A special thank you to Lenn Harley for writing a stellar post about the offshoring of title searches. Check out Lenn's diagram. I love it! Thanks are also due to all of you who commented and showed concern. Offshored title searches are a particularly complicated matter that have become something of a personal cause for me and a rapidly growing number of others.
I've prepared a slide presentation highlighting the spirit of Lenn's post for Title-opoly and decided to give friends on Active Rain a sneak preview. Following Jeff's advise, I'm experimenting with eyejot and hope to embed a meaningful message in the Title-opoly post.
As a title company owner, I had two first hand experiences with costly litigation stemming from title claims. As an expert witness, I was retained once by a title insurer and another time by the insured's attorney who had filed suit against the title insurer. Homeowners involved in title claims often feel that they haven't been properly represented by title insurers and hire their own attorneys.
Claims council working for title insurers have a duty to protect the interests of corporate shareholders. I don't know of a singe instance where a homeowner was painlessly compensated for losses after notifying their title insurer of a pending claim. The terms of title policies, which are rarely explained or understood, give title insurers a significant number of advantageous rights including the latitude to thoroughly investigate any and all allegations, possible relationships, prior knowledge, etc. It's standard practice for insurers to conduct lengthy investigations to eliminate any possibility that parties to a claim might be in collusion. I once had a client who, as the defendant named in a title related cause and the seller of a Maryland property, was unable to consummate a contract of sale for well over year while a title insurer investigated the joint ownership of a boat in Florida. Sad but true: a pending sale means nothing to claims council who pursue their own agenda.
Title claims equate to litigation, depositions, court dates, piles of legal documents, subrogation of rights, etc. Consumers subjected to title claims couldn't possibly be compensated for the sleepless nights and emotional trauma they're forced to endure, nor do title policies allow for the payment of punitive damages.
I'm often asked why the offshoring of title searches remains an increasingly prevalent practice in light of the elevated claim's ratios reported by title insures. I don't have an answer.
I do know from experience that a thoroughly (locally) searched and examined title rarely results in a claim.
It's a matter of trust when you really think about it. Title companies are expected to act in the best interest of consumers. Offshored title searches raise serious questions about the integrity of companies that use them.
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