Suing for non-disclosure
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Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
3yIt's interesting you're considering suing before you've submitted a claim and given the insurer an opportunity to investigate the matter and if there is indeed a covered defect and coverage, to cure it or pay your loss.
A title policy is a contract between the insured and the insurer with rights and obligations on both parties. One of the insured's obligations is to notify the insurer of any allegations of a title defect which the insured believes may be covered under the policy, as soon as possible. Failure to do so may adversely affect the coverage under the policy. In addition, despite popular misimpressions, a title policy is not an opinion of title and is not a representation of the status of title. It is merely an agreement of the terms and conditions under which an insurer will pay a covered loss.
In my experience, many courts have found that when a policy issuing agent has conducted a title search and exam for the issuance of a title commitment and policy, it's done for the benefit of the insurer and not the insured, and therefore the insured has not been damage (in a recoverable way) by the agent's failure to disclose a known defect. The agent may have liability to the insurer for its loss but not to the insured. If one received an abstract of title or an attorney's opinion of title they might have a cause of action for negligence, in my opinion.
I suggest you submit your claim and let the process unfold and see if you do have a loss that is not recoverable under the policy before you get to concerned, though you might still want to get an attorney's opinion about your legal rights.
5 Replies
Quote from @Ruth Hall:
What are the chances of winning suing the seller for non-disclosure?
I bought a flip, renovated and in the market to sell. I was provided a clean owner's FIDELITY NATIONAL TITLE INSURANCE COMPANY policy by the agency. I closed the house through a local title agency. I'm hearing news there might be some title issues since they missed some paperwork and have not completed yet. I don't know yet what that paperwork and details are since it was just brought to my notice today. Both the seller and the title agency was aware of the missing paper work but did not disclose it to me until today.
Sounds like maybe you should consider making a title insurance claim?
Quote from @Steve K.:
Quote from @Ruth Hall:
What are the chances of winning suing the seller for non-disclosure?
I bought a flip, renovated and in the market to sell. I was provided a clean owner's FIDELITY NATIONAL TITLE INSURANCE COMPANY policy by the agency. I closed the house through a local title agency. I'm hearing news there might be some title issues since they missed some paperwork and have not completed yet. I don't know yet what that paperwork and details are since it was just brought to my notice today. Both the seller and the title agency was aware of the missing paper work but did not disclose it to me until today.
Sounds like maybe you should consider making a title insurance claim?
Yes, I will be making a claim through the owners title. But what about suing the agency and the seller for not disclosing the issue to me prior to close? Even if the owner's policy covers the purchase price, I still tend to lose money spent on renovation if the title issue is not resolved..
Quote from @Ruth Hall:
Quote from @Steve K.:
Quote from @Ruth Hall:
What are the chances of winning suing the seller for non-disclosure?
I bought a flip, renovated and in the market to sell. I was provided a clean owner's FIDELITY NATIONAL TITLE INSURANCE COMPANY policy by the agency. I closed the house through a local title agency. I'm hearing news there might be some title issues since they missed some paperwork and have not completed yet. I don't know yet what that paperwork and details are since it was just brought to my notice today. Both the seller and the title agency was aware of the missing paper work but did not disclose it to me until today.
Sounds like maybe you should consider making a title insurance claim?
Yes, I will be making a claim through the owners title. But what about suing the agency and the seller for not disclosing the issue to me prior to close? Even if the owner's policy covers the purchase price, I still tend to lose money spent on renovation if the title issue is not resolved..
Good question for an attorney...
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
It's interesting you're considering suing before you've submitted a claim and given the insurer an opportunity to investigate the matter and if there is indeed a covered defect and coverage, to cure it or pay your loss.
A title policy is a contract between the insured and the insurer with rights and obligations on both parties. One of the insured's obligations is to notify the insurer of any allegations of a title defect which the insured believes may be covered under the policy, as soon as possible. Failure to do so may adversely affect the coverage under the policy. In addition, despite popular misimpressions, a title policy is not an opinion of title and is not a representation of the status of title. It is merely an agreement of the terms and conditions under which an insurer will pay a covered loss.
In my experience, many courts have found that when a policy issuing agent has conducted a title search and exam for the issuance of a title commitment and policy, it's done for the benefit of the insurer and not the insured, and therefore the insured has not been damage (in a recoverable way) by the agent's failure to disclose a known defect. The agent may have liability to the insurer for its loss but not to the insured. If one received an abstract of title or an attorney's opinion of title they might have a cause of action for negligence, in my opinion.
I suggest you submit your claim and let the process unfold and see if you do have a loss that is not recoverable under the policy before you get to concerned, though you might still want to get an attorney's opinion about your legal rights.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
Quote from @Ruth Hall:
What are the chances of winning suing the seller for non-disclosure?
I bought a flip, renovated and in the market to sell. I was provided a clean owner's FIDELITY NATIONAL TITLE INSURANCE COMPANY policy by the agency. I closed the house through a local title agency. I'm hearing news there might be some title issues since they missed some paperwork and have not completed yet. I don't know yet what that paperwork and details are since it was just brought to my notice today. Both the seller and the title agency was aware of the missing paper work but did not disclose it to me until today.
"there might be some title issues" - well this is not confirmed. If there are title issues, the title company typically would not have written the policy in the first place. Also how do you know they were aware of it. If there were issues typically they are listed on the initial report that is provided to you
Either way you would need to sue them and be able to prove they were aware of it, which will cost you tens of thousands of dollars.
Also what are your damages? Is the house currently sale pending? What is the buyers title company saying as that is what really matters...
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