Bulletin: NY000026

Dear Associates:

I am sure that you are aware that real property is subject to forfeiture by the United States Government where the real property is used in violation of law or is acquired with proceeds from the commission of a crime. The most common federal forfeiture statutes are:

21 U.S.C. 881 - a civil "in rem" forfeiture action brought directly as an action against the property, with no requirement that the owner be convicted of the crime, however, the property may not be forfeited if the owner establishes that the commission or omission occurred without the knowledge or consent of that owner;

21 U.S.C. 853 - a criminal " in personam" forfeiture action requiring that the defendant individual be convicted of a crime but that the forfeiture shall not be effective as to a Bona Fide Purchaser for Value; and,

18 U.S.C. 1963 - the "RICO" criminal "in personam" forfeiture statute requiring that the defendant individual be convicted of a crime but that the forfeiture shall not be effective as to a Bona Fide Purchaser for Value.

Based upon the above, we will insure a transfer of property from the United States after forfeiture pursuant to 21 U.S.C. 881, 21 U.S.C. 853 or U.S.C. 1963 under the following circumstances:

Civil Forfeiture under 21 U.S.C. 881

An order for the Warrant of arrest of the property must be signed by a judge or magistrate (not a stamped signature);

The complaint must request forfeiture of the property and allege specific bases for forfeiture;

All owners and lienholders (including spouses with marital or community property rights) of the property who are not executing deeds or releases must be given notice by personal service as evidenced by a review of the process receipt and return. (Contact our legal department in order to approve issuance if personal service does not occur on all owners and lienholders.);

Notice of the proposed forfeiture must have been published in the federal district where the land is located (and the district where the proceeding occurs, if a different district);

An order must authorize forfeiture of the specific property;

The order must be final and non-appealable (generally, ninety days after the entry of the order if no motion is filed) as evidenced by a letter from the United States Attorney's Office or other knowledgeable party;

The forfeiture must occur in the federal district where the land is located or in the district where criminal prosecution of the owner is occurring;

If an owner of the property is subject to criminal prosecution, that prosecution must be final and no longer subject to appeal;

Certified copies of the Order for warrant of arrest, order of forfeiture and evidence of personal notice must be recorded in the local real property records;

You must verify by inquiry or inspection that no one is in possession of the land (except through the United States);

You must disclose to the proposed insured in writing that the forfeiture is a link in the chain of title' and,

If the sales price of the property exceeds $100,000, you must contact the Underwriting Department or the Legal Department to secure authority to issue. Among the issues to be considered will be a possible "Creditors' Rights" exception.

Criminal Forfeitures Under 21 U.S.C. 853 and 18 U.S.C. 1963

You must review the indictment to verify that it seeks forfeiture of this specific property by identifiable legal description;

The defendant owner must be convicted of a criminal offense;

You must review the court order to verify that it authorizes forfeiture and seizure of the property;

All parties (including spouses with marital or community property rights) who are not defendants in a criminal action and who are not executing deeds or releases must be given personal notice. The Legal Department must approve issuance if personal service does not occur on all owners and lienholders;

You must verify that notice of the proposed forfeiture has been published in a newspaper of general circulation;

The United States must file a motion for final order of forfeiture;

A subsequent final order of forfeiture must be entered by the court;

The "final" (second) order of forfeiture must be final and non-appealable;

The conviction must be final and non-appealable (verify with the Untied States Department of Justice or other knowledgeable party);

The united State must furnish a warranty deed (which should warrant the validity of the forfeiture);

Certified copies of the indictment and orders of forfeiture must be filed in the local real property records;

You must verify by inquiry or inspection that no one is in actual possession of the land (except through the United States);

You must disclose to the proposed insured in writing that the forfeiture is a link in the chain of title; and,

 If the sales price of the property exceeds $100,000, you must contact the Underwriting Department or the Legal Department to secure authority to issue. Among the issues to be considered will be a possible ?Creditors' Rights? exception.

If you cannot comply with the above guidelines, please call us. We will consider forfeitures which do not comply with these guidelines or other forfeitures (such as state forfeitures) on a case-by-case basis.

Forfeitures Under State Law

There are numerous state laws that provide for forfeiture of real estate because of criminal acts ((N.Y. Civ. Prac. L&R Section 1310-1352 (Forfeiture), N.Y. PUB. Health Law Section 3300-3391 (controlled substance) and N.Y. Penal Law Section 460.00-460.80 (criminal)). If you are requested to insure where a state forfeiture appears as a link in the chain of title, call the Legal Department. Our principal concerns include personal service on all owners, finality of the forfeiture, clarity of the law in providing for forfeiture of real estate, and authority of the state or political subdivision to convey.

Suspicious Parties in the Chain of Title

Claims may occur under title policies (not where we are insuring a forfeiture, but where we suspect one may occur) because of a forfeiture of the property as proceeds of illegal drug or other transactions. Even though the possible forfeiture would be excluded from coverage, you should not issue without consultation with our Legal Department where:

The proposed purchaser or other party to the transaction brings a large amount of cash, which may indicate drug dealing sources;

The party to the transaction is subject to a current criminal proceeding, which may indicate possible proceeds that are tainted; and,

Where you have community knowledge that the particular person to the transaction may be a drug dealer.

Please note that you should never allege that the property is potentially subject to forfeiture or that the person involved has violated the law; instead, advise the Legal Department as to your concerns and a determination of insurability shall be made.

As in the past, please do not hesitate to contact us if we can be of further assistance.