The "What's My Line" contest was an interesting one. After over 20 years in the business, I had a pretty good idea what went on with most of the people we're involved with in our transactions. Business survival has required a pretty good undertanding of what goes on with lenders - we have to know where the joker is going to show up. We've been on plenty of inspections with our clients, although not recently, since our attorneys decided that being there entailed unacceptable liability. Mary does our staging, so that was familiar. And I've looked at hundreds of title commitments.
But maybe there was something about title insurance? Then it occurred to me that we had never been involved in an actual title claim. We've seen title objections over the years, with some resolved and some resulting in canceled contract. And we've worked through multitudes of problems together with our title company in their role as closing services coordinator. But never an actual claim, where there was an undiscovered title defect that created a post-closing problem.
So I asked Dan Medeiros, our stellar Title Representative for Land Title here in Fort Collins, with whom we have worked for over 10 years now, to have lunch and fill me in on what happens when there is a claim. I even offered to buy, and we headed to Island Grill for our traditional fish taco lunch.
Dan didn't think it was that unusual that we hadn't been involved in a claim. Land Title does very thorough research and our residential practice isn't a hot spot for problems. The biggest concentration of claims happens in property development, with assembly of multiple parcels of land, government approval processes, lots of actors and sometimes poorly documented agreements. The refinance market also generates a considerabe number of claims, many of which come from unclosed lines of credit which generate post-closing leins. And the third biggest probelm area tends to be undislosed leins, and those are usually mechanics (workmans) leins. Other areas include boundary disputes and encroachments.
For a claim to be valid, there have to be actual damages, and Dan pointed out that often title defects either don't result in those, or in some cases, involve the kind of damages that are hard to define - loss of peace of mind, psychological impact, etc.
Interestingly, Dan doesn't get involved much in the claim aspect of his business. Once a claim is filed, all contact from the filing forward is with the underwriter's claim department. All we both know about that is if we ever have a claim, we'll call Dan and he'll help us file it. And from that point, Dan is prohibited from discussing the claim with his own clients, although he can still meet for fish tacos.
It was a good discussion and I'm looking forward to another 20 years without needing to know more.
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