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Letter to the Editor: Net Branching is Not Per Se Unacceptable to HUD

National Mortgage Professional
Mar 30, 2001

When Real Estate Can Be Haunted By The PastJames Ystesundtitle insurance, chicago title What does a self-styled descendant of the Spanish Conquistadors have to do with one of the nation's largest title insurance organization? Ask Chicago Title, who will tell you of numerous trips to an Albuquerque, New Mexico courtroom to successfully defend against this alleged conquistador's claim that a client's real estate belongs to him by virtue of an ancestral Spanish Land Grant. The lesson? "When you own real estate, someone else's past can come back to haunt you," said Ron Antoine, Resident Vice President and Wisconsin State Manager of Chicago Title Insurance Company. While most types of insurance protect people from harm that may occur in the future, title insurance does exactly the opposite, it insures against harmful events that may have already occurred, but are unknown at the time the title is transferred. Unlike other types of insurance, a title policy protects the holder the entire time he or she owns the land-for only the cost of a one-time premium payment. Take The Case of the Missing Heir. While a man named Jackson was developing a piece of property he purchased, a claim was filed against the property on behalf of Dan Smith. Mr. Smith believed that his father was the illegitimate son of the man who owned the property 40 years before, and therefore should have inherited a portion of the property. He sought to force Mr. Jackson to subdivide the property, or sell it and divide the proceeds with him. In such cases, it is critical that the owner of the land have, in force, a title policy with a company that stands prepared to defend all claims, regardless of how far in the past they may originate. That's because, in title disputes, time does not cure all defects in the title. And even a small claim, if successful, could force the sale of the property. A title insurance policy holds the insurers responsible for defending against such claims. Without such a policy, the owner would have to bear the burden of research, legal, and court costs, in addition to the loss of some or all of the property if the title cannot be defended successfully. These costs may far exceed the cost of a single premium title policy. Even if a claim is defended successfully, there are no guarantees against a claim arising from another source, starting the expensive process again. In the case of Smith and Jackson, Chicago Title Insurance Company conducted an extensive review of the chain of title records, as well as the family's birth, death, and marriage records, to find that there was insubstantial evidence to support Mr. Smith's paternity claim. In addition, a study was conducted of inheritance and paternity law from the company's vast database of cases pertaining to land title questions. This investigation helped Chicago Title successfully defend its customer's right to retain and develop the land. A number of title problems can arise to haunt a property owner, including: ++Title Forgery. When a forgery is found, every subsequent transaction can be declared null and void. ++Technical Fault. If found in a previous transfer, a technicality such as an improperly handled foreclosure can render the title invalid. ++Hidden Defect. This occurs when the defect could not be discovered prior to the transfer of title. For instance, while digging a new swimming pool, a property owner may discover that his or her neighbor's septic tank system is buried in his or her backyard. When purchasing property, it is important to remember that every conveyance or encumbrance of a parcel of land creates the possibility of a title problem. And whether that problem occurred six months or 60 years ago, the best method of protection is the purchase of a title insurance policy from a company that is prepared to defend it as many times as necessary, for as long as the property is owned. James Ystesund is Business Development Manager with Chicago Title Insurance Company. He can be contacted at (414) 796-9651 or fax (414) 796-3888, or E-mail Ystesund@CTT.com.
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