Title Insurance Success Stories
Protect Your Most Important Investment
Title insurance protects your property against the past as well as the future.
A policyholder is protected against challenges to rightful ownership of real
property, challenges that arise from circumstances of past ownerships. Each
successive owner brings the possibility of title challenges to the property.
When you purchase real property, rely on Chicago Title to protect your
interests. You'll be insured by a company backed by more than 150 years of
successful title operations.
Click the links on the right to see how title insurance has helped many
consumers resolve a variety of title challenges.
Note: While the situations have taken place, the names have been changed to
protect the privacy of the individuals and/or companies involved.
Easement Rejection - You Can't Get There From Here
Betty G., a real estate broker, purchased an undeveloped lot in a rural county
in Northern California. She also purchased a title insurance policy protecting
not only her title to the lot but also a road easement benefiting the lot
across adjoining property. The lot was the northernmost of a four-lot
subdivision. The original subdivider had attempted to reserve an easement over
an existing north-south road that traversed the most westerly boundary of the
three southerly lots. However, the document that attempted to serve the
easement was defective because it did not contain the language necessary to
give record notice that an easement was being created. When the owners of the
three southerly lots found out that Betty G. intended to develop her parcel by
dividing it into two lots and building homes for sale, they challenged her
right to use the easement. Betty G. made a claim under her title policy.
It was determined that a successful reformation action to reform the document
to correctly reflect the intention of the subdivider to create an easement
could be successful. It was also determined that Betty G. had the right to an
easement by implication, necessity and, arguably, prescription.
Following this analysis, contact was made with each of the owners of the three
southerly properties. After an explanation that Betty G. was entitled to the
easement on any one of several legal theories, two of the owners readily agreed
to execute the documents necessary to grant Betty G. an easement over their
The most southerly property holder, however, still contested Betty G's right to
an easement. They adamantly insisted that they would only execute easement
documents if Betty G. agreed not to develop her property. Obviously, that was
unacceptable. Through a series of correspondence it was made very clear to the
most southerly property owners that the alternative to settlement necessarily
would involve litigation or other dispute resolution mechanisms. After several
weeks of dialogue and correspondence, the most southerly property holders
agreed to a cash settlement in exchange for a clear and unambiguous easement
This claim was resolved in a matter of weeks. Further, because of the facts
Betty G was able to be assured that if she wished to sell her property during
the time the claim was pending, title insurance would be available to her new
buyer while efforts continued to resolve the easement problem.
Betty G. stated that, as a real estate broker, she had always considered title
insurance to be simply a hurdle to delay a closing. However, after having her
own claim with such a good result, she realized how important title insurance
Unexpected Tax Lien - Carol B.'s Tax Lien and the Benefits
of her Title Policy
A CLTA Standard Policy was issued to Carol B. She is a single mother, barely
managing on her waitress' salary. She was only just able to qualify for a
low-interest loan from the United States Department of Agriculture Rural
Housing Community Development Service. This loan enabled her to purchase her
The Development Service has very strict criteria for low-income individuals.
These criteria include such items as the ratio of an individual's salary to
their loan payments and the amount that they can afford to pay for real
property taxes. Carol B. met these criteria, but an increase in either her loan
payments or real property taxes would disqualify her from the Loan Program and
would result in the loss of her home.
Shortly after her purchase of the property, Carol B. received a new tax bill
for real property taxes. The bill disclosed that the taxes were over $2,000.00
per year, which would disqualify her from being able to keep her home. When she
contacted the assessor's office, Carol B. was told that the increased taxes
included a $9,000.00 special assessment for a special street tax. This special
tax had not been shown as a separate matter in the preliminary report that
Carol B. and the Loan Program had received.
Both Carol B. and the Loan Program then contacted the title insurer. Prompt
arrangements were made to pay the special taxes, enabling Carol B. to keep her
Lack of Access to Property - The Saga of George and Kathy
Mr. and Mrs. George B. purchased a small farm in a rural northern California
County for $70,000 in 1975. In connection with this transaction, they obtained
an owner's title insurance policy.
