By John R. Blake, Esq.
This article appeared in the June 22-28, 2001 issue of the New England Real Estate Journal.
This year has brought much economic uncertainty. Lenders
and borrowers alike struggle to determine whether the real estate
market is weakening. Curiously, however, mortgage rates are low,
encouraging a large amount of refinancing. In a similar fashion, the
title insurance market has been in flux. Agencies have merged, and
many underwriters have new addresses that are unfamiliar to their
For the agent, the safeguard in uncertain times is to
strengthen the underwriter-agent relationship. Agents are facing many
of the same pressures felt by underwriters: pressures from demand for
decreased attorney's fees and title premiums, pressures to close loans
ever faster, and pressure to be increasingly responsive to bank
Responsiveness to Title Questions
Given the shortened time frame for both commercial and
residential closings, when a title issue arises, there is frequently
very little time for lender's counsel to consider the issue and pass
judgment on it. Often, the answer is needed, if not within a day or
two, the same day as the issue arises. The authors have recently dealt
with situations in which closing attorneys have received their title
abstract the day of the closing, and the title issue needs to be
resolved within the hour.
The agent needs to know that the underwriter, and the
underwriter's team, are ready to provide a rapid response, and perform
triage on the title defect. A relationship can be cemented for a
career based on a rapid response to a title question. Therefore,
underwriters should make certain that their agent has access to an
underwriting team that is available on a moment's notice.
One of the authors created a lasting relationship with
an underwriter who left his wife's birthday cake sitting in the back
seat of a car in order to respond on a moment's notice to a title
problem. While the cake died, the relationship has thrived ever since.
Responsiveness to Title Claims
No agent or underwriter likes to think about title
claims. Sometimes the agent has a claim against him or her. Sometimes
the agent represents a buyer, has found a title defect (and a title
policy) and has to make a quick claim on the policy. It is critical to
the transaction for the underwriter to provide a quick analysis of,
and coverage of, a claim. Often, the claim can be resolved with a day
or two of concerted effort. This is critical if the closing involves
someone's new home, and the buyer's lease is set to expire.
If a title company is slow to respond to the claim,
often buyer's counsel will resort to its own efforts to resolve the
claim, efforts for which the agent may not receive compensation. A
failure to respond quickly to a claim can harm a relationship for
years to come.
Taking Advantage of New Technology
Underwriters have been, and must continue to be, quick
to provide new technology to their agents. Title insurance companies
can distinguish themselves from the crowd by offering business tools
through which firms and solo practitioners can realize significant
savings on products, ranging from software to shipping services. Most
if not all title insurance companies provide policy preparation
software to their agents, some of which interfaces with accounting and
trust account reconciliation programs. Web access is also making its
way into the agent-company relationship, with some companies giving
their agents that ability to access policy databases online. The
foregoing signals that title insurers are aware more than ever that
the practice of law is a business and that increasing the bottom line
gets agents attention.
Continuing Legal Education
Title insurance companies can play a significant role in
helping attorneys to develop and maintain their practice. The most
visible evidence of this is continuing legal education. Title
insurance companies produce enormous volumes of materials designed to
keep real estate practitioners current in the law and upcoming
legislative changes. Title insurance company seminars also provide an
informative (as well as convenient) means for keeping abreast of
changes in the law. Telephonic seminars and updates via the Internet are
convenient tools for the busy agent.
Sharing the Risk
Some of the attention to cost savings faced by the agent
has found its way into the insurer's products. Aware of the pricing
pressures their agents have come under in the increasingly competitive
world of financial services, some companies assume more risk without a
correlating increase in premium so that closings can go forward
without the expense of obtaining plot plans, full environmental site
assessments, or expensive and time consuming zoning opinions. Enhanced
coverage is offered by some insurers at rates which represent
significant value considering the coverage offered.
Focus on the Individual
Many companies, now national agencies, are known for
their individual attorneys, who represent a wealth of knowledge and
experience, which translates to getting deals done. The title insurer
should never underestimate the strength of the relationship between
the individual underwriter and the agent. The relationship of trust is
built up over a period of several years and dozens of deals. It is
the underwriter's greatest asset.