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 agents.
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 requests.
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.