Wisconsin Eagle's Nest: Q2 2024

Wisconsin Contact List

Put your trust in the professionals that put you first. Meet the key players who are committed to providing the necessary resources and underwriting guidance you need, and the service solutions that give you an edge.

Product, Service, and Administrative Support

Don Kennedy

Division Managing Director 714 788 4908 dokennedy@firstam com

Underwriting Support

Marv Ripp

VP, State Counsel

608 286 3202 mripp@firstam com

Allison Kalweit

Underwriting Counsel

608 346 5135 akalweit@firstam com

Ben Smaglick

Agency Representative 608 345 3902 bsmaglick@firstam com

Agent Underwriting Divisional Leadership

Len Prescott, Esq. VP, Director of Agency Underwriting

305 908 6252

305 900 8427

Steve Zablocki

Senior Underwriting Counsel

608 286 3224 szablocki@firstam com

Julie Angelakos

Regional Underwriting Director

630 799 7123 jangelakos@firstam com

Randy Paslay VP, Divisional Underwriting

714 250 8607

951 529 4664

Federal Judgments

What are they and how do we address them?

Steve Zablocki, Senior Underwriting Counsel

We deal with state court judgments a lot They are old hat We have our processes and procedures to address and deal with them. We know that the judgment must be docketed to be a lien. We know the lien is then good for 10 years In limited circumstance, the 10 years can be extended We also know (or should know) that CCAPs “judgment expiration date” of 20 years means nothing. CCAPs has an internal process that lists a judgment’s expiration for 20 years. It means nothing regarding title or to judgment liens You may ignore that date

What about federal judgments? They are in fact a different animal. When perfected, a federal judgment is good for 20 years. The federal judgment is a lien on property of the judgment debtor situated in the county and a transcript of judgment may be filed with the clerk of circuit courts of any other county with like effect. Further, the federal judgment may be filed in the Register of Deeds for the County in the same manner which a notice of tax lien would be filed

With all that said, how do we “mind the gap ” and where does that leave us when it comes to federal judgments? Let’s keep it simple If we know there’s a federal lawsuit or an impending federal judgment against a seller or mortgagor, avail yourself to the federal pacer system for more information. You can sign up for an account at:

https://www uscourts gov/court-records/electronic-filing-cmecf

Unfortunately, the pacer system is not free However, check it if you believe there might be a federal judgment It will bring you peace of mind and could avoid a race to the courthouse if you suspect an issue Naturally, if you aren’t sure, call your First American Underwriter. We will gladly guide you through the process and inform you on what should be raised as possible requirements or exceptions.

Unsatisfied Assignments of Leases and Rents

What to do?

Steve Zablocki, Senior Underwriting Counsel

An Assignment of Leases and Rents will often accompany a commercial mortgage They are present where the property is rented to a tenant. The Assignment gives the lender the power to step into the shoes of the landlord and collect rents if the mortgagor stops making payments The Assignment provides record notice that upon a default, the tenant must pay the lender.

Does the tenant have to pay the lender? There is some question as to whether this assignment was agreed to by the tenant However, very often the landlord is in default with the lender because the tenant failed to make their payments. As such, the Assignment of Leases and Rents may sometimes have questionable value

Whatever the case, a recorded Assignment of Leases and Rents is a real property interest.

It is an item of title What happens if a lender satisfies their mortgage but does not mention the Assignment of Leases and Rents? Can you remove it from any title commitment? Yes, but only so long as the lender has no other interests in the property

The lender may not have any other mortgage, RESA or other interest remaining. The Assignment of Leases and Rents lender must be fully paid. There should be no doubts. The reason all interests need to be gone is that the Assignment would likely extend to other debts owed to the lender The lender should have no further interest in the property. If you aren’t sure, leave the Assignment on your commitment until sufficient proof is provided. Naturally, if you have any questions, please contact your First American Underwriter

Who is in the Property? Tenants in Possession

Steve Zablocki, Senior Underwriting Counsel

Owner occupied sales are easy You can likely rely on a representation in an Owner’s Affidavit that the property is vacant. However, when the property is tenant occupied, things can get complicated. If the property is being sold “with” the tenant, some care is needed

Do we know what sort of tenant is present? Is the tenancy for residential or commercial use? Is the tenancy month to month or for a term of years? Finally, does that tenant have some sort of hidden real property interest like a right of first refusal or even an unrecorded land contract?

