The Dirt Lawyer's Blog Archive

Have you been impacted by the closure of the retail or other direct operations of Lawyers Title or Commonwealth Land Title? Some good people I know have lost or are losing their jobs. I don't even have the full story of the impact yet. I do understand -- through a press release -- that the residential closing offices in Illinois except Crystal Lake were all closed yesterday. That said, please note that agency operations have not been impacted negatively by the merger (As I was typing, in fact, an email from Fidelity came in with a new contacts list.) Please therefore feel free to contact my colleagues at River West National Title & Escrow by email or at 312-646-1290, and they'll do whatever they can to help you out. Best wishes to all....

CoStar reports the ubiquitous Younan Properties is taking the plunge on 180 N. LaSalle, with a closing date of no later than December 17. There's light at the end of the tunnel? That's what panelists were saying in Irvine yesterday. If you own a title policy through LandAmerica or are closing a deal with them, don't panic. Fidelity has you covered . If you have a 1031 account with them, then, you may have a problem . That company and the holding company went bankrupt. Lawyers Title and Commonwealth Land Title did not and are being sold to Fidelity and are doing business as usual. Bailout money and CRE: where's ours ? Doug Cornelius has a great post on the New York Daily News "stealing" the Empire State Building by preparing and recording fraudulent deeds. Apparently they conveyed the building right back the next day, but I agree with Doug (caveat: I am also not licensed in NY) that someone will get in trouble over this one way or another.

But now it's on much better terms for Fidelity. The skinny? LandAm apparently had a toxic exchange subsidiary that invested about $290 million in auction rate securities that may take forever to get rid of. And you need to access that money to faciliate the exchanges. In short? Liquidity crisis. So the solution? File Chapter 11 and sell the money making parts of the company, Lawyers Title and Commonwealth, to Fidelity. This of course assumes the deal gets past regulatory approvals, and I think it will. So FNF gets the cake without having to eat the poisonous part of the business. As an agent of these companies, I see this as a good thing as we will have the backing of the 800 pound gorilla in writing policies. I don't know, however, how this might affect (a) day to day operations (I am told not really), and (b) current employees in direct operations at Lawyers and Commonwealth. We are being told the local level relationships will not change. UPDATE : The full tex...

Fidelity decided to terminate its acquisition of LandAmerica, as was its right at the end of the due diligence period. This came to me in an email from LandAm today: Why did Fidelity decide to terminate the merger agreement? We were informed that the principal reason for their refusal to go forward was the pessimism over the current and foreseeable real estate economy and not because of any negative finds concerning our company. What is the financial viability of the LandAmerica underwriters? The LandAmerica underwriters, Lawyers Title and Commonwealth, have over $300 million in combined statutory surplus. And we have some of the industry’s most stringent requirements for reserves in place to protect our policyholders. The LandAmerica underwriters’ claims reserves are backed by over $1.1 billion in cash and investments. Take that as you wish. I know they have cut back to or even beyond the bone in staffing to get through the crunch. It'll be interesting to see whether the bo...

As an agent for LandAmerica , thanks to my ownership interest in River West National Title , I was wondering about the company's future. The stock was down about 90% this year and 3Q financials were delayed. I figured the company was looking for a buyer (no easy feat in this market) or a Chapter 11. We got the former. Subject to the usual contingencies -- and presumably antitrust approval -- Fidelity National's buying the company . Here's the press release . You'll know Fidelity better in Chicago through brands such as Chicago Title and Ticor, just as LandAmerica is better known through Lawyers Title and Commonwealth. I don't know what impact this will have on our operations, but I hope of course it will be a good one. We'll just have to see how this all plays out. So many people in the industry have lost their jobs lately that you need a scorecard to figure out who is left.

The Tribune has a good story today about, frankly, the excesses of the cowboy dealing that was going on the last few years. Ticor Title Insurance Company is refusing to pay out on a lender's title insurance policy where Countrywide was the lender on the grounds that Countrywide was grossly negligent in its underwriting of the loan that led to the claim. (Full disclosure: my title company, River West National Title & Escrow , is not a Ticor agent, but it is an agent of a competitor .) In essence, what happened was this: the owner of a property on the South Side died in 2001 but the deed was fraudulently transferred through forged deeds, notarized documents from relatives, and loans originated by still more relatives. Countrywide quickly foreclosed on the house and sold it to a speculator, who, by the way, found the dead body of the original owner's son inside. Gross, huh? Anyone who spent more than five minutes looking at the file would, in my opinion, have seen some ...

CNN is reporting about a subdivision in Orlando that apparently contains, oh, live bombs . Yes, you read that right. I don't know what the law is in Florida, but I can't see anything that would actually cover this on a disclosure report in Illinois. Maybe that's because no one in their right mind ever thought someone would build on a, um...bomb range. I've heard about unexploded ordinance in the UK many times, but here? Not so much. Interestingly, Nearly two decades ago, the 1989 development order, in which the county granted the permission to develop the land, shows that builders and developers knew "of the site's history of military use." Wouldn't the terms of a development order typically show up on a title report? Was this excluded, and why? I know I have seen development orders when reviewing title before? Of course, there will be inevitable lawsuits against the developer for failing to disclose this. No one wants to buy, no one wants to le...

