Retention of Title Records Training

IL Statute and IDFPR guidance

The Illinois Title Insurance Act requires title agents to maintain certain records for at least 7 years after issuance of the corresponding title insurance policy. Section 215 ILCS 155/21.3 provides that “evidence of the examination of title, if any, and determination of insurability for business written by a title insurance company or its title insurance agent … shall be preserved and retained by the title insurance company or its title insurance agent for as long as appropriate to the circumstances, but in no event less than 7 years after the title insurance policy has been issued … or as provided by applicable federal law.”

FNF Agency Contract

FNF currently requires its full-service agents to maintain all required records for the state-mandated duration of time and provide records to FNF in a timely manner upon request. These obligations are imposed through FNF’s standard written agency agreement, which also grants FNF the right to terminate the agreement of any agent that fails to comply with applicable record retention requirements.

Consistent with Illinois state law, our standard title insurance agency agreement requires title agents to prepare, preserve, and maintain a separate title file “containing all documents upon which Agent relied to make its determination of insurability, including, but not limited to: affidavits, maps, plats, lien waivers, surveys, title reports, searches, examinations, and work sheets, together with a copy of each commitment, policy, endorsement and other title assurance issued.” Such records “shall be preserved in accordance with applicable State document retention requirements, or in the case of a legal hold order, in accordance with instructions of Principal.”

Federal guidance

§1026.25 of Regulation Z provides Federal record retention requirements under the TILA-RESPA Integrated Disclosure Rule. There are three significant record retention requirements under the Rule:

  1. A creditor must retain copies of the Closing Disclosure (and all documents related to the Closing Disclosure) for five years after consummation.
  2. The creditor, or servicer if applicable, must retain the Escrow Closing Notice and the Post-Consummation Partial Payment Policy disclosure for two years. These requirements are derived from RESPA (Regulation X).
  3. Creditors must maintain “evidence of compliance” with the Integrated
    Disclosure to meet provisions of Regulation Z. While not very specific, this should include the Loan Estimate forms and all documents related to the Closing Disclosure.

Regulations X and Z permit, but do not require, electronic record-keeping. These records can be maintained by any method that reproduces disclosures and other records accurately, including computer programs.

Records required to be maintained

FNF agents must maintain all documents upon which agents relied to make its determination of insurability, including, but not limited to:

  • affidavits,
  • maps,
  • plats,
  • lien waivers,
  • surveys,
  • title reports,
  • searches,
  • examinations,
  • work sheets, and
  • copies of each commitment, policy, endorsement and other title assurance issued

 

Communications

FNF expects that all its agents take the requirements for records retention under state law and our agency agreements seriously. Statutorily required records must be available for regulators to review upon request. Additionally, both FNF and the Illinois Department of Financial and Professional Regulation expect that full-service agents will require the attorney agents they engage to likewise retain required records for the state mandated duration of time.

During routine audits of our agents, FNF will review agents for records retention compliance. If FNF finds during an agency audit that the agent has not maintained files properly, it may make recommendations in its audit report that the agent improve its file maintenance procedures.

Failure to comply with both Illinois and FNF requirements regarding records retention may result in adverse consequences, including termination of the agency relationship with FNF.

Questions

If you have any questions about these requirements or what documents are expected to be retained, please contact your FNTG agency underwriter.

(THIS MEMO IS INTENDED FOR THE AGENTS AND DIRECT OPERATIONS OF FIDELITY NATIONAL FINANCIAL AND IS NOT TO BE FORWARDED WITHOUT THE EXPRESS WRITTEN CONSENT OF FNF.)

Your Underwriting Team

Jeff York
Jeff.York@ctt.com
Direct: 312-223-2328

Dawn Godlewski
Dawn.Godlewski@ctt.com
Direct: 312-223-2338

Dan Johnson
Daniel.Johnson@ctt.com
Direct: 312-223-2727

 

DOWNLOAD MEMO

Record Retention Bulletin For All NCS Agents

NCS Chicago would like to remind our valued Agents on the policies for record retention.

The IL Title Insurance Act requires the retention of certain records for at least 7 years after issuance of a title insurance policy or as provided by applicable federal law.

Record Retention Training

Chicago Title Insurance Company (“NCS Chicago”) will create training on record retention requirements required under the Illinois Title Insurance Act, rules and regulations promulgated pursuant to the Act, and federal law, which NCS Chicago shall post to its website and make available to all of its agents. (See attached bulletin.) NCS Chicago will incorporate such training into its new agent on-boarding process and into its bi-monthly training webinars for agents.

Chicago Title Insurance Company will require its full-service agents to maintain copies of their contracts with attorney agents, including, but not limited to agreements respecting title premium splits or other compensation. This requirement will be incorporated into all trainings as well.

Audits

As noted in the attached FNTG bulletin, Chicago Title Insurance Company will conduct periodic field audits of its Agents to ensure compliance regarding retention of documents.

