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We moved into a new neighborhood last year which we were told simply had a homeowner's association. To our surprise, our real estate tax bill received in December also included a special assessment for a community improvement district, an extra $500 a year.

My research of county recorded documents shows this being recorded a year prior to us closing. Our title policy did not locate nor except the CID and its obligation.

We opened a claim with the title company back in January. However, the attorney assigned to our claim has been dragging her feet. I have sent emails, fax, and spoken to her trying to receive the status of our claim.

All she's done is pointed out a separate recorded document (Doc. ABC) saying that it does not create an assessment obligation to individual lot owners. I responded by giving her the document number (Doc. XYZ) and recording date of the document that does create such an assessment.

We have spoken to an attorney, back in December, who recommended us raising the issue with the title company. What should we do next? Should I try to get the name of the attorney's supervisor? It's been just about 3 months since the date of the letter showing our claim was opened. I'm thinking they know we are correct and are hoping that by ignoring us, we'll just go away.

Thanks in advance for any advice!

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What is your opinion of purchasing title insurance on REO/bank owned homes? More important?

I am first to admit that I h... (more)

SUCKISSTAPLES (Apr. 24, 2009 @ 11:06a) |

Frankly, from my perspective, when it comes to lenders, the issue of corporate authority to execute a warranty deed and ... (more)

geo123 (Apr. 24, 2009 @ 12:35p) |

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geo123 (Apr. 27, 2009 @ 1:14p) |

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Just curious, what exactly are you demanding in your claim??

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What type of a title insurance policy do you have -- is it an ALTA owner's policy or a proprietary title policy offered by the title company? If it's an ALTA policy, is it an '06 policy (you'll find this information on the very bottom of Schedule A and on the bottom of the policy jacket). Is it a Short Form Owner's policy (does it say "Short Form" at the top of Schedule A)?

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gatzdon said: Just curious, what exactly are you demanding in your claim??I would guess that the OP has demanded that the title company cover this and any future assessments. Depending on the type of policy that he/she has, this may or may not be an appropriate demand.

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geo123 said: gatzdon said: Just curious, what exactly are you demanding in your claim??I would guess that the OP has demanded that the title company cover this and any future assessments. Depending on the type of policy that he/she has, this may or may not be an appropriate demand.I can understand the policy covers easement that wasn't uncovered at the time of closing. But doesn't the town have unlimited rights to increase property taxes? Why should the title policy cover it?

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nycll said: geo123 said: gatzdon said: Just curious, what exactly are you demanding in your claim??I would guess that the OP has demanded that the title company cover this and any future assessments. Depending on the type of policy that he/she has, this may or may not be an appropriate demand.I can understand the policy covers easement that wasn't uncovered at the time of closing. But doesn't the town have unlimited rights to increase property taxes? Why should the title policy cover it?States/counties do have the right to increase property taxes and such tax increases are not covered by title policies. The OP's post suggests that this is not a tax increase, however, but a special assessment passed pursuant to some type of a HOA Declaration/Restrictive Covenants, which may or may not be covered by the title policy.

In other words, if the authority for the charge imposed on the OP comes from a recorded document, then, depending on the type of policy the OP has, the charge may be covered by his/her title policy.

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Yes, we are demanding they cover this and any future assessments. It is not property taxes, but a special assessment for the CID (on top of the annual HOA dues, which also show up on the real estate tax bill). It is an ALTA policy.

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I'd make a personal visit to the office and speak w/ all involved, after that... I guess it depends on what state you are in, but I had a similar problem and contacted the State Dept. of Insurance - they often have a department that just deals w/ title insurance.

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lindyn said: Yes, we are demanding they cover this and any future assessments. It is not property taxes, but a special assessment for the CID (on top of the annual HOA dues, which also show up on the real estate tax bill). It is an ALTA policy.What is the year of the policy jacket (again, see the bottom of the policy jacket or Schedule A for that info)? Is it a short form residential policy (does it say "short form residential" at the top of Schedule A? Is there a Schedule B that lists specific exceptions and subordinate matters? If so, what does it list?

