If you Google "The Closing Specialists" or "Diane Cipa", the link for this Post Gazette article will pop up. To my knowledge, Lawrence Walsh never did a follow-up piece. The claim was settled shortly after publication. Mr. Gruendl decided to accept the $650 offered by Al Watterson of Lawyers Title. A friend or acquaintance, after reading the article must have helped the Gruendl’s understand that they were entitled recovery of damages but not a refund of the insurance premium.
Following the incident, I sent a note to Mr. Walsh thanking him for the publicity and giving us a fine public example of title insurance in action.
The unnamed title searcher was the source of two claims that year, both outsales. In both cases, our file audit revealed that the searcher was aware that the lots in question had been deeded to other parties, but she failed to include this information in the reports sent to our office. The title searcher made an error in judgment. The outsales had occurred in the 70s and the properties had changed hands a few times. In each of these conveyances, none of the attorneys who prepared the deeds had noted the outsales. The searcher assumed that all of these attorneys had searched the title and that their judgment was better than hers. She assumed the attorneys were right and failed to report the outsales.
The Closing Specialists® and this searcher parted company. Even after reviewing the claims, she argued her case and we had to conclude that she might do it again.
So in each of these two cases, the seller’s deed included land that they did NOT own. In each case, the buyers decided to NOT get surveys. Thank heavens the buyers decided to purchase owner title insurance. If they had not, they would have had no recourse but to sue the sellers and hope for the best.
The Gruendl’s were more than compensated for the value of the lot. They paid the neighbor $530 and got a check from Lawyers Title for $650.
The other party – who did not go public and so shall remain nameless – received a much higher compensation. Lawyers Title had the property appraised. They apportioned the fair market value of the lot between the insured owner and the insured mortgage lender.
When the “dirty deed” article was published in the Post Gazette, friends and associates asked why I was silent. I simply have a policy of not commenting on a formal claim in process. I don’t think it’s fair to either the insured or the title insurance company.
So in the end, the dirty deed was human error – a bad search report, and the only way to protect yourself against human frailty in a real estate transaction is to buy owner title insurance.
Monday, November 27, 2006
Thursday, November 16, 2006
I am a title insurance agent.
Everyday I work with prevention of title claims prior to closing and correction of title problems that are discovered later. Over my morning coffee, these are the problems on my desk to work out this morning:
1. File closed in 1999 with owner title policy. The insured just received notice of revival of a state tax lien from 1997 in the amount of $696. I’ll be reviewing our search file to see if the lien is valid. If so, how was it missed? If the lien is not valid, we’ll defend the property and fix the problem. If the lien is valid, it will be paid. The insured owner is covered.
2. I have a search that revealed a second mortgage in foreclosure. The sellers had filed bankruptcy and assumed they could ignore the foreclosure notice. They put the property on the market and sold it to a buyer who was smart enough to order title insurance. We suggested that the seller pursue a “short sale” – a reduced payoff with the lender to avoid foreclosure. I’ll help them process the short sale request later today.
3. I have a corrective deed to prepare and send out to a seller. Both the buyer and the seller failed to disclose there was a second parcel that should have been conveyed back in 2003 when we insured their title and closed the purchase transaction. When discovered, the seller’s attorney refused to assist the correction in any way even though he had prepared the original incorrect deed. We are fixing it.
4. In 2005 we held money from a seller’s proceeds to satisfy numerous liens. They had been paid but not satisfied of record. The seller’s attorney will not return our phone calls. We are hiring an attorney – at the seller’s expense from the funds in escrow – to resolve and satisfy the liens and clear the title.
These four simple cases are part of my normal everyday work life. Each of the files is covered by an owner title insurance policy and thus the work I am doing is part of that coverage. It’s unlikely that any of this work will be counted in claims reported by title insurance companies. This is the unseen work done by the folks who get the lion’s share of the title insurance premium.
This afternoon, I’ll have a new set of title issues to work on. I love my job and hope this helps you understand why an owner title insurance policy is a good investment.
1. File closed in 1999 with owner title policy. The insured just received notice of revival of a state tax lien from 1997 in the amount of $696. I’ll be reviewing our search file to see if the lien is valid. If so, how was it missed? If the lien is not valid, we’ll defend the property and fix the problem. If the lien is valid, it will be paid. The insured owner is covered.
2. I have a search that revealed a second mortgage in foreclosure. The sellers had filed bankruptcy and assumed they could ignore the foreclosure notice. They put the property on the market and sold it to a buyer who was smart enough to order title insurance. We suggested that the seller pursue a “short sale” – a reduced payoff with the lender to avoid foreclosure. I’ll help them process the short sale request later today.
