Sunday, October 21, 2007

query: how to file a claim

Sorry! I thought I had covered this but perhaps not directly. It's important so thanks for raising the issue.

First, get your owner title insurance policy in front of you. Make a copy of it to submit with the claim. If you can't find your policy, make a copy of your HUD-1 Settlement Statement. The HUD-1 is proof that you paid for an owner policy.

Look for the name and address of the actual title underwriter, not the agent. Some but not all policy jackets will have this information prominently posted, some will not. If you can't find it, look for a large office of the title underwriter in the closest metropolitan area. You can find it on-line if you Google their name.

Now, write a letter explaining the nature of the claim. Include all supporting data such as a letter you may have received from someone asking for money. Be specific and be sure to sign the letter.

Mail the letter along with supporting documentation and a copy of your policy to the title underwriter via certified mail. You want to get a prompt response and by sending it certified mail you will get their attention. BTW - send it to the attention of "claims department". that will get it to the proper person.

I suggest that you also call your title agent or attorney to let them know you are making a claim. WHY? Well, if they are responsible providers, they will likely jump on the issue and try to resolve it ASAP because they want to help you. Under no circumstances should you let them talk you out of making a formal claim. It's your right to do so and the sooner you get it started, the sooner you will get an answer.

Your responsiblity in any claim situation is to mitigate damages. That means you cannot delay contacting the title underwriter. Give them an opportunity to step up to the plate and defend you before you give anyone any money.

Once you have the signed receipt back from the post office confirming that your letter has arrived, if you haven't heard from anyone, follow-up with a phone call and find out who is assigned to your case.

If the claim is rejected and you feel the rejection is not fair, you can contact an attorney or the state attorney general or the state insurance commission for assistance.

There ARE circumstances that are NOT covered by title insurance and your title insurer should be able to clarify that in a way that you understand. IF, however, it's not clear and you think they are brushing you off, then pursue the matter.

Good luck!


Reemoe said...

We moved into a new neighborhood last year which we were told simply had a homeowner's association. To our surprise, our real estate tax bill received in December also included a special assessment for a community improvement district, an extra $500 a year.

My research of county recorded documents shows this being recorded a year prior to us closing. Our title policy did not locate nor except the CID and its obligation.

We opened a claim with the title company back in January. However, the attorney assigned to our claim has been dragging her feet. I have sent emails, fax, and spoken to her trying to receive the status of our claim.

All she's done is pointed out a separate recorded document (Doc. ABC) saying that it does not create an assessment obligation to individual lot owners. I responded by giving her the document number (Doc. XYZ) and recording date of the document that does create such an assessment.

We have spoken to an attorney, back in December, who recommended us raising the issue with the title company. What should we do next? Should I try to get the name of the attorney's supervisor? It's been just about 3 months since the date of the letter showing our claim was opened. I'm thinking they know we are correct and are hoping that by ignoring us, we'll just go away.

Thanks in advance for any advice!

Diane Cipa said...

Title companies are overwhelmed with claims right now for many reasons, including the increase in foreclosures. Make sure that all communications you have with the title company is by certified mail. You want them to know that you are keeping close track of everything. If you haven't yet used certified mail, consider sending a certified letter now summarizing the case and demanding payment. Include a copies of the documents you think cover the loss.

Remember, I am not an attorney and you have an attorney with whom you can review these comments.

I can't speak to the merit of the claim but if you firmly believe you are in the right and your loss is only $500 you'll have to decide if it makes sense to pay an attorney to advocate on your behalf. Since it's only $500, I'm not saying that's chump change, but it's probably less than you'd have to pay the attorney, try some other way to sine light on the process.

For instance, you could contact the consumer advocacy division of your state insurance department. They might help. You could also take your case to the local media. The press is very interested in title insurance now and they may have a consumer watchdog type reporter who need material for a story.

I'm not saying this will win your case, but if it's truly a justified claim, it'll pull the matter to a higher level and someone will decide it's worth paying the $500 to get rid of the grief. Good luck!

RMO87 said...

Thanks for the quick response, Diane! It is actually a $500 assessment annually for 20 years, so we are talking $10,000.

I will work on sending out a certified letter next week.

By the way, our title policy uses the ALTA 10-17-92 documents, even though we closed in 2008 (in Missouri). Not sure why they didn't use the 6-17-06 policies.

Kimberley Osborne said...

I closed escrow on my home October 2009. This year, I have been notified that my property taxes have over doubled due to prior liens on the property, resulting in a 600/mo increase to my mortgage. I have spoken with the tax collector and title. Title informed me that I cannot be reimbursed until 2011, when my property gets reassessed. Is this true? I don't understand how I have paid someone else's liens from my impound account, but cannot be reimbursed until my property gets reassessed.

Diane Cipa said...

