Insurance Guides And Tips

So-called "straight" letters are usually, but not solely issued by title underwriters for matters which are "cured" by the passage of time, even if nothing is done, or for matters which may not actually affect the title to be insured.

The following is a list of common uses for straight letters and the reasons for their issuance as straight letters, as well as some comments on the exceptions themselves:

A) Judgments against persons of a similar name to a party which is out of title which do not appear to be against the party at an address discernable from the abstract of title. First, the judgment was probably cleared by an affidavit at the prior insurer's closing. Or, the judgment expires over a period of time.

B) Where a judgment is "on the head", a straight letter will be offered, however a Performance Letter or Conditional Performance Letter would be more appropriate, unless an escrow was taken, in which case an escrow benefit letter might be used.

C) Another consideration is given to the "Purchase Money Mortgage" rule, where a pre-existing judgment against the purchaser becomes a lien against the property purchased, but is subordinate to a mortgage which is made to finance the acquisition cost of the premises. No letter would be issued from the insurer which handled that mortgage transaction, although a careless reliance on a prior policy for a reissue could cause the issuer of a later policy to miss a judgment, in which case a letter might be appropriate from the later insurer, unless that insurer's policy covered only a mortgage and that mortgage wasn't foreclosed.

D) New York State Franchise Taxes (licensing fees, etc.) against a corporation which is now out of title. Again a statute of limitations for enforcement exists and the form of proof taken at closing may not have been adequate;

E) New York City Corporation Taxes

F) Proofs of Death, Estate Taxes, Etc/.

G) Devolution of Title

H) All other defects in title that would have been cleared at the insurers closing....


The Straight Letter is used as a substitute for a copy of the proofs sufficient to remove the exception, which are obstensibly obtained by the prior company. There are some agencies and companies which have maintained their files in pristine order over the years, and can provide proofs, and others which have taken the attitude that their policy of insurance itself is an adequate substitute for the proofs. The latter companies spend more time issuing letters of indemnity than necessary.