Indeed, if you hear about a tenant, ask the seller some more questions. Does the tenant know about the sale? Does the tenant have an interest in the property? Is there a written lease? Most people (or we hope) are honest If we know there is a potential third party right, call underwriting.

Likely you will maintain the parties in possession standard exception If we know there is a potential third party right, call underwriting. Likely you will maintain the parties in possession standard exception. There may be additional requirements or exceptions

The key is to ask, ask and ask some more Make yourself fully comfortable with the property’s occupation. A special consideration should be made for foreclosure purchases at sheriff’s sale. We have no idea nor does likely does the prospective buyer know the occupancy status of the property The former owner may resist removal or could in fact move back in. Leave the parties in possession exception in for a purchase at sheriff’s sale. Too many uncertainties can arise otherwise

As always, if you aren’t sure on a transaction, contact your First American underwriter.

Land Contracts: Everything old is new.

Steve Zablocki, Senior Underwriting Counsel

In the 1980’s, interest rates and the real estate market was such that land contracts became a more prevalent method for conveying title Seller financing had an advantage since it avoided the need for a downpayment and could skirt lender underwriting requirements People with less than perfect credit could purchase real estate

Like all things that go in cycles, the market changed and the land contract became less appealing. Interest rates plummeted and lender requirements changed. Just about anyone could get a loan. The good times couldn’t and didn’t last forever.

Indeed, as trends go, we have gone full circle. The challenges in lending are now back again Interest rates are up again Land contracts like, art deco or bell bottoms, are back in vogue

What should we title people keep in mind when dealing with land contract transactions? Well, chiefly, we are unable to insure anything for the Seller/Vendor We can give them a letter report if they want to know the status of their title That’s about it

For the Buyer/Vendee, we can usually issue a standard Owner’s Policy Vesting in a hypothetical transaction will recite Jack and Jill Smith, Vendees under a land contract, Bob and Jane, Vendors. A number exception is raised in the Owner’s Policy for the terms and conditions of the land contract. After all, we aren’t insuring that the Vendee keeps title if they do not make their land contract payments or comply with the land contract terms.

Often a land contract will have a shorter term than a mortgage As such, you may have a situation where the Vendee pays off the land contract with a mortgage loan In that case, you can insure a loan policy with a requirement that a deed in fulfillment of the land contract is provided

You can also most time endorse the Owner’s policy to remove the vendor language from Schedule A of the Policy if/when the deed in fulfillment is recorded

Finally, a land contract foreclosure can present its own share of problems The land contract foreclosure is known as a “strict foreclosure” In it, the Vendor alleges a default by the Vendee and requests that the Court vest title back with the Vendor. The Court issues an order of strict foreclosure and grants the Vendee a redemption period. The period of time is usually shorter than a standard foreclosure but is at least 7 days. Following the redemption period, the Court must issue an order of non-redemption and final judgment of strict foreclosure. This is the document of conveyance passing title back to the Vendor

What if there are liens and judgments against the Vendee? First, a lis pendens will have to be recorded to cut off future interests Next, similar to a mortgage foreclosure, the Vendor must join the lienholders and have their interests judicially foreclosed

It gets even more complicated if there are United States Internal Revenue Service tax liens The IRS has made clear that the only way a subordinate tax lien can be cleared is through a public sale

As a result, any strict foreclosure would have to be accompanied by a sale and not through title vesting back with the Vendor. Whatever the case, land contracts appear to be back in fashion… For now. If you do have any questions regarding a land contract’s creation, enforcement or foreclosure, give your First American Underwriter a call. Our hope is that we will stay hip with any changes.

Product Highlights

Upcoming Webinars

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➢ Clearing Liens - Part 1

June 5, 2024 | 9:00am – 10:00am CST

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July 10, 2024 | 9:00am – 10:00am CST

➢ AgentNet Tips, Tricks & Features

August 7th, 2024 | 10:00am – 11:00am CST

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September 4th, 2024 | 9:00am – 10:00am CST

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October 9th, 2024 | 9:00am – 10:00am CST

➢ Eagle Policies for Owners

November 6, 2024 | 9:00am – 10:00am CST

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December 4th, 2024 | 9:00am – 10:00am CST