This year has been another successful endeavor for the Idaho Land Title Association. On a positive note the Association, in collaboration with many of its members, was able to work with the Depart-ment of Insurance and address its concerns with the issuance of commitments with to be deter-mined buyers. In addition the membership benefited from another year of positive financial performance for the Association.
Many of these successes are due in a large part to our outgoing president, Brian Stone, the board members, Executive Director, our lobbyists, and the committee members who donate their time to help our industry as a whole. I would like to give a big thanks to all those who have participated in the ILTA this past year. I hope that you continue to support our Association into the future.
This year’s convention was held in Suncadia, WA. It was another successful five state convention. We had many great educational experiences and had an opportunity to see a beautiful part of the state of Washington. That being said, we are very excited for the 2015 Pacific Northwest Conven-tion which will be held in Coeur d’ Alene, ID the 6-8th of August. We have already begun planning for the event and are looking forward to provide a great experience for all of the attendees. We hope you put it on your calendar and come spend time with us in Coeur d’Alene in 2015.
As Brian steps in to the role of past president we have a new board member to welcome to the ILTA. Daryl Olsen from Alliance Title will represent the South East region for the ILTA membership. Along with Daryl we will continue to benefit from the current board of directors consisting of JT Jacobsen from Kootenai Title, Cindy Guanell, First American Title Insurance Co., Brian Stone, Alliance Title & Escrow, and John Holt, Stewart Title. The ILTA is excited to work with such a great group of people and appreciates the time they donate to be a part of this organization.
I would also like to extend a thank you to our Committee Chairs. They spend a lot of time and effort to help the ILTA provide its members with great benefits. We appreciate all that they do. If you get a chance please reach out and thank them.
Liaison and Convention-John Holt
Political Action Committee-Cameron McFaddan
I am looking forward to this next year as the ILTA president. We will be focused on continuing to providing the Association members with value. The ILTA strives to bring benefits to its members through our legislative efforts, judicial involvement, educational opportunities, IPAC and TIPAC efforts, and liaising with the members and DOI.
Convention Business Meeting Minutes and Committee Reports
The Business Meeting at the annual convention was called to order and conducted by Brian Stone. A summary of the minutes is as fol-lows:
1. Financial Statement for the year—January 1, 2014 to June 30, 2014 was distributed. The Association is in a healthy state and the financials were reviewed and approved.
2. Brian presented his President’s Report summarizing the year’s highlights:
- ILTA successfully operated within budget
- Continued to maintain our membership numbers with a 7.6% membership increase due primarily from existing opera-tions expanding and the addition of a new underwriter (North American Title Insurance Company)
- 2014 153 Members consisting of 127 agents; 18 associates; 8 underwriters
- 2013 144 Members consisting of 118 agents; 19 associates; 7 underwriters
- Held 11 scheduled Board & Liaison Committee Meetings
- Liaison Meeting with membership and DOI covered or discussed DOI related issues, Legislative matters, Case Law review and other topics as required.
- Communication with DOI representative at the Liaison Committee Meetings
- Continued the 27 year communication process with the State of Idaho DOI
- Retirement of Dale Freeman in January 2014 and appointment of Jim Scanlon in April 2014
- Unlicensed products and companies, insurance or non-insurance products
- Consumer related issues
- National trends and news and NAIC updates
- February 28, 2014 DOI Advisory and Data Call
- Funds raised: $2,236 for IPAC year to date and contributed $2,500 to candidates
- IPAC account balance as of June 2014 is $7,232
- IPAC account balance as of June 2013 was $6,475
- ILTA attended the ALTA National Legislative Conference in Washington D.C. Kris Ellis as the Legislative Chair at-tended on behalf of the ILTA.
- Annual Education Seminar continued its success with 89 attendees and the 3rd annual casino night IPAC fundraiser. This was a slight decrease in attendance from prior years.
