Top title insurance claims (1 - 5)

Title insurance claims arise more often that you might think. Below is a list of the most common title insurance claims for the District of Columbia, compiled by Elisabeth Zajic, vice president and senior counsel for First American Title Insurance Companyin D.C.

For further reading, the Underwriter Bulletins contain a wealth of information geared more toward the industry but still valuable for anyone who's planning to buy a home.

Click beyond the jump to continue reading.

Top title insurance claims (6 - 10)

Part 2 of a series

Title insurance claims arise more often that you might think. Below is a list of the most common title insurance claims for the District of Columbia, compiled by Elisabeth Zajic, vice president and senior counsel for First American Title Insurance Company in D.C.

For further reading, the Underwriter Bulletins contain a wealth of information geared more toward the industry but still valuable for anyone who's planning to buy a home.

6. Mortgagors holding over after foreclosure. A claim will almost invariably arise when title derives from foreclosure and the mortgagor (borrower) whose property interest was extinguished in the foreclosure sale remains in possession of the property. The claim is precipitated when the successful bidder at the foreclosure sale seeks to evict the former owner/mortgagor in an action for possession, who will respond with a plea of title seeking to invalidate the foreclosure sale. The plea of title gives rise to a duty of defense and indemnification to the foreclosure sale buyer who purchased an owner's title insurance policy.

Because of the near certainty of litigation giving rise to a duty of defense under the title policy issued, First American Title Insurance will not insure title out of foreclosure when the mortgagor remains in possession of the property. Foreclosure requirements listed in your commitment for title insurance should be amended as follows:

I. Recording of Notice of Foreclosure in the Office of the Recorder of Deeds for the District of Columbia pursuant to which captioned property is sold to the proposed insured.

II. Proof of mailing of the notice by certified mail with return receipt to the record owner, complying with the District of Columbia Code and the terms of the Deed of Trust relating to notice of sale.

III. Proof of Publication of Notice in the Washington Post of other English language newspaper with general circulation in the District of Columbia. The proof also must establish that the notice was published five times within a 10-day period.

IV. Certificate of Sale and Auctioneer's Report

V. True copy of Deed of Trust note.

VI. Copy of Affidavit in compliance with Soldier's and Sailor's Civil Relief Act of 1940.

VII. Proof of notice of the sale to all junior lien holders known or of record.

VIII. Proof that possession of the premises has been surrendered to the insured owner/or assigns.

More info: Mortgagors Holding over after Foreclosure

7. Survey issues. A surprising number of claims in D.C. are caused by survey issues. They frequently involve bitter disputes between neighbors, resulting in lengthy and expensive litigation.

In D.C. survey coverage is not given to owners based on a house location survey except with special approval. When a house location survey is provided for closing, the general survey exception should remain in the owner's policy, including Eagle policy. You should read the plat into the owner's policy as well as the loan policy, taking specific exception to matters adverse to title shown on the plat. The survey should be reviewed with the buyer(s) by the settlement officer, who should point out those survey matters which exception is taken. The buyers should sign off on a copy of the plat to be maintained in the settlement file.

8. Disclosure issues. Recently, there has been a surge of litigation stemming from claims of breach of the duty of reasonable care by settlement attorneys who fail to advise purchasers of real property of the title consequences of certain matters of record. Various types of historic preservation easements given by prior owners of record have proven to be particularly problematic. These are not title insurance claims, but claims of negligence on the part of settlement attorneys.

Without going into lengthy discussion of the duty of care of a settlement attorney or settlement company, all of you should be sensitive to directing attention to matters of record which will affect the use and enjoyment of the property by the new owners, such as survey matters, easement issues and restrictive covenants. If possible, it is a good idea to send a copy of the title insurance commitment and survey to the buyers in advance of closing.

If, for whatever reason, you are not providing title insurance coverage for matters which a buyer could reasonably expect such coverage, you must disclose that fact and get a written waiver of coverage. These matters could include TOPA rights, mortgagors holding over after foreclosure, title to parking spaces, easement rights, pending litigation and unpaid taxes and assessments, although this list is by no means comprehensive.

9. Parking space claims. We have dozens of them!

For example, a parking space is listed in the contract but overlooked in the title order and neither conveyed nor insured. If the contract references parking, we have a claim even if the space is not included in the legal description in the policy.

OR – limited common element parking spaces are not properly assigned by amendment to the condo docs and the appropriate exception is not taken in the policy.

OR – the A & T number for the parking space is not included in the FP-7C and the tax bills continue to go to the prior owner, who does not, of course, pay the bills or forward them. The parking space is then sold at tax sale, and we have a claim.

