In order to gain a better understanding of what title insurance legal disputes are and how they may arise, it is first helpful to have a basic grasp of what the terms title and title insurance mean. Thus, the first part of this section will briefly discuss the definitions for both terms and then move on to the primary focus of this article, namely, title insurance legal disputes.
In a real estate context, title refers to a number of various rights that the valid owner of a piece of property or a specific asset has over that property or asset. These rights are typically represented in a legal document, such as a deed, which allows the owner to show proof of ownership and to transfer their rights in the property or asset later on if they so wish. For example, if a homeowner decides to sell their house to a homebuyer.
Title insurance then can generally be described as a type of insurance policy that is purchased by homeowners and mortgage lenders to protect them against defects or other issues associated with the title to a property that they intend to or are in the process of buying. For instance, title insurance can protect a prospective homeowner against financial losses resulting from purchasing fraudulent or invalid title.
In other words, title insurance allows an injured party to recover damages or other forms of relief in the event that the terms of a policy are breached. It is important to note that the coverage provided by a title insurance policy will differ in each situation. This is because the terms of these types of policies are negotiable and often tailored to the needs of the parties involved in the transaction.
Now that you know the basic definitions for both title and title insurance, a title insurance legal dispute is therefore a dispute that occurs between the parties to a real estate transaction (usually, involving a title insurance company) over a title insurance issue.
For example, a title insurance legal dispute may arise when a title insurance company refuses to cover the costs of a defective title despite the fact that the new homeowner’s title insurance policy requires it to do so.
The above discussion is intended to provide a very general overview of title, title insurance, and title insurance legal disputes. While this information can be useful in understanding such topics, it is strongly recommended that you consult with a local real estate lawyer if you need further advice about title laws in your area or require professional assistance with a title insurance legal dispute.
In addition, hiring a lawyer to review a title insurance policy or to negotiate an issue with a title insurance policy before the final agreement is signed, can be useful in preventing or protecting against future title insurance legal disputes.
What are Some Common Subjects of Title Insurance Legal Disputes?
One of the most common subjects at the center of many title insurance legal disputes is what a particular title insurance policy covers and whether the title insurance company must pay for the resulting financial losses. For instance, in some cases, a title insurance policy may not provide coverage for the entire sale-purchase process of a home, but only issues that are specific to the title itself (e.g., fraud, forgery, and so forth).
Some other common subjects of title insurance legal disputes include the following:
- Marketable title: As previously mentioned, one of the issues that may come up in connection with title to a property is that the title itself may not be marketable. Title may not be marketable if there is a lien, debt, or other encumbrance on the property that would cause title to become defective. Accordingly, many title insurance discussions will focus on what type of benefits should be issued to a policyholder that discovers that the title to their property is invalid or unmarketable.
- Named beneficiaries: If a title insurance policy is vaguely worded or does not contain clear terms as to which parties are covered under a policy, there can sometimes be confusion over which parties the title insurance company must pay or issue benefits. For example, if title to a property was gifted or devised in a will, there may be an issue with figuring out which parties are affected and covered by this sort of real estate transaction.
- Limitations of owners’ rights: Laws concerning real estate transactions and property typically vary from state to state. Thus, it is no surprise that what a property owner must disclose during the sale of a property will tend to vary as well based on state laws. For instance, some states have enacted “buyer beware” statutes that shift the burden of discovering defects to the buyer, as opposed to the seller. These laws can then affect how a title insurance policy is written and interpreted.
- Failure to pay or provide benefits: In some instances, the policyholder might run into issues with collecting the title insurance benefits they may be rightfully entitled to or recovering the insurance payments that they are owed from their title insurance company. In which case, the policyholder will need to retain counsel to either negotiate with the title insurance company or file a lawsuit against the company in court.
As is evident from the above discussion, many title insurance legal disputes can be avoided by drafting a clear and comprehensive title insurance policy. A real estate lawyer can assist with this process, as well as can discuss the terms of a particular policy. They can also negotiate with a title insurance company’s legal representatives on a policyholder’s behalf before the final documents are signed.
Therefore, a policyholder may want to consider hiring a real estate lawyer before purchasing any such policies.
Do I Need a Lawyer for Assistance with a Title Insurance Legal Dispute?
Title insurance legal disputes can go on for prolonged periods of time due to the complexities of the legal issues involved as well as the various laws that may apply to a particular dispute. Oftentimes, the complicated nature of these types of disputes will require court intervention and will therefore lead to litigation and legal proceedings.
Thus, if you are experiencing any legal issues, disputes, or concerns over a title insurance policy, it may be in your best interest to retain a local real estate lawyer for further legal assistance with such matters. An experienced real estate lawyer can offer sound legal advice that pertains to your specific title insurance issue and will already be familiar with the laws and procedural requirements used in your area.
Your lawyer will be able to provide recommendations on the next steps you should take based on your circumstances and can explain your legal rights both under the law and as described by your title insurance documents. Your lawyer can also assist you in filing a lawsuit against the offending party and in recovering any potential monetary damages. In addition, your lawyer can help you in finding the best ways to go about minimizing your losses.
Finally, if you need to appear in court or at a settlement conference with the opposing party, your lawyer will be able to provide legal representation on your behalf as well.