If you've said that or heard that or even thought that, then read this . What a great 1L Property question that story would be. For those of you of don't want to read it, the story is one of a home being built on someone else's property eleven years ago. It is more complex than that, so do go take a look. And think of this the next time you even dream of doing a real estate deal without a lawyer, a survey or title insurance to cover your behind. BTW, the dean of the ucla Law School agrees . (Thanks to Lin Hanson , an outstanding senior member of the bar who goes out of his way to help his fellow attorneys on a listserv to which I subscribe, for pointing this one out.)

You end up working twice as hard when you get back. Some random Monday thoughts: Lisa Michelle Galley has some thoughtful comments on green lending in a post from yesterday . (P.S. -- Lisa, I agree with you --- seems like underwriting spin to me.) Calgary -- yes, Calgary??? has the second most expensive office space in North America according to CBRE. (Courtesy of Deal Junkie.) Four major title companies are being hit with class action lawsuits alleging they are "charging customers for services performed by other companies involved in the residential real estate settlement process." (Note that River West's underwriter, LandAmerica , is not a party.) Big shopping centers in Will County (including some I believe I've written about here before) are being delayed due to economic conditions. While I was gone I missed this excellent interview with Barry Sternlicht. No more shopping at Sharper Image, at least not the brick-and-mortar version. All of the 86 remaini...

I can finally tell you why I have been away from my blogging efforts more than I'd like for the last month or so. I am pleased to announce that River West National Title & Escrow LLC opened for business this morning in the building where my Chicago office is located. No, I am not giving up my law practice. This is a completely separate operation. I will spend a small amount of time on the company but I am really more of an investor. And here's why. For a few years now, I have been becoming more and more frustrated with the level of service I have been receiving from some title companies on deals on which I was working. The frustration only got worse when I left my last firm (which, while a smaller firm, does only real estate and is thus a player having considerable influence with title companies). Recently, I've had deals held up and fees rise tremendously because I was dealing with people who could not think outside the box. The sentence I kept hearing was, ...

I had a nice round of golf Friday with a friend who is one of the most seasoned veterans in the commercial title insurance business, and one of my four or five "go to" people that I would call on to do a deal with me if had the choice. He's bailed me out of more than one crisis in my career. As we often do, we spent a little time swapping war stories on transactions, and I heard one that made think that, no matter how long you've been in real estate, you'll never encounter every crazy fact pattern. And this one was really bizarre and a little scary if you are buying land, so much so that I had to share it with you. Here's the basic story: buyer and seller enter into a contract to sell property in Cook County. For you out-of-towners, Chicago is in this county. The property was in a "special service area" (SSA) created in the 1970s, meaning that extra tax levies can be imposed on the land. The title company pulls title and sees the assessment area...

First American Corp., known by many in the industry as FATCO, is cutting another 1,300 jobs , bringing the total to 1,900 since the second quarter. FATCO also appears to be taking a serious look at moving more and more titled-related work offshore . Title companies should remember the following: my clients send work to title companies not because of the name. Nor is price even the prime consideration, although it plays a secondary role. My clients pick title companies because of service and the ability to underwrite transactions creatively. An underwriter who can think outside the box is worth a fortune, and in my opinion, worth paying a little more premium because if a deal does encounter a title problem, the legal fees alone will eat up the savings by using a company that will not think outside the box. (Note that I say "my clients" pick the companies. These days I rarely get to pick the title insurer in a deal because the sales people have gotten smart and have gone d...

Kroger is building a new grocery store down here in Bourbonnais and it was scheduled to open on September 13. Unfortunately, in a situation that almost reminds me of a bar exam question, the opening has been postponed indefinitely because there is no "curb cut" permit, or a permit to access the property via the adjoining street. (Kroger operates in a nearby building that it rents; I know one of the owners of that location and I’m sure that person is happy.) I do not purport to know all the facts here, nor am I assigning blame or even suggesting that anyone is in fact to blame. But, had I been involved, is there anything I could have have done to try to prevent this problem? Maybe, maybe not. At the least, I would have tried to obtain title insurance over this issue when buying the land. A basic title policy only insures ownership of the property in question. In a commercial deal of this size, if representing the buyer I would have insisted upon obtaining an access end...

I thought it might be interesting to talk about legal terminology from time to time. Watching an old episode of The Jetsons was the clincher to start with encroachments. An encroachment is when a structure intrudes on to the land of another. Usually it is a fence, a garage or some kind of building. Sometimes an encroachment can be on to someone's easement, which is one form of a right to use another's property. A common example of this is a toolshed built over a utility easement. I cannot tell you how to deal with any particular encroachment because the resolution of such a matter is really done on a case-by-case basis. Sometimes it is a big problem, other times it is not. Sometimes title insurance is available, insuring over forced removal or diminution of value or against adverse possession (an interesting topic for another time), and sometimes ( e.g. , especially with fences) it is not. As we all say, consult your attorney. Some of you are probably asking: why the he...

Notwithstanding complaints that it is expensive and unnecessary (an article late last year from Forbes, no less!), title insurance is still a vital player in the real estate business. And I happen to disagree with the conclusion, at least from my perspective as a commercial guy who also needs extensive escrow services and other real estate related help. Title companies can be either a huge help in getting a transaction done, or a huge hindrance. I have encountered both over the years. I have always tried to steer business to companies and underwriters that think outside the box to solve problems that less creative types thought were unsolvable. Many people think that the lawyers control who picks the title companies to do the deals. And maybe some do, especially in states where lawyers are much more involved in the process, such as Florida or Georgia (where most real estate lawyers, even in commercial deals, are title agents and derive significant revenue from it). But guess what?...