County Closures Causing Gap Coverage Issue as Industry Asks Offices to Remain Open
March 19, 2020
Title underwriters are taking different approaches to the closures or limited hours of county offices due to the COVID-19 pandemic as the inability to record and process documents in some counties in increasing the gap period. This period refers to the date the county certifies records are current through to recording. The gap period will continue to grow and introduce increased risk as long as county offices are closed or operate with limited hours.
Most title underwriters have issued bulletins permitting the continued closing and funding transactions in counties where recording is at risk due to county closures, assuming the risk during the gap period, with certain restrictions. For example, where electronic recording is still available in a county that has closed its offices, underwriters are generally requiring electronic recording be utilized.
In addition, most underwriters already have an exception and insuring provision over the issue of inaccessibility to records.
The law firm Ballad Spahr reports that almost all underwriters have excluded non-traditional or “hard money” financing from their COVID-19 protocols in counties with closures, and most are not insuring transactions where a title search cannot be performed. Additionally, almost all title underwriters have provided specific, additional language for title policies and sellers affidavits pursuant to their COVID-19 county closure protocols.
Brent Laliberte, president of Bayou Title in Louisiana, said it’s important to have a good relationship with government officials. Earlier this week, he reached out to the executive director for the state’s Clerk of Court's Association as well as the clerk for Jefferson Parish after receiving a notice that East Baton Rouge Parish Clerk of Courts Office announced it was closing—including its land records division.
The proposed procedures would have allowed the office to accept documents via U.S. and overnight mail. The office would track them in the order in which they were received. While documents would be prepped, the office indicated the documents would not actually be recorded until it was open to the public. Then, the office would attempt to reconcile the recording of documents electronically submitted and those hand or mail delivered.
“Obviously, with no real recordation occurring there are no real closing possibilities in most jurisdictions,” Laliberte said.
He informed the officials how important it was that recordation remain available. Due to his efforts, the 19th Judicial District Court for the Parish of East Baton Rouge amended the order, indicating the parish would record documents as received and open a drive-thru window for the public to record documents as needed.
“If you have a healthy relationship with people, and you can explain to them that while respecting everyone's health concerns, you can still try to work it so that commerce remains in motion,” Laliberte said.
Several state land title associations have submitted letters requesting offices of county recorders, registers of deeds and auditors remain open in order to facilitate the conveyance of property or the refinance of mortgages.
The Ohio Land Title Association and Ohio Association of Realtors co-signed an open letter to Ohio Gov. Mike DeWine requesting an executive order be issued requiring county recorders and auditors “maintain minimal hours of operation for official filings and requests, processing of recorded information and providing accurate records of the counties’ official records.” If this solution is not possible, the assocations asked that at minimum a drop box or something similar be maintained to ensure business continues without direct physical contact.
Meanwhile, the California Land Title Association, California Escrow Association, California Bankers Association, California Association of Realtors and California Mortgage Bankers Association co-signed an open letter to California Gov. Gavin Newsom. Concerned that interruptions to certain government services could have severe economic ramifications, the associations requested that the work of the county registrar and recorders “be declared an essential service which should remain open, with steps taken in order to minimize any risk to workers.” Their solutions included permitting recordings of documents submitted online, via U.S. mail or in-person delivery by appointment only.
Additionally, the Wisconsin Land Title Association (WLTA) sent a letter to the Wisconsin Registers of Deeds noting that online searching capabilities are limited in approximately 58 Wisconsin counties. Because of this, the WLTA asked for physical access to land records in those local Register of Deeds offices so title agents can appropriately provide title insurance. The WLTA asked that the Register of Deeds offices be open to title companies “on a reasonable basis,” such as by appointment while imposing time and sanitary limitations.
Should other state associations like to follow in these footsteps, ALTA recommends including the following language:
“Our state’s county auditors and recorders are necessary to keep the real estate industry in good health during the COVID-19 pandemic. Specifically, title examiners need access to these offices and court records to process property titles so real estate transactions can close and title interests transferred. Because many county offices have closed or limited services, title examiners are no longer able to access reliable information required for the lawful transfer or conveyance of property. Please help the citizens of this state have their real estate transactions officially recorded or their properties refinanced by letting these offices remain open, even on a limited basis, during the COVID-19 crisis. These changes will encourage economic stability during this very precarious time.”
Contact ALTA at 202-296-3671 or [email protected].