Why marketability of title insurance is forward

[pbmaise]

Claims that title insurance only protect you from events BEFORE purchase are false.

Specifically I speak of the ALTA policy that protects most Puna homeowners that purchased it.

There is a vocal group fighting me on this point and I wish to start this thread so people can see facts not opinions. You are hurting Puna homeowners by posting anything that are based on your idea or opinion. Therefore, to counter anything I post here specifically cite case law, scholarly article, or title insurance firms.

Note: Citing what real estate people post on their websites, or even lawyers is not case law and fact.

[pbmaise]

Source: First American Title

The ALTA 1992 form policy defines “unmarketability of the title” as:

“An alleged or apparent matter affecting the title to the land, not excluded or excepted from coverage, which would entitle a purchaser of the estate or interest described in Schedule A to be released from the obligation to purchase by virtue of a contractual condition requiring the delivery of marketable title. "

Website:

http://www.firstamny.com/detail.aspx?id=142

[pbmaise]

Plain English translation:

When you buy an ALTA Insurance policy, we will tell you in advance things regarding your property Title we do not cover. Look in Schedule A.

When you are ready to sell your property, a buyer will sign a contract to buy.

That future buyer will then look at your property Title.

If that buyer doesn't like your property Title they will likely back out of the agreement.

A typical reason a qualified buyer will back out of agreements to buy is they find out that they cannot obtain conventional financing and conventional insurance.

Therefore, while you own your property, if conventional financing and insurance is no longer available to a future buyer, you may file a claim.

Claims can be uptown 150% of your purchase price.

[Seeb]

Only if your title is clouded. Something can have 0 market value and still have clear title

[Obie]

Enter the following statement in a Google search.


Coverage ends on the day the policy is issued and extends backward in time for an indefinite period.


There are 359,000 results for that statement.Those are just a few of us who disagree with you.

[pbmaise]

John C. Murray's paper published by the American Bar Association has more weight than 10 billion matches on Google.

He knows what he is writing about and his work has been accepted by the National association for attorneys.

Murray cites settled case law regarding what constitutes marketability of title:

“we are to concern ourselves with issues that affect the possessory title of the owner, such as covenants, easements, leases, liens, boundary disputes, gaps in the chain of title, and adverse possession"

Translation: The Court is interested in the question of what non-physical aspects of the property the Title Insurance firm guaranteed the buyer was obtaining versus what he actually got.

The pre-existing condition that applied to most homeowners in the affected areas was one that permitted them to obtain conventional financing and HPIA insurance.

When banks pulled out of the area, and moratoriums on insurance came into existence, nothing physical occurred to the properties.

These are issues that affect current owners who now can see that a future buyer is unable to enjoy the same services they had available when they themselves were buying and purchased the policy.

(“Marketable title is one that may be ‘freely made the subject of resale’ and that can be sold at a ‘fair price’ to a reasonable purchaser or mortgaged to a person of reasonable prudence as security for the loan of money’” (quoting 77 AM. JUR. 2d Vendor and Purchaser § 131, at 313-14 (1975))

Question: Can affected Puna residents get a fair price after most lenders and insurance companies bailed out? It is not relevant that one insurance firm is still left at high cost since a reasonable buyer wouldn't accept that high cost policy.

[pbmaise]

Insurance providing protection for the marketability of title can by nature be only forward and after purchase.

If that protection guaranteed the title was only marketable at the time of purchase and backwards it would be an oxymoron. You obviously purchased and closed the deal. Hence the property title was at that time marketable and merchantable to you.

A guarantee of marketability of title can by this definition only concern and ask the question will a future buyer offer a fair price.

Quote from Murray
Unfortunately, there is no standard or precise definition of “unmarketability,” which is a term of art and subject to judicial interpretation based on the facts of each case.

[leilanidude]

pbmaise, the problem with your statements is that insurance is obtainable - it just isn't at a price you may like. Lloyds is still offering insurance, for one. Also, no roads have been covered by lava and closed, so you cannot claim that your property is now landlocked and inaccessible.

[Kapohocat]

Title insurance does not just cover that items mentioned above. It also covers unknown encroachment issues.

Unfortunately in the case of my mother's property, the policy was voided because it went from AJS and MES to AJS and MES RLT thus voiding the policy. (This was also back in the late 90's and now the policies have riders for the transfer from individuals to their RLT's).

We had encroachment issues that were not disclosed. So we had to remedy them when we sold Mom's property at a cost of $2000 which in the scheme of things was not a lot but still... FATIC would not pay and it was for this reason alone. We have since submitted a complaint to the DCCA.)

[Seeb]

( Murray cites settled case law regarding what constitutes marketability of title:

“we are to concern ourselves with issues that affect the possessory title of the owner, such as covenants, easements, leases, liens, boundary disputes, gaps in the chain of title, and adverse possession" )

You answered the question right there
Anything past that is just B.S.