The only means of access to and from the Insureds' property was an old dirt
road that went across a neighboring parcel of land and connected with a state
highway. The title search that was conducted when the Insureds purchased their
property showed that there were no recorded grants of easement or other
documents in the public records that gave them the right to use this road. The
road had been used for many many years and most people in the immediate area
had always recognized the old dirt road as an access way to the neighboring
land. The title insurance policy purchased contained the now-standard
provisions insuring against loss caused by the lack of a right of access to and
from the property.
In 1990, the neighboring parcel was acquired by Out Of State Investment
Corporation, a foreign corporation that began to implement plans to build a
200-to-300-home residential subdivision. When it determined that the dirt road
used by the Insureds ran right through the middle of its proposed subdivision,
Out of State hired a large law firm from outside the community to bring a
lawsuit against the Insureds to prevent them from continuing to use the road.
When the Insureds were served with the lawsuit, they were struggling
financially. They were in the process of trying to sell their farm so that they
could finalize their pending divorce. They needed to be able to establish a
right of access to be able to sell the farm, but could not afford the crushing
cost of litigating a high-stakes quiet title action against a wealthy
corporation represented by a law firm known for its "scorched earth" litigation
tactics. Even if they could have afforded to retain an attorney, the Insureds
had no experience or information that would have enabled them to locate an
attorney with the highly specialized knowledge needed to effectively litigate
the complex title issues presented by the lawsuit.
When the Insureds advised the title insurer of the lawsuit brought by Out of
State, the insurer retained an experienced and highly competent real estate
attorney to represent them. Drawing on its title expertise and its superior
resources, the Company researched the history of the Insureds' property and the
surrounding properties back to the mid-1800's. Using ancient maps and records,
it was able to conclusively prove that the road used by the Insureds had been a
heavily-traveled wagon road in the late 1800's and had been established as a
county road under an obscure state law that had been repealed in the 1890's.
Based on this showing, the Insureds were able to obtain a summary judgment that
conclusively determined that the road was a county road and, therefore, that
the Insureds had a legal right to use it to get to and from their property.
By successfully utilizing the summary judgment procedure, the insurer was able
to avoid a lengthy discovery process, eliminate the need for a trial and
resolve the lawsuit-which might otherwise have gone on for years-in less than
six months after it took over the case. The Insureds were able to sell their
farm, finalize their divorce and get on with their lives. Out of State, which
had refused to grant the Insureds a private right of way over its property, had
to revise its plans to accommodate the public road as a part of its proposed
Property Extends Onto Adjoining Land - Harvey's Garage
Harvey was a happy new homeowner who delighted in his hobby, that is, his
Harley Davidson Motorcycle. Harvey would never think to leave his Harley out of
the garage and exposed to the elements. That was exactly the threat he had to
face not three months after moving into his new home. It seems that some years
ago, through inadvertence, a prior owner of the property built the garage two
feet over onto their neighbor's land.
One early morning Harvey's neighbor woke up to the possibility that the garage
was over the property line as he thrilled to the thunderous sound of the Harley
being taken out for a spin by Harvey. The next day the neighbor, Jack,
contacted his surveyor.
Harvey was in a sorry state until he searched through his closing records and
found his title policy. Fortunately, the threat of a forced removal of Harvey's
garage because it extended onto adjoining land was a covered title risk in
Harvey's title policy.
Both Harvey and Jack wanted to be good neighbors, but a solution was necessary.
Jack contacted his lawyer who drafted a lawsuit seeking to require Harvey to
remove his garage from Jack's land. The title insurer was notified and the
insurer suggested a mediation of the dispute to spare everyone frustration and
expense. Fortunately, the mediator structured a reasonable settlement which
required a fair amount of sound proofing material in the garage and a
cooperative neighborly respect between both Harvey and Jack. The garage was
allowed to stand on its original foundation, sound proofing was added at the
title insurer's expense and a lot line adjustment was worked out, also at the
insurer's expense. Harvey and Jack now could live next to one another without
controversy, thanks to Harvey's title insurer.
