Title Insurance and Real Estate Attorneys

Every parcel of privately-owned Idaho real estate has a long history, with a chain of title stretching back to original governmental grants or other original source of private ownership rights. The different rights pertaining to real estate are often compared to a bundle of sticks. These include, for example, mineral rights, utility easements, air rights, leasehold rights, rights of way, and grazing rights. Together with many other “sticks,” these compose the rights that an owner of real estate may have and may sell, and these can each often be sold separately from the rest of the bundle. When that happens, the ownership of the property title becomes more complex. Real property is also subject to other factors, such as liens, subdivision laws, zoning requirements, taxes, planning commissions, property line questions, and homeowner associations, each of which can affect the legal title.

At Racine Olson, our experienced team of attorneys has deep experience reviewing, creating, and understanding such issues with respect to real property on behalf of owners, buyers, sellers, lenders, and other interested parties. As part of this work, we often review title insurance reports and policies to confirm legal status of real estate titles.

Title insurance is very different from most other types of insurance that people are usually familiar with. A title insurance policy is a cross between a research report and insurance, and it is as much to provide information as to provide insurance proceeds in the event of loss. Prior to issuing a title insurance policy, the title company will review the status of title on a property, as listed in the applicable property records, and the title policy will generally specifically exclude any problems that are found. This is somewhat as if your car insurance required that you first have a mechanic carefully inspect the car and list all problems he finds with it, and then the car insurance policy were written to not cover any damage or accidents based on those problems. That approach might not make sense for car insurance, of course, but it is standard for title insurance policies due to their different nature.

Physical problems with the condition of real estate can often be obvious to a trained inspector or even a simple walkthrough of a property - a roof may be leaking, paint peeling, or pipes clogged. Title issues, however, are often not known unless research is done as to the status of title for a parcel of property. In Idaho and many other states, an initial report from a title company (often called a “title commitment” or “property report”) can be a fast way to discover many of these types of issues. Buyers and lenders often then obtain a title insurance policy to protect their rights in the property, though a title commitment can often be obtained for research purposes without actually then getting a policy.

Since the title insurance policy will list and exclude any problems found by the title company, persons getting title insurance (usually, buyers and lenders) must review the title commitment in advance of purchasing or lending on property to ensure that they are comfortable with anything the title company has uncovered. These problems can be legion, as they can be based on anything that has been recorded or unrecorded in the real property records for the property at issue, but they are often related to the “bundle of sticks” concept. Typical issues found include pre-existing liens, easements and other rights that have been granted over time, disputes, and questions as to ownership. For example, are any liens outstanding against the property? Unpaid taxes? Easements running across the property? Buried utility lines? Homeowners association covenants and requirements? Lawsuits? The title policy will list any such problems that are in the public records, and state that it does not cover them.

These problems are usually itemized in Schedule B-2 of the title commitment and are called the “exceptions” to the title policy. The best approach to understanding the actual state of title is to review and analyze all exceptions, and obtain copies of the underlying recorded documents from the title company. The documentation will provide the details as to what the exception really entails. Depending on the issues involved, these problems may be able to be resolved, and different approaches can help ensure that an insured party is covered as necessary.

We advise and assist clients with all kinds of title concerns. Prior issues that we have reviewed and addressed include:

• Old liens that were never removed and which could potentially be foreclosed on unless a new buyer pays them.
• Blanket utility easements on property that has already been built on.
• Canal easements running under a hardware store.
• Utility pipe easements running under a proposed $40 million building.
• Questions as to what actually happened with the chain of ownership, and whether later-recorded deeds had validity.
• Property line disputes and uncertainties regarding legal descriptions and overlapping parcels.
• Homeowner association covenants, conditions and restrictions, and how they affect the property.

Title insurance is not a silver bullet that solves all title questions, but it is a critical tool that should be strongly considered by every person who has or intends to obtain an interest in real property. Even if an insurance policy is not ultimately purchased, a title commitment or property report can clarify many questions about the title to property, and even more important, identify landmines that parties weren’t even aware of but that could have a huge impact on the value of the real estate. Because of the complexity of the issue, we strongly recommend that title discussion and review be accomplished by attorneys that have the experience necessary to clarify the issues and ensure that an individual’s needs are met.

Our team of Idaho lawyers can help you with any of your real estate and business needs. Whether you are seeking to buy, sell, or lend on property, or review a current structure or dispute, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation, or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.