- November 28, 1995
- All New York Managers, Office Counsel, Underwriters and Agents
- No Consideration Deeds and Intra-Family Transactions Beware of Forgeries
In the past several weeks, the Company has experienced an increase in the number of claims involving the alleged forgery of signatures on deeds and other conveyancing instruments. Almost all of them involve "no consideration" deeds or intra-family transactions in the chain of title. In one case, the last deed of record prior to the insured transaction was executed by husband (H) and wife (W) to H and an apparently unrelated woman (X) for no consideration. Six months later, H and X conveyed the property to a third party (P) for valuable consideration. A title policy was issued to P insuring his title to the property. Shortly thereafter, W claimed that she and H were divorced and that H forged her signature to the deed which conveyed the property to H and X.
In another case, a deed from H and W to H was recorded three (3) years after its execution. There was no consideration for the conveyance. H thereafter made a mortgage to a lender which was insured as a first mortgage lien and then subsequently foreclosed. W has now alleged that her signature on the deed conveying her interest in the property was forged by H.
In each of the above case, the last deeds of record prior to the insured transaction were "no consideration", "intra-family" transfers. In such cases, all underwriters must exercise extreme caution. Because these transactions generally occur prior to the time a title company is asked to insure a bona fide purchase or mortgage of real property, they are, for the most part, unsupervised, with no safeguards (such as an acknowledgment of signatures before a title company closer who would require photo I.D. and other proof of identity at the time of execution of the instrument) taken to prevent a fraud or forgery.
As a result of this recent spate of forgery claims, please be advised that, effective immediately, where there is such a deed in the chain of title, the Company will not insure a fee, mortgage or other conveyance unless there has been at least one transaction, subsequent to the "no consideration" or "intra-family" deed, which has been insured by a title company (either directly or through its authorized agent). Furthermore, the Company will not accept "no consideration" or "intra-family" deeds which are executed prior to closing but delivered at the closing of a transaction to be insured, unless all the signatories to the deed are present at the closing, establish their identity to the satisfaction of the title closer and re-execute the deed in the presence of the title closer.
These new guidelines will remain in effect until further notice. Should you have any questions regarding this matter, please contact Company Counsel.
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.
- Bulletins Replaced:
- Related Bulletins:
- Underwriting Manual:
- 6.36 Forgeries
- Exceptions Manual: