- July 17, 2009
- All Utah Issuing Offices
- Vendor's Lien Priority
Claims are currently being generated under the following scenario. An examination of the title reveals two deeds of trust (DT) recorded concurrently. The first recorded DT is to an institutional lender. The second recorded DT is a vendor's lien. This lien is sometimes called a seller carry-back loan because the seller secures a loan for part of the purchase price with a DT. Subsequently, the first recorded DT goes into default and the lender forecloses. This results in a trustee's deed back to the lender and then a conveyance from the lender to a bona fide purchaser. The vendor's lien is then assigned to an entity formed by Bruce Shapiro who is in the business of researching titles to spot this situation and then making contact with the vendor to purchase an assignment of the vendor's DT. One such entity is called Persimmon Investments, Inc. That entity then records a notice of default or otherwise notifies the current title holder and their lender of its intent to foreclose the vendor's lien.
The Shapiro entity's argument is that the vendor's lien enjoyed a special priority position to the first recorded DT that foreclosed because it is senior to the other loan regardless of recording order. The Shapiro entity argues, therefore, that the vendor's lien was not extinguished in the foreclosure and that the current title holders took subject to their still valid lien.
When you identify this situation in your examination of title, regardless of whether Shapiro or Persimmon is involved, you must except to the vendor's lien in any commitment and policy you write. In order to delete such an exception you must have underwriting approval from your local underwriting personnel or Stewart Legal Services.
Please refer to Bulletin MU000040 for information regarding insuring a loan when there is a concurrently filed vendor's lien.
If you have questions relating to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.
For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.
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:
- MU000040 Insuring Where There Are Multiple Mortgages Recorded Simultaneously
- Underwriting Manual:
- 15.72 Purchase Money Mortgages
- Exceptions Manual: