In that blog, I detailed the failure of a title settlement agent to satisfy the prior owner’s mortgage, with the result that the new owner was served with a foreclosure complaint.
Boundary line disputes are another common subject of title litigation. Suppose you obtain a property survey depicting your boundary lines prior to the closing of your real estate purchase.
You then proceed to install a fence inside the boundary line, carefully referring to your survey to locate it properly. Shortly thereafter, you receive a letter from your neighbor’s attorney advising that you placed the fence on the neighbor’s property and demanding its removal.
If you submitted your survey to your title insurer on or before closing, and if that survey was endorsed to the title policy, you should refer the neighbor’s claim letter to your title insurer which is likely to be obligated under the terms of the policy to provide you with a defense and indemnification. This is particularly true if the neighbor files a lawsuit against you.
It may be that your survey is wrong, or that the neighbor’s survey is wrong. Or that both surveys are wrong. If you are sued, the title company is likely to retain an expert surveyor on your behalf who will give an opinion as to where the boundary line actually is. This may involve review of public property records and conducting field work in and around your property. If it turns out that you placed the fence on the neighbor’s property, the title company may try to work out a compromise or an easement with the neighbor. If that is not possible, then the title company may pay to relocate your fence and to compensate you for the diminution in value of your property. Or provide you with legal counsel to defend the lawsuit through and including trial.
Again, these are further reasons to purchase title insurance when you buy real estate. And to promptly refer any claim to your title insurance company.