Discusses the history of Title Insurance, it statutory basis, and the legislative intent behind its creation as found in O.R.C. 3953, et seq.
Title insurance commitment
A title commitment is basically the title company’s promise to issue a title insurance policy for the property after closing. The title commitment contains the same terms, conditions, and exclusions that will be in the actual insurance policy.
Almost every purchase and sale agreement contains language requiring the seller to provide the buyer with title insurance. Most all title companies across the country issue the title policy using forms distributed by the American Land Title Association (ALTA). This segment talks about an attorney’s obligations to the client, whether Owner or Lender.
Owners title insurance
An owner’s title insurance policy protects the new owner, in the event that an unknown issue affecting the property at the time the policy is issued later causes problems with title to the property. This segment talks about the legal rights and remedies of the title insurance issues to the Owners.
Lender’s title insurance
If there is a mortgage for the property, the lender will additionally require a “lender’s policy,” also known as a “mortgagee’s policy,” which protects the lender against the same sorts of issues. (The lender is, after all, counting on the property as collateral, and doesn’t want to later discover that some unknown party has competing claims against it.) . This segment talks about the legal rights and remedies of the title insurance issues to the Lender.
When a title company issues insurance, it will list as exceptions and exclude from coverage certain standard items that apply to all properties. It will also make exceptions out of specific items discovered during its records search that pertain only to the property being insured -- and there may be several of them.
Whether standard or specific, not every exception that a title company lists in your policy is necessarily of concern. For example, the title company may list as an exception a public utility easement (such as the power company’s right to stretch wires across the property or come check the electric or gas meter). Such an easement is a fairly common exception, and so long as the power company’s use of the easement won’t interfere with your client’s use of the property, you probably don’t need to worry about it.
Some problematic exceptions, however, may impact ownership or use of the property or include unacceptable terms. If, for example, your clients have particular plans for the property; say, your clients plan to build a shed in the back yard; you’d want to know about anything that might interfere with those plans, such as that gravel storage easement that is recorded on the property.
Exceptions might also be significant because they point to expenses your client will have to pay relating to the property, such as covenants requiring payments to the owner’s association governing the property.
Or, the exceptions might alert you to changes that will need to be made to the property. For example, perhaps you see that the title company has made an exception for items appearing on a recorded survey of the property. By reviewing the survey, you might see you will need to remove the fence in back because it is not on the property line, but is actually a few feet into the neighbor’s property. If this issue is not discovered and resolved prior to closing (for example, by having the seller either move the fence or obtain an easement from the neighbor for its existence on the neighbor’s property), the title company will give you no help in resolving this issue. Your client could be in for a large expense after closing if the neighbor demands you move the fence off his or her property.
For these reasons, it is important for an attorney to examine the title commitment carefully, understand the exceptions, and determine whether any are unacceptable. Since most purchase agreements contain a provision making the purchase of the property contingent on the buyer’s review and acceptance of the condition of the title, resolving any issues found in the title examination of the title commitment before buying the property is a valuable opportunity to save your client from nasty title trouble later.
This segment will cover the status of caselaw interpreting the appellate and Supreme Court cases that have ruled on issues involving Title Insurance. This may include discussion of the following issues and cases, as time permits.
The principle that title insurance is a contract of indemnity, not a guaranty of the state of title, is recognized generally by the courts in cases involving both owner's and mortgagee's title insurance.1 The difference between indemnity and guaranty contracts is that a contract of indemnity does not guarantee the state of the title, but rather agrees to indemnify the insured for any loss.2 The type of loss contemplated by a title policy which is an indemnity contract is that loss or damage sustained when, because of a defect in the title, the insured was bound to pay something to make it good.3 The purpose of title insurance is to safeguard the transferee of real estate from the possibility of loss through defects that may cloud title.4
The correct measure of damages under a mortgagee's title insurance policy when security fails due to an undiscovered, prior lien is the amount the mortgagee would have received but for the presence of the senior lien.5
Language of a title policy restricting any claim of loss or damage, including negligence claims, to the policy provisions limited the insured/mortgagee to the contractual remedies available in the policy, thus defeating the insured's independent tort claim based upon the insurer's allegedly negligent failure to discover and disclose the existence of a superior mortgage.6
Purchasers' allegations that the title company had a duty to disclose all easements of record, that it failed to disclose a sewer easement of record, and that the sewer easement prevented them from constructing the residence as planned and approved was sufficient to state a negligence claim against the title company.7
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Roccina Niehaus focuses her practice on residential and commercial real estate law. In her 28 years of experience in the real estate field, Roccina’s practice has included title review and underwriting, including risk assessment and curative measures; preparation and closing of residential and commercial transactions, subdivision/planned unit/condominium development, and the negotiation and preparation of all types of real estate documents. Her experience also includes representation of several local municipalities and governmental agencies in real estate acquisitions and sales. Roccina has also been retained by national underwriters to serve as an expert witness in several title insurance and escrow claims. She is licensed to practice in Ohio and Federal courts, and is a licensed title insurance agent in Ohio and Kentucky (1985) and Indiana (2001).
Roccina is a graduate of Xavier University and the University of Cincinnati College of Law. She has lectured extensively on the title examination, underwriting, and closing process, and related topics, before real estate attorneys and professionals, and first time homebuyers. Roccina served on a task force organized to comment on the Consumer Financial Protection Bureau for the Ohio Land Title Association and is a member of the Education Committee of that Association. She has presented at the University of Cincinnati Communiversity, at Salmon P. Chase College of Law, the Southwest Ohio Land Title Association, the Ohio Land Title Association, and on behalf of PESI. Roccina is active in the Cincinnati Bar Association as a presenter for the CBA Real Property Institute seminar, and Brown Bag Lecture Series. She served eight years on the Real Property Committee as Seminar Chairperson, Secretary, Vice-Chair and Chair. In addition, Roccina serves as an officer of and has lectured on behalf of the Joint Committee between the Cincinnati Bar Association and the Cincinnati Area Board of Realtors.
Roccina lives in Blue Ash with her husband. They have two grown children.