Property Law Spring 2017

Professor Marc H. Greenberg

Golden Gate University School of Law

Title Assurance Part 3

 Title Assurance Part 3
• Waldorf Insurance and Bonding, Inc., v. Eglin National Bank –
– Waldorff’s purchase contract for the condo was not recorded – it couldn’t
be because the seller’s signature was not recorded. Why wasn’t it?
– Was the bank on inquiry notice to investigate the status of ownership of
Unit 111? Yes, because the Unit was specifically referenced in the ‘73 and
‘73 mortagages. The rule is that possession gives inquiry notice –
therefore the bank had a duty to inquire of Waldorff whether it claimed an
interest in the unit.
• Marketable Title Acts - these statutes seek to extinguish old title defects
automatically with the passage of time – the time periods often coincide with
relevant statutes of limitations periods. They allow searches to be limited to
the relevant time period.
• Registration of Title – this process, known as the “Torrens system”
involves a litigation over rights to title, followed by a certificate of title which
once registered, is less likely to be subject to successful contrary claims.
 Title Assurance Part 3
Torrens v. Title Insurance
– The Torrens system has been widely criticized, and has been repealed
in many of the jurisdictions which originally adopted it.
– Critics point to the costs of the required litigation of title cases; and the
many exceptions which render the purported conclusiveness of the
registered certificate of title far less conclusive than anticipated.
– Title insurance companies, title abstract companies and lawyers who
work in the real estate title business all have strong vested interests in
opposing the Torrens system, and have been effective in limiting its
application.
– The ease, flexibility, reliability and relative low cost of title insurance,
which accomplishes many of the same purposes as a certificate of title,
is a key factor in the lack of reliance on the Torrens system in the U.S.
 Title Assurance Part 3
• Walker Rogge, Inc. v. Chelsea Title & Guaranty Co. –
– Is there a breach of the title insurance contract here, or does the survey
exception clause exculpate the title company from liability?
– Can a company engaged to provide a policy of title insurance be held
liable for negligence in the title search it conducts as a condition of
issuing insurance? Does it matter if the company does not represent
that it is reporting the status of the title, and the results of its search, to
its customer?
– Given the requirement that the company act in good faith and deal
fairly with its customers, does this distinction between title search and
title insurance provide a basis for avoiding liability by the title
company? Or are these two functions too intertwined and integral to
the insurance policy’s accuracy?
– Does it matter that Chelsea had twice insured the tract, and had files
containing evidence that the true acreage was only 12 acres?
 Title Assurance Part 3
• Lick Mill Creek Apartments v. Chicago Title Insurance Co. –
– Does a title insurance policy cover the cost of removing hazardous
waste?
– Does the presence of hazardous waste on the property make its title
unmarketable? Or does the contamination only affect the fair market
value of the property?
– Who should bear the burden for undiscovered contamination of this
property – the buyer and seller, or the title company?
– Since the contamination, once discovered, could result in a government
lien being placed against the property at some point in the future, to
guarantee that clean-up costs are paid by the owner, isn’t this a lien on
the property that the title insurance is obligated to cover?