*Pay attention to parking spaces! In many areas of D.C. they are now worth a small fortune!

10. Eagle policy schedule of caps and deductibles. Don't forget to include it when issuing Eagle policies! If the schedule of limitation of liability is not included with the policy, the argument can be made that there is no limitation on liability, thereby drastically increasing the potential amount of coverage for certain risks.


About the author

Elisabeth Zajic is a vice president and senior counsel at First American Title Insurance Corporation in Washington, DC.

Seasoned settlement attorney returns to Federal Title

Pens around Catherine E. Schmitt's office have a way of disappearing. That's the running joke around the office anyway, because this retired Marine and newest member of Federal Title & Escrow Company's team of closing attorneys can do a lot more with a pen than push paper.

Catherine Schmitt, formerly the managing attorney for Monarch Title – Georgetown and Bethesda – rejoins the ranks of Federal Title's talented staff after a five-year hiatus. She brings with her 20 years of title experience and a steadfast work ethic sharpened by her service with the U.S. Marine Corps.

She says the most rewarding aspect of her work is the time she spends developing relationships with her clients.

“I am a loyal customer of Catherine”, says Tom Buerger of Re/Max Allegiance. “She is always there for me – whether it is as an expediter for a quick settlement, as a counselor to allay the fears of my first-time homebuyers or as a resource to solve potential issues before they become a problem that will delay settlement. She is my attorney-on-call.”

Schmitt’s clients vary from new homebuyers to seasoned investors, but one thing her clients have in common is they understand the settlement process.

"Buying and refinancing a home are big decisions,” says Schmitt. “The settlement process is an opportunity to educate clients. It's a time for them to ask questions, so they can feel comfortable and informed."

Schmitt earned two Bachelor’s degrees from the University of Maryland and has her Juris Doctorate from Drake University Law School in Des Moines, Iowa, the same institution that produced Federal Title's founder and president, Todd Ewing.

"Catherine works hard and is dedicated to her clients.” Ewing says. “She is a model of customer service, and I am very excited to welcome her back to our team.”

Homebuyers seeking advice from Schmitt about title insurance or the settlement process need only venture up Wisconsin Avenue to Federal Title’s Friendship Heights office. Reach Catherine E. Schmitt at 202-362-1500 or e-mail her at This email address is being protected from spambots. You need JavaScript enabled to view it. .

About Federal Title & Escrow Company

In an industry contaminated by affiliated business arrangements, kickbacks and other referral incentives, the Internet returns the power to the people. Federal Title recognizes consumer-driven market pressures, as exemplified by the new RESPA rule, and seeks to offer home buyers substantial closing cost savings and a streamlined settlement process. Federal Title has a reputation of being technically innovative and always at the forefront of the latest real estate trends.

Years ago the company made a bold move by eschewing all Affiliated Business Arrangements and established its REAL Credit Program, which saves home buyers up to $1,100 on closing costs.

Now Playing: Closing Costs Explained Visually

CONTACT:
Nikki Smith
Main line: 202-362-1500
Direct line: 202-274-1517
E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: www.federaltitle.com

Title Report highlights our 'unique' business model

A few weeks back Federal Title president Todd Ewing spoke with The Title Report editor Jennifer Kovacs about Federal Title's approach to the changes."There's a hard push with the RESPA reforms toward what we've been doing all along, which is full disclosure. Mortgage lenders are not just going to expect it, they're going to demand all title companies provide a guaranteed quote for their services," Ewing said.

With new legislation around the Real Estate Settlement Procedures Act slated to take effect Jan. 1, 2010, many in the industry have concerns about how these changes will impact their daily work routine. More accountability, full disclosures -- the new RESPA rule has placed a lot of lenders in particular on the hook.

Click beyond the jump to read "Title company's unique anti-AfBA business model pays off.

How well do you understand RESPA?

At its core, the Real Estate Settlement Procedures Act, better known as RESPA, is a consumer disclosure and anti-kickback statute intended to alert consumers about their settlement costs and to prohibit kickbacks that could increase the cost of getting a mortgage.

New RESPA regulations were published in November 2008 and are scheduled to take effect Jan. 1, 2010.

To prepare for the changes, Federal Title & Escrow Company is hosting a free event for 100 guests, which will feature a presentation by mortgage banking and consumer finance expert Holly Spencer Bunting. To attend this free event and learn more about RESPA, This email address is being protected from spambots. You need JavaScript enabled to view it. the marketing department at Federal Title.

Wondering just how savvy you are when it comes to RESPA? Take this RESPA Quiz created by Realtor.org and test your knowledge of the law.

Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.