Season 1, Episode 5

Title Nerds

Dec 2 2021 • 40 mins

In Episode Five of Title Nerds, hosts Mike O’Donnell and Bethany Abele are joined by partners from Riker Danzig’s Bankruptcy & Corporate Restructuring Practice, along with Riker Danzig attorney Mike Crowley from the Title Insurance team.  First, Bankruptcy Chair Joe Schwartz explains how liens and mortgages pass through bankruptcy.  Partner Tara Schellhorn next joins Joe to address avoidance action-type claims, where Mike and Bethany questioned them about preferences as a way for Trustees to recoup payments and property interests, and best defenses against preferences.  In a wide-ranging discussion, Joe and Tara provided insights on trustees being a hypothetical lien holder or a bona fide purchaser for value, as well as fraudulent transfers and the federal and state fraudulent conveyance statutes.  Of particular interest to title underwriters, Tara discussed the 363 sale process, and how to confirm that clear title is being delivered.

In the second segment, Mike Crowley, an associate in Riker Danzig’s Title Insurance practice, discusses the federal case Tithonus Partners II, LP v. Chicago Title Ins. Co., 2021 WL 4711284 (W.D. Pa. Oct. 8, 2021) in which a dispute arose over coverage after the insured owner conveyed its property to its 99.9% owner. After purchasing the property, which contained an assisted living facility as well as vacant land, the owner, Tithonus Tyrone, obtained refinancing from HUD for the property containing the assisted living facility and conveyed the 58 acres of vacant land to Tithonus Partners II, LP, who was the 99.9% owner and limited partner of Tithonus Tyrone. Tithonus Partners later subdivided the property and sold some of it to a third party.  In 2020, that third party commenced an action against Tithonus Partners, claiming that some of the conveyed property was not owned by Tithonus Partners.  Tithonus Partners then made a title claim with Chicago Title, who denied the claim because Tithonus Partners was not the Insured under the policy.  Tithonus Partners then sued Chicago Title and the parties cross-moved for summary judgment.  The Court rejected Tithonus Partners’ claim that it was a successor to an Insured and, further, found that the unambiguous policy language required 100% ownership.  The Court granted Chicago Title’s motion and the action was dismissed.