Bulletin: IL2012001

Dear Associates:

Please be advised that nine Underwriters in Illinois have developed, through the Illinois Land Title Association, an Inter-Underwriter Indemnification Agreement, State of Illinois, (hereinafter “Agreement”).  

PARTICIPATING UNDERWRITERS TO ILLINOIS MUTUAL INDEMNIFICATION AGREEMENT:

• AmTrust Title Insurance Company
• Attorney’ Title Guaranty Fund
• Chicago Title Insurance Company
• Commonwealth Land Title Insurance Company
• Fidelity National Title Insurance Company
• First American Title Insurance Company
• Old Republic National Title Insurance Company
• Stewart Title Guaranty Company
• Title Resources Guaranty Company
• WFG National Title Insurance Company

The Indemnification Agreement will cover Mortgages up to $500,000 only and as described as “Defect” in Paragraph IV of the Agreement as set forth below:

Mortgages or Trust Deeds that have not been effectively released, discharged or reconveyed, provided the mortgage is not a “gap” mortgage or a future advance/revolving credit/equity line mortgage as defined in Paragraph (F) of the Conditions. Mortgages for which a Certificate of Release pursuant to the Mortgage Certificate of Release Act has been issued shall be deemed effectively released.

Conditions Are:

1.     Current insurer has prepared a commitment in anticipation of issuing a policy;

2.     Prior insurer issued a prior policy that provided coverage against loss due to the Defect.

a.     Agreement shall not apply if Defect is insured over by endorsement or affirmative language in the policy.

b.    Defect shall be deemed to include the insured mortgage in prior policy only when current policy is an Owner’s Policy issued to an unrelated insured.

3.     Owner’s Policy issued by prior insurer shall be the basis of indemnity if the insured covered by prior policy is seller or borrower in current Insurer’s transaction.

4.     Loan Policy issued by prior insurer shall be the basis of indemnity if:

a.     the insured, as defined by the prior policy, has subsequently acquired the Land by foreclosure or by deed-in-lieu of foreclosure

b.    the insured, as defined by the prior policy, is the seller in the transaction that will be insured by the current policy, and

c.     the current policy is an Owner’s Policy issued to an unrelated insured.

5.     Agreement is not applicable if the public records disclose that litigation or foreclosure proceedings arising from the Defect occurred after the effective date of the prior policy, or the current insurer has actual knowledge of litigation arising from the Defect.

6.     Agreement is not applicable if the public records disclose the existence of a “gap” mortgage, or open future advance/revolving credit/equity line mortgage. A “gap” mortgage shall be defined as any mortgage that is recorded within three (3) months prior to the effective date of the prior policy.

7.     Agreement shall apply only if the current insurer is in possession of a copy of the prior policy issued by the prior insurer before relying on said prior policy as a basis of indemnity.

The sole obligation of the prior insurer is to indemnify the current Insurer from loss arising from the Defect as provided in the Agreement. Current insurer must notify prior insurer within 30 days prior to any proposed payment or settlement of a claim arising from Defect. All notices required must be given in writing by mail or by courier to the location shown in Section VII of the Agreement.

PLEASE NOTE THIS AGREEMENT IS AMONG THE NINE UNDERWRITERS THAT ENTERED INTO THE AGREEMENT ONLY. THEREFORE, IN ORDER TO CLEAR A MORTGAGE COVERED BY THE AGREEMENT,  AN UNDERWRITER MUST AUTHORIZE IT. YOU MUST CHECK WITH STEWART LEGAL SERVICES THE SAME AS IF YOU WERE GOING TO REQUEST A HOLD HARMLESS LETTER OR LETTER OF INDMENITY FOR APPROVAL TO CLEAR THE EXCEPTION.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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