ALTA Addresses Minnesota Article Titled "Trouble With Title Insurance"
August 3, 2009
The American Land Title Association last week addressed a one-sided story in Minnesota produced by FOX affiliate KMSP-TV, titled "Trouble With Title Insurance." While the TV station claimed it was attempting to tell consumers that it's important they know what land they actually own and to shop around for title insurance, it also only highlighted one homeowner's false accusations that title insurance is an "expensive piece of junk."
ALTA responded by highlighting the benefits of an owner's policy and how a consumer should proceed if they feel there is a valid claim. In the future, we encouraged the TV station to contact the ALTA to provide valuable information regarding title insurance.
Here's the entire response ALTA sent the TV station:
Your online story titled "Trouble With Title Insurance," and associated video, unfairly characterizes title insurance as an "expensive piece of junk" that does not provide consumers any protection. While we typically can't comment on specific cases such as the one discussed in your article, this situation is pretty cut and dry and the article and video only shared one side of the story. The homeowners acquired the property in 1997. They believed that they owned more land than was actually the case, apparently due to location of the neighbor's fence well inside the neighbor's property. In reliance on this mistaken belief, the homeowners improved land that was not theirs with a shed and septic tank. This was all done after a title insurance policy was issued. When they learned these improvements encroached onto the neighbor's land, they submitted a notice of claim to First American Title Insurance Co. in August 2007. The underwriter investigated and denied the claim since the disputed land was outside the insured land, as described in the policy. The homeowners wanted First American to finance an adverse possession claim against the neighbor, but the company declined to do so. There is no title insurance product that would give the coverage sought by the homeowners under the facts of this case.
In general, title insurance policies are unique to each transaction and coverage is not the same across the board. If a consumer purchased a homeowners title insurance policy at the time of closing and feels there is a valid claim, we encourage consumers to promptly notify the title insurance company whose name appears on his title policy. The title policy includes instructions for contacting the title insurer, usually at the end of the "Conditions and Stipulations" section within the policy. When giving notice of a potential claim to the title insurer, homeowners should include the property address, a brief statement of the question or matter that is of concern, copies of any claims documents received, and a copy of the owner's policy (if available). The handling of a claim depends upon terms of the insurance contract, state laws, complexity of the claim and sufficiency of the docs to prove the claim. Remember, the broad coverage of title insurance includes protection against frivolous claims, or "clouds" on title that may not present an immediate problem. So it's best consumers to contact the title insurer promptly, as soon as they have any question or concern about their legal rights with insured land.
Title insurance, just like any other line of insurance, can include exceptions to what is covered. We encourage all consumers to learn what protections their policy provides. Consumers can learn more about title insurance, the different types of policies and the closing process at www.homeclosing101.com.
Other than getting the facts twisted, the story does provide good advice about availability of the owners policy – which many buyers do not purchase in some parts of the country – and the importance of knowing that there are different levels of coverage – with standard coverage being the least expensive and comprehensive, and the ALTA Homeowners product being the best (without an expensive survey).
The article does correctly suggest that homebuyers should shop around for title insurance. Many consumers rely on their real estate agent or lender for a recommendation for a title company since they are in a position to know which companies provide good service. However, consumers are not required to use the title company they recommend. ALTA encourages consumers to shop for title insurance by calling title companies in their area to ask for a rate quote. Consumers also can learn how to shop for title insurance at www.homeclosing101.com.
In the future, we encourage you and the TV station's other reporters to contact the American Land Title Association to provide valuable information regarding title insurance.