Bulletin: SLS2023011

Dear Associates:

This bulletin updates and replaces SLS2015001.

The following information refers to Forfeitures 21 U.S.C. 853, 18 U.S.C. 1962, 18 U.S.C. 982.

Real Property is subject to forfeiture if it facilitates an illegal activity (such as drug trafficking) or is the traceable proceeds of an illegal activity. The most common federal forfeiture statutes are:

• 21 U.S.C. 853 (drug abuse): A criminal “in personam” forfeiture requiring that the defendant individual be convicted of a crime.
• 18 U.S. C. 1963 (RICO): criminal “in personam” forfeiture requiring that the defendant individual be convicted of a crime.
• 18 U.S.C. 982 (money laundering, financial institution crimes, counterfeiting, wire and mail fraud, theft and fraud, etc.): A criminal “in personam” forfeiture requiring that the defendant individual be convicted of a crime.

We will not rely on a federal forfeiture to terminate the interest of innocent parties, including owners, governmental liens (such as tax liens) or to terminate mortgages held by institutional lenders or to terminate easements or restrictions. We will require a release of or exception to these interests and encumbrances. However, it is the federal government’s position that it will only pay ad valorem taxes up to the date of the order of forfeiture.

We will insure on a transfer from the United States after the criminal forfeiture pursuant to 21 U.S.C. 853, 18 U.S.C. 1963, or 18 U.S.C. 982 under the following circumstances.

Criminal Forfeitures Under 21 U.S.C. 853, 18 U.S.C. 1963, and 18 U.S.C. 982

• The Preliminary Order of Forfeiture must authorize forfeiture of the property.
• All owners and lienholders (including spouses with marital or community property rights) of the property who are not convicted and mentioned in the Preliminary Order of Forfeiture must execute deeds or releases.
• The government must publish notice of the proposed forfeiture in a newspaper of general circulation where the property is located for three consecutive weeks. As an alternative to this publication, the government may publish for at least thirty (30) consecutive days on the official government website, www.forfeiture.gov notice of the Preliminary Order of Forfeiture.
• The court must enter a (second) Final Order of Forfeiture.
• The government must certify that the order is final and nonappealable. Generally, the Final Order is final 90 days after the entry of the Preliminary Order if no motion is filed.
• The government must certify that the conviction (reflected in the Preliminary Order) is final and nonappealable no later than 60 days after entry of the final order if no motion filed.
• You must verify that no one is in possession of the land (except the purchaser). You may rely on a certification by the U.S. (Marshal Service).
• You must require recordation of evidence of compliance with the items above. You may use an Affidavit to verify compliance with our requirements. You must record the Affidavit where state law allows recording. Otherwise, record the Orders of Forfeiture.
• You must disclose to the proposed insured that the forfeiture is a link in the chain of title. You may do so by adding the following to the commitment, binder or preliminary report.

NOTE: Title offered by the United State as the seller (or as a predecessor, if applicable) is based upon a forfeiture proceeding under (here refer to proceeding).

• You must require a deed by the U.S. (Marshals Service).

INSURING ANY FORFEITURE IS AN EXTRA HAZARAZDOUS RISK AND MUST BE APPROVED BY UNDERWRITING PERSONNEL.

It is also worth noting that claims have resulted when insuring a property being conveyed or mortgaged by an owner subject to a pending criminal or civil government forfeiture. Thus, any property subject to a lis pendens or preliminary or final order of forfeiture requires a release of the government’s interest in the property. If you cannot comply with the guidelines, please call us.

We will consider forfeitures including civil forfeitures that do not comply with these guidelines or other forfeitures (such as state forfeitures) on a case-by-case basis.

Forfeitures Under State Law

Numerous state laws provide for forfeiture because of criminal actions.

For example, many states have controlled substances laws or "Little RICO” (racketeering) forfeiture laws. If you are asked to insure based on a state forfeiture in the chain of title, call our underwriting personnel. Our 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 (for example, see Section 11005.2 of the California Government Code).

Four states (Maine, Nebraska, North Carolina and New Mexico) have recently abolished civil forfeitures. The United States Supreme Court is going to hear the case of Culley v. Marshall to determine whether state civil forfeiture laws violate due process and speedy trial laws.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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