Thursday, December 07, 2006

A seller, a municipal assessment, and a title insurance claim denial

Take a minute to read this article.

You have to read it carefully to get to the real truth because I see three mistakes, but none by the title insurer.

FIRST MISTAKE: Municipal authority failure to file a lien pursuant to statute.

SECOND MISTAKE: Closing attorney or agent raising the municipal assessment as a condition of sale presumably without considering validity of the lien.

THIRD MISTAKE: The sellers [insured homeowners] assumed the lien was valid, paid it, then contacted their title insurance company to make a claim.

If the lien had been valid, the title insurance policy would have covered it. Had the sellers contacted their title insurance company upon notification of the problem, rather than simply paying the assessment, the title insurer would have defended the sellers and enlightened the closing attorney or agent and the municipality.

When examining title prior to issuance of a title insurance policy, municipal accounts are reviewed and delinquencies or assessments are paid if deemed lienable. Balances that have matured beyond the statutory limit for lienability are not paid. In those cases we contact the municipality, explain why we are not considering the balance lienable, and if they don't understand, refer them to their legal counsel.

MORAL OF THE STORY: Sellers faced with title clearance conditions should immediately contact their title insurer for resolution. Allow them to do their job and defend your title.

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