Searching for info on title insurance claims and found your blog. Awesome there's someone out there explaining how this stuff works, thanks!!!! Any chance you can offer an opinion on our issue below?
We have First American Title Ins. Eagle Protection Owners Policy on our home bought in 1999. Many years into our ownership in 2008 our city building department came to us to enforce an old order to comply for an unpermitted attached deck many years before our purchase of the home. This was our first discovery of this since the sellers did not disclose the open issue nor did we uncover any such notices during escrow. But after further research, the orders are valid and enforceable and now we had to do an extremely costly amount of geological, engineering and construction work ($100K+) to bring the structure into compliance and satisfy the city.
The sellers avoided our demands for repayment, so we sued them for fraud and have a case pending that is now being sent to arbitration. We have a strong case on the facts but our wallet may run dry before we get to the end of it as the sellers are doing all they can to delay and run up our costs. We may actually have to abandon the suit vs. risking going even further into debt to finish the fight.
On suggestion of a friend I had a look at our title policy, originally I thought it was excluded but because the city has shown this issue was open and enforceable from way back when, it now seems we might actually have a claim against the building permit risk since the notices were on record prior to our purchase of the home and the policy. BUT we're already well down the road in a legal action. Will the fact we took action against the sellers on our own and are already well down that road impact our ability to make this claim to the title insurance co? The liability cap ($25K) is well below our damages, but in the end it may be all we can get because we can't afford to continue chasing the sellers who seemingly have the money to fight it.
Remember I am not an attorney. Though I can offer enhanced coverage, I've never sold it. Your case may be just one of those rare ones in which the enhanced coverage is worth the extra premium, but I am also thinking this kind of case might be covered under a regular policy. [On a side note, I'd be interested to know if your were given a choice of regular owner coverage versus enhanced. I was shocked a few years ago to find many title agents simply writing enhanced and getting a higher premium without discussion with the consumer.]
I would definitely file a claim because I think there's a good chance you could recover some of your loss. I'd also be inclined to wonder why your attorney did not advise you to file a claim earlier in the process.
You are a consumer and a layman. You hired a professional who should have thought about title insurance as one avenue for resolution.
Remember to file your claim by certified mail. There are lots of claims being processed right now. You may consider sending a copy of your policy - highlighting the section of the policy you think covers the matter - with the claim letter and copying your state department of insurance. I suggest this because state regulators are looking very closely at title insurance. They are just now starting to understand how it works and how better to regulate it. This may help you as the notation of a copy to the regulator might cause the title company to find in your favor because there is a bright light shining on the matter.
It is a shame because this is something the title agent could not have discovered unless they failed to obtain municipal lien letters. There is also the possibility that the title agent DID get letters from the city and the CITY failed to disclose the pending order. In any case, under the enhanced coverage of the Eagle policy, it sounds like you might be covered so go for it. Good luck and I would be very interested to hear the outcome. If you think of it, let me know.
I'm going to post this case on the blog in case we have some title attorneys reading who might want to add a thought or two.
Thanks for sharing your case and thanks for reading!