3. I have a corrective deed to prepare and send out to a seller. Both the buyer and the seller failed to disclose there was a second parcel that should have been conveyed back in 2003 when we insured their title and closed the purchase transaction. When discovered, the seller’s attorney refused to assist the correction in any way even though he had prepared the original incorrect deed. We are fixing it.
4. In 2005 we held money from a seller’s proceeds to satisfy numerous liens. They had been paid but not satisfied of record. The seller’s attorney will not return our phone calls. We are hiring an attorney – at the seller’s expense from the funds in escrow – to resolve and satisfy the liens and clear the title.
These four simple cases are part of my normal everyday work life. Each of the files is covered by an owner title insurance policy and thus the work I am doing is part of that coverage. It’s unlikely that any of this work will be counted in claims reported by title insurance companies. This is the unseen work done by the folks who get the lion’s share of the title insurance premium.
This afternoon, I’ll have a new set of title issues to work on. I love my job and hope this helps you understand why an owner title insurance policy is a good investment.
Saturday, November 11, 2006
Is title insurance enough protection?
Human beings we are, and it’s “people” problems at the heart of it all. Humans make mistakes; some steal, and most are poor communicators. An owner title insurance policy will protect the homebuyer from many of the risks, but not all.
A consumer should also buy a current up to date survey, making sure the surveyor actually does field work and research. The drawing should accurately show the location of easements, rights of way, and improvements/structures. It’s not safe to rely on the seller’s knowledge of lot line locations. They may be mistaken. Owner title insurance typically does not cover the location of structures or lot lines. So if you close without a survey and find out later that the garage is actually on your neighbor’s property or that lovely area for a garden is not yours, you’re on your own. You’ll either go to court or take your lumps.
Owner title insurance does not cover the condition of the structure. A smart homebuyer will take the time to hire professional inspectors and look at their reports before the closing. Keep in mind the age of the house and be realistic about your expectations. Every good home inspector will point out all the flaws they find. You, the homebuyer, will need to decide which ones are really important and then negotiate with the seller for repair.
I am amazed when a transaction falls apart because the buyer insisted that the seller make the house perfect. Unless you are buying a brand new home, try to keep your expectations realistic. It probably took a long time to find the right house in the right neighborhood at the right price. Don't blow the deal seeking perfection. A willing buyer negotiating with a willing seller will usually find the right balance and resolve their concerns.
Here's some language we use at closing to make sure both buyer and seller have reached an understanding:
"The undersigned buyer(s) and seller(s) agree that all terms and conditions of the sales agreement have been satisfied or waived.
The undersigned buyer(s) confirms that they have had an opportunity to inspect the premises to their satisfaction and that they have personally reviewed and accepted any inspection reports issued by contractors performing tests on their behalf including but not limited to septic dye test, termite/pest inspection, home inspection, etc.
For purposes of holding the real estate agents, real estate companies, Lender, its successors and assigns, and The Closing Specialists® harmless, buyer(s) agrees to accept property in "as is" condition. Representations and warranties from the seller are still being relied upon by the buyer(s) and are not hereby waived.
Buyer(s) and seller(s) further agree to hold harmless all/any real estate agents, real estate companies, Lender, its successors and/or assigns, and The Closing Specialists® from further liabilities and/or remedies related to the physical condition of the premises."
I know it's boring stuff, but signing this document at closing is a sort of "speak now or forever hold your peace" moment. We really do not want you to close until you are satisfied.
Do your homework before you go to the closing table. Order your survey and inspections as soon as the agreement is accepted. Review any concerns directly with the surveyor or inspector. Negotiate repairs, if necessary. Do a final walk thru right before closing to make sure the condition of the house is broom clean and as agreed. Then close knowing you have done as much as possible to protect your interests and enjoy your new home!
A consumer should also buy a current up to date survey, making sure the surveyor actually does field work and research. The drawing should accurately show the location of easements, rights of way, and improvements/structures. It’s not safe to rely on the seller’s knowledge of lot line locations. They may be mistaken. Owner title insurance typically does not cover the location of structures or lot lines. So if you close without a survey and find out later that the garage is actually on your neighbor’s property or that lovely area for a garden is not yours, you’re on your own. You’ll either go to court or take your lumps.
Owner title insurance does not cover the condition of the structure. A smart homebuyer will take the time to hire professional inspectors and look at their reports before the closing. Keep in mind the age of the house and be realistic about your expectations. Every good home inspector will point out all the flaws they find. You, the homebuyer, will need to decide which ones are really important and then negotiate with the seller for repair.
I am amazed when a transaction falls apart because the buyer insisted that the seller make the house perfect. Unless you are buying a brand new home, try to keep your expectations realistic. It probably took a long time to find the right house in the right neighborhood at the right price. Don't blow the deal seeking perfection. A willing buyer negotiating with a willing seller will usually find the right balance and resolve their concerns.