Mechanic Lien Claim - Loretta's Title Policy Covered a
Mechanic Lien Claim
Loretta loved her new home. She was especially thankful for the fact that the
seller replaced the roof so she would not have to spend money for the
unexpected surprise of a leaking roof. She had that problem with her prior
home. Much to her surprise as it turned out the seller never paid the roofing
contractor. Surprise turned to frustration when the roofing contractor insisted
he had a mechanic lien (you might call it a construction lien) which he could
foreclose against Loretta's new home.
Imagine the relief when Loretta learned she could tender the problem to her
title insurer to take care of the whole problem. She had a comprehensive ALTA
Residential Policy that provided coverage for such liens. Her insurer contacted
the roofing contractor and after a few months of negotiation the lien claim was
settled and resolved. In the end Loretta was safe and secure under her new roof
and she never had to fret over the contractor's mechanics lien claim.
Subordination Nightmare - Scenario of Security Lend
The We-Sell Property Company is approached by Trust-Us Developers who offer to
buy 6 acres of We-Sell's prime downtown real estate. Trust-Us explains that
they have plans to build "Downtown Center," a beautiful complex of high-end
retail and commercial tenants.
Trust-Us offers We-Sell $3,000,000.00 for the land on the following terms:
$500,000.00 cash and seller carry back a Deed of Trust of $2,500,000.00. This
Deed of Trust will, of course, have to be subordinated to a construction deed
of trust for approximately $20,000,000.00. Trust-Us tells We-Sell the completed
project will be worth "a fortune" and, the construction lender will monitor the
We-Sell agrees to these terms on the following conditions: -Construction loan
may not exceed $20,000,000.00 -Interest rate may not exceed Prime +2% -All
construction loan funds must be used solely for the development of this project
and are to be controlled by the construction lender.
A deed of trust in favor of We-Sell is executed by Trust-Us and a rider is
attached which sets forth the automatic subordination provision and its
Shortly thereafter, Trust-Us finds construction financing with Security-Lend
Finance Company. The construction loan is negotiated for a first deed of trust
of $18,000,000.00 at Prime Rate +2% interest. Security-Lend sends its deed of
trust to the title company and requests an ALTA Loan policy showing its lien in
first position based on the automatic subordination provision in the We-Sell
deed of trust.
The title officer reviews the We-Sell deed of trust and sees that the amount of
construction financing and interest rate comply with the conditions set forth
in the rider. The title officer however requires that We-Sell execute a
standard CLTA form Subordination Agreement. We-Sell agrees and signs the CLTA
form but adds language that the subordination is conditioned upon all
construction funds being used solely for development of the "Downtown Center"
project and that the construction lender will control disbursements.
The title officer rejected the document stating that he will insure only if an
unaltered CLTA form Subordination is used. We-Sell complies, the transaction
closes and the construction lender funds the entire loan amount to Trust-Us.
After three months, no work has begun on the project and We-Sell tries to
contact Trust-Us. Their telephone has been disconnected and it appears that
they have disappeared with all of the construction funds.
We-Sell receives a Notice of Default from Security-Lend Finance Company and
immediately retains an attorney to file an action to enjoin Security-Lend's
foreclosure. We-Sell claims that the subordination is invalid because all of
its conditions that were set out in the rider attached to their deed of trust
were not met. We-Sell argues that its conditions to subordination contained on
the rider put Security-Lend "on notice" of those conditions, depriving
Security-Lend from their first priority position as the title company had
Security-Lend tenders its defense to the title company, who is pleased to see
that their title officer required an unaltered CLTA form subordination
In litigation, with the title insurer defending Security-Lend, it is ultimately
determined that the subordination language in the CLTA subordination form
clearly provides that it supercedes all prior agreements regarding
subordination of the deed of trust. Security-Lend is in first position as it
intended and as it was insured.