subsequent to the "No Consideration" deed, which had been insured by a title company. In addition, such deeds were not to be accepted at a closing unless all the parties who had executed the instrument were present, and their identity was established to the satisfaction of the title closer.

You will also recall that the second Bulletin (No. NY000107 ) was issued after the Company had received some negative feedback to the effect that the policy established in there earlier Bulletin was too restrictive. As a result, the second Bulletin adopted a more flexible case by case approach, with consideration to be given to a number of factors that might persuade the Company to insure title, notwithstanding the existence of "No Consideration" deed. These factors included the availability and willingness of the attorney who supervised the execution of the deed in question to give a representation as to the circumstances of the transaction, including information regarding his or her knowledge of the identity of the parties involved and the actual delivery of the instrument of conveyance. It was also suggested that the title reader, clearance officer or examiner, compare, where possible, the signatures on other instruments in the chain of title with the signature on the deed in question. The similarity of the signatures might convince the examiner that the party who signed the "No Consideration" deed was the same person as the individual who executed the prior instruments in the chain. Finally, we thought that an affidavit, executed by the grantor of the deed in question, acknowledging that it was executed and delivered without any undue influence or duress, might be a positive factor to be considered in the ultimate determination of our willingness to insure.

Unfortunately, the case by case approach has not stemmed the tide of claims that have been submitted to the Company on these types of deed transactions. The problem is particularly sever in the Far Rockaway area of Queens County. You should be especially vigilant in connection with any titles in that area which involve no consideration transfers. Because of the severity of the problem, the new Company policy, effective immediately, is that where there is a "No Consideration" deed in the chain of title, or where such a deed, executed prior to the closing, is delivered at closing (without all parties to the deed being present, with photo identification, and willing to execute a confirmation deed), no title insurance may be issued without obtaining the prior approval of a Company Counsel.

Should you have any questions regarding this matter, please do not hesitate to contact Company Counsel.