That's a good question and one I'd like to extend to our readers out there. Are you aware of any rules governing the custody of title files when a title company goes out of business?
It's an important question because title underwriters have demonstrated that they have no good system in place to find issued policies. A consumer trying to make a claim pretty much has to provide evidence that they are insured in order receive service. I know we're trying to change that scenario but the reality is that we are still operating in a buyer beware state.
[As an aside, it always cracks me up that title underwriters tout their ability to perform instant automated title searches but can't locate a consumer's policy. What a crock.]
Think about it. Title underwriters never really push attorneys or title agents to submit their policies in a timely manner. What if the agency goes out of business before the policy is even filed with the underwriter? What happens to those files?
When I closed my Statewide Settlement operations I moved the files into The Closing Specialists. I'm aware of no requirement to do so but it seemed logical and fair. We do still have to work those files. As the properties are sold or refinanced, we use the files as resources and we also field questions from attorneys or title agents who may raise issues or questions on our insured transaction.
If we weren't working these files for the insured consumer, who would?
So, yes, it's a good question and one I can't answer.