Good job to our reader and good job to his title company!

Hello Ms. Cipa,

I replied a few weeks ago to your "how_to_file_claim" post on your Title Insurance Talk blog. You replied and recommended writing a certified letter. I did and it seemed to have worked, as I finally received a response:

I received the following letter from my title company yesterday regarding my claim:

XYZ Title Company has finished our review of the aforesaid claim. As you know, you submitted a claim after receiving your 2008 tax bill and noticing you were billed for both an HOA and a CID assessment. While the HOA assessment was disclosed to you prior to your closing, you maintain you were not aware of the CID and the document creating the CID. It is noted the contract you signed for this transaction points out the “BUYERS acknowledges that the Property may be subject to recorded declarations, maintenance or other documents that place certain restrictions on building materials and uses of the Property, require maintenance of the area and assess homes association dues. BUYERS are responsible for obtaining a copy of any such recorded declarations and other documents and for reading and understanding them prior to closing. Buyers agree to abide by all of the provisions of such recorded declarations and documents. At closing, Buyers shall directly pay or reimburse Builder for any homes association dues paid or payable for the period after closing. BUYERS recognize that homes association dues are approximately $360.00 per year.” While you acknowledge the yearly homeowner’s association dues which you acknowledge in the contract could only have been assessed pursuant to a recorded instrument, you are now claiming you have no knowledge of such instrument and have submitted a claim for reimbursement of the CID assessment of $505.00 for this tax bill as well as future years.

XYZ Title Company has investigated the matter and determined that the CID document was not listed on your commitment and policy and should have been. However, you were aware that such a document had to exist. Furthermore, in reviewing other purchases of other homes affected by a similar restriction, we can not find any transaction in which the proper disclosure by the title company resulted in any change in the purchase price. The buyers proceeded to purchase these other properties without decreasing the amount they were willing to pay. Furthermore, in reviewing the contract we find that you would have been obligated to close and purchase subject land whether or not the CID was disclosed to you. That being the case, there is no loss that is covered by your title insurance policy since such loss is limited to the “difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy” (See policy Conditions and Stipulations 7 (a) (ii). However, we also recognize the unfair surprise this assessment has caused you if you were not aware of the existence of this resolution, and we are therefore, willing to pay this year’s installment.

Therefore, enclosed please find our check for $505.00 for payment of said CID and complete settlement of this claim. Future payments of said CID will be your responsibility as previously discussed under the terms of your policy.

In your opinion, does the title company have its butt covered, or is their letter full of fluff and attempting to avoid paying the $505 for the next 16 years? They DID admit failing to list the CID document on our policy. If we truly had no claim, why would they pay us the $505 check?

Or do we have a better case against our builder (or their law firm that drew up the CID documents), for disguising the CID as an HOA and never stating the words "community improvement district" in the contract, or its potential assessment amount?

During our research late last year, we received word from the law firm that drew up the CID documents that the recorded document "specifies the formation of the CID and that it will act as an HOA and assess the property within its boundaries...." We also learned from the Missouri Department of Economic Development that an HOA and a CID are different legal entities. It appears that the builder was trying to hide the CID, portraying as an HOA. The contract only mentions an HOA with dues of $360; why would we reasonably expect to also be part of a CID with additional assessments on top of this?

Thanks again; I really appreciate your time!

The title company was generous. I'd cash that check and be grateful.

Whether you have recourse with others, well, I think you need to pose that question to an attorney.

Glad you were able to find some relief and clarity on the issue. Thank you for the follow up. I will post this as it will be helpful for others. Take care!

Diane