Recently Abstracts, Incorporated encountered a situation where the search disclosed several open mortgages made by the previous owner of the subject premises. The seller, a non-attorney, provided us with a copy of the Fee Policy issued when he acquired the premises. Normally we would accept the prior policy as sufficient proof and omit these prior mortgages.
Unfortunately, the prior policy that we were presented was issued by an underwriter who is no longer in business. Obviously, the attorney who represented the purchaser at the time did not know that the underwriter he choose to insure the premises would not be in business today.
Accordingly, we have been directed by our underwriters not to accept a policy from defunct insurers. The Department of Financial Services (DFS) has the responsibility of monitoring the financial resources of each underwriter. It has been the practice of the department when appropriate, to issue an order to the underwriter to either cease doing business or to no longer issue title policies.