documentary stamps on short sales · 1 documentary stamps on short sales 2 eyes wide shut — case...

THIRD QUARTER 2008 • VOLUME 11, ISSUE 3

1 Documentary Stamps on Short Sales

2 Eyes Wide Shut — Case Law Update

3 Ez Jacket Is Ready To Use

3 More Discounts Through ORT’s StarsLink

4 Forged Mortgage Satisfactions

5 Celebrating Commitment

6 Ask Your Underwriter

O L D R E P U B L I C N AT I O N A L T I T L E I N S U R A N C E C O M PA N Y

Documentary Stamps on Short Sales■ By James C. Russick, VP & Florida State Counsel

In August, the FloridaDepartment of Revenuepublished an unofficial

statement that documentarystamps should be paid on theoutstanding principal balancedue on the promissory note,not the sales price of theproperty, when there was asale of real property for lessthan the amount owed.

Old Republic NationalTitle Insurance Companyimmediately realized thethreat this position posed toagents’ business. While mostother underwriters quicklysent a knee-jerk responsedirecting their agents tocomply, Old Republic Titletook a more deliberate, pro-agent approach. We did notsuggest the collection ofadditional documentarystamps for the value of anyrelinquished debt. Nor didwe encourage requiring holdharmless agreements. Weadvised agents to continuebusiness as usual.

This was not done lightly.It was predicated on athorough review of therelevant law and the strongpublic policy arguments. We

also elicited and received atremendous amount ofassistance and insight from adocumentarystamp expertand title agentwithin theRPPTL Sectionof the FloridaBar. At the endof the day, ourregionalmanager, ScottPierce, with adeterminationto protect thebest interests ofOld Republicclosing agentsaround thestate, set ourdirection andwe requested a meeting withthe Department of Revenue.

On August 29, 2008, OldRepublic’s lobbyist and I metwith the general counsel andtwo deputy directors forDOR. During that meeting,we discussed legislative his-tory, case law, the relevantstatute, and several publicpolicy issues. For their con-sideration, we presentedthem with sample due dili-

gence packages representa-tive of the documentationrequired by various lenders

when consider-ing whether toaccept a shortsale. At DOR’srequest, we alsoprovided actualredacted docu-ments (con-tracts, closingstatements, andrelated docu-mentation) fromtransactionsclosed by severalof our agentsaround the state.

Subsequently,the DOR issuedtheir official

Technical Advisory whichessentially adopts the posi-tion advanced by OldRepublic. Accordingly, docu-mentary stamps should con-tinue to be collected on theamount paid by the buyer tothe seller in a short saletransaction.

While the FloridaAssociation of Realtors also

While most otherunderwritersquickly sent a

knee-jerk responsedirecting their

agents to comply,Old Republic Title

took a moredeliberate,pro-agentapproach.

Continued on page 5—

ORT_NEWS_3RD QTR 2008.QXD 10/31/08 3:21 PM

Third Quarter 2008 —2— Old Republic National Title Insurance Company

The new case of Charles v.Florida Fo r e c l o s u r ePlacement Center, 33 Fla.

L. Weekly D1932 (Fla.App. 3Dist.), includes an interestingtwist on the liability and dutyof a closing agent. In C h a r l e s,a seventy-two-year-old widowowned a home she purchased in1975. The home had beenunencumbered since 1989, butin 2003 she took out a loan for$81,000 and secured it with amortgage on the property. Tw oyears later, she mortgaged theproperty again to secure anadditional $35,000. When shewas unable to make thepayments, the second lendercommenced foreclosureproceedings against her.

Shortly after theforeclosure action was filed,Mrs. Charles received anunsolicited visit from arepresentative of FloridaForeclosure Placement Center(“FFPC”), who allegedly said hecould help her save her homewithout losing ownership. Mrs.Charles agreed to his help andexecuted a power of attorney infavor of FFPC. Two monthsl a t e r, FFPC sent Mrs. Charlesto Quantum Title Services

(“Quantum”) to executedocuments that purportedlywould save her home fromforeclosure withoutjeopardizing her ownership. Ina c t u a l i t y, the documentsprepared by Quantum andexecuted by Mrs. Charles atthe closing were documentsthat transferred title to herproperty to a JacquelinePierre-Andre (“Pierre-Andre”),who was not present at theclosing. The “sale” wasfinanced with the proceeds oftwo loans in the total amountof $165,000, brokered by acompany named Envision.

Upon learning that she nolonger owned her home, Mrs.Charles sued all of the playersin this transaction, includingthe title agency, Quantum. A sto Quantum, Mrs. Charlessought to recover for claimssounding in fraud, conspiracyto defraud and negligence.Although the trial courtoriginally dismissed all of theclaims, with prejudice, forfailure to state a cause ofaction, the Third District Courtof Appeal reversed andremanded the case withinstructions to reinstate the

action. The court specificallyfound that the complaintalleged sufficient facts to statethe cause of action forconspiracy to defraud againstall of the parties and, asagainst the title company,Quantum, were also sufficientto support claims for fraud andnegligence.

