All Forum Posts by: Peter Walther

Your friend really needs to get some advice from a good real estate attorney who practices in the area where the property is.

That written, first, as has been pointed out several times, it sounds like your friend has received the benefit of his title policy, so I doubt there's any recourse there.  For the next time, in my experience, a title policy can be issued for the expected value of the property after the improvements are completed.  An Owner's Policy will probably have a clause that limits the amount of insurance to the value of the property as of the date the claim is made.  In your friend's situation, the loss would not be the amount he has spent improving the property, but the value of the property as improved by the partial construction.  For a lender's policy, it would be the amount of money disbursed under the mortgage/deed of trust. Now that's the amount of insurance and not necessarily the amount of the loss which could be a different calculation.

Second, if memory serves me, a claim for unjust enrichment requires the cause of action be based on a contract between the parties where the plaintiff (your friend) performed a service for the defendant (the property owner) for which the plaintiff had an expectation to be paid.  In my opinion your friend might have a cause of action for equitable improvement, but the possibility for success depends entirely on the specific facts.  Again, you friend needs to get to an attorney.

Lastly, your friend is not looking to have title restored to him as he never likely never had title since generally title cannot not pass under a forged deed unless the deed transfer has been recorded in a Torrens title state, he's going to ask to be paid back for the value of the improvement.  For example, if the improvements don't meet code, he shouldn't expect to be repaid the $200k he paid to make the improvements.  He should expect to be ordered to remove the improvements at his expense.

The low judgement amount vs the estimate market value leads me to believe these may be HOA or COA foreclosures in which case 1st mtgs will survive and the purchaser will be taking subject to. Do you know how to search/examine title and read/understand foreclosure pleadings?

I believe CT is a filed rate state where each title insurer sets their own premium rate which is filed and approved by the state and the insurer must adhere to those rates.  The rates are public information.  As a practical matter, most insurers use the same rates (the lowest) so as to be competitive with the other insurers.  The difference in the cost to close generally results from higher or lower ancillary services costs, such as search, exam, doc prep, attorney fees and closing fee.  The best thing any buyer can do is shop around, but keep in mind that just as in any purchase of a product or service, the lowest cost might not be the best price.  Experience and ability doesn't come cheap.

I suggest you read your title policy, particularly Schedule B, to be sure you haven't taken title to a recorded easement or restrictive covenant that you're unaware of.

Here's a comparison of the two coverages, whether it's worth the price difference is up to you. 

ALTA Policy Comparison

I believe there isn't enough information in your post to come to an informed non-attorney's opinion as to who might be legally responsible, but it sounds like the buyer certainly didn't take enough interest in making sure he got what he bargained for.  I would need to see a copy of the original contract to see if all three parcels were listed as a start.  As far as the phantom property, was the deed into your father recorded and who told you the deed is invalid?

If I understand the situation correctly, you're under contract to purchase two parcels of land from a lender, one parcel has a house; the other adjacent parcel is a vacant 2-acre parcel.  The lender/seller just realized the foreclosure only included the 2-acre parcel, apparently because of an error in the legal description and needs to bring an action to foreclose on the house parcel.

If that's correct and you want to wait, you could ask the seller if they'll agree to extend the closing through the completion of the foreclosure.  I suspect your contract may have a provision that the sale can be canceled by either party if the seller cannot deliver good title so they may not be willing to do so.

Without reviewing the documents, I can't form an informed opinion, but I suspect the lender will need to bring an action to reform the legal description as part of the foreclosure. I believe it's possible that if the legal description on the mortgage/DOT is ambiguous, the borrowers could raise a defense that they didn't intend on encumbering the house parcel and the burden will be on the lender to prove to the satisfaction of the court that the borrowers did intend to do so. I've seen some pretty tenacious borrowers put up a good fight for years and at times win.

 You're welcome and thanks for the vote.

If you didn't get a title policy when you purchased the property, I believe you should purchase on now, before you invest any more money in the project, to be relatively sure there aren't any other issues with the title. I would ask the HOA for a copy of the governing docs; they may even be on their web site. In my experience, if your property is included in the land described in the docs then the dues must be paid or risk foreclosure. If you're unhappy with the way the Board is running things you can always run for a seat and try to change things.

Assuming your husband is a named insured on the policy, I believe his coverage should continue as long as he holds an interest in the property.  In addition, I believe if you read the Conditions section of the policy, you might find that you continue to be an Insured since you have potential liability for the warranties you gave in the deed to your husband.  I'm not an attorney and this isn't legal advice, just my opinion.