Monday, November 03, 2014

What? No owner policy!

Hi Diane, 
I moved into a house and thought my lawyer had included a buyer's title insurance policy because I asked for one. However, it turns out the lawyer was in a conflict of interest situation as he was also the lawyer for the mortgage company. The lawyer had had me pay for title insurance for the mortgage company and admitted as much when I questioned him about it at a later date.
I need to make a claim because an inspection of my home by a city inspector found several building code and by-law infractions in renovations, construction and structural work that was done before I purchased the house. I was presented with an order to have them remedied. 
This would be a huge expense expense for me so was glad I had purchased title insurance - or so I thought I had done.  I purchased title insurance after I received the order from the city and the policy date is my possession date for the house. 
Will the policy still cover these violations? Or, is my only recourse to sue my lawyer?
Thanks in advance for your help,

Morning, Jim:  Well, I guess the good news is that there's a good chance these items would not be covered by an owner policy.  I think it depends on whether you would have purchase enhanced coverage and what type of enhanced coverage is available in your state.  Zoning violations and by-law infractions are often exceptions to coverage.

I think you should have an attorney review your transaction.  I wouldn't think too much about the conflict of interest angle as this is very common with the attorney's serving both the buyer and the lender.  I would mainly look at his fiduciary duty to take care of you with the same level of care that he gave the lender.  In PA a buyer has to sign a hard worded waiver to skip the owner policy. Perhaps your state has a similar document.

Good luck.


No comments: