THIS JUST IN: Due to the board’s conflict of interest and their subsequent reluctance to do anything about the corridor build-outs, the nation’s largest title insurance company is now involved and presently “weighing its options.” We’ve learned that one of those potential options is to blackball 111, i.e. refuse to further insure here. YIKES! No title insurance means no lenders; no lenders means no sales; and no sales means your property value is… well… bupkis.
Here’s the who, why, and what you should do.
How is it that the Nation’s Largest Title Company is involved?
As a result of the last article, we have it that a homeowner here apparently dropped a dime and filed a claim with their Title Insurance Company, Chicago Title. After review, it was determined that the owner would be “afforded coverage.” And Chicago Title kicked it upstairs to the mothership, FNF.
So who’s FNF?
Fidelity National Financial, Inc., is the nation’s largest title insurance company through its title insurance underwriters – Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York – that collectively issue more title insurance policies than any other title company in the United States.
Why the drama?
Title insurance is crucial for a home buyer because it protects you and the lender from the possibility that your seller doesn’t have free and clear ownership of the property and, therefore, cannot rightfully transfer full ownership to you. It’s as simple as this: You can’t sell real estate when you can’t establish that you own it; and banks won’t loan money for purchasers to buy the property. That’s because the bank wants to be sure that if it forecloses, it will get good title to the property. That’s why banks won’t approve a mortgage for a property if a title insurance company won’t insure its title. And title insurance companies won’t do that if they know the title is clouded.
Why would FNF cut us off?
Title insurance companies guard against title defects. Generally speaking, these hidden risks include: 1) Errors in the public records such as incorrect information in deeds and mortgages regarding names, signatures and legal descriptions; 2) Judgments, liens and mortgages or any other claims against the property or the seller which become the new owner’s responsibility after closing, such as unpaid taxes, assessments and other debts to creditors; 3) Claims to ownership by the spouse of a former owner or by the “missing heir” of a deceased owner who did not receive his share of the estate; and 4) Invalid deeds or other transfers by sellers who did not actually own the property.
And as was described in the last article, ironically we’re #1. Simply stated, due to the corridor build-outs, all of our property descriptions are just not true. Our ownership percentages of the common element are all wrong. As such, the insurance company may not issue new policies for titles with known defects. And if/when that happens, we’re dead in the water.
Why should you care?
As was said at the outset, no insurance means no lenders; no lenders means no sales; no sales means your property value is bupkis.
Exaggeration? Not in the slightest. Consider this: Given the numerous challenges 111 has faced in the last three years, now add clouded titles. Here, by way of example, look at Vince Scott. Scott, an associate broker at KoenigRubloff Realty Group, still, after two price reductions, cannot seem to unload his Unit 11A. It’s been some 525 days on the market and counting. Now how might full disclosure of clouded title impact his efforts? Forget it. Looks like our “Concerned Homeowner” is going to remain concerned.
As should you.
What should YOU do?
1. Check your Title Insurance Policy and file a claim directly;
2. Speak with an attorney;
3. To avoid any potential for legal exposure, if you’re selling, disclose the situation to any prospective buyer; and
4. Have your attorney write the board and demand they rectify the situation immediately.
# # #
STORY UPDATE 2/12/16: This just in… Chicago Title has reversed its previous determination for coverage. After a recent appraisal by PF Appraisals, it was determined that there had been no diminution of the appraised value of the particular unit (whose owner filed the title insurance claim) due to the corridor build-outs. As such, the situation is an express exception to that owner’s policy. The damages as a consequence of the corridor build-out are more derivative in nature, i.e. impacts all owners. Consequently, a group of homeowners are now considering legal action to correct what the present board (due to its conflicts of interest), has been reluctant to address. Stay tuned.