[WSBARP] Form of deed for converting separate to community
Jayne Gilbert
jgilbertatty at gmail.com
Wed Nov 9 16:51:20 PST 2016
Great answer Dwight!
On Wed, Nov 9, 2016 at 4:37 PM, Bickel, Dwight <Dwight.Bickel at fntg.com>
wrote:
> A deed from one person as sole owner to himself/herself and a spouse, to
> create community property, will not affect the rights of the grantor spouse
> as an Insured under a prior title insurance policy. It does not matter if
> that deed includes any warranties of title, because the Insured continues
> to be the owner. That answer is the same using any owner’s policy form
> since 1970.
>
>
>
> There are two applicable provisions of the two common owner's policy forms
> now in use. The first is the definition of "Insured" and the second is
> "Continuation of Coverage."
>
>
>
> Many conveyances that are not sales are to an entity that is automatically
> a successor Insured. For example, a conveyance form the Insured to another
> person as Trustee of a living trust, or an LLC owned by the Grantor. For
> grantees defined as an Insured, there is no need for the deed to include a
> warranty.
>
>
>
> But a warranty deed is important when the Insured conveys to another, that
> is not a defined successor Insured, and the Insured will no longer also be
> an owner. One example is a gift conveyance from the Insured to a child.
> Another example is conveyance to a new entity that is owned by the Insured
> and a new person. If the grantee is not a defined Insured, but it is not a
> sale, then the deed should include a warranty such that the Insured grantor
> continues to have liability for the title that would entitle reimbursement
> from the policy if there is a title defect.
>
>
>
> Note that the grantee in a conveyance that is not a sale is not an Insured
> unless the grantee is defined as an Insured. In your example, the new
> grantee spouse is not an Insured, but the previously-insured grantor spouse
> continues to own an interest in the property and continues to be an Insured.
>
>
>
> The basic owner's policy form used since 2006 states:
>
>
>
> 1. DEFINITION OF TERMS
>
> (i) the term "Insured" also includes
>
> (D) a grantee of an Insured under a deed delivered without payment of
> actual valuable consideration conveying the Title
>
> (1) if the stock, shares, memberships, or other equity interests of
> the grantee are wholly-owned by the named Insured,
>
> (2) if the grantee wholly owns the named Insured,
>
> (3) if the grantee is wholly-owned by an affiliated Entity of the
> named Insured, provided the affiliated Entity and the named Insured are
> both wholly-owned by the same person or Entity, or
>
> (4) if the grantee is a trustee or beneficiary of a trust created
> by a written instrument established by the Insured named in Schedule A for
> estate planning purposes.
>
> (ii) with regard to (A), (B), (C), and (D) reserving, however, all rights
> and defenses as to any successor that the Company would have had against
> any predecessor Insured.
>
>
>
> 2. CONTINUATION OF INSURANCE
>
> The coverage of this policy shall continue in force as of Date of Policy
> in favor of an Insured, but only so long as the Insured retains an estate
> or interest in the Land, or holds an obligation secured by a purchase
> money Mortgage given by a purchaser from the Insured, or only so long as
> the Insured shall have liability by reason of warranties in any transfer or
> conveyance of the Title. This policy shall not continue in force in favor
> of any purchaser from the Insured of either (i) an estate or interest in
> the Land, or (ii) an obligation secured by a purchase money Mortgage given
> to the Insured.
>
>
>
> The expanded coverage residential Homeowner's title insurance policy
> available since 1998 is similar, that the Insured continues to have rights
> forever and a grantee spouse does not have rights. It does not have the
> deed warranty language from the 2006 form, but keep in mind that if the
> Insured conveys to another without a warranty, that Insured could not have
> loss that is covered by the policy. That form states both issues in the
> same section:
>
>
>
> 2. CONTINUATION OF COVERAGE
>
> a. This Policy insures You forever, even after You no longer
> have Your Title. You cannot assign this Policy to anyone else.
>
>
>
> b. This Policy also insures:
>
> (1) anyone who inherits Your Title because of Your death;
>
>
>
> (2) Your spouse who receives Your Title because of dissolution of
> Your marriage;
>
>
>
> (3) the trustee or successor trustee of Your Trust or any Estate
> Planning Entity created for You to whom or to which You transfer Your Title
> after the Policy Date;
>
>
>
> (4) the beneficiaries of Your Trust upon Your death; or
>
>
>
> (5) anyone who receives Your Title by a transfer effective on
> Your death as authorized by law.
>
> [(5) was added in 2010]
>
> c. We may assert against the insureds identified in Section
> 2.b. any rights and defenses that We have against any previous insured
> under this Policy.
>
>
>
>
>
> *From:* wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.
> wsbarppt.com] *On Behalf Of *Mark Geyer
> *Sent:* Wednesday, November 09, 2016 10:34 AM
> *To:* wsbarp at lists.wsbarppt.com
> *Subject:* [WSBARP] Form of deed for converting separate to community
>
>
>
> More than once over the last few years our title company colleagues have
> advised against using QC deeds to avoid negating title insurance coverage.
> Does that apply to deeds for conversion of separate property of one spouse
> to both spouses as community property?
>
>
>
> Thanks,
>
>
>
> Mark
>
>
>
> Mark J. Geyer, P.S.
>
> PO Box 15733
>
> Seattle WA 98115
>
> (206) 849-7982 Telephone
>
> mgeyer at mgeyerlaw.com
>
>
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--
*************************************************
Jayne Marsh Gilbert
Gilbert and Gilbert Lawyers, PS
(360) 336-9515
*************************************************
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