Lawsuit Breakdown – Title Company Misses Double Sale of Property

In the second post of our continuing Lawsuit Breakdown series, we will continue to assess and analyze various cases that have occurred surrounding title agents and the liability title agents face.  This second case is 100 Investment Limited Partnership v. Columbia Town Center Title Company.  It revolves around a missed deed and liability on a title company when the title insurance refuses to pay.

100 Investment Limited Partnership v. Columbia Town Center Title Company

In this case, 100 Investment Limited Partnership (100 Investments) sought to purchase a parcel of land.  Unfortunately, that parcel had previously been sold by the sellers.  While the deed was properly recorded, Columbia Town Center Title Company (Title Company) failed to uncover the deed and issued an abstract showing clean title.  The Title Company also issued a title insurance policy to 100 Investments.  The abstract was relied on by the insurance company when issuing the policy.

This error was discovered only after 100 Investments paid fair market value to secure the property.  Once discovered, however, a lawsuit was filed because the title policies denied coverage because of a special warranty deed that was filed by the investment firm.  The lawsuit alleged that the title insurance companies were vicariously liable since they relied on their agent’s – the title company’s – work.  The court found that the title company was liable, but that the insurance company was not.  This is in line with many other cases countrywide.

It is important that title companies, abstract firms, title agents and lawyers providing the opinion of title be well versed in searching for deeds.  If any of these parties rely on another’s work, it is important to maintain confidence in the party’s ability and monitor for this.  Finally, each firm should maintain the proper level of Errors and Omissions Insurance to protect the firm from acts of negligence.

Contact us to learn more about whether your firm has the right level and type of insurance.