There are several types of ALTA owner's policies out there, so you need to answer the questions above to tell us the type of policy that you have.

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slappycakes said: I'd make a personal visit to the office and speak w/ all involved, after that... I guess it depends on what state you are in, but I had a similar problem and contacted the State Dept. of Insurance - they often have a department that just deals w/ title insurance.The State Department of Insurance is highly unlikely to do anything in this case. Unlike other types of insurers that are very tightly governed and, once liability is established, must make payouts within a very tight time frame, title insurance matters are very different. Title insurance companies often take their time investigating the matter, deciding whether it is possible to avoid the claim by other methods, etc...

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I have verified it is an ALTA (10-17-92). How does this differ from the '06 version? Also, we are in the state of Missouri.

Thanks again!

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Almost forgot--I do not see "short form" listed anywhere, but it DOES have a Schedule B.

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lindyn said: I have verified it is an ALTA (10-17-92). How does this differ from the '06 version? Also, we are in the state of Missouri.

Thanks again!
Right, the 10-17-92 ALTA Owner's policy replaced the 1990 Alta policies and narrowed the creditors' rights exclusion by substitution of the "New York" creditors' rights language. The earlier 1987 policies contained no express creditor's rights exclusion.

The '06 ALTA forms are far superior to the '92 policies and contain a number of provisions that are more favorable to the insured. For instance, new covered risk 2(c) of the '06 owner's policy for the first time in a policy provided explicit "survey" (or boundary and encroachment) coverage without issuance of a special endorsement. This coverage is still not a substitute for a contiguity or access endorsement, and will not insure against shortages in area, absent a special endorsement.

Anyway, I don't have the '92 policy jacket in front of me, so it's difficult to say anything. Does your Schedule B have an exception for "Covenants, Conditions, and Restirictions, Easements and Servitudes, and Minerals?" Does it contain an exception for "taxes for calendar year __, not yet due and payable?"

By the way, the 10/17/92 ALTA Owner's Policy was de-certified as ALTA Forms on June 17, 2007. After that date it may be only issued if it is available in the state and if specifically requested by the insured. Did you close on the house after June 17, 2007 and, if so, how did you end up with the '92 policies?

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Ok, I just pulled up the '92 Owner's Policy. To the extent the document that's given rise to the assessment was recorded prior to your deed and was not specifically or broadly excluded on Schedule B, you do have a claim for coverage since it is arguably a "defect, lien or encumbrance on the title" (Covered Risk #2). Depending on the way the assessment is characterized, the title company could very well point to Exclusion 1(a) or to 3(a) (so the argument would be that you "assumed" liability for the assessment, which could be true depending on the way the vesting document reads).

This seems very fact specific and the fact that you have a '92 policy isn't making it any easier. What, if anything, is the title company telling you so far?

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Yes, it contains the exception for "taxes for calendar year __, not yet due and payable." I closed in 2008, but have no idea why the '92 policy was used.

As a follow-up, what are the different ways the assessment could be characterized? And where can I find the 'vesting document?'

Thanks again!

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It seems there is enough wiggle room for the title insurer to weasel out of it. I am not the lawyer (geo is), but I would not be surprised if they get away with it if you sue them.

Btw is this item really not on the long report of the search?

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geo,
i would also like to know how to speed things up. mine keeps saying 'no updates - we are looking into it'

im beginning to think that is their strategy until we get tired of asking and go away.

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lindyn said: As a follow-up, what are the different ways the assessment could be characterized?I don't know enough about the assessment here, but it could potentially be characterized as relating to your occupancy, use, or enjoyment of the land or as relating to environmental protection, which would exclude it from title insurance coverage. In layman's terms, if it is characterized as essentially a tax or a surcharge assessed by a municipality against a large group of owners, the title company could refuse to pay.

And where can I find the 'vesting document?'In this context, I use the term "vesting document" to mean the document that vests the entity levying the charge with the authority and the power to do so. I believe you mentioned earlier that you've already located a recorded document that grants such power to the entity imposing the charge.

