In 2007, many of the major underwriters in Mississippi finalized an agreement to alter and improve this process with regard to certain matters of title. The purpose of the Mississippi Mutual Indemnification Agreement (the “MIA”) is to expedite the clearance of certain types of potential defects and limit the need to obtain individual letters of indemnity. A copy of the MIA can be accessed here: Mississippi Mutual Indemnification Agreement
Under the MIA, the procedure that the title company or agent must follow is not complicated. If an exception to title is a covered “potential defect” as defined in the MIA, and the general conditions of coverage are satisfied, then, subject to certain limitations, the prior title insurer will be deemed to indemnify the new insurer without the need of further action by either company.
Potential defects covered by the Mutual Indemnity Agreement include five (5) specific title matters that are, unfortunately, routine in Mississippi. These potential defects generally include the following:
(a) Conveyances of a possible homestead without joinder of a spouse if the grantor was married;
(b) Liens arising from money judgments (but not a certificate of delinquency for child support) and federal or state tax liens up to a face amount of $250,000.00;
(c) Unsatisfied mortgages or deeds of trust securing on their face no more than $250,000.00 so long as it does not secure revolving credit or equity lines of credit;
(d) Lack of guardians or attorneys ad litem to represent an absent defendant or deficiencies in or absence of, a diligent search affidavit (when required by law) in any judicial proceeding (“The Case”) which results in a final, unappealable judgment affecting the title to the property;
(e) Lack of or insufficient notice of record of the authority of an attorney-in-fact or trustee to make a prior conveyance to the seller or mortgagor in the current transaction so long as the indemnitor’s policy insuring the title without the exception is a least one-year-old.
In order for the obligation of the indemnifying title insurer (Indemnitor) to arise, the following general conditions of coverage must be satisfied:
(1) The indemnitor’s policy must be a least one year old and contain no exception for the subject title objection listed above;
(2) There must be no record notice of any proceeding to enforce the judgment, tax lien, or mortgage;
(3) There must be no record notice of any proceeding to attack or set aside the title resulting from the Case or the conveyance referenced in items (d) or (e) above;
(4) The amount of the automatic indemnity is limited to the Face Amount of the indemnitor’s policy or $250,000.00 whichever is LESS;
(5) This indemnity is limited to policies issued on Mississippi properties only; and
(6) An indemnitor is the underwriter who has already issued its policy without exception to the covered matter. An indemnitee is an underwriter whose policy is issued in reliance upon the automatic indemnitees given in the Agreement.
It is important to note that a policy issuing agent should obtain permission from the underwriter of the new policy (the proposed indemnitee) to rely upon the terms and provisions of the Agreement before insuring over one or more of the defects referred to in items (a) through (e) above. In addition, nothing in the MIA prevents a participating underwriter from issuing a separate letter of indemnity or refusing to indemnify in cases not covered under the MIA or requires an underwriter to issue a letter of indemnity, if at all, within the time set for the closing.
The following underwriters have joined in the execution of the MIA as “participating underwriters”:
|Participating Underwriter||Effective Date|
|Alliant National Title Insurance Company||December 1, 2017|
|AmTrust Title Insurance Company||February 21, 2018|
|Chicago Title Insurance Company||May 17, 2007|
|Commonwealth Land Title Insurance Company||May 23, 2007|
|Fidelity National Title Insurance Company||October 15, 2007|
|First American Title Insurance Company||May 17, 2007|
|Lawyers Title Insurance Company||May 23, 2007|
|Mississippi Valley Title Insurance Company||November 8, 2011|
|Old Republic National Title Insurance Company||November 8, 2011|
|Security Union Title Insurance Company||May 17, 2007|
|Stewart Title Guaranty Company||November 29, 2007|
|The Security Title Guarantee Corporation of Baltimore||December 4, 2007|
|Ticor Title Insurance Company||October 23, 2007|
|Transnation Title Insurance Company||May 23, 2007|
|Westcor Land Title Insurance Company||September 19, 2012|
There are a several cautions in relying on the MIA:
1. Both insurers have to be signatories to the MIA.
2. Each insurer may decide whether they are willing to rely on the MIA in any situation, and sometimes there are business risk reasons an insurer will choose not to rely on the MIA even when it would otherwise apply. As an LTAMS member agent, we strongly encourage you to check the underwriting guidelines of your insurer before relying on the MIA to insure over any defect. The prior insured does not have any “right” to have you rely on the MIA to insure over something. So don’t let them bully you.
3. There are technical details and requirements which can limit the availability of the MIA in certain circumstances. If you have any questions about whether the MIA applies, contact the underwriter for the new policy you plan to issue (not the underwriter for the prior policy).
4. Relying on the MIA to insure over a defect doesn’t automatically satisfy your duty to your customer. We recommend that anytime you are relying on the MIA that you explain the defect to your customer and how you have obtained approval to insure over it to help their transaction go forward more quickly.
5. You must retain a copy of the prior policy in your file. There is always a risk that your file will be lost or indecipherable by the time a claim is made. So that the claim doesn’t turn into an E&O claim against you, the best practice is to add a note to the body of the policy which identifies the defect by record location by including the Book and Page or Instrument Number, and indicate that you are covering the matter based on the Mississippi Mutual Indemnification Agreement and Title policy #XXXXX issued by the prior insurer.
As always, if you have any questions about the applicability of the MIA to your situation, talk to the underwriting department of your title insurer.
If your insurer is not a party to the MIA, please ask them to contact Kenneth Farmer by email at email@example.com or by phone at 601-863-1021.