Title Agents Claims Examples

Title industry claims are unexpected and can happen to most any organization. The three examples below are indicative of the types of claims that can occur, but are in no way all encompassing.

First Claim Example:

A title examiner did not locate 3 mortgages recorded as liens against a property. All 3 mortgages were of public record, but they were filed between the examiners title search and the loan closing. At the loan closing , the examiner did not update his search, and the seller did not disclose any existing liens against his property. Thereafter, an owners title insurance policy was issued to the buyer without exception to the existing mortgages. The lender began foreclosure proceedings against the buyer, who filed a title insurance claim under his owners policy for $320,000 in damages sought by the lender. The title insurance company pursued reimbursement from the title examiner.

Second Claim Example:

A 2^nd mortgage of $174,000 was not paid off at closing. The loan closer was aware of the existing mortgage, but believed it could not attach to the property because it was recorded as a personal lien. The seller, who also was aware of his outstanding 2^nd mortgage, pocketed funds at closing that should have been used to payoff his 2^nd mortgage. A foreclosure action was later brought against the purchaser, who filed a title insurance claim. The title insurer in turn brought an action against the loan closer. Although the seller received funds intended to payoff his 2^nd mortgage, he disappeared and could not be located by claim investigators or police. Therefore, the loan closer was held accountable for $214,000 in total damages.

Third Claim Example:

A loan closer performed a closing for a refinance. Instead of obtaining the payoff amount of the existing mortgage, he calculated it himself. It was incorrect, and the existing mortgage was not satisfied. The E&O insurer settled for a total loss of $36,500.