New Case Provides Clarification for Title Industry

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New Case Holds That Title Company Has No Liability When It Gratuitously Provides Erroneous Title Information:

In a case decided August 10, 2010, the Court of Appeal (2nd District) declined to find a duty of care on the part of an underwritten title company that informally provided erroneous information about the priority of a Deed of Trust to someone who relied on the information to bid on property at a trustee's sale. Chicago Title Company advised the individual who purchased the property in an e-mail that the Deed of Trust being foreclosed upon was not subject to any senior liens when in fact it was in second position, behind a $1.6 million first Deed of Trust. The purchaser asserted that he had an oral agreement with Chicago Title Company to purchase a policy of title insurance in the future for any property he purchased out of foreclosure in exchange for the title company's e-mailed "yes" or "no" answers to his questions about whether the Deeds of Trust were subject to senior liens, and that this alleged agreement subjected Chicago Title Company to tort liability as an "abstractor" for providing erroneous information. The court disagreed and held that there can be no liability for erroneous title information in the absence of a title insurance policy or an abstract of title.

The case, Soifer v. Chicago Title Company, (Aug.10, 2010) Cal.App. LEXIS 1385, should provide an added layer of protection against contractual and tort liability claims to underwritten title companies and title insurers alike.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Mark Epstein, Wendel, Rosen, Black & Dean LLP | Attorney Advertising

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