Bulletin: NY000066

Date:
October 19, 1994
To:
New York State Counsel, Managers, Underwriters and Agents Please Alert Your Examiners, Readers and Production Personnel
RE:
Underwriting Alert! 134 West End Avenue, Brooklyn, New York Block 8719 Lot 18 - No Insurance to Issue Without Approval of Counsel

Dear Associates:

It has come to our attention that the property owner or lender has been "shopping" the captioned title to agents of Stewart Title.

The last deed of record, recorded over a month after the death of the grantor, purports to convey title to the grantor as trustee of The Schaeffer Living Trust. One outstanding issue in this matter is that of the "delivery question".

In addition, the agent to whom the title was first brought discussed the issue of the apparent illusory nature of the instrument setting up the trust. This instrument sets up the settlor as sole trustee and sole lifetime beneficiary. It is Company policy that transfers into living trusts of this nature, which may be valid in states such as California or Florida (and usually called "grantor trusts"), are not presumed to be valid under the laws of the State of New York.

According to the agent, the settlor/trustee beneficiary left two daughters, and one of the daughters is the successor trustee and remainderman of the trust (the other is a remainderman for all or a portion of "liquid assets" of the trust).

This matter can be cleared if the will is admitted to probate, and the surrogate rules the trust valid; in which case, the first daughter can convey as successor trustee in accordance with the trust. Alternatively, if the will is admitted to probate and the surrogate rules the trust invalid, the first daughter can convey as executrix in accordance with the will. Any other scenario that has been discussed involves having the second daughter either join in the deed or execute a quitclaim deed for recording.

This title cannot be insured unless all the underwriting issues are cleared through Company Underwriting 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.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
6.38 Fraud
 
19.44 Trust And Trustees
Exceptions Manual:
None
Forms:
None