the doctrine of merger of title

I saw this question posted online:


The mortgage crisis has brought with it a record number of foreclosures.  Not surprisingly, deeds in lieu of foreclosure have also become much more common.  Generally, the doctrine of merger of title holds that when a greater and lesser estate coincide and meet in the same person, the lesser estate is merged with the greater. The question then becomes, does the deed in lieu have the effect of extinguishing the lender’s mortgage lien? 


I asked Phil Noce of Elite Title what he thought.  He answered this way:

I remember researching this issue in my younger days at Chicago Title.  If the deed makes a specific reference that it is for the purpose of satisfying the existing mortgage, nothing further will be required.  If it is just a deed to the lender without such a reference the question of intent  comes into play and the title companies have always taken the position that the mortgage must be cancelled of record.  I have seen deeds which stated that the mortgage is to remain open.


The main problem with a deed in lieu of foreclosure is junior liens.  In a foreclosure junior liens can be cut off, but if the lender accepts a deed in lieu of foreclosure that lender takes subject to all outstanding liens.  That is why it is necessary to do a search to make sure the are no other liens before such a deed is accepted.



Posted via email from Title Insurance
Continuing Ed for Title Agents

I don’t know if this is true but it’s funny

Rebuilding New Orleans caused residents often to be challenged with the task of tracing home titles back potentially hundreds of years.

With a community rich with history stretching back over two centuries,
houses have been passed along through generations of family, sometimes making it quite difficult to establish ownership. Here’s a great letter an attorney wrote to the FHA on behalf of a client:   You have to love this lawyer…

        A New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral. The title to the property dated back to 1803, which took the lawyer three months to track down. After sending the information to the FHA, he received the following reply:
        (Actual reply from the FHA): 

        “Upon review of your letter adjoining your client’s loan application, we note that the request is supported by an Abstract of Title. While we compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin.”

         Annoyed, the lawyer responded as follows: 

        (Actual response):

        “Your letter regarding title in Case No.189156 has been received. I note that you wish to have title extended further than the 206 years covered by the present application.

        I was unaware that any educated person in this country, particularly those working in the property area, would not know that Louisiana was purchased by the United States from France in 1803, the year of origin identified in our application. For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France , which had acquired it by Right of Conquest from Spain . The land came into the possession of Spain by Right of Discovery made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the Spanish monarch, Queen

        The good Queen Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus’s expedition. Now the Pope, as I’m sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume that God also made that part of the world called Louisiana . God, therefore, would be the owner of origin and His
origins date back to before the beginning of time, the world as we know it, and the FHA. I hope you find God’s original claim to be satisfactory. Now, may we have our loan?” 

        The loan was immediately approved. And you want our government running the health care?

Posted via email from Title Insurance
Continuing Ed for Title Agents