- Break even for event
- ALTA Best Practices, fraud prevention, and agent and underwriter panels were highlights
- Legislative Activities general summary
- February 28, 2014 DOI Advisory and Data Call
- Legislation for Underwriter filed rates for CPL was introduced
- ILTA submitting an Amicus brief on the Parkwest trustee definition
- Working with the Idaho Association of Counties on the multi-titled documents issue
- Working on the oil and gas lease issue
- Promoted TAN membership and reached all goals with ALTA to increase the national grass roots network Distributed quarterly ILTA newsletters over the past year
3. Committee reports were made:
Liaison Committee—John added to Brian’s comments about the past year’s Liaison meetings:
The major focuses were communications with the DOI regarding consumer issues, federal and NAIC news and trends; CFPB issues and BEST PRACTICES; and, legislative issues. The Liaison Committee met 11 times the past year. Working with the DOI and the transition from the retirement of the DOI primary contact, Dale Freeman, to his eventual replacement, Jim Scanlon, has been a key focus. Dale was cognizant of unlicensed products and entities and the detrimental impact those products and entities have on the title industry. Arlene Barrie was involved between Dale and Jim and Arlene is a market conduct examiner and her focus seemed to be on market conduct issues and statistics. Jim comes from a property and casualty background and is working to learn about the title industry and recognizing its uniqueness in the insurance field. Jim has actively participated with the ILTA working group on the cancelation fee issue and TBD issue that came up from recent DOI audits.
Bob highlighted a couple of new cases. A full report of the these cases follow in this Newsletter.
Les Lake recapped the successful Ed Seminar that focused on Best Practices and fraud prevention issues as well as a well received and frank discussion on issues from an agent panel and an underwriter panel. Development of best prac tices looks to continue to be an ongoing process that will require due diligence in conjunction with continued review and education on CFPB requirements. If you have suggested ed topics for next year’s seminar contact Les at *protected email*.
Kris highlighted the legislative issues. A full summary follows in this Newsletter.
John advised Idaho is hosting the 2015 Pacific NW Convention in Coeur d’ Alene August 6-8 at the Coeur d’ Alene Resort. Convention will be on a Thursday to Saturday format but most likely will be a bit different than the past conventions in Portland and Suncadia. The meeting will begin Thursday with optional underwriter meetings followed by state business meetings, the icebreaker and a bbq. Friday will be a full day of education with speakers and breakout sessions to maximize education. Friday will end with a keynote speaker at the banquet and installation of officers. Saturday will have golf and additional optional meetings with underwriters.
The Committee nominated Quinn Stufflebeam as President; Cindy Guanell as VP Southwest; J.T. Jacobsen as VP Pan handle; Daryl Olsen as VP Southeast; and, John Holt as Secretary/Treasurer. Brian Stone to serve as Past President. A significant number of email votes were submitted in addition to the vote at the Business Meeting and the slate of officers were unanimously approved.
By Bob Rice
Terrie H. Rowley v. Ada County Highway District, Idaho Supreme Court, Docket No. 40672 (April 8, 2014).
This case concerns the ownership of a ten-foot-wide walkway in a Boise Subdivision and arose after Rowley sought an injunction to remove the shed her neighbor placed on that walkway. The district court held that (1) the subdivision plats showed the original developers clearly and unequivocally dedicated the walkway to the public and (2) ACHD owns the walkway. ACHD appealed the decision of the district court arguing that the original develop-ers did not clearly and unequivocally intend a public dedication and no statutory provision authorizes ACHD to own the walkway. The Idaho Supreme Court vacated and remanded with directions to the district court to enter summary judgment in favor of ACHD.
This decision hinges on the basis of what is necessary for a common law dedication. Under the common law, a public dedication must satisfy a two-part test. First the landowner must clearly and unequivocally indicate intent to dedicate the land to the public, and second the public must accept the offer.
The Supreme Court determined that the dedication language in the plats was crucial. The subdivision in question was platted in two steps, one plat was filed in 1950, the second plat filed in 1954. The 1950 plat showed an unla-beled strip of property running between the parties’ two lots. This unlabeled strip is the ten-foot-wide walkway. The 1954 plat showed the same strip of land between the parties’ lots but this time labeled the strip as a “Walk Way”. The strip of land on both plats extended beyond the parties’ lots and connected with bordering streets.
The 1950 Plat stated: “[t]he owners do hereby dedicate to the use of the public forever all streets, not heretofore dedicated, as shown on this plat.” Thus, the plat dedicated only streets to the public ; it did not dedicate any ease-ments or rights-of-way. The 1954 Plat stated: “[t]he owners do hereby dedicate to the use of the public, forever, all streets and rights of way easements not heretofore dedicated as shown on this plat.” The District Court con-cluded that the developers intent to dedicate the walkway was clear based upon the 1954 Plat’s dedication lan-guage, reasoning that if the walkway was not dedicated to the public, the 1954 Plat’s dedication language was meaningless since the roads had already been dedicated in the 1950 Plat. In other words the district court held that Smiths must have intended to dedicate the walkway to the public because the walkway was the only possible “right of way easement not heretofore dedicated.”
