Reply #11: Here are some answers, as best I remember them [View All]

[customerserviceguy]

I haven't worked in the industry for over six years, but I did work in it on and off for about twenty-five of the years from 1976-2005. Also, I only worked in one state (WA) and was only familiar with the real estate practices there, but a lot of what's happened in the national mortgage market occurred there. I certainly haven't worked through a crisis of the level that we've seen in the last few years, although the market from 1980-83 seemed pretty scary at the time. With that in mind, here are your answers:

A title policy provides full coverage subject to its listed exceptions. There are a host of them that are pre-printed on title insurance policy "jackets" that every title policy is stapled into. Further, there are exceptions that are particular to a property, such as the matters that are disclosed by a title examination.

Yes, such a policy covers the value of a property, and many, if not most or all, have an inflation rider attached that includes the rising value of real estate. Clearly, those riders have little value for anything purchased within the last decade.

A title policy covers events that happened BEFORE the date of the policy, any matters that arise after that date are not covered, except to the extent that they come from circumstances (beyond the stated exceptions) before that date. Any questionable transfers of a mortgage that was created on the same or any subsequent date as the date of the transfer would not be covered.

You are correct as to the Massachusetts investor, provided he had owner's title insurance. Any flawed or faulty foreclosure that did not convey title to the bank who deeded him the property is indeed covered. I agree, the individual who bought this property has a claim of action against his title insurer (who would in turn have a claim against the bank to litigate) or in the absence of a policy, would have his own claims against the bank's warranty of clear title.

You make the same mistake of equating "the Deed" with "title". A deed is an instrument of conveyance from one party to another, and a connected string of them is a chain of title. Presuming all deeds in that chain are valid, whoever is at the end of that chain holds "title" even though there are many deeds along the way, including the last one. I blame the game Monopoly for most peoples' poor understanding of the process.

Again, anything that arises from matters prior to the date of a title policy (which is almost always simultaneous with the recording date of the last deed in the chain) is covered, anything that arises from any actions after that date are not.

I hope I've explained this clearly, we have a few other individuals who are frequent posters here at DU who currently work in the industry, and I would defer to their expertise, if they have information that relates more specifically to either recent circumstances, cases, or law in other places that I'm not familiar with, which almost certainly includes where your property is.