Ask the TITLEMAN™ - Affidavit of Succession; Settlement; Transfer of Interest

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

Q. We have an escrow for vacant land selling around $80,000.00. The Seller has recorded, but he has not filed, the Affidavit of Succession. I thought the ceiling for this type of doc is $50,000.00 and only for a home and not vacant land. What document should be filed with the County Clerk?
A. Glad to hear from you. The determining factor of whether or not you can use the Affidavit of Transfer of Title to Real Property- that’s the official name of the document- is the equity that the decedent had in the property at the time of death. It is valid for any type of interest in real estate vacant or improved. I assume that there never was any probate proceedings started and that the equity of the deceased party in this property (and any other real estate within the state) was under the current threshold of $75,000. The parties would comply with the statute by filing the Affidavit, the death certificate, the original will (if there is one) together with the filing fees required by the local court. Hope this helps.

Q. I am just trying to verify something. The Assessor’s Office stated that to get the two parcels my client is receiving through a lawsuit settlement into one assessor parcel number, she must convey the properties back to herself in one deed. As part of the settlement, the other side is paying for a Homeowners Plus policy. I do not see anything in her new title policy that will eliminate coverage simply because she conveys the two properties to herself. Am I missing anything?
A. Good idea for double checking. I have had to too many times notify people of the unfortunate news that their title policy has lapsed because they used the wrong kind of deed. The title policy (actually called Homeowner’s Policy of Title Insurance) such as this would generally not terminate in this case especially if she transfers the title into one parcel by Warranty Deed.

Q. When we are issuing an owners policy of title insurance at close to, lets say John and Jane Doe (per the real estate contract), but they have later do a deed from themselves to their trust, is there title policy void?
A. You bring up a good point. A title policy could terminate upon the transfer of the insured interest unless the insured retains an interest in the property (say a seller carry-back) or if they sold under a Warranty Deed. In some title policies, a quit claim deed would terminate their coverage. If the policy is a Homeowner’s Policy of Title Insurance, then they should be okay since that policy has an automatic coverage provision for when they put the property into their personal trust. Either way, I would suggest they contact title to obtain an additional insured endorsement to include the new trust. Keep in mind this does not insure that the new insured is legitimately formed nor does it advance the effective date of the title policy forward.

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.