The Supreme Court reversed the District Court on the basis that an owner’s intent to dedicate land to public use must be clearly and unequivocally shown and must never be presumed by the court. The public dedication must be explicitly set forth on the plat.
Bank of Idaho v. First American Title Insurance Company, Idaho Supreme Court, Docket No. 41157 (June 17, 2014).
Bank of Idaho (Bank) made two construction loans to developers who planned to construct a fourplex on each of two adjoining lots in the city of Idaho Falls. The Bank loaned $227,041.30 to construct a fourplex on Lot 1 and $226,737.80 to construct a fourplex on Lot 2. Each loan was secured by a separate deed of trust which was in-sured by First American. Each Policy included an endorsement that the parties understood would insure against loss or damage that the bank might sustain by reason of a multifamily residence not being constructed on the lot. After discussions with representatives of the city, the developers changed their original plans and built both four-plexes on Lot 2 and built a parking lot with storm water retention and landscaping on Lot 1. The developers later defaulted on their loans, and the bank foreclosed on both deeds of trust. At the foreclosure sale, the bank ac-quired each lot by making a full credit bid on all amounts due and owing on the note secured by the deed of trust. The Bank then submitted a claim on the title policy with respect to Lot 1 to recover under the endorsement. The insurance company rejected the claim and the Bank filed a lawsuit seeking to recover under the title insurance pol-icy for the developers’ failure to construct a multifamily residence on Lot 1.
The district court held that the bank’s full credit bid terminated any liability of the insurance company under the terms of the title insurance policy. The Supreme Court disagreed and remanded the case back to the trial court. The Supreme Court based its decision to reverse on the endorsement insuring that a multi family residence was located on Lot 1 and the Conditions and Stipulations contained in the Policy. The Supreme Court did not deter-mine what damages the Bank incurred and remanded the case to the District Court for that determination.
Ultimately this case hinged on the Idaho Supreme Court’s conclusion that an ambiguity existed in the title policy between Section 2(c)(ii) and Section 9(c). The Supreme Court held that the words “all payments made” under Sec-tion 2(c)(ii) does not include a full credit bid by the insured at a trustee’s sale. The good news for the Title Insur-ance Industry is that the policy being interpreted by the Idaho Supreme Court was the 1992 ALTA Loan Policy. The 2006 ALTA Loan Policy, which is now the industry standard in Idaho, does not contain this ambiguity. That said, this whole mess could have been avoided if the title company would not have issued the endorsement insur-ing that a multi-family residence was located on the property when in fact it had not yet been constructed. It is not a good idea to issue an ALTA 22 Endorsement on bare ground.
Congratulations to Derek Mathews and George Peters of the Washington Land Title Association for hosting this year’s con-vention at the Suncadia Resort in Cle Elum, Washington. Suncadia proved to be a beautiful, refreshing and relaxing mountain resort and the convention was a success on the educational and networking fronts.
On the business/educational front the CFPB and ALTA’s BEST PRACTICES continued to be the highlight and the focus of the message from incoming ALTA President Diane Evans. Federal regulators are pressing and pushing and reminding lenders of their liability with enforcement actions. Lenders are responsible and liable for the acts of third party providers that harm consumers. This in turn emphasizes the importance of the title industry to establish BEST PRACTICES and be ready to dem-onstrate compliance with written procedures and policies. ALTA continues to develop the BEST PRACTICE framework that includes 1) Best Practices, 2) Assessment Procedures, 3) a Certification Package, 4) Assessment Preparation Workbooks, and 5) Policy and Procedures Creation Guidelines. The ALTA is further developing an “Elite Provider Program”. 109,000 com-plaints have been registered with the CFPB on their online complaint board. Working with the CFPB and fostering a better relationship is a primary goal of ALTA together with further enhancing TAN membership which has grown to more than 7500 members. With federal regulation and further legislative reform in the financial industry at the forefront, growing our grass roots network (TAN) and being active with the ALTA and our state land title associations has never been more important.
Ted Jones presented a regional/national economic report in his entertaining and humorous style. The economy and reach of the CFPB is having a continued slowing affect on real estate and the title industry. There are more renters in their 20-30’s due to large student loan debt. Jobs are still a vital component in the recovery of the economy and it has been the slowest in 4 dec-ades with little incentives for small business, although the northwest has fared better for business and job potential. Housing sales are coming back but with more boom on the high end. The lower end is having an opposite result due to the more strin-gent requirements in getting loans and the CFPB qualified mortgage requirements. New home sales are slightly increasing on a whole but builders are also facing issues that necessitate a careful eye for a possible mechanic lien boom. Interest rates are ex-pected to increase with less lending expected in the next year since 2000. While the economic growth may be slow it is coming back but with higher interest rates companies should brace for more normal levels of refinance business (less than 20%). Com-mercial real estate has come back which has helped. The current state of politics (both republican and democrat) is contribut-ing to the stagnancy. Politicians seem to be consumed by their power and re-election to continue the power. With no term limits and no standout leaders or leadership focus on issues important to constituents is being sacrificed at the expense of poli-ticians working to maintain their personal power.
