Say Hello to Keller Title
I have personally filed 2 claims. The first one was for a condo that I owned and the town came back and said they made a mistake when they sub-divided the lot years before I purchased the condo and that additional tax was due. The title company paid. The second claim was in January when I sold a condo in Florida and a water bill of $200 showed up on my closing disclosure for a previous owner – it was actually for a tenant of an owner – 2 owners back. Not sure why I got stuck with the bill but the title company did NOT pay this time and I was stuck paying it.
To clarify a title company has the option of paying a claim or litigating.
In our case the title company chose to litigate. The case was taken all the way to the state court of appeals and after 5 years we prevailed.
During that period from 2007 to 2016 the property dropped in value by 75%.
Of course, the title company paid the legal expenses, however, we lost the ability to sell over that period. Then I think the title company might have gone after the state for reimbursement because the state was at fault in handling the deed. So my point is that the title companies have little exposure and if they do have to pay a claim or lose a case they may have another party to sue for their damages.
I think everyone is missing the point when it comes to title insurance. The American Land Title Association does a poor job in explaining all of the risks as to why it is a good idea to purchase title insurance. I am a 26 year real estate attorney with approximately 95,000 closed transactions. You mustn’t think of just actual money paid out by a title insurance underwriter in analyzing title insurance as a worthwhile product. Every other day we have issues that are resolved with title insurance. Today for example I have someone who purchased their home 14 years ago and the legal description on her deed is missing. She has title insurance. Now to speed things up we are working on contacting the previous owner of 14 years ago. Hopefully we can locate them and the previous owners are alive and will cooperate. Ultimately though title insurance will resolve this issue if parties are not available or cooperative.
Several days ago I had a claim whereby the current owner who is selling their property has title to a wrong lot, not the correct lot number. This issue seems to have existed for 100 years whereby it was only discovered when the potential buyer requested a survey (the previous owner did not) and the surveyor had to examine a plat from 1897. The lot issue was then discovered dating back to the late 1800’s. Heirs are now being tracked down. Perhaps there will be money paid out in damages. Heirs may be tracked down and a certain level of confidence will be weighed making the title insurable. Insurable title is not perfect title and title insurance allows mortgages and purchases to take place without perfect title. Without title insurance many transactions would not take place.
Remember in the landmark case in Pennsylvania (Watson vs. Muirhead) the buyer lost his property without any compensation or any recourse against the person who completed the title work. The court decided that the title agent was entitled to his opinion and that his opinion was wrong. This did not make the title agent negligent and therefore the buyer lost his property to the previous owner’s creditor without any compensation. After this case, Commonwealth Land Title was created to avoid this devastating consequence.
Title insurance smoothes out transactions by placing pressure on title agents to resolve issues on files where the agent issued a policy. Indemnity letters are traded between agents issued by title insurance underwriters to allow a title agent to insure over many times a day all over country. Title insurance allows issues to be past over. Everyone knows there is a fortune 500 company standing behind the issue that was discovered giving a level of comfort to all parties involved.
I’m not sure how many people would be willing to go through with a transaction if all of the risks were disclosed and the title agent wanted a buyer to waive all liability. One title claim can easily wipe out all of the profits that a title insurer makes off of a decent size 30 year agent. The industry would not work if actual payouts were common. I had a buyer not that long ago indicate that he did not want to purchase owner’s title insurance. I had a conversation with the buyer about the risks and they asked for an example. In this particular case the seller of the property was an LLC owned by several family members. I informed the buyer that when dealing with entity documents or trusts eventually you have to depend on the honesty of the seller. Therefore title insurance would protect you if someone was presenting fraudulent LLC authority documents. I explained that business entity documents are private documents whereby one has to eventually rely on honesty at some point. The buyer then explained that he would take that risk. I explained to him that I understood but that I did not want to self insure title and therefore I would agree to close the transaction but I would require a waiver of liability as to the title. When we went to closing I presented the waiver of liability reminding him of our conversation. Needless to say he did not want to sign the waiver and accepted the owner’s title insurance. I suppose title insurance may not be worth it until it is your risk.
I had a customer that was 2 weeks into a refinance with me. He called me up in a panic because he had just gotten a notice from the town that they were going to foreclose on him if he didn’t pay back the home improvement loan he had taken out through the town’s program. The problem was that the loan in question was actually taken out by the previous owner but the title company missed it somehow. Long story short, I talked the customer through the process of filing the claim with his title policy issuer and they ate the mistake to the tune of $7,800. He has referred several people to me for mortgages since then!!!
More b.s. to deal with. Real Estate companies should NOT be allowed to own a title company nor a mortgage company. They illegally steer their clients and everyone knows it. Aside from that, they hire the bottom-feeders who can’t make a living elsewhere. I hate this crap.
Your email address will not be published. Required fields are marked *