Thread: Title insurance question

Despite the shoddy title work, you had knowledge of the error and exception and allowed the closing to take place. You have suffered no damages on which to base a claim. These two facts would preclude, in my opinion, any merit for a claim. That said, you can always give it a go. It might at least shine some light on the standards of the agent and perhaps cause the underwriter to do a better job of training.

Originally Posted by BenMarco

So, is there any way I can make them pay for their shoddy work (and ignoring me!)? According to the property appraiser the land has a market value of $38,800 and is roughly 13,400 sq. ft., which is $2.90/sq. ft. So, if there were any grounds for damages, would it be reasonable to suggest that since there are 2,500 sq. ft. we don't actually own (the property is 100' wide) that they insured us for, they would be liable in the amount of roughly $7,239?

land value doesn't work this way. A home site is a home site and 2500sf won't affect the value unless this amount of land will allow/disallow further development.

Punishing someone for doing sloppy work is not cause for damages unless you actually sustain damages.

Originally Posted by Diane Cipa

Despite the shoddy title work, you had knowledge of the error and exception and allowed the closing to take place. You have suffered no damages on which to base a claim. These two facts would preclude, in my opinion, any merit for a claim. That said, you can always give it a go. It might at least shine some light on the standards of the agent and perhaps cause the underwriter to do a better job of training.

What knowledge I had is irrelevant, isn't it? They signed legal documents giving me title to those 2,500 sq. ft., with a warranty, and they also issued me title insurance for those 2,500 sq. ft.

Now theoretically speaking, what if I didn't know any better and I had thought the road was really on my property, and I had intended on either closing it off and using that land for some other purpose, or closing it and charging a toll or charging the other landowners who use it for a perpetual easement across MY land, etc? Now it turns out I don't really own that land and I have lost out on those monies. Wouldn't that be considered damages? I mean, can they really just put any darn legal they want down and when it turns out to be incorrect, that's just the way it is and they don't really have to insure that legal description against any claims, etc.?

And just for the record, are any of you real estate lawyers, or are you just speculating?

Your speculating and we are speculating. If you want real answers you will have to hire a lawyer. let us know what they say.

I am a non-attorney title insurance agent in PA. I don't give legal advice and I do like to chat about title insurance related topics.

Personal knowledge is always relevant. It's part of the pre-defined exceptions to title insurance printed on your policy jacket and title insurance commitment. You should carefully review your title insurance policy. If you do not see an exception either pre-printed on the jacket or in the Schedule B and you want to give a claim, do so. You do not need to hire an attorney. Simply file a claim. The title company will process it and reply. If you still believe you have a case after hearing their position, then hire an attorney.

Visible easements, like roadways, are generally exception in title insurance. Persons who acquire real property intending to block off a visible roadway must do extensive research prior to taking that chance. I doubt that you'd find a title company willing grant affirmative coverage over that action so you'd be on you own against lawsuits by those whose rights have been curtailed.

On the other hand, I have seen valid claims processed where the legal description did not acknowledge an outsale. I was involved in two because an abstractor we used back then presumed local attorneys knew better and she did not report outsales on two transactions. In both cases local attorneys had continued to transfer these properties without exception for lots that had been subdivided off and sold to others. The chains moved through multiple conveyances and no one had the property surveyed. The outsale took place in the 70s and in that county title insurance wasn't prevalent until the 90s, so the local law ofices weren't using the higher standards of title examination.

The real estate agents represented to the buyers that the extra land was included because they were looking at the deeds. The buyers did not purchase surveys. Our abstractor erred and did not report the outsales and so we insured over defective legal descriptions. Both buyers filed claims and were paid for the value of the lots. In one case the lot value was established by the parties - they asked for less than $1000 and in the other case an appraisal determined the value. In the second case the money was apportioned between the buyer and their mortgage lender.

These two cases, both created by abstractor error, are classic examples of the value of title insurance. Following the incidents, we dropped the abstractor because she still couldn't comprehend the error. She couldn't believe that the local attorneys had both made mistakes. We also added additional clerical review - not required - in which we plot the land and send the plotting along with highlighted maps - if available on the public record - to the buyer with their title insurance commitment and ask them to review the maps to make certain there are no errors prior to closing. We have found this pre-closing review useful.

Thank you for your reply Diane. Very informational. I'm still waiting on the paper copy of our policy, which should be arriving any day now, at which time I'll sit down and give it a thorough reading. Unless it's perfectly clear we have no claim, I think I might just file one, if only to at least bring to the attention of the insurer the mistakes made by the agent, as you suggested. But I do recall reading something about them terminating any coverage should they be required to pay a claim? Might not even be worth it if they don't have to issue a refund when terminating coverage?

For the record, we didn't get a commitment to review. I assume that was given to HUD's representatives, because they paid for both policies.

You're welcome, Ben. It's not unusual that agents fail to provide a copy of the title commitment prior to closing. For some reason the industry thinks giving a copy to the lender is all that's required. I disagree.

I encourage savvy buyers to ask for it and take the time to read it and raise questions if needed. You are paying for the product.

I am unaware of any type of cancellation following a claim other than perhaps a circumstance in which the paid claim met the value of the policy.

Good luck.