Diane Evans made a second presentation that focused on the CFPB. Title agent focus should be on ensuring compliance and readiness with the CFPB requirements. Securing information is vital. For example, are files on your desk and office secure? When you copy a driver’s license at closing do you take the file with you or leave it on the table? Does the recycle person pre-sent ID and/or are you familiar with him? Do you follow the person to the truck and watch the documents being shredded? Members should not wait to establish BEST PRACTICES. The CFPB is not going away anytime soon. In fact, it consists of 1362 employees and is growing. 109,000 complaints have been lodged on the CFPB online complaint board. The CFPB has collected $867 million in refunds to consumers and levied $119 million in penalties. Penalties have come from actions regard-ing illegal split of real estate settlement fees; kickbacks and referrals and giving of other things of value; inflated rentals; com-missions; side deals like builders finishing landscaping or a basement if parties go to a certain vendor; and, the use of affiliated businesses without using notice of disclosure forms about a possible conflict and advising consumers of their rights to choose. The CFPB continues to develop surveys and study projects to help consumers. Programs like the “Know Before You Owe”; studies and revisions to loan and closing disclosure forms for easier use; and, surveys on whether e-closings are beneficial are examples of ongoing projects. In summary, Ms. Evans advised self assessment is critical. It is critical for employees’ jobs, customers and survival. She recommends that each office assess themselves by September 2014 (October 2014 at the latest). While lenders are being held ultimately responsible and liable, vendors need to show and demonstrate their BEST PRAC-TICES to assure lenders that they are viable partners. It is advised to talk to your lender representatives. Talk to your software providers. Determine what you are doing to prepare for new forms. And, keep abreast of updates.
Other highlights of the meeting were breakout sessions on claims; fraud and cyber issues and the signs to detect and prevent; and, securing data.
Political and Economic Update
Idaho finished the fiscal year on June 30th $7.2 million ahead of the $2,808.2 million that was predicted in January 2014. The General fund grew 2.4% from fiscal year 2013 to 2014, which was slightly faster than the anticipated 2.1% pace. The $7.2 million surplus was the result of increased individual income receipts and miscellaneous revenue that more than surpassed the slight shortages in corporate income tax receipts and sales tax receipts. While the financial condition of Idaho appears to be stable the Republican Party is any-thing but. There is still not a clear Party Chairman: the past party chairman is suing the party to keep his chairman’s seat while others throw their hat in the ring assuming he is not. There will be several new legisla-tors once the dust settles in November. During the interim we are traveling the state meeting with current and potential legislators educating them on issues affecting the title industry.
Department of Insurance Update
The Department of Insurance issued a new advisory on July 25th that rescinded the two previous advisories and clarified the issue of cancellation fees. The ILTA had requested a further rules review after Jim Scanlon (new DOI liaison to ILTA) had voiced concerns about the large number of TBD’s that he considered to be illegal inducements. After reviewing several title companies’ practices and getting a better understanding of the industry Jim now understands there are very good reasons for TBD’s and would rather deal with them on an individual basis instead of trying to write a rule that would attempt to list the TBD’s that are not illegal inducements. Auditors will still be looking at TBD’s to determine if they are done with the willful intent of avoiding the cancellation fee. In those cases it may still be an illegal inducement. In the future the DOI will handle complaints with the particular title agent and the agents in that County where the complaint origi-nated. The ILTA, specifically the Legislative Committee, has spent a lot of time and consternation trying to resolve this issue and in the end there will not be a rule change. However, the ILTA has been very successful in helping Jim with his education/learning curve and we believe he knows the Association wants to do the right thing and will work hard to partner with the Department of Insurance as we move forward.
Other Legislative Issues
· The ILTA continues to work with the Idaho Association of Counties on a statute change to clarify that multi-titled documents only need to be recorded once and paid for once if they are relate to the same property.
· Monitoring the Department of Lands in anticipation of setback rules for gas and oil drilling.
· Monitoring Consumer Protection Letter legislation.
Kris and Larry
Newsletter July 2014_ – DOWNLOAD PDF