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mshen11 said: geo,
i would also like to know how to speed things up. mine keeps saying 'no updates - we are looking into it'

im beginning to think that is their strategy until we get tired of asking and go away.
It is sort of their strategy. Title insurance companies are not overtly trying to avoid paying out legitimate claims (that would be grounds for bad faith lawsuits) but they are entitled to take reasonable measures to minimize their losses while adequately protecting their insured. In other words, if they can take steps to avoid payouts without exacerbating your losses, they are well within their rights to do so. They are also entitled to fully and completely investigate the matter, which can take time since title matters and the language of title policies can be tricky.

As I previously mentioned to the OP over PM's, the title company needs to either make the payment by the due date or to deny his/her coverage, so that he/she can take steps to make the payment. They should not be stringing the OP along past the payment due date without giving him/her an indication as to what they intend to do. As an aside, unfortunately, taking several months to "look into things" is not that long in the title insurance industry -- as long as the investigation is not excarcerbating your losses (which is the reason that I asked about the payment due date), they could potentially keep investigating it for years.

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[they could potentially keep investigating it for years.]

so the secret to speed up a case is to force yourself in a worst/losing situation (such as monetary loss, forced into litigation, etc...)?

is "worst" a relative term? a few hundred dollar to OP may mean nothing to the title company.

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mshen11 said: [they could potentially keep investigating it for years.]

so the secret to speed up a case is to force yourself in a worst/losing situation (such as monetary loss, forced into litigation, etc...)?

is "worst" a relative term? a few hundred dollar to OP may mean nothing to the title company.
Unfortunately, there are no definitive answers to these questions, as these are all very situation specific.

There is a very good reason that I keep mentioning on FW that good title is FAR better than title insurance. This thread is just one of the reasons that I say this. Here is another.

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geo123 said: mshen11 said: [they could potentially keep investigating it for years.]

so the secret to speed up a case is to force yourself in a worst/losing situation (such as monetary loss, forced into litigation, etc...)?

is "worst" a relative term? a few hundred dollar to OP may mean nothing to the title company.
Unfortunately, there are no definitive answers to these questions, as these are all very situation specific.

There is a very good reason that I keep mentioning on FW that good title is FAR better than title insurance. This thread is just one of the reasons that I say this. Here is another.


Thanks for the possts Geo. I'll be one of the first to admit that title insurance is something many don't think about, but still pay for it because the mortgage company requires it.

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gatzdon said: Thanks for the possts Geo. I'll be one of the first to admit that title insurance is something many don't think about, but still pay for it because the mortgage company requires it.Remember that the owner's title policy is ALWAYS optional and is NEVER required by your lender. What the lender requires is the lender's title policy, not the owner's.

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i didnt remember because i never knew about it. so my question is this:

isnt buying 2 policies kind of redunant. what advantages are there owners have over the bank's? in another thread you indicated to me the bank's might be more superior than the owner's.

geo, knowing what you know, would you buy owner's title insurance? from where i stand now, it is pretty worthless.

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mshen11 said: i didnt remember because i never knew about it. so my question is this:

isnt buying 2 policies kind of redunant. what advantages are there owners have over the bank's? in another thread you indicated to me the bank's might be more superior than the owner's.
The lender's title policy protects the lender; the owner's title policy protects the property owner. So, while both policies may insure against the same exact things, the reason for the two policies is the fact that the insured are different.

By the way, the lender's risk is slightly different from that of the owner, so the provisions of the lender's title policy are somewhat different, as are the endorsements that are often requested by the lender.

geo, knowing what you know, would you buy owner's title insurance? from where i stand now, it is pretty worthless.In small residential transactions the prep work leading up to the purchase of the title policy tends to be extremely poor, which often negates a lot of the benefits and protections provided by title policies. Further, residential purchasers often have no idea what title policies do and don't know whether the types of risks that they are concerned about are even covered under the policies. If I had to generalize, I can tell you that as a residential purchaser I would absolutely ALWAYS purchase an owner's policy if I was buying new construction, since it is extremely common to have materialman's liens on those and title policies typically provide good coverage against them. I would likewise ALWAYS purchase an owner's policy if the property I was buying had undergone recent remodeling/renovations, so I wouldn't have to worry about materialman's liens there. In all other circumstances, it would be a case-by-case decision for me, which would depend on the precise circumstances surrounding each property.

