ALTA Survey: Title commitment lists: the owner, the borrower/purchaser, the lender, the title company (& underwriter).?ÿ The standard (4) parties I have always certified to.
I was requested to add (3) additional parties, all LLC(s), and as just explained to me, "mezzanine lenders".?ÿ These parties are not listed in the title commitment.
According to investopedia.com: What Is Mezzanine Financing? Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert the debt to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid.?ÿ In terms of risk, it exists between senior debt and equity.
This is a new one to me.
Any comments/advice?
Respectfully submitted.
You get to choose who want to certify to. If you only want to certify to the buyer, fine. Or just the lender, fine. They may not hire you because they want others certified to. It is still your choice and the more entities you certify to the greater the risk of being sued. Although the incremental portion of the added risk is probably infinitesimal. If the original 4 don't have a desire to sue you , it is highly unlikely these mezzanine lenders will have a desire to sue you.
Don't certify to unknown parties.?ÿ Tell them that you'll certify to additional parties, if they give you actual names now
@jph Corporate names were provided, all LLC(s).?ÿ They are apparently behind-the-scene financiers that assist with financing riskier loans, and at higher interest rates.?ÿ In 20 years of signing, I have never dealt with "mezzanine lenders", nor have I certified to parties not listed in the title commitment.
What fee do you attach to the liability the additional "mezzanine lenders" put you in for the statue of limitations in your state??ÿ Any additional liability should, in my humble opinion, justify an increase from the quoted fee.
My $0.02
I agree that it would be well within the licensee's purview to negotiate additional fees above and beyond the minimum certification, based upon the standards:
Especially for "mezzanine lenders".
?ÿ
Only did a few ALTA's to me they are more trouble than profitable, but I have certified other surveys to all kinds of entity's. Never made any difference to me who I certified the survey to. You are just certifying the survey is correct. ?????ÿ
Someone once explained on the forum that if the party wants to sue, the certification means they don't have to otherwise prove you owed them the duty of correct information. It just lets them skip a step.
I've never been particularly good a playing pretend so I tend to get aggravated when professional risk assessors (lenders) ask me to extend my liability without offering to pay for my increased risk exposure.?ÿ You can find legions of PLSs who don't care and just add the names, this just adds to the problem.?ÿ Please don't provide charity to highly sophisticated parties who are knowingly exploiting you.
At a minimum, charge them 15% of the total contract per additional party.?ÿ You might even start with 20% and let them talk you down.?ÿ?ÿ
@murphy I don't know the answer to this, but are you really adding any liability? You are already liable for any errors to anybody affected by your survey subject to your states statute of limitations. I think all that adding a a name does is reduces the steps the named party needs to go through.
That said, I probably would refuse to add a shady LLC.?ÿ
I think all that adding a a name does is reduces the steps the named party needs to go through
The key word is "all".?ÿ I don't minimize or devalue the reduction of these steps or legal buffers..?ÿ When dealing with professional risk assessors, my default assumption is that they know more about risk than I do.?ÿ I don't fully understand all the liability, but I can trust that lenders have an insensitive to divest risk.?ÿ I also find that the, "It doesn't matter whose name goes on the certification", argument is contrary to everything I've ever learned about contracts, insurance, and certification in general.?ÿ?ÿ
Why not just certify to everyone?
?ÿI certify to all lenders of the United States of America.?ÿ It'd save time and you wouldn't have to worry about misspelling their names.
@murphy I get what you are saying, but what I have never really dug into, because I have only ever done two ALTA's is how the certification increases liability. Just the fact that you have done a survey creates liability to any one with potential to be harmed by it. What is the additional liability we are taking on by certifying an ALTA (beyond just the inherent increase in liability due to agreeing to survey improvements)?
While your trust that liability proffesionalals know better about liability is probably a good general rule, and I would apply it to my actions too, they aren't any more immune to blindly following nonsensical rules than surveyors are (ex. descriptions always need to run counterclockwise).?ÿ
@aliquot?ÿ
I'd be interested in discussing this with a lender specializing in commercial real estate.?ÿ I've performed a good amount of ALTAs and the primary concern seems to be what and to whom I am certifying.?ÿ?ÿ
Maybe I need to offset my liability paranoia with some tangible risk.?ÿ Perhaps a nighttime bike tour of Caracas or hang gliding in Eastern Ukraine?
@murphy Maybe I have the perspective I do because I have ridden a bike at night in Caracas.