Addressing the conspiracyto defraud allegation, the courtnoted that to be liable, each co-conspirator need not act tofurther a conspiracy; each“need only know of the schemeand assist in it in some way tobe responsible for all of theacts of his co-conspirators.” Inthis case, Mrs. Charles allegedthat FFPC intended to defraudher when it told her that it wasgoing to save her home withoutaffecting title, when the realintent was to defraud her ofthe approximately $55,000 ine q u i t y. The fraud was thencarried out with the assistanceof a straw buyer (Pierre-Andre), the mortgage broker(Envision) and the closingagent (Quantum), all of whomallegedly participated in asham “sale” that satisfiedMrs. Charles’ existing debts

Eyes Wide Shut — Case Law Update■ By Jeanne F. Murphy, Florida State Counsel

Continued on page 5—



EzJacket Is Ready to Use■ By Walt Donovan, Director of Florida Title Operations

We are pleased to announcethat Old Republic’sezJacket/ezRemit programs

are available to our resident Floridaagents. The program enablesagents to generate policy jacketsand remit statistical policyinformation through the StarsLinkweb site.

The ezJacket/ezRemit systemeliminates the need to store andaccount for paper jackets, andautomatically computes policy andendorsement premiums, calculatingthe agent share and underwritingremittance. Our goal is to have allFlorida resident agents enrolled inezJacket/ezRemit and to eliminatepaper inventory and log bookrecordkeeping by year-end. Inaddition to generating the jacketsthemselves, the program will allowyou to view and print reports forboth reported and unreportedjackets.

The program’s ezRemit functionenables agents to send their policystatistical information, creating anelectronic record of each remittance.Upon submitting the reportelectronically, you can send thepremium payment to Judy Ramirezand the Data Entry Departmentlike you normally do. Jacksonville-

serviced agents will continue tosend premium payments to LawanaSkipper. Since we continue to buildthe SPLANT database for your use,we will ask that you continue tosend the paper policies with theremittance.

Access to ezJacket/ezRemit isthrough our agents’-only website,StarsLink, and if you are not acurrent user, you will have toregister for StarsLink. Your agencyrepresentative will confirm yourStarsLink account informationbefore he/she visits you and will beable to assist you in registering, ifyou have not already done so. Aftersigning in to StarsLink, go to theAgent Services menu and selectezJacket/ezRemit. You will need to

register for ezJacket/ezRemit thefirst time you visit the site.Complete the registrationinformation and submit by clickingthe “OK” button. Authorization willbe approved by our state office andyou will receive an email with anactivation link to gain access to theprogram.

Your Agency Representative willcontact you to demonstrateezJacket/ezRemit, help you startusing this useful and efficientprogram, and pick up your unusedjacket inventory. We hope you willenjoy the relief from maintainingpaper inventory and log books thatezJacket/ezRemit provides.

More Discounts Through ORT’s StarsLink!■ By Debbie Compton, Agency Account Manager

As the Underwriter that focuses solely on its Agents, we appreciate the impact this challenging market hashad on you, and we understand you’re probably trying to save money wherever possible. To assist you in thateffort, we are pleased to announce the addition of 20 nationally-recognized companies who offer our Agents greatersavings.

Visit our StarsLink web site to view all the companies who provide discounts. Once you have logged in, clickon Agent Services at the top of the page, Star Services and Supplies, and then click on the categories shownon the left side of the page for the name(s) of the companies who will provide you with a discount.

We hope you’ll take advantage of Old Republic’s StarsLink web site. Remember, we’re “Your Partner inBuilding a Successful Future.”



Although forged mortgagesatisfactions have alwaysbeen a problem, a recent

investigation resulting in thediscovery of 150 fraudulentsatisfactions in the trunk of avehicle underscores the gravityof the situation. Due to theincreasing prevalence of forgedor fraudulent satisfactions in thecurrent market, it is imperativethat agents are aware of and onthe lookout for certain red flagswhen performing a title searchand examination.

The most common red flag isthe naked or unsupportedmortgage satisfaction. Amortgage satisfaction is deemedunsupported when the searchdoes not reflect a proximate saleor refinance transaction whichwould have provided the fundsto satisfy the existing mortgage.Often, there is nothing of recordto evidence how the mortgagewas satisfied. In that instance,agents must contact the lenderto verify the validity of thesatisfaction.

When the search does revealanother mortgage recorded inproximity to the satisfaction, themortgage must be reviewed toconfirm that the transactionwould have provided sufficientfunds to satisfy the existingmortgage. Even though thepayoff amount of a priormortgage is unknown, anobvious disparity should bequestioned. For example, amortgage is recorded in 2006 inthe amount of $700,000. Thesame owner executes anothermortgage in the amount of

$100,000 which is recorded inJanuary, 2008. A satisfaction ofthe original mortgage is recordedin February, 2008. Althoughthere is another mortgagerecorded in proximity to thesatisfaction, it does not appearto have provided enough fundsto satisfy the prior, relativelyrecent mortgage. Therefore,before issuing a commitment orpolicy without an exception forthe 2006 mortgage, the agentshould confirm the satisfactionwith the lender.

