A. Overview

An indemnity letter, or hold harmless letter, is an agreement, in letter form given by one title insurance underwriter to another, indemnifying the latter against a particular title matter that was either specifically insured or not raised as an exception on the indemnifying company’s title policy and for which it has liability.

When you examine your search and find defects, liens, or encumbrances in the search that pre-dated the current titleholder’s ownership of the land, first ask the current owner for his or her Owner’s Policy of Title Insurance ("Policy") to determine whether the matter was covered by the policy. If so, request a hold harmless letter.

Each title insurance underwriter has its own standards for the types of defects for which it will issue hold harmless letters. The following is a non-exhaustive list of circumstances where Advocus would likely hold harmless letters:

• Mortgages from prior owners that have not been released of record;
• Unreleased liens;
• Unreleased judgments against the current seller or a prior owner;
• Pending court cases;
• Unreleased mortgages, liens, judgments, and pending court cases that were insured over on the prior title policy;
• Unpaid tax installments;
• Change in grantor's marital status;
• Information regarding a deceased seller;
• Financing statements; and
• Break in the chain of title.

The following are examples of exceptions for which Advocus will not issue hold harmless letters:

• Encroachments and building line violations;
• Covenants, conditions, and restrictions;
• Easements; and
• Liens and judgments that have expired by reason of the statute of limitations

B. Loan Policy v. Owner's Policy

A Loan Policy terminates upon a release of the insured mortgage, so a request for a hold harmless letter must be based upon the coverage given under an Owner’s Policy.

C. Requesting a Hold Harmless Letter 

Make all requests for a hold harmless letter to Advocus’ Hold Harmless Department by emailing holdharm@advocustitle.com, either to issue one to another title company based upon a previously issued Advocus Policy or to obtain a hold harmless letter from another title insurance underwriter. If a hold harmless letter from the prior title company is required, do not send the request directly to the title insurance underwriter or its issuing agent. The process of obtaining and issuing hold harmless letters may require a considerable amount of time, so request the letter as soon as you identify the defect.

Because a request for a hold harmless letter is in the nature of a claim on the issued policy, you must send any request for a hold harmless letter on an Advocus policy immediately to Advocus’ Hold Harmless Department to determine if a full claims investigation must be initiated. Additionally, Advocus and other title companies have entered into an inter-underwriter agreement in which the title companies agreed to provide each other a blanket indemnification for certain unreleased mortgages. Upon request for a hold harmless letter, Advocus' Hold Harmless Department will determine whether the title matter falls within the terms of the agreement and will advise accordingly.

When a hold harmless letter is required from the prior title company, be certain to include a copy of the prior Owner’s Policy in your request to Advocus’ Hold Harmless Department. If the prior title policy is not available or unknown, examine the most recently recorded deed to determine if a title company’s name and commitment or policy number has been entered on the deed.

If you require a hold harmless letter, or need additional information, contact the Advocus Hold Harmless Department by email at holdharm@advocustitle.com.