Livinglies's Weblog

“Title” means that legally the person possessing title has the right to treat the subject property as his/her/their own and to use such property in any legal manner.

In thumbing through the latest edition of Florida Secretary and perusing the approved forms for use in law practice, it is obvious that one thing is very clear. There is no approved form for the conveyance of a nonexistent asset or an asset that is not owned by the person who claims to be the grantor.

This common-sense conclusion is also a matter of custom and practice. Go into any bank of any size in any location and ask them for a loan based upon the collateral of a mortgage loan. They won’t give it to you except under two conditions: (a) you say you own it and (b) you do legally own it. Without both of those items being true, you won’t get any money out of your claim about the loan because the loan is not your property.

Take this example from an option contract:

Proof of Title: Optionor shall, at its expense, furnish Optionee a title insurance policy written by an insurer acceptable to Optionee, insuring the title to the Property to be free and clear of all defects except those specifically set forth below:

Or this from a warranty deed:

said Grantors do hereby fully warrant the title to said land, and will defend the same against the lawful claims of all persons whomsoever.

It is always there in every document of transfer. The grantor does not simply say that a transfer is occurring; he, she or it must assert that it owns the thing being transferred. If you don’t see that, then there is every possibility that the written instrument you are reading has no legal meaning.

And without any assertion of the title being vested in the grantor, the document fails the test of facial validity. That means no legal presumptions and THAT means the foreclosure mill must prove the claim with direct evidence of title and consideration —- something I know they can never do.

So in answer to those who are peppering me with questions about title insurance, let me answer as many of those questions in one article as possible.

Title insurance is an agreement to pay damages and to defend against claims, just like any other insurance contract. The existence of an insurance carrier does not mean it issued a policy, and the existence of a policy does not mean that it is insuring against the claims that you fear or have in mind. And it most certainly does not mean that the insurance carrier is warranting title, because that function is ascribed strictly to the owner of the real property that is the subject of the case.

At the very least, if someone is unwilling or unable to warrant title to an asset, then the title to the assets is at least questionable and the instrument supposedly transferring title to that property is equally questionable. That has legal significance.

Without a warranty of title, there is no reason to apply the statutory presumptions that attach to a facially valid document. The reason is that a facial document speaks for itself. If it does not say that the grantor owns the asset, then it does not say for sure that the asset is actually being transferred, even if it recites consideration (which mostly likely then was not and could not have been paid).

People who assume that title insurance means that the title is assured are wrong. To “assure” is not the same as “insure.” The title is not assured by any title carrier. Nor is title assured or even insured by the title insurance agent.

Without a title warranty, no approved form works to transfer title conditionally or unconditionally except a quitclaim deed which expressly asserts that title is granted only up to the point that the grantor has or may have any interest.

And whereas title agents had once produced a title report that was relied upon by the purchasing or borrowing homeowner, there I is now a disclaimer on such reports that the homeowner should not rely on such reports.

A close look at any allonge or assignment will reveal that the assignment of mortgage or the assignment of the beneficial interest under a deed of trust is more like a quit claim deed than a normal deed exchanged between the old homeowner and the new homeowner — usually called a warranty deed.

It is called a warranty deed for obvious reasons: the grantor warrants that he/she/they have (in legal language “are seized with”) title and therefore have the right to grant title to a successor or to someone to hold as collateral tos secure thepeformacne of another contract (the note) which in turn is based upon a promise supported by consideration.

Both pro se litigants and lawyers (and thence judges) often skip the consideration issue. But in contacts 101 in the first semester, indeed in the first class, we learn in law school that no contract is enforceable (even if it is written) unless there is mutual consideration. Writing down a promise to convey title to an aircraft carrier does not mean you can do it. And without receiving consideration, you are under no obligation to do it. The written promise is a legal nullity — although it might be evidence of a scam.

So in your case (whatever it might be), skip the idea about title insurance because it doesn’t mean anything. The fact that a new pretender leader is reported to accept the title policy is not a statement entitled to a presumption of title.

But absolutely DO LOOK AT ANY ASSIGNMENT. Because what has been missing from all such meaningless documents since securitization claims began is any hint that the named grantor owned the underlying obligation, the legal debt, note, or mortgage, much less the generally required warranty of title such s that found in a warranty deed.

A quit claim deed does not raise the presumption of title. It merely precludes the grantor from claiming the title in the future. An assignment without a warranty of title to the asset (i.e., the underlying obligation or loan account receivable) also is facially deficient in raising the presumption used by hundreds of foreclosure mills — i.e., that the transfer of title to the lien was completed.

Hence, if they want to foreclose on the lien they just first allege and prove they are the owners of the lien as required by statute, which is always the same verbatim adoption of §9-203 UCC. And THAT means they must have paid value for the transfer of ownership of the lien; otherwise, under the laws of all jurisdictions, a purported transfer of ownership of the lien without a corresponding transfer of the underlying obligation is a legal nullity.

Why is this important to all homeowners with a lien recorded against their property? Because when push comes to shove, and someone tries to enforce the lien, the would-be enforcer cannot use the legal presumption that statutes provide from facially valid documents.

The failure to warranty title means the document is not facially valid to prove the truth of the matter asserted, to wit: that the lien was transferred from one legal owner to another. AND the failure of consideration means that the purported assignment is not substantively valid either.

The moral of the story is that just because something is in writing does not mean it is true, that it is from a trusted source or that it is proffered in good faith. None of those things are true in the current foreclosure marketplace.

 

Filed under: foreclosure |