Too often parties to a real estate transaction assume because they have title insurance they are protected from any defects in the title and all claims from third parties. Unfortunately, this is far from the case.
Title insurance only addresses matters in the public record related to legal title of the property. Title insurance does not address claims which are not yet recorded, claims based on occupation of the property, or ensure parties they are buying a legally created parcel that they can develop or put to use. Each of these issues can cause significant problems for a purchaser, create significant liability for a seller, and are not addressed by title insurance.
Liens/Claims of contractors for work performed before the purchase, but not filed at time of closing can result in liens arising against the property after it is purchased. An unsuspecting buyer will not have title insurance to address these liens, unless the issue is specifically addressed in the title insurance policy. Similarly, if someone is occupying a portion of the property and claims ownership right or a right to continue occupancy not based on a recorded document, title insurance will provide no protection to the buyer who wants to make use of the property. Perhaps most significantly, a seller may have a deed to the parcel, and therefore legal title which the title company will insure, but the parcel was not legally created under land use laws and therefore cannot be developed by the buyer. Title insurance does not address this issue, and can leave a buyer or seller in a very difficult and costly position.
Taking the time to investigate the possibility of any unrecorded claims, claims based on occupancy, and checking with the appropriate government officials regarding the legality and usability of the parcel can avoid significant problems, which can be devastating to the ownership and development of property.
Mark Hoyt
Mark represents businesses and individuals in all aspects of complex civil litigation, land development, and construction. In his commercial litigation practice, he leverages his extensive experience in litigation, mediation, and arbitration to identify the vehicle which will most efficiently and effectively achieve his clients’ goals. He emphasizes construction defect, commercial and business dissolution litigation while maintaining a boutique practice recovering compensation for the victims of elder and sex abuse.
Salem, Oregon 97301 