Ask the TITLEMAN™ - Altered Warranty Deed; Patriot Act; HOA Authority

by John T. Lotardo aka TITLEMAN™
Sr. VP/General Counsel, Stewart Title & Trust of Phoenix, Inc.

Q. Have you ever heard of a title company altering a warranty deed for any reason without the guarantor’s consent? My husband bought and sold the property adjacent to ours. When the warranty deed was executed, the legal description was changed such that an easement across our driveway for “roadway purposes” was extinguished. The easement being for the benefit of the adjacent property. The same property also has an easement across another neighbor’s property for ingress and egress and is in fact the driveway used by the subject property. A few years later, without our knowledge or consent, the title company—and I will never use them again—re-recorded the warranty deed stating the deed was being rerecorded to correct the legal description, whereby, the legal description was x’d out and the prior legal description which contained the easement was added to the deed. I found this out years after the fact when someone mentioned that my neighbor claimed to have an easement across my driveway. I spoke with the title company about it and they told me to just go down to the recorder’s office and change it back. I told them it was their error and they needed to correct it. Then they hooked me up with a paralegal. She said she would contact the neighbor and ask him to deed it back. She contacted my neighbor who of course refused to deed the easement back claiming he needed it for the utility people. Now that our house is on the market, I need to get this issue resolved. Can we report this to the insurance commission? Is there any agency that has control over title companies? Currently the neighbor is using our driveway for his pool service to clean his pool. I don’t mind that, but I don’t want to give him an easement. Any suggestions?
A. It sounds a little confusing. I would say have title to prepare a commitment with the information for the properties and then you could begin to answer the issues. It may be that you were obligated to give that easement for your buyer when you sold it years ago and the title company was merely complying with the intent of the transaction. That said, it sounds like your claim to the title company was ignored. Such problems are usually handled much better than that. Perhaps the person you were dealing with did not understand how important the matter was. See if you can make another demand in writing to the department that handles these types of matters and see if you get a better response. Perhaps with some additional information, the title company can explain why things were done. If not, you can always speak with the Department of Insurance and/or the Department of Financial Institutions toi see if they can get a more adequate response.

Q. Can you please inform me on the details of the new “patriot act” for obtaining a mortgage for a new house in AZ? My brother is looking into purchasing a house in Arizona and has a SSN and an AZ driver’s license, is there any other info needed in order to apply for a mortgage?
A. The USA PATRIOT Act does indeed effect how mortgages are handled not only in Arizona but the entire Unites States as well. The Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism) was in response to the terrorist attacks of September 11, 2001 and, from a mortgage perspective, was implemented to combat terrorist activities within the real estate community. Most importantly, those obtaining loans must have proper identification as lenders will require that (as they always have). Some lenders will make additional inquiries if they are uncertain about the legitimacy of the identification or if your brother’s name matches any of those on the suspected activity list that is compiled by the United States. Once he has decided to buy in Arizona, he should create a relationship with a lender so that he knows what their particular policies are in order to not have any last minute surprises.

Q. One of the attorney’s paralegals asked me a great question and I told her I would ask the TITLEMAN. The facts as I know them are that the streets in a subdivision were dedicated to the City. The City has accepted them and they maintain the streets. They do not care if the owners park on the street or not. However, the CC & Rs state that they are not allowed to park on the street. Can the owners park on the road or not?
A. It seems everyone wants to pick on HOAs lately. In fact some in the real estate community consider them to a quasi-governmental entity because of the control they have over a community. I would say that normally the HOA has authority to impress rules on the community members. Sometimes that ability is curtailed by statute. For example, legislation was enacted in Arizona that prevented an HOA from restricting truck drivers from parking their public service vehicle under a certain weight “on a street of driveway in the planned community (chap 166 HB2492). Those kinds or restrictions apparently went too far but it allows the general proposition that HOAs still have the ability to create restrictions limited by statute and the CC & Rs.

The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Copyright John T. Lotardo. All rights reserved. John Lotardo (aka the TITLEMAN™) is Senior Vice-President and General Counsel for Stewart Title & Trust of Phoenix, Inc., and State Underwriting Counsel for Stewart Title Guaranty Company. He is a member of the National Advisory Councils for GoGetEscrow.com, GoGetLoan.com, GoGetNotary.com and GoGetRealEstate.com. The information supplied is of a general nature and should not be relied upon as comprehensive legal advice. Please consult with your own local legal counsel. For more about John, visit: www.GoGetEscrow.com/Get/Titleman or www.AskTheTitleman.com.