Many people who choose to purchase a home or an interest in real estate choose to buy title insurance. Title insurance is a contract formed with an insurance company, where they certify the property will have marketable title. If not, the title insurance company will indemnify the owner of title insurance for any loss associated with a defect in the title to the land they want to purchase. Defects in the title usually will make the title unmarketable because of some encumbrance, such as a mechanics lien on the property.
In some cases, an owner of title insurance will be damaged from a defect in the title to the real estate they have an interest in. When this happens, the title insurance company is supposed to pay the owner the benefits under the policy. If they do not, an owner can still sue to recover those benefits if they can prove:
The owner of the title insurance may also be required to show that they complied with any of the title insurance company's "notice of claim and proof of loss" requirements.
A lawsuit against a title insurance company can generally be defended in several ways:
In certain cases, a defective, encumbered, or unmarketable title will not be covered by a title insurance policy. This means that if one exists, the owner of the title insurance company cannot collect any benefits. Some examples include:
Usually, in a successful lawsuit to recover title insurance benefits, an award will be limited to the difference in value between the property with a title defect, and the value of the property without a title defect. Depending on what the defect, encumbrance, or unmarketable title issue exists, this difference can be substantial.
If you think you are being denied title insurance benefits from your title insurance company, it is strongly recommended for you to contact a real estate attorney or contract attorney who has some experience dealing with insurance companies. Only an attorney will be able to explain the issues and help to protect your rights.
Last Modified: 03-22-2018 12:07 AM PDTLaw Library Disclaimer
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