The first step in determining whether you have a viable title claim is to review your title policy in detail. You must be sure that the defect you are concerned about does not appear as an exception to coverage in Schedule B of the title policy or elsewhere. Once you have determined a claim exists, you should thoroughly review the policies and procedures in your title policy for submitting a claim. Be aware that most title policies say that you must timely submit your claim and also provide additional documents to the title insurance company reviewing your claim. There is also an address set forth in most title policies for where you must send notice of your claim. The failure to comply with the policies and procedures for submitting a claim may provide the title company a defense to liability. Since the reporting of the claim is usually wholly within your hands, it is incumbent upon you to abide by these policies and procedures as closely as possible.
When you submit your claim to the title company, do it in writing and keep a complete copy of all the documents that you send to, or receive from, the title company for your records. In an effort to streamline your claim with the title company, provide the title company with as much information and documentation as possible. For example, you should send copies of your title policy, the documents evidencing the title defect, and any correspondence you may have with any third parties regarding their interest in the property to the title company when you submit your claim. To ensure your claim submission is in order, you should consider hiring a reputable attorney to assist you with this process.
A title company has an obligation to act with diligence in reviewing your claim. If several weeks or months pass and you have not received any kind of acknowledgement from the title company, you should consider sending a follow up letter and consulting an attorney, if you have not already done so. If you have received an acknowledgement or even an acceptance of the claim, but months have passed and nothing has been done, you also should consider consulting an attorney.
Once a claim has been accepted, the title insurance company has several options to resolve the title claim. Depending on the nature of the claim, the title company may litigate, or negotiate to resolve the defect with a third party, take some other non-judicial action, and/or it may pay you the damages you have suffered as a result of the title claim. Ultimately, the title company’s goal should be to eliminate the title defect and/or compensate you for the title defect. Some title claims are resolved without the necessity of litigation. If, however, the settlement offered does not fully compensate you for your losses, you do have the option to make a counteroffer or to litigate against the title company. All claims must usually be brought within five (5) years of discovery of the title defect, otherwise your claims may be time barred. If your do not feel the title company has diligently acted to protect your interest, has improperly valued your damages, or has not properly valued your losses, you should consult with an attorney.
To read more on title claims see Title Claims – How Title Insurance Protects You