Bulletin: SLS2015001

Date:
January 08, 2015
To:
All Issuing Offices
RE:
UNDERWRITING - Forfeitures (Revised)

Dear Associates:

This Bulletin updates and replaces SLS2014005.

The following information refers to Forfeitures 21 U.S.C. 881, 18 U.S.C. 981, 21 U.S.C. 853, 18 U.S.C. 1962, 18 U.S.C. 982.

Real Property is subject to forfeiture if it facilitates an illegal activity (such as drug trafficking) or is the traceable proceeds of an illegal activity. The most common federal forfeiture statutes are:

  • 21 U.S.C. 881 (controlled substances): A civil "in rem" forfeiture brought directly as an action against the property, with no requirement that the owner be convicted of the crime.
  • 18 U.S.C. 981 (money laundering, foreign controlled substances, financial institution crimes, counterfeiting, wire and mail fraud, theft and fraud, etc.): A civil "in rem" forfeiture brought directly as an action against the property, with no requirement that the owner be convicted of the crime.
  • 21 U.S.C. 853 (drug abuse): A criminal "in personam" forfeiture requiring that the defendant individual be convicted of a crime.
  • 18 U.S.C. 1963 (RICO): The "RICO" criminal "in personam" forfeiture requiring that the defendant individual be convicted of a crime.
  • 18 U.S.C. 982 (money laundering, financial institution crimes, counterfeiting, wire and mail fraud, theft and fraud, etc.): A criminal "in personam" forfeiture requiring that the defendant individual be convicted of a crime.

We will not rely on a federal forfeiture to terminate governmental liens (such as tax liens) or to terminate mortgages held by institutional lenders or to terminate easements or restrictions. We will require a release of or exception to these encumbrances. However, it is the federal government’s position that it will only pay ad valorem taxes up to the date of the order of forfeiture.

We will insure on a transfer from the United States after the forfeiture pursuant to 21 U.S.C. 881, 18 U.S.C. 981, 21 U.S.C. 853, 18 U.S.C. 1963, or 18 U.S.C. 982 under the following circumstances.

Civil Forfeiture Under 21 U.S.C. 881 or 18 U.S.C. 981

  • The complaint must request forfeiture of the property and allege specific bases for forfeiture.
  • All owners and lienholders (including spouses with marital or community property rights) of the property who are not executing deeds or releases must receive notice by personal service as evidenced by a review of the process receipt and return or certified mail return receipt. If personal service does not occur on an owner or lienholder, (1) we must review a copy of the case agent's affidavit concerning attempted notice, (2) our underwriting personnel must approve issuance of the policy, and (3) we must not issue a policy until one year after entry of the final Order of Forfeiture (unless our underwriting personnel authorize earlier issuance).
  • The government must publish notice of the proposed forfeiture in the federal district in which the land is located (and the district where the proceeding occurs, if a different district) for three consecutive weeks. As an alternative to this publication, the government may publish for at least thirty (30) consecutive days on the official government website, www.forfeiture.gov notice of the Preliminary Order of Forfeiture.
  • An order must authorize forfeiture of the specific property. Any interest recognized as valid in the order must be released or conveyed.
  • The government must certify that the order is final and nonappealable. Generally, an order is final 90 days after the entry of the order if no motion is filed.
  • The forfeiture proceeding must occur in the federal district in which the land is located or in the district in which the criminal prosecution of the owner is occurring.
  • You must verify that no one is in possession of the land (except the purchaser). You may rely on a certification by the U.S.
  • You must require recordation of evidence of compliance with the items above. You may use an Affidavit to verify compliance with our requirements. You must record the Affidavit where state law allows recording. Otherwise, record the Order of Forfeiture.
  • You must disclose in writing to the proposed insured that the forfeiture is a link in the chain of title. You may do so by adding the following to the commitment, binder or preliminary report: "Note: Title offered by the United States as the seller [or as a predecessor, if applicable] is based upon a forfeiture proceeding under [here refer to proceeding]."
  • You must require a deed by the U.S. (Marshals Service).

INSURING ANY FORFEITURE IS AN EXTRAHAZARDOUS RISK AND MUST BE APPROVED BY UNDERWRITING PERSONNEL.

Criminal Forfeitures Under 21 U.S.C. 853, 18 U.S.C. 1963, and 18 U.S.C. 982

  • The Preliminary Order of Forfeiture must authorize forfeiture of the property.
  • All owners and lienholders (including spouses with marital or community property rights) of the property who are not convicted and mentioned in the Preliminary Order of Forfeiture and who are not executing deeds or releases must receive notice by personal service as evidenced by a review of the process receipt and return or certified mail return receipt. If personal service does not occur on such owner or lienholder, (1) we must review a copy of the case agent's affidavit concerning attempted notice, (2) our underwriting personnel must approve issuance of the policy, and (3) we must not issue a policy until one year after entry of the final Order of Forfeiture (unless our underwriting personnel authorize earlier issuance).
  • The government must publish notice of the proposed forfeiture in a newspaper of general circulation where the property is located for three consecutive weeks. As an alternative to this publication, the government may publish for at least thirty (30) consecutive days on the official government website, www.forfeiture.gov notice of the Preliminary Order of Forfeiture.
  • The court must enter a (second) Final Order of Forfeiture.
  • The government must certify that the order is final and nonappealable. Generally the Final Order is final 90 days after the entry of the Order if no motion is filed.
  • The government must certify that the conviction (reflected in the Preliminary Order) is final and nonappealable. Generally, the conviction is final no later than 60 days after entry of the order if no motion is filed.
  • You must verify that no one is in possession of the land (except the purchaser). You may rely on a certification by the U.S.
  • You must require recordation of evidence of compliance with the items above. You may use an Affidavit to verify compliance with our requirements. You must record the Affidavit where state law allows recording. Otherwise, record the Order of Forfeiture.
  • You must disclose to the proposed insured that the forfeiture is a link in the chain of title. You may do so by adding the following to the commitment, binder or preliminary report:

Note: Title offered by the United States as the seller [or as a predecessor, if applicable] is based upon a forfeiture proceeding under [here refer to proceeding].

  • You must require a deed by the U.S. (Marshals Service).

INSURING ANY FORFEITURE IS AN EXTRAHAZARDOUS RISK AND MUST BE APPROVED BY UNDERWRITING PERSONNEL.

If you cannot comply with these guidelines, please call us. We will consider forfeitures that do not comply with these guidelines or other forfeitures (such as state forfeitures) on a case-by-case basis.

Forfeitures Under State Law

Numerous state laws provide for forfeiture because of criminal actions. For example, many states have controlled substances laws or "Little RICO" (racketeering) forfeiture laws. If you are asked to insure based on a state forfeiture in the chain of title, call our underwriting personnel. Our concerns include personal service on all owners, finality of the forfeiture, clarity of the law in providing for forfeiture of real estate, and authority of the state or political subdivision to convey (for example, see Section 11005.2 of the California Government Code).

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
SLS2014005 UNDERWRITING - Forfeitures
 
NL000056 Forfeitures
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None