dirty deed or crappy search?

If you Google “The Closing Specialists” or “Diane Cipa”, the link for this Post Gazette article will pop up. To my knowledge, Lawrence Walsh never did a follow-up piece. The claim was settled shortly after publication. Mr. Gruendl decided to accept the $650 offered by Al Watterson of Lawyers Title. A friend or acquaintance, after reading the article, must have helped the Gruendl’s understand that they were entitled to recovery of damages but not a refund of the insurance premium.

Following the incident, I sent a note to Mr. Walsh thanking him for the publicity and giving us a fine public example of title insurance in action.

The unnamed title searcher was the source of two claims that year, both outsales. In both cases, our file audit revealed that the searcher was aware that the lots in question had been deeded to other parties, but she failed to include this information in the reports sent to our office. The title searcher made an error in judgment. The outsales had occurred in the 70s and the properties had changed hands a few times. In each of these conveyances, none of the attorneys who prepared the deeds had noted the outsales. The searcher assumed that all of these attorneys had searched the title and that their judgment was better than hers. She assumed the attorneys were right and failed to report the outsales.

The Closing Specialists® and this searcher parted company. Even after reviewing the claims, she argued her case and we had to conclude that she might do it again.

So in each of these two cases, the seller’s deed included land that they did NOT own. In each case, the buyers decided to NOT get surveys. Thank heavens the buyers decided to purchase owner title insurance. If they had not, they would have had no recourse but to sue the sellers and hope for the best.

The Gruendl’s were more than compensated for the value of the lot. They paid the neighbor $530 and got a check from Lawyers Title for $650.

The other party – who did not go public and so shall remain nameless – received a much higher compensation. Lawyers Title had the property appraised. They apportioned the fair market value of the lot between the insured owner and the insured mortgage lender.

When the “dirty deed” article was published in the Post Gazette, friends and associates asked why I was silent. I simply have a policy of not commenting on a formal claim in process. I don’t think it’s fair to either the insured or the title insurance company.

So in the end, the dirty deed was human error – a bad search report, and the only way to protect yourself against human frailty in a real estate transaction is to buy owner title insurance.

Now, take this story and think about all of the title agents out there who only do “short searches” - maybe only pulling the last 12 or 24 months in a chain. They won’t find old mistakes, will they? No. Is the consumer well served with short searches? Not in my view, especially if they are paying for a product that purportedly includes a full search.

There is no substitute for a full search done by a good abstractor followed by a thorough examination by a capable title agent and capped off with an owner policy. Dollars for that kind of product are well spent.

Hats off to all you professionals out their who guide your consumers to quality services. Thank you!

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