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mshen11 said: i didnt remember because i never knew about it. so my question is this:

isnt buying 2 policies kind of redunant. what advantages are there owners have over the bank's? in another thread you indicated to me the bank's might be more superior than the owner's.

geo, knowing what you know, would you buy owner's title insurance? from where i stand now, it is pretty worthless.
its redundant only if you get a 100% mortgage and never pay it down.

Presumably, you put some money down, and continue to payoff the home. So your "stake" in the home becomes greater and you want to protect your share of the home.

Once your home is paidoff, your own title coverage is the only policy left.

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point taken SIS. since im in the earlier years of the mortgage - i dont see a benefit. benefit doesnt kick in til later.

muchmuchmuch later in my case.

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As a follow up to the above, people in other threads have mentioned that lenders would not be buying title policies if they were worthless, so people just do the same thing. The reasoning is somewhat flawed here. First, title policies are not worthless but you often have to know what you are doing in order to get value out of them. Keep in mind that lenders purchase title policies not just for the actual insurance policy but also to get the benefit of having a second pair of eyes oversee the transaction and spot various issues at the outset, so they can be addressed right away.

Second, lenders have the leverage and the resources to make title insurance companies do what they are supposed to do. As a lender's counsel with a large firm, for instance, I probably deal with over a billion dollars a year in title coverage. We have direct access and long term relationships with very experienced senior underwriters, national, regional and local title counsel and powerful title agents. Our clients are international, national, regional and local banks and other financial institutions that not only have the resources to ensure that title companies do what they are supposed to do under the title policies, but also have the leverage to divert a lot of business away from title companies that prove to be problematic. We also know exactly what type of title coverage we are getting from the outset -- it is not at all unusual for us to spend tens of thousands of dollars reviewing and negotiating title policies at the outset to ensure that our clients are properly protected.

Even in cases where we are brought in to fix a problem, the above factors make it significantly easier for us to get the right results for our clients. For instance, a couple of weeks ago we were supposed to foreclose on a commercial development only to discover that one of the mortgages was recorded without a signature page and noone knows where the signature page is. The lender has a title policy on this property. So, I gave the title insurance a choice: either let us foreclose and insure the sale based on this defective mortgage or face a title claim for the entire amount of the indebtedness plus my very significant legal fees, which claim you will be unable to defend. If we didn't have the resources and the leverage that we do, we would have been forced to postpone the foreclosure for months if not years until the title company investigated, reviewed everything and decided what to do. I was, however, able to get the title company in this case to provide a full indemnity for the foreclosure and it only took a few days to do so. The reason I am posting all of this is not to brag about our resources but to explain the reason that title policies can often be significantly more valuable to lenders than to small residential owners, who lack any of these resources and have no leverage.

Again, I am not necessarily saying that people should not be purchasing title policies for themselves. What I am saying, however, is that just like with all other types of insurance, you really should try hard to educate yourself as much as you can about potential title issues and the protections, exceptions and caveats contained in various types of title insurance, so that you are then in the best position to decide whether a title policy is warranted in your specific case and also know what to do if you have to file a claim.

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mshen11 said: point taken SIS. since im in the earlier years of the mortgage - i dont see a benefit. benefit doesnt kick in til later.

muchmuchmuch later in my case.
As you are now painfully aware, not all title policies are created equal. As you and I have privately discussed, your specific owner's policy is a proprietary non-ALTA owner's policy, which provides very limited protection against the specific title issue that you've encountered. Hence, the title company's exposure in your case is relatively small, which, combined with the relative complexity of your situation, means that the title company is in no particular rush to help out.

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geo123 said: As a follow up to the above, people in other threads have mentioned that lenders would not be buying title policies if they were worthless, so people just do the same thing. Most often , the lenders arent "buying" title policies though , are they?