Here's some language we use at closing to make sure both buyer and seller have reached an understanding:
"The undersigned buyer(s) and seller(s) agree that all terms and conditions of the sales agreement have been satisfied or waived.
The undersigned buyer(s) confirms that they have had an opportunity to inspect the premises to their satisfaction and that they have personally reviewed and accepted any inspection reports issued by contractors performing tests on their behalf including but not limited to septic dye test, termite/pest inspection, home inspection, etc.
For purposes of holding the real estate agents, real estate companies, Lender, its successors and assigns, and The Closing Specialists® harmless, buyer(s) agrees to accept property in "as is" condition. Representations and warranties from the seller are still being relied upon by the buyer(s) and are not hereby waived.
Buyer(s) and seller(s) further agree to hold harmless all/any real estate agents, real estate companies, Lender, its successors and/or assigns, and The Closing Specialists® from further liabilities and/or remedies related to the physical condition of the premises."
I know it's boring stuff, but signing this document at closing is a sort of "speak now or forever hold your peace" moment. We really do not want you to close until you are satisfied.
Do your homework before you go to the closing table. Order your survey and inspections as soon as the agreement is accepted. Review any concerns directly with the surveyor or inspector. Negotiate repairs, if necessary. Do a final walk thru right before closing to make sure the condition of the house is broom clean and as agreed. Then close knowing you have done as much as possible to protect your interests and enjoy your new home!
Tuesday, November 07, 2006
REAL LIFE TITLE INSURANCE COST COMPARISON
We occasionally collect HUD-1 Settlement Statements as proof of the sale of a residence to clear lender conditions. The following cost comparison is based on HUD-1 Settlement Statements prepared by three different title insurance agents for closings that took place in 2006. The fourth title agency quoted is The Closing Specialists® using our standard fee schedule. All quotes have been adjusted to show a premium based on $100,000. All of the actual transactions were close to that price level so I am presuming the underlying non-regulated fees would remain the same.
Set of facts: The sale price is $100,000 in a purchase transaction with a mortgage and the property was sold within the last ten years for consideration.
The fees used in the following comparison are those solely controlled by the title insurance agents:
#1 title insurance premium 858.75
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 285.00
lien letters 75.00
document preparation 0.00
courier fee 55.00
wire fee 20.00
notary fee 0.00
#2 title insurance premium 772.88
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 250.00
lien letters 15.00
document preparation 0.00
courier fee 15.00
wire fee 17.00
notary fee 35.00
#3 title insurance premium 772.88
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 250.00
lien letters 15.00
document preparation 0.00
courier fee 15.50
wire fee 10.00
notary fee 0.00
#4 title insurance premium 772.88 The Closing Specialists®
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 0.00
lien letters 15.00
document preparation 175.00
courier fee 25.00
wire fee 0.00
notary fee 0.00
#1 $1478.75
#2 $1289.88
#3 $1248.38
#4 $1172.88
Example #1 is from a title insurance agent who has overcharged the buyer by failing to give the reissue rate and adding $50 to the cost of lien letters. Both overcharges are unlawful. The remaining examples, including TCS, show routine differences in non-regulated fees. All four examples demonstrate that even in a regulated state there is good reason to shop around before placing an order for title insurance and closing services.
Set of facts: The sale price is $100,000 in a purchase transaction with a mortgage and the property was sold within the last ten years for consideration.
The fees used in the following comparison are those solely controlled by the title insurance agents:
#1 title insurance premium 858.75
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 285.00
lien letters 75.00
document preparation 0.00
courier fee 55.00
wire fee 20.00
notary fee 0.00
#2 title insurance premium 772.88
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 250.00
lien letters 15.00
document preparation 0.00
courier fee 15.00
wire fee 17.00
notary fee 35.00
#3 title insurance premium 772.88
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 250.00
lien letters 15.00
document preparation 0.00
courier fee 15.50
wire fee 10.00
notary fee 0.00
#4 title insurance premium 772.88 The Closing Specialists®
loan policy endorsements 150.00
closing services letter 35.00
settlement or closing fee 0.00
lien letters 15.00
document preparation 175.00
courier fee 25.00
wire fee 0.00
notary fee 0.00
#1 $1478.75
#2 $1289.88
#3 $1248.38
#4 $1172.88
Example #1 is from a title insurance agent who has overcharged the buyer by failing to give the reissue rate and adding $50 to the cost of lien letters. Both overcharges are unlawful. The remaining examples, including TCS, show routine differences in non-regulated fees. All four examples demonstrate that even in a regulated state there is good reason to shop around before placing an order for title insurance and closing services.
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