- October 23, 1989
- All Controlled and Partially Owned Offices
- Syndications and Serving as Trustee
The potential liability arising out of a Stewart Title office that is acting as trustee is so great that you should not enter into any such transaction without first obtaining prior written approval from the Legal Department.
Although an issuing office is not an active participant in the sale of such beneficial interests, the office can be named as a party defendant in a suit to enjoin violation of both Federal and State Securities Laws.
Example: At the request of the organizers, a Stewart Title office served in a corporate capacity, as Trustee, in holding legal title to the subject property for the beneficiaries named in each trust agreement. The issuing office was paid a nominal trustee's fee and wrote the title insurance in connection with the land purchases. The agreements provided that the trustee would perform no service other than as the holder of legal title. All other services were performed by others. To finance land purchases, many fractional beneficial interests were sold by the organizers and the beneficial interest owners named in the trust agreements. Federal and State authorities asserted the sale of such fractional beneficial interests resulted in a violation of Federal and State Securities Laws and the organizers and our office were sued.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.