This story just amazes me. We are issuing title insurance on a property our seller purchased just a few years ago. We found THREE, count em, THREE life estates - unresolved. We did the research and found definite proof of the death for two and possible proof of death for the third. The big issue is the potential inheritance lien. In Pennsylvania inheritance tax is an unfiled lien which may be levied against real property of the deceased for just a little over 20 years. Title insurers must clear the matter before issuing a policy. Two of the deaths in this case took place less than 20 years ago.
We wondered whether our seller had purchased title insurance and found that they had so we contacted the attorney who had handled the purchase on their behalf. We found that the attorney hadn't issued the policy. He had obtained the title insurance for his clients through another attorney who was a title agent. We asked for a copy of the policy intending to request indemnification.
Guess what? Not only had they not issued an owner policy, the loan policy had exceptions for the life estates!!!! I couldn't believe it. The consumer trusted his attorney to look out for his interest. The consumer paid for title insurance and got none. The lender - a local bank - trusted the attorney to give them first lien position and didn't get it. I've got to wonder whose interest was served?
It's even more screwy because the cover letter faxed to us with the policy is addressed to the consumer and clearly states that it's their policy. It's not, of course. It does the consumer no good to have a loan policy. I wonder if the attorney even knows the difference.
We are escrowing funds pending resolution and payment of the inheritance taxes. What a shame that this consumer has to bear responsibility for something that should have been taken care of before they purchased the property. TWO attorneys, count em, TWO attorneys..........yoi.