That doesn't make any sense to me either, Kim. I think you need to formally file a claim with the title insurance company named on your owner policy. Send a copy of the policy and the letter[s] you received from the tax authority concerning the old liens. If old liens exist and they are valid liens, I do not understand how or why a future re-assessment would have any relevance.

Stay on target. Your claim is concerning the OLD LIENS, not a future increase in taxes, got it? The title insurance policy is coverage over things that happened in the past and the old liens should be covered.

If you aren't sure about filing, hire an attorney to help you with the letter. Good luck!

JGrissom said...

We closed on a single family residential property July 8, 2009. About eight months into our residency I noticed that the water & sewer rates we were paying to the city managed utilities were higher than the electric rates at that time. Further investigation revealed that we were being billed five times the base rate of water & sewer because the property was last on the books with the city utilities, city zoning & planning and county tax assessors as a commercial multi-family unit. The city utility department refused to make any refunds or modifications to our current billing situation until we resolve the zoning issue. We immediately filed for re-zoning and re-assessment with the county tax assessors office (almost ten months ago now) and it is pending approval by the board. City zoning & planning told us the property was an unlawful conversion, that we did not have a valid “certificate of occupancy” to occupy the home and that we would need to make application for a C.O. Once we submitted an application for a C.O. the city building inspector came out and cited approximately thirty building construction deficiencies that would have to be remedied before a C.O. would be issued.
Preliminary estimates are $17,000 - $22,000 in construction cost to remediate, in addition to the permit cost they want to charge for the new work as well as permit cost for the conversion work not permitted by past owner(s)… making the claim roughly $25,000. The city could in theory shut off utilities to the home and demand that we vacate, but I have been in constant communication and negotiation to make sure that they know we are doing all we can to resolve this matter. We are looking to make a claim with the title insurance under the following: defective title, building violations, zoning violations, existing violations and unmarketable title. My question for you is have ever heard of a situation like this and what advice can you offer?

Diane Cipa said...

Hi, J: I'm sorry to hear of this situation. Zoning is one of those things that can be off someone's radar unless they are not doing full due diligence or the municipality fails to give good notice.

The question of zoning most often surfaces when we get lien letters from the municipality. Those requiring occupancy permits typically state the requirement in the lien letter.

I would contact the title insurance company named on the owner policy and file a claim.

You may also want to consult an attorney to consider action against the seller or the real estate agent if there was an agency involved in the transaction.

Don't forget to make your claim in writing and by certified mail. This serves notice that you are serious. I'm not saying title companies don't respond otherwise, because they do, but it's just in case, I do recommend the method, just in case.

There are a number of different angles in this case and its possible all may not be addressed by the title insurance coverage.

Good luck!



Hi! I have a quick question regarding title insurance claim.

We bought a house Dec 2010, the closing date was Dec 9, 2010. When we received the first half of 2010 tax bill on Feb 2011, there was a $500 special assessment and upon inquiry this item was for grass cutting done in 2010 (services done prior to our closing date). I contacted the title company that did the search and they informed us that the information regarding this fee was not available at the time of the closing. According to them, it was posted December 11, 2010. I checked with the Auditor's office and the Safety Service Director of the city and they both informed me that the information was available already on November 29, 2010.

Do you think that the insurance claim will be successful?


Diane Cipa said...

Hi, Ivy: Look closely at the Schedule B exceptions for coverage. Usually you will see an exception for taxes that are NOT YET DUE AND PAYABLE. In these cases, the important date is that date that the bill is issued. For instance a local tax bill may be out 3/1/11 and payable at discount through 4/30/11. I would consider this bill due and payable as of 3/1/11. So if I closed a transaction on or after that date, the tax would be covered.

I would submit a claim directly to the title insurance company via certified mail and include documentation from the tax authority.

In the meantime, I would pay the tax so that no penalties or interest are added.

Hope that helps and thanks for reading. ;)

Anonymous said...

very interesting article.

Diane Cipa said...

As a follow up to the original post, the major title companies have improved the claim submission process and you can now start a claim pretty easily on their web sites. I recommend using the web site tool if you are web savvy, however, if you do not get a response within a few days assigning a claim number, then I would use the old style method of letter by certified mail.

Robert Duran said...

I have a question, can I filed an title insurance claim if my property value went down because the person who sold my house didnt disclose that they filed an easement after my contract was signed and two days before my closing date?

Diane Cipa said...

Hi, Robert. It's hard to say if title insurance covers this matter. Take a look at the title insurance commitment and the policy to see if either had an exception for the easement. File the title insurance claim to have the matter reviewed by the company attorneys. They may need to have an appraiser determine whether or not the easement impacts value.

If you aren't satisfied with a claim outcome, you might discuss with an attorney how the title insurance agent, seller and other parties either withheld this information or failed to discover it. The title insurance agent ought to have checked the public record before recording your deed and they ought to have discovered the new easement. You may be able to sue these parties. Discuss this with an attorney.