CTtalk: Advance Survey Analysis

In our latest edition of CTtalk, we provide an in-depth look at analyzing surveys, from gaps and overlaps to conflicting legal descriptions.  Whether you're new to the title insurance industry or a seasoned professional, this article will help all real estate professionals gain a better understanding of surveys and how they are an integral part of a real estate transaction.

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Cannabis Customer Memo

Download Customer Memo

Schedule B, Part I of all title commitments issued by Chicago Title Insurance Company (“Chicago Title”) now include the following:

      1. Notice: Please be aware that due to the conflict between federal and state laws concerning the cultivation, distribution, manufacture or sale of marijuana, the Company is not able to close or insure any transaction involving Land that is associated with these activities.

While a number of states have legalized the cultivation and distribution of marijuana at various levels, it remains recognized as a Schedule I controlled substance by the federal government. Further, the manufacturing, distribution, or possession of marijuana is punishable under the Controlled Substances Act (the “CSA”).  In the event of federal prosecution and when read with the Supremacy Clause of the Constitution, the CSA would govern and supersede any state law that does not agree.  Given the conflict between federal and state laws at this time, Chicago Title will not insure land that is associated with marijuana-based activities.

Outside of the above, we have received inquiries concerning Chicago Title’s stance on insuring land that is used for the production, distribution and/or sale of hemp products and hemp-derived products such as Cannabidiol (CBD).  While it is important that you reach out to your Chicago Title, NCS Chicago account manager to begin conversations concerning our willingness to insure land involving any such related uses, the following shall serve as basic guidelines in these areas:

Hemp

Under the recently passed Agriculture Improvement Act of 2018 (the “2018 Farm Bill”), the production of hemp has been legalized on a federal level, subject to the conditions contained therein.  Chicago Title is willing to insure land containing hemp facilities, provided we are able to determine that such facilities exist legally under both state and federal law—with all necessary permits/licenses issued by the appropriate authorities.

CBD

CBD and other hemp-derived products are likewise legal under the 2018 Farm Bill, provided the hemp from which they are derived is produced in accordance with the Bill.  As a result, Chicago Title is willing to insure land containing retail establishments being used for the sale of such hemp-derived products.

Since the regulation of the above remains in a state of fluctuation, it is important that all specific questions concerning Chicago Title’s position be directed to your Chicago Title, NCS Chicago account manager.  We strongly encourage that our customers have conversations with their clients about the planned use(s) of land and address questions as to Chicago Title’s willingness to insure as early as possible.

2019 Mid-Year Company Fact Sheet: How We Performed

The second quarter was a strong performance for our title business, as our Fidelity National Title Group family of companies generated adjusted pre-tax earnings of $363 million and a 17.7% adjusted pre-tax title margin, both of which represent our best quarterly performance since the third quarter of 2003.

Download our Company Fact Sheet HERE to see how we finished with our best quarterly performance in nearly 16 years!

What is Blockchain and How Will It Impact Real Estate?

By Paul Peterson
V.P. & Senior Underwriter
Chicago Title Insurance Company

Download the article HERE

The simplest definition of Blockchain that I have seen is “Blockchain:  a type of encrypted electronic transaction ledger in which new information can be added, but previous information (which are stored in blocks) cannot be edited or deleted.”  Yet Blockchain is more than an electronic encrypted abstract that is contained on multiple disbursed computers that should make it nearly impossible to simultaneously hack and change. It is an abstract that can be viewed either by the public or only those who have a passcode access.  New information can be entered onto the chain only by parties with passcode access.  If the Blockchain is in essence made the title certificate to an asset, you can transfer the Blockchain “token” representing that asset to another party through your passcode access.  Blockchain is the underlying program through which cryptocurrency is transferred.  There is already a story, however, of parties losing millions because the company they stored their passcode with cannot unencrypt the deceased president’s computer that contained the passcodes.  If you combine Blockchain with what are called smart contracts, you can set up escrow agreements and simultaneously transfer the token that is title to the asset for cryptocurrency or cash and have a ledger for both parties of the transfer.  Google “Blockchain for Dummies” and you will get a nice explanation by IBM and other authors of Blockchain.

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News Brief: MyDec Required for All Cook County Property Transfers

CLICK HERE to download a full version of the notice.

Effective January 21, 2019, prior to recording, all Cook County property conveyance instruments must be accompanied by an electronically-completed Cook County Real Estate Transfer Tax Declaration, aka, a "MyDec," which can be completed via the Illinois Department of Revenue's MyDec Transfer Tax Portal - https://mytax.illinois.gov/mydec. The requirement to use MyDec is already in effect for all property transfers in the City of Chicago, and is being extended to all property in Cook County, including "exempt" and "non-exempt" transfers.

We encourage you to contact our office with any questions or concerns.

Remembering Doug Karlen

By Robert C. Strybel
Vice President & Senior National Commercial Counsel
Chicago Title Insurance Company, NCS Chicago

I had the pleasure of working with Doug Karlen for the better part of twenty years. I benefitted greatly from his vast title knowledge, his almost encyclopedic memory, and his ability – usually safely within company parameters – of finding creative solutions to the most-complex of title issues.

