Concerned Americans in Foreign Lands. 

As U.S. based investors have gone bargain hunting or looking for strategic hotel and commercial real estate investment opportunities outside our borders, many of them have worried about how to protect their title when challenges arise. They worry how an American investor or lender will fare in a foreign country against a citizen of that country under different laws, courts and procedures that may appear less favorable to the U.S. investors.

U.S. Insurer, Title Policy, Governing Law And Enforcement for Foreign Properties. 
 

When a claim arises in the foreign jurisdiction, the U.S. insurance company either pays off the claim (and takes a subrogation of the insured's rights) or monitors and pays for the defense of the insured in that country. From an insurance claim standpoint, the important action takes place in the U.S. 

FNF avoids regulations of its activities with foreign insurance laws by having a U.S. title insurance company issue the policy to a U.S. entity that owns the property - or a U.S. entity that controls (through a subsidiary) an entity that does. And FNF has developed a specific "doing business" endorsement which says that all entities in the ownership chain are authorized to do business and a claim against any one of them is the same as a claim made directly against the insured.

This coverage was first developed by Bob Calamari and his colleagues at FNF in 1997 when Calamari was asked to insure Starwood's acquisition of the three Westin Regina resort properties in Mexico. He was able to convince the company that it made good business sense and was a prudent first foreign venture. Since then, Calamari says, "We have insured hundreds of properties in Mexico, including a recently-closed $375 million synthetic lease transaction on a new construction manufacturing facility."

Lenders Like Greater Protection. 

In December 2000, following customer demand, Calamari formed the Global Solutions division at FNF to offer the product for properties in Europe and Central and South America. According to Calamari, the product is also catching on with lenders. Calamari says, "Many major lenders have started requiring title insurance overseas, and we have seen instances where the ability to provide this title insurance gave the borrower far more in savings on interest than the cost of our product."

Cost and Availability Vary. 

The cost varies depending on the country and the size of the policy. Calamari says, "You can expect rates to be slightly higher than 'Texas rates' with delivery of a commitment within 30 to 45 days of receipt of an order." He also says that you can count on availability for property in Western Europe, Central and South America, all countries of the former British Empire, and the countries of Asia that have a longstanding concept of private land ownership. In deciding whether to offer coverage in a particular country, FNF basically looks to see if the land recording system gives adequate notice to third parties, and whether documents can be recorded promptly after closing.

For more information, contact Bob Calamari at 212-481-5858 or [email protected].
http://www.fnf.com

The Global Hospitality Group(r) is a registered servicemark of Jeffer, Mangels, Butler & Marmaro LLP