9-115.400
Attorney General's
Authority to Warrant Title
The preferred deed to transfer forfeited property is a U.S.
Marshal's quitclaim deed (USM-159A) executed by the marshal. The
quitclaim deed makes no warranty representations. It serves only to
convey whatever right, title and interest that the Government had
as of the execution date.
A special warranty deed may be used instead when the marshal,
in consultation with the United States Attorney, concludes that
such a deed is necessary and appropriate under the facts of a
particular case, as described in the
Criminal Resource Manual at 2258. The
special warranty deed assures the grantee/buyer that the United
States, as the current seller, has done nothing to encumber the
property, nor has it conveyed any right, title, or interest in the
property while the government was the owner of the property. In
effect, the special warranty deed warrants the forfeiture process.
See the Criminal Resource Manual at
2259.
Finally, property may be transferred by a general warranty
deed. A general warranty deed assures the grantee/buyer that title
to the property is free and clear of any and all liens and
encumbrances, and insures the grantee/buyer from any future claims
against the property. See the Criminal
Resource Manual at 2260. It is Department policy to use general
warranty deeds only in exceptional circumstances. See the
Criminal Resource Manual at 2258. As used
in this policy, the terms "general warranty deed" and "special
warranty deed" are not intended to be limiting in their
application. In some states, warranty deeds are not used (e.g., in
California a "grant deed" provides limited statutory warranties).
The use of such state variations equivalent to a general warranty
deed is satisfactory for purposes of this policy. See the
Criminal Resource Manual at 2257.
9-115.412
Indemnification Agreement in Addition to
Special Warranty Deed
When the circumstances for use of a special warranty deed
exist, the buyer may also request that the United States provide
certain indemnifications in order to obtain title insurance. These
indemnification agreements establish affirmative measures to be
taken by the United States, beyond the basic terms and obligations
of its warranty deed, in the event that claims are later made
against the property. The indemnification agreement may be included
either in the terms of the special warranty deed or in a separate
document which incorporates the deed by reference. In either form,
indemnification agreements will be limited to the following
terms:
- The United States will specially warrant its title against
defects or clouds arising out of the forfeiture process, and hold
the buyer harmless as a result of such defects in title or clouds
involving the propriety of the forfeiture of the property.
- In the event that a court in a final judgment rules that
the United States did not acquire valid legal title to the real
property through the forfeiture process and therefore was not able
to convey clear title to the buyer, the United States will refund
to the buyer the amount of the purchase price of the property, plus
the value of any improvements made to the property by the buyer.
The amount will be paid out of the Assets Forfeiture Fund, plus
interest on the total amount at the current rate as provided in 28
U.S.C. § 1961 from the date of the purchase of the
property by the buyer to the date of the final judgment.
- The United States, by its special warranty deed, does not
warrant the title of the prior owner of the property who acquired
title before the forfeiture.
9-115.413
Approval for Use of a Special Warranty
Deed with Indemnification
Requests to the Seized Assets Division of the U.S. Marshals
Service for approval to convey title through a special warranty
deed with indemnification must be accompanied by the following:
- An explanation of the special circumstances which justify
the indemnification;
- A proposed indemnification agreement, whether in a
separate agreement or as additional paragraphs in a special
warranty deed; and
- A statement of the amount of the purchase price which
potentially may have to be refunded.
9-115.420
General Warranty Deed
If the buyer of the forfeited property is unable to procure a
title insurance policy with a special warranty deed and
indemnification agreement, then the Marshal may be authorized by a
Significant Property Decision to execute a general warranty
deed.
It is the policy of the Department that the Attorney General's
discretion to warrant clear title, through the use of a general
warranty deed, will be exercised only in compelling circumstances
where the financial advantage of offering a general warranty deed
in the particular case, compared to the available alternatives, far
outweighs both the potential cost of honoring the warranty in that
case and the potential effect of increased purchaser demand for
general warranty deeds in future sales of other forfeited
properties. The Seized Asset Division of the U.S. Marshals Service,
in the exercise of sound business judgment, shall also consider the
cumulative potential liability which will accrue over time as a
result of each successive use of a general warranty deed.
9-115.421
Approval for Use of a General Warranty
Deed
If one or more of the circumstances listed in the
Criminal Resource Manual at 2258 is
present, and the Marshal and the United States Attorney responsible
for the forfeiture action deem it appropriate to warrant clear
title, the Marshal and the United States Attorney shall request
approval from the Seized Assets Division to convey title through a
general warranty deed or its equivalent.
Requests to the Seized Assets Division of the U.S. Marshals
Service for approval to convey title through a general warranty
deed or its equivalent shall include the following:
- A title report, identifying specific deficiencies and/or
exceptions that are the basis of the inability to secure title
insurance, and a written explanation from the responsible Assistant
United States Attorney addressing why the deficiencies and/or
exceptions have not been or cannot be corrected in order to avoid
the necessity of a general warranty deed;
- An explanation establishing that a special warranty deed
(e.g., warranting only the forfeiture process) would not be
sufficient;
- A statement of, and an explanation of the basis for, the
estimated financial advantage of offering a general warranty deed
as compared to other options; and
- An explanation of the circumstances that do not permit
disposition of the property by allowing the lienholder to
foreclose, sell the property, recover the amount of the lien plus
interest and expenses from the proceeds of the sale, and pay to the
Marshal for forfeiture, any remaining proceeds in return for the
release of the lis pendens on the property.
[cited in
USAM 9-119.120]
9-115.430
Dispute Resolution
The Asset Forfeiture and Money Laundering Section (AFMLS) will
resolve any disputes that may arise in the event the United States
Attorney and the U.S. Marshal cannot agree on the appropriate form
of deed to be used.
| 9-115.500
Purchase or
Personal Use of Forfeited Property by Department
Employees
Title 28, C.F.R., §§ 45.735-18(a) and (b)
prohibit Department of Justice employees from purchasing, either
directly or indirectly, or using any property if the property has
been forfeited to the government and offered for sale by the
Department or its agents. See the Criminal
Resource Manual at 2261. A waiver to the aforementioned
restrictions may be granted by the head of the employee's division
upon a determination that two requirements are satisfied:
- the purchase was not based on nonpublic information that
came to the employee's attention by reason of his status as a
Department of Justice employee, i.e., that the purchase was based
upon nonpublic source information; and
- the employee's reason for purchasing or using the property
is so compelling as to outweigh any appearance of impropriety.
See Title 28, C.F.R., sections 45.735-18(c)(1) and
(2).
9-115.600
Review of Official
Use of Forfeited Property Valued at over $50,000
Part IV, D of The Attorney General's Guidelines on Seized
and Forfeited Property (July 1990) (
USAM 9-118.000 et seq.) requires
notification to the "Executive Office for Asset Forfeiture . . . at
the time property valued at $50,000 or greater is placed into
official use." Although this requirement may be satisfied by
post-transfer notification, the FBI and U.S. Marshals Service
provided the then Executive Office for Asset Forfeiture with
advance notice of and an opportunity to review such decisions. Such
notification should now be made to the Asset Forfeiture and Money
Laundering Section (AFMLS), Criminal Division.
Please ensure that AFMLS is given advance notice of and an
opportunity to review official use actions involving federal
forfeited property valued at $50,000 or more. AFMLS will endeavor
to act on all such notifications within two weeks of receipt.
| | | | | | | | | | | | | | | | | | | | | | |