Whenever possible, a seller should provide a prior Owner’s Policy of title insurance. Ideally, the seller should provide the prior policy in time to include it with the search order, but even if it's included later during the title clearance process, a prior Owner’s or even a Loan policy can save the member attorney additional work. In addition to expediting the search process so the member attorney receives the search sooner, the prior policy is also evidence that prior liens or unreleased mortgages are paid off.

Under ATG Administrative Regulation 7D, when a member attorney receives a search that contains unreleased mortgages, liens, or other title defects from a previous property owner, the attorney must order a letter from the prior title insurer that holds ATG harmless from the unreleased lien, mortgage or encumbrance. ATG’s Hold Harmless Department can request this letter on behalf of the member attorney. (See Obtaining Hold Harmless Letters.) More often than not, a prior insurer will require the owner of the property to produce a copy of his or her Owner’s Policy before the insurer will issue the hold harmless letter to ATG. In some situations, our Hold Harmless Department is able to insure over the lien or unreleased mortgage by relying on the Illinois Inter-Underwriter Indemnification Agreement. In order for ATG to rely on this document, a copy of the prior policy is required.

As an ATG member, please be sure to impress upon your seller the importance of providing their prior Owner’s Policy, since unreleased mortgages are difficult for ATG to insure over without evidence that they are paid.  Please note that the statute of limitation on a mortgage is one of the following: (a) 20 years from the time of the expiration date listed on the mortgage document itself; or (b) 30 years from the time of execution of the mortgage if it contains no expiration date.

Questions? Contact an Underwriter, or contact the ATG Hold Harmless Department at holdharm@atgf.com or 800.252.0402.