Bulletin: CA000011

Dear Associates:

Stewart has suffered policy losses recently involving postponed property tax liens in favor of the State of California.

These liens should be posted to the specific property account. However, on occasion they are inadvertently posted to the general index, usually as liens. When posted in this manner they have been ignored because they were more than ten years old.

Postponed property tax liens do not expire by the passage of time. They are effective as a lien against the property forever unless terminated by the State of California. The period of postponement ends and payment is triggered by the transfer of the property or the death of the owner.

This bulletin is a reminder that the title documents must be examined and sole reliance can't be placed on the printout.

Instruments posted as liens against your owner on the GI with no other identifying characteristics must be examined unless they are prior to the owner's acquisition.

This must be done to avoid this type of totally preventable loss.

When a claim is made by the State Controller's office following a sale in which the lien was not paid, the company has no defense and must pay to protect our insureds. Our only chance of recovery for these is to proceed against the former owner or his estate. This is a difficult, time consuming and often futile process.

Postponed principal and accumulated interest on these liens, especially the older ones, amounts to thousands of dollars.