ARTICLES: MORE THAN THEY BARGAINED FOR: ARE TITLE INSURANCE COMPANIES LIABLE IN TORT FOR UNDISCLOSED TITLE DEFECTS? Skip over navigation
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Copyright (c) 1995 The Catholic University Law Review
Catholic University Law Review

ARTICLES: MORE THAN THEY BARGAINED FOR: ARE TITLE INSURANCE COMPANIES LIABLE IN TORT FOR UNDISCLOSED TITLE DEFECTS?

Fall, 1995

Catholic University Law Review

45 Cath. U.L. Rev. 71

Author

James Bruce Davis *

Excerpt





Title insurance has become the prevailing method by which real estate purchasers and mortgage lenders protect themselves against the risk of defects in their titles. 1 Title insurance policies typically provide that the title insurance company will indemnify the insured owner or lender for loss or damage caused by a title defect that existed on the date of his policy, unless the defect was excluded from policy coverage. If the title insurance company fails to perform its obligations under the policy, the insured may recover his loss from the company in an action for breach of contract. 2

This Article explores the question of whether insured owners and lenders may also recover in tort from a title insurance company for title defects it failed to disclose in a title insurance policy. The cases addressing this question have split into two opposing branches over the past twenty years, with the authorities more or less evenly divided. 3 One line of cases holds that the title insurance policy's terms and conditions provide the insured's exclusive remedy against his title insurance company for an un disclosed title defect. 4 The alternative line of cases holds that a title insurance company has an implied duty to search public records for title defects, that it may be held liable for negligently performing that duty, and that contractual disclaimers of tort liability are void. 5

The issue of tort liability usually arises when a property owner or mortgage lender discovers a title defect that ...
 
 
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