As much as I valued the insight and expertise he so readily shared, what I cherish most is remembering Doug not just as a colleague or a mentor, but as a friend.

For a number of years – first at Clark Street and later at 10 South LaSalle – Doug was a regular at our lunch table, which featured an ever-evolving cast of underwriters, management and staff. While no one would confuse us with the Algonquin Round Table, we prided ourselves on occasionally solving a world problem or two – even if it only related to the Cubs’ bullpen.

To be sure, there was a steady stream of title talk, but topics ran the gamut: music, sports, history, current events – little was off-limit. (A running joke: “Politics is too divisive. Let’s talk about religion instead.”) I learned of Doug’s passion for classical music and opera – he was a regular at the Lyric, and would share his thoughts and critiques on the latest performances. Would that his appreciation rubbed off on me; after I butchered the operatic origins of the musical “Rent,” I was lucky not to be banished.

As was Doug’s way, he rarely sought to be the center of attention. Instead, like the good teacher that he was, Doug often would get the discussion started simply by throwing out a question - “So … what’s this I’m reading about a new court case/news story/title memo?” – knowing the table would run with it.

Speaking of memos: the lunch room also was where I was introduced to Doug’s prescience in handling memos and bulletins.  “The Karlen Rule” dictated that such missives should be held from distribution for three days, in anticipation of receipt of the inevitable revision.

Doug had a sharp sense of humor; dry, occasionally biting, but never offensive. This also was reflected in his writing – thoughtful and detailed, but with enough wit to keep a reader’s attention. “Title Granny” is pure Doug: who else could deliver such a concise synopsis of title insurance in such an amusing manner? That was Doug’s gift – the ability to explain the arcane (and frequently mundane) in a way even his Bubbe could understand.

Doug’s writing skills also made him an excellent sounding-board for my own efforts. I had the good fortune of co-authorizing a paper with him – admittedly more his work than mine – and his comments to my input were detailed and constructive.

That Doug could accomplish all this, despite his nearly life-long low vision, speaks volumes of his determination. For those who only knew Doug from emails and phone calls, you may never have known the efforts he put in to simply reading a title report or a court case. And that was how Doug wanted it – he refused to be defined or limited by his disability.

At his retirement dinner last year, Doug urged those gathered to be compassionate, and generous with both time and knowledge – to be a “mensch;” that is, a good human being. In word and in deed, Doug was a true mensch – and there’s no need to wait three days for everyone to know that.

Endorsement Handbook

The latest version of Chicago Title's Endorsement Handbook is now available to download!  The basic coverages provided by the standard American Land Title Association (“ALTA”) title insurance policies address many of the most common title insurance needs. Often, however, certain insureds or certain aspects of a specific real estate transaction raise special concerns. By requesting an endorsement to the title insurance policy, an Insured owner or lender may be able to receive insurance against the risk of suffering loss or damage by reason of a particular matter that is beyond the coverage of the standard policy jacket.

This handbook is intended to serve as an introduction for our customers to the most commonly requested title insurance endorsements. It contains a brief commentary introduction to each endorsement followed by the text of each such endorsement

Click HERE to download a copy!

Karlen’s Korner Special Edition: Looking for State Tax Liens

By Douglas M. Karlen
Regional Counsel (Retired)
Chicago Title Insurance Company

Click HERE to download the article.

Q: How do you find a state tax lien?

A: You could look it up—on the State Tax Lien Registry.

Q: What the heck is the State Tax Lien Registry?

A: Well, . . . see Public Act 100-22.

Public Act 100-22 (SB 9, the budget and revenue bill), among many other things, creates the State Tax Lien Registration Act, codified at 35 ILCS 750/1-1 et seq. The Act is intended to establish a statewide filing system for notices of lien in favor of and enforced by the Illinois Department of Revenue (IDOR). See 35 ILCS 750/1-5. This statewide filing system is an internet-based state tax lien registry to be operated and maintained by IDOR. IDOR will file all notices of state tax liens in the registry, and it will no longer file notices of state tax liens with county recorders. This portion of P.A. 100-22 is effective January 1, 2018.

IDOR must file notice of a state tax lien in the state tax lien registry within 3 years of the date on which final tax liability is determined. 35 ILCS 750/1-10. By filing the notice in the registry, IDOR perfects a lien that immediately attaches to all property (including real property) owned by the debtor (that is, the delinquent taxpayer) as of the date of filing or acquired thereafter. 35 ILCS 750/1-20. The lien takes priority from the filing date and remains enforceable for 20 years from the filing date. 35 ILCS 750/1-25. Thus, a state tax lien filed in the state tax lien registry will affect real property in exactly the same manner as state tax liens currently filed in the offices of county recorders. There is, however, one difference; liens appearing in the registry will encumber all of the debtor’s property located anywhere within the State of Illinois—not, as under current law, just in the county in which the lien is recorded.

When IDOR files a notice of state tax lien in the state tax lien registry, IDOR must include in the notice:

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