The Docket: Connecticut Court Rules No Coverage for Insured That Knew About Easement
November 30, 2017
The Docket is a monthly TitleNews Online feature provided by ALTA’s Title Counsel Committee, which reviews significant court rulings and other legal developments, and explains the relevance to the title insurance industry.
Christopher Smart an attorney with the law firm Carlton Fields reviews a recent decision by the Superior Court of Connecticut that held the insureds knew their property was subject to an easement. Smart can be reached at csmart@carltonfields.com.
Citation: Egan v. Eastland Title Services, Inc., et al. Case No. CV 16-6027100 (Conn. Sup. Ct., Sep. 29, 2017) (granting title insurer’s motion for summary judgment)
Facts: Plaintiffs Egan and Gieleghem purchased property from defendants Langs and purchased an owner’s title insurance policy from Defendant Old Republic Title Insurance Company. At the time of the closing, the plaintiffs had, among other things, a property condition report that disclosed an “ROW near water to access their property,” a map that disclosed the existence of the easement and constructive notice of the recorded easement. Their Realtor also disclosed the easement and discussed it with them. After the closing, the plaintiffs made a claim under the owner’s policy based on the easement. After Old Republic denied coverage, the plaintiffs brought this action against Old Republic.
Holding: Old Republic moved for summary judgment admitting the easement and the coverage provisions of the policy but arguing that the easement was excluded pursuant to a policy exclusion because the plaintiffs “created, allowed, or agreed” to the easement. The plaintiffs opposed that motion, alleging that they had received conflicting information at the time of the closing and were unaware of the scope of the easement and that for both reasons there were issues of material fact that precluded summary judgment. The court granted Old Republic’s motion, finding that there were no material issues of fact that the plaintiffs were aware that the property was subject to the easement prior to the closing and that their alleged loss was excluded pursuant to the policy. The policy exclusion, the court noted, does not require full knowledge and understanding of an easement; rather it requires only awareness of the easement.
Importance to the title industry: The exclusion for recorded or unrecorded risks created, allowed or agreed to by the insured is an important reflection of the nature of title insurance. Title insurance is a policy of indemnity against certain title risks, but it is not a substitute for due diligence. Title insurers rely on an examination of the chain of title in the public records, but a purchaser of property is frequently in a much better position to identify and assess the matters affecting title to the property based on a physical examination of it and dealings with the seller. Thus, where an easement is not identified or excepted from coverage in a title insurance commitment, but a purchaser learns of the easement from an inspection of the property or its dealings with the Realtor and the buyer agrees to purchase the property anyway without disclosing the easement to the insurer, the resulting title insurance owner’s policy will not cover any loss alleged to arise from that easement.
Contact ALTA at 202-296-3671 or communications@alta.org.