Seems the lenders are getting the coverage for "free", by requiring the borrower to pay for them. A few lenders pay for their own policies (HELOCs and some no fee mortgage deals) but the majority do not.

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SUCKISSTAPLES said: geo123 said: As a follow up to the above, people in other threads have mentioned that lenders would not be buying title policies if they were worthless, so people just do the same thing. Most often , the lenders arent "buying" title policies though , are they?

Seems the lenders are getting the coverage for "free", by requiring the borrower to pay for them. A few lenders pay for their own policies (HELOCs and some no fee mortgage deals) but the majority do not.
Correct, but it doesn't mean that it's truly "free" for lenders. Lenders compete on costs, so a lender that could save its borrowers the cost of the lender's title insurance coverage would have an advantage over its competitors. Smart lenders already try to eliminate costs that are not essential and negotiate with their providers for reduced fees, which cost savings are then passed on to the borrowers so that lenders can get more business.

Believe it or not, but I have seen some commercial transactions in which lenders have decided to waive title insurance requirements altogether to gain such an advantage, although that is very unusual. It is not unusual for me, however, to recommend to my lender clients in certain situations to waive certain expensive title endorsements where I believe the cost outweighs the benefit to save the borrower some money and to make the lender more appealing to the borrower.

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in my limited experience on purchases and refis - the bank allowed me to choose the title insurance in all cases. of course out of my own pocket.

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geo123 said:

Again, I am not necessarily saying that people should not be purchasing title policies for themselves. What I am saying, however, is that just like with all other types of insurance, you really should try hard to educate yourself as much as you can about potential title issues and the protections, exceptions and caveats contained in various types of title insurance, so that you are then in the best position to decide whether a title policy is warranted in your specific case and also know what to do if you have to file a claim.
What is your opinion of purchasing title insurance on REO/bank owned homes? More important?

I am first to admit that I have no clue whether I am truly buying a home from "HSBC Series III-V trust 2005-35 shares A-F as held by Deutsche Bank" , whether they properly foreclosed, and I dont think the title company does either. I cant even easily determine chain of title, how can the average layperson do so?

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SUCKISSTAPLES said: What is your opinion of purchasing title insurance on REO/bank owned homes? More important?Depends. In some respects purchasing a REO from a lender is safer than purchasing non-foreclosed property from an individual or a developer. After all, all the recourses that you have under a warranty deed signed by an individual or a single purpose entity formed by a developer for your subdivision aren't worth very much because it'd be very difficult if not impossible to get your damages paid by them. On the other hand, if you are buying a house from a lender, if there is a title issue down the road, having recourse against the lender-owner under the warranty deed means quite a bit and should convince the lender to cooperate. Very few defenses are available to a prior owner under a warranty deed, so even if the lender does not cooperate, you stand a very good chance of recovering your damages against the lender under the warranty deed recourse provisions.

I am first to admit that I have no clue whether I am truly buying a home from "HSBC Series III-V trust 2005-35 shares A-F as held by Deutsche Bank" , whether they properly foreclosed, and I dont think the title company does either. I cant even easily determine chain of title, how can the average layperson do so?Frankly, from my perspective, when it comes to lenders, the issue of corporate authority to execute a warranty deed and to convey the property are of very minor concern. You probably stand a better chance of running into authority issues with individuals when title to property has been affected by various quit claim deeds and executor deeds but even that tends not to happen very often.

I consider various liens to be by far the most common title issue encountered by people, followed closely by issues associated with discrepancies in the legal descriptions. The absolute best defense against these issues by far is not trusting the closing attorney to take care of everything and reviewing (or hiring someone to review) the title work and the exception documents yourself as well as closely proofreading vesting documents. Here is a link to a personal example showing the importance of doing this.

By the way, incidentally, a foreclosure is one of the best shields you can have against prior liens, provided, of course, that the liens are not federal tax liens (as I've previously posted in other threads, a foreclosure can extinguish federal tax liens but you have to know what you are doing). So, purchasing an REO property from a lender tends to also insulate you against prior lien concerns much better than buying a property from an individual or a developer.

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