Saturday, October 20, 2007

query: can a title company sue a seller after closing of property

Yes. Suing the seller is a routine part of claims management.

When you sell real property you give a warranty to the buyer. You also sign certain legally binding affidavits for the title company. The warranties and affirmations made by affidavit give the title company a legal pathway right back to you.

There is nothing wrong with that - after all you have personal knowledge of the property and an obligation to tell the truth. If you cause damage, you should expect the title company to seek recompense from you.


Anonymous said...

What if you signed documents that specifically said you were not providing a warranty regarding the condition of the property. Additionally, the buyers declined a home inspection? Isn't it the title insurance supposed to do some due diligence before issuing a policy?

Diane Cipa said...

This is a good question. Thanks for asking. The point you raise is critical to understanding what title insurance does and does not cover. Title insurance does not concern itself with the physical condition of the dwelling at all.

The warranty I mention here in this post is a warranty of title, not the physical condition of the house. A warranty is a guarantee, so when a seller signs a deed they give a guarantee of title.

Selling a house "as is" is common and so in that case the seller may be giving a guarantee of title in the deed but providing no guarantee of the physical structure. So, the buyer is on their own if the roof leaks after closing, but if there are unpaid taxes against the property discovered after the closing the seller would have an obligation to pay.

Does that make sense?