Title Insurer’s Offer to Insure Over Title Defect Does Not Remove Cause Of Claim
In the unpublished case of De Paz, et al, v. First American Title Insurance Co., No. B220937 (July 22), Division Five of the Second Appellate District considered a trial court’s confirmation of an arbitration award in favor of First American Title Insurance Co.В The arbitration award was subject subject to the standard for review of errors of law and substantial errors of fact in accord with Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal. 4th 11334, 1340, 1364.В The Court of Appeal reversed the trial court on the ground that an offer to insure a speculative new buyer did not remove the cause of the claim.
The Court found that the recorded title showed there was a question of plaintiffs’ rights and ownership until at least September, 2008.В The policy language specifically insured the property’s marketability.В The law recognizes that any adverse claim to property which indicates a buyer will not receive the complete interest is sufficient to cloud title and render property unmarketable.В See Paramount Properties Co. v. Transamerica Title Insurance Co. (1970) 1 Cal. 3rd 562, 567, fn. 4.В The Court went on to find that the title insurer’s exclusionary clause which purported to insulate it “if We remove the cause of the claim with reasonable diligence after receiving notice of it…including any obligation for loss You had while We were removing the cause of the claim” did not protect the insurer until, in fact, the title defect was actually removed.В An offer to insure title was not the same thing as the removal of the defect itself.В Plaintiffs were damaged by the property’s lack of marketability within the policy’s meaning until at least September, 2008.
July 22, 2010
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