[WSBARP] 3 story house meets 2 story CCR restriction
Kary Krismer
Krismer at comcast.net
Fri Mar 23 15:42:13 PDT 2018
My concern would still be the ability to get coverage when your client
wants to sell. For all we know the same title insurance company
currently has a policy covering the builder's lender, so maybe they
don't consider this an additional risk at this point. If that's the case
then their willingness to accommodate you now would be entirely
expected. Even if the standard policy language would cover it now, you
don't know it would in the future.
Also, I don't think you can totally ignore the fact that you have a
known claim here but by the time the issue becomes contested the title
company might be insolvent, or perhaps more likely the issue I mentioned
before that there might be other lien claims taken against the property
since this is new construction, reducing the amount of coverage still
available.
Kary L. Krismer
John L. Scott/KMS Renton
206 723-2148
On 3/23/2018 10:12 AM, marc holmeslawgroup.com wrote:
>
> The title company has offered the following endorsement which seems to
> address the primary concern. The last sentence says the express terms
> of the endorsement controls over other inconsistent provisions of the
> policy so that seems to address the concern about prior knowledge of
> the insured.
>
> I have just asked what coverage limits and deductibles would apply to
> a claim covered by this endorsement and if and how the restrictive
> language in it would apply to a hypothetical where the house is
> destroyed in a fire and a neighbor seeks to enforce the covenant to
> prevent it being rebuilt as a 3 story house.
>
> Assuming those answers are acceptable, does this seem like adequate
> assurance of coverage? Anything else to be concerned about?
>
> Marc Holmes
>
> Holmes Law Group PLLC
>
> 2303 W. Commodore Way, # 306
>
> Seattle WA 98199
>
> HolmesLawGroup.com <http://holmeslawgroup.com/>
>
> marc at holmeslawgroup.com <mailto:marc at holmeslawgroup.com>
>
> Ofc: 206-357-4224
>
> Cell: 206-849-0853
>
> *From:* wsbarp-bounces at lists.wsbarppt.com
> <wsbarp-bounces at lists.wsbarppt.com> *On Behalf Of *Gregory L. Ursich
> *Sent:* Tuesday, March 20, 2018 5:09 PM
> *To:* WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
> *Cc:* kim walawrealty.com <kim at walawrealty.com>
> *Subject:* Re: [WSBARP] 3 story house meets 2 story CCR restriction
>
> Marc: The Title policy will not protect the new homeowner if they buy
> with knowledge of the violation. One of the main exclusions of a title
> policy is that any known condition to the buyer is excluded from
> coverage. -Greg Ursich, Inslee Best
>
> Sent from my iPhone
>
>
> On Mar 20, 2018, at 2:50 PM, marc holmeslawgroup.com
> <http://holmeslawgroup.com> <marc at holmeslawgroup.com
> <mailto:marc at holmeslawgroup.com>> wrote:
>
> Thank you all for the detailed responses both on and off list.
> The CCRs are from the 40s and did create the functional equivalent
> of an Architectural Control Committee but our working assumption
> is that it and the HOA generally have been defunct for many
> years. We’re trying to confirm this but it’s not the end of the
> story either way as the CCRs very clearly give all lot owners the
> right to enforce the CCRs in a private action.
>
> Some asked about the stories of the house in question. The third
> floor contains multiple bedrooms and bathrooms and a court order
> to remove it would be devastating to the property. I haven’t
> visited the site yet but from the listing photos it seems pretty
> clear that the 1^st floor is built on grade with very little if
> not zero below grade. The MLS listing calls it a “Multi-Level”
> home and the available options they had to choose from were 2
> story with basement, tri-level, or multi-level.
>
> Arguing it is not a 3 story house seems ill advised to say the least.
>
> As for the 22T, yes we have one and have given notice of
> disapproval. Now we’re trying to figure out if there’s a
> reasonable way forward or if it’s time to take our ball and go
> find another home. Unfortunately, it appears to be the latter.
>
> Marc Holmes
>
> Holmes Law Group PLLC
>
> 2303 W. Commodore Way, # 306
>
> Seattle WA 98199
>
> HolmesLawGroup.com <http://holmeslawgroup.com/>
>
> marc at holmeslawgroup.com <mailto:marc at holmeslawgroup.com>
>
> Ofc: 206-357-4224
>
> Cell: 206-849-0853
>
> *From:* wsbarp-bounces at lists.wsbarppt.com
> <mailto:wsbarp-bounces at lists.wsbarppt.com>
> <wsbarp-bounces at lists.wsbarppt.com
> <mailto:wsbarp-bounces at lists.wsbarppt.com>> *On Behalf Of *John
> McCrady
> *Sent:* Tuesday, March 20, 2018 1:01 PM
> *To:* WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com
> <mailto:wsbarp at lists.wsbarppt.com>>
> *Subject:* Re: [WSBARP] 3 story house meets 2 story CCR restriction
>
> Beware of Item 4 of the Exclusions:
>
> Risks:
>
> a. that are created, allowed, or agreed to by You, whether or not
> they are recorded in the Public Records;
> b. that are Known to You at the Policy Date, but not to Us, unless
> they are recorded in the Public Records at the Policy Date;
> c. that result in no loss to You; or
> d. that first occur after the Policy Date - this does not limit
> the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28.
>
> I would probably want to request affirmative coverage against that
> matter.
>
> John McCrady
>
> Counsel
>
> Puget Sound Title Company
>
> 5350 Orchard Street West
>
> University Place WA 98467
>
> 253-476-5721
>
> j.mccrady at pstitle.com <mailto:j.mccrady at pstitle.com>
>
> *From:* wsbarp-bounces at lists.wsbarppt.com
> <mailto:wsbarp-bounces at lists.wsbarppt.com>
> [mailto:wsbarp-bounces at lists.wsbarppt.com] *On Behalf Of *marc
> holmeslawgroup.com <http://holmeslawgroup.com>
> *Sent:* Tuesday, March 20, 2018 11:27 AM
> *To:* WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com
> <mailto:wsbarp at lists.wsbarppt.com>>
> *Cc:* kim holmeslawgroup.com <http://holmeslawgroup.com>
> <kim at holmeslawgroup.com <mailto:kim at holmeslawgroup.com>>
> *Subject:* [WSBARP] 3 story house meets 2 story CCR restriction
>
> We have a client set to buy a brand new 3 story house and, lo and
> behold, the builder didn’t notice or ignored a CCR restriction
> limiting homes to no more than 2 stories. Title company says the
> ALTA Homeowner’s policy covers this and points to a “covered risk”
> provision that reads:
>
> You are forced to correct or remove an existing violation of any
> covenant, condition or restriction affecting the Land, even if the
> covenant, condition or restriction is excepted in Schedule B.
> However, You are not covered for any violation that relates to:
>
> 1