Agents should also be carefulwhen relying on a deed filed inproximity to the mortgagesatisfaction. In reviewing thedeed, the amount ofdocumentary stamps paid willconfirm that the transaction wasa sale which would haveprovided adequate funds to payoff the prior mortgage, notmerely a conveyance for little or

no consideration. Assume thesame scenario as above exceptthat, instead of a subsequentmortgage, a deed is recorded inJanuary 2008. A purchasemoney mortgage is not recorded.The deed reflects thatdocumentary stamps were paidin the amount of $0.70. The lackof documentary stamps clearlyevidences that the sales pricewould not have providedsufficient proceeds to pay off theprior $700,000 mortgage. Assuch, the agent must contact thelender to confirm theauthenticity of the satisfaction.

Unfortunately, forgery andfraud is growing morewidespread. It is incumbent onour agents to be vigilant andconfirm with the lender whenthe validity of a mortgagesatisfaction is questionable.

Forged Mortgage Satisfactions■ By Suzanne Barry, Florida State Counsel



■ Robin Cardella,Vice President and Mid-FL Operations Manager

We are extremely proud to announceadditional companies who have made acommitment to Old Republic National TitleInsurance Company and its customers:

Republic Land & Title, Inc., Palm Harbor – 10 Years +

Owner: Dick Gruber Manager: Donna Crino

Comments and information

We invite your feedback andwelcome your suggestions regarding

“In The Title Corner” and the publication of future articles.

Address correspondence to:

In The Title Corner Old Republic National Title

Insurance Co. 100 S. Ashley Drive Suite 700Tampa, FL 33602800-342-5957Fax: 813-228-0301www.ortfl.com

Eyes Wide Shut — Case Law Updatecontinued from page 2—

and replaced them with newfinancing which generated fees,costs and net proceeds pocketedby the co-conspirators, but notMrs. Charles.

The fraud allegation againstQuantum which withstooddismissal, was based on theassertion that Quantumknowingly concealed the natureof the documents that Mrs.Charles was signing and,knowing that she believed thatshe was preserving her ownershipinterest, intentionally failed todisclose that the documents shewas signing would transferownership to a straw buyer, allfor the purpose of depriving herof the equity in her home.

The negligence count allegedthat as closing agent, Quantumhad a duty to act in a reasonablyprudent manner by at leastidentifying what Mrs. Charleswas signing. The court notedthat not only did Quantum fail toidentify the documents, had Mrs.Charles known she was signing adeed and a closing statement forthe sale of her home, she wouldnot have executed them. Thecourt went so far as to say, i nd i c t u m, that although Quantumclearly had no duty to explain thelegal ramifications of thedocuments, as that would havebeen the unauthorized practice ofl a w, it did have an obligation toat least identify them, inferring

that it was actionable negligenceto fail to do so.

A c c o r d i n g l y, at least thiscourt feels it is your duty as aclosing agent to identify eachdocument before your customersigns it. Keep in mind, however,that “identify” specifically doesnot mean “explain.” If you arenot an attorney and questionscome up about the document, youmust refer the customer to theira t t o r n e y, even if you are the onewho prepared the document.The Florida Supreme Court hasspecifically held that althoughtitle insurance agents mayconduct real estate closingsincident to fulfilling conditions inthe title insurance commitment,it is the unauthorized practice oflaw to give advice, orally or inwriting, relating to the methodsof taking title or concerning thelegal effect of any document. SeeF l a . Bar v. M c P h e e, 195 So.2d552, 554 (Fla. 1967). We realizethis creates a delicate line forclosing agents to walk, but atleast you have the FloridaSupreme Court behind you whenyou advise customers that youare prohibited from answeringquestions about the effect ofclosing documents or what theymean.

As always, if you have anyquestions, please do not hesitateto contact the underwritingdepartment.

met with the DOR, to the best of our knowledge, no other title insuranceunderwriter doing business in Florida requested a meeting on your behalf.Thank you for continuing to allow Old Republic National Title InsuranceCompany to be your business partner.

Documentary Stamps on Short Salescontinued from page 1—


Old Republic National Title Insurance Co. 100 S. Ashley Drive, Suite 700

Tampa, Florida 33602

PRSTD STDU.S. PostageP A I DTampa, FL

Permit #3162

Ask Your Underwriter■ Carolyn Broadwater, Florida State Counsel

Question: Does a bankruptcy automatically wipe out all judgmentsand mortgages on the property.

Answer: No. Actually, mortgages always remain unless the debtorobtained a special order that “strips’” the lien. These ordersare rarely obtained and we suggest that you check with us ifyou plan to rely on one.

As for judgments, the bankruptcy discharge releases thedebtor from personal liability, but any judgment liens thathad attached to debtor’s property prior to the filing of thebankruptcy petition remain liens against such propertyunless an order is obtained.


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