RTC TITLE ISSUES
Introductory Comment: This Chapter is applicable only to title issues relating to real property assets of a failed federal savings and loan association (“Failed Association”) in which the Resolution Trust corporation (“RTC”) has been appointed as the receiver or conservator by the Office of Thrift Supervision, U.S. Department of Treasury (“OTS”), by operation of law pursuant to the provisions of the Financial Institutions, Reform, Recovery and Enforcement Act of 1989, enacted August 9, 1989 (“FIERREA”). The appointment of the RTC as conservator or receiver is documented by OTS Orders, which Orders also evidence the transfer of assets, by operation of law, from the Failed Association to RTC, as receiver for the Failed Association, and, in a majority of instances, evidence the creation of a pass-through receivership, whereby a newly-chartered federal association (a “Bridge Association”) is formed by OTS; simultaneously therewith, the OTS will appoint the RTC as conservator for the newly-chartered Bridge Association, into which the assets of the Failed Association are transferred by virtue of a Purchase and Assumption Agreement (“P&A Agreement”). In rare circumstances, certain assets acquired by the Failed Association may not be transferred to the Bridge Association by virtue of the P&A Agreement. In almost all circumstances, the P&A Agreement will not provide a specific itemization of those assets being transferred from the Failed Association to the Bridge Association. The Bridge Association normally will remain in existence until the RTC disposes of some or most of the assets, whereupon the RTC will dissolve the Bridge Association and will appoint RTC as receiver for the Bridge Association. The RTC is required to file OTS Orders in the county deed records only of the location of the principal place of business of the Failed Association and is not required by law to file OTS Orders in the county deed records in which real property assets of the Failed Association are located. This Chapter is not applicable to title issues arising from failed national banks, or failed state banks, state trust companies, or state savings banks. Inquiry should be made to the governmental agencies having authority over said banks, trust companies, and savings banks, inasmuch as the rules and regulations regarding transfers of title are in many cases in conflict to those rules and regulations applicable to the RTC.
33.1 Chain of Title of Ownership of Real Property Assets of Failed Association
To establish the proper chain of title to real property assets of a Failed Association, all applicable OTS Orders should be recorded in the deed records of the county in which the real property interest is located. It is preferable also to record the P&A Agreement. If either originals or certified copies of the OTS Orders, etc., are not available for recordation; then, in such event, the instrument to be executed by the RTC regarding a real property interest should specifically recite all OTS Orders and the P&A Agreement, if applicable, and copies of all unrecorded Orders and Agreements should be retained by the title agent or closing attorney. It also is preferable to place the specific recitals regarding Orders and Agreements in the instrument even if the Orders, etc., are otherwise properly recorded. The requirements of this standard apply to an instrument evidencing any type of real property interest to be recorded, including without limitation, warranty and quitclaim deeds, deeds under power of sale, transfers and assignments of deeds to secure debt, loan modification agreements, cancellations of deeds to secure debt, etc., as well as foreclosure advertisements.
33.2 Sales of Real Property Interests Held by RTC
RTC policy and practice has evolved from the execution by RTC of only quitclaim deeds in the early years of FIRREA to evidence sales of real property owned by RTC, to the use of limited warranty deeds in standard sales of real estate owned properties. RTC has reserved the right to insist on the use of a quitclaim deed to transfer title on a case-by-case basis. RTC normally will execute only a “bare bones” seller’s affidavit. The RTC’s seller’s affidavit, however, should contain appropriate affirmations that will dissolve, by operation of Georgia law, involuntary liens, such a materialmen’s liens and real estate brokers’ liens; or, in the alternative, independent verification should be made that would establish that no lien rights exist.
33.3 Use of Powers of Attorney by RTC
RTC normally will appoint an individual to act on its behalf as attorney in fact to execute instruments regarding a real property interest, via power of attorney. The power of attorney should either be recorded separately in the county deed records in which the real property interest is located, or a copy of the power of attorney should be affixed to the instrument transferring title itself and be recorded as an exhibit to the instrument. The power of attorney should be reviewed carefully to determine any specific limits or exceptions to the authority granted to the attorney in fact. In rare circumstances, a corporate officer of the RTC will execute an instrument, in which case a power of attorney is not applicable; however, evidence of the appropriate delegation of authority to the corporate offices so executing the instrument should be obtained.
33.4 Pass-Through Receivership Title Issues
To eliminate a perceived gap in the chain of title in a pass-through receivership created by : (a) a lack of reference to specific assets being transferred from the Failed Association to the Bridge Association, or (b) the instance in which the conveyance or transfer occurs after dissolution of the Bridge Association, either: (a) a release of the interest being transferred should be obtained not only from the Association immediately transferring title, but also from the initial Failed Association; or (b) the applicable OTS Orders should be recorded, which Orders should recite or confirm the transfer of the assets of the Failed Association to the Bridge Association, as supported by the P&A Agreement. The RTC, on a case-by-case basis, will execute joinder quitclaim and/or warranty deeds, joinder releases, and joinder transfers and assignments, or separate release instruments, to release any residual rights possibly retained by any such Associations. Use of the joinder or separate release instruments by the RTC has been a common practice only since late 1992.
33.5 Validity of Foreclosure Conducted by Holder of Superior Interest of Property in which RTC as Receiver of a Failed Association Holds an Interest
To determine the validity of foreclosures of involuntary, non-consensual liens, i.e., tax sales, materialmen’s liens, superior in priority to an interest of RTC, as receiver, or RTC in its corporate capacity, a determination must be made whether required legal notice by the foreclosing lienholder was given to the RTC, and whether the RTC expressly gave its consent to the foreclosure or acquiesced in the request for consent by allowing more than sixty (60) days to pass from the date of receipt of the notice to the date of foreclosure. A non-judicial foreclosure of a consensual, bona fide deed to secure debt superior in interest to an interest of the RTC in its receivership or corporate capacity shall be assumed valid and shall be assumed to terminate any rights of redemption of the RTC in and to the foreclosed property, without the requirement of providing notice or obtaining consent from the RTC, if the interest being foreclosed is held by the RTC by virtue of a security instrument. If RTC actually holds legal and equitable title to the property being foreclosed, however, consent is deemed given by the RTC only if the foreclosing mortgage holder gives the RTC proper notice of intent to foreclose.
Comment: This standard highlights only a few of the many provisions of Section 219 of FIRREA, as codified at 12 U.S.C. Section 1825(b)(2), as clarified by RTC’s Interim Statement of Policy on Foreclosure Consent and Redemption Rights, effective May 7, 1992, 57 Fed.Reg.19,651. A supplemental statement issued by RTC on June 23, 1992, 47 Fed. Reg. 27,990, set forth the central address for foreclosure notices and requests for consent. In circumstances in which RTC holds an interest, whether as a security interest holder, or as a title holder, to real property which is being foreclosed by a superior holder of either a consensual or non-consensual lien, the applicable provisions of the above-referenced section of FIRREA, together with the RTC Interim Statement, should be reviewed carefully. The provisions of Section 219 requiring notice and consent are not applicable to situations in which RTC serves as conservator for an Association, but only situations in which RTC either serves in its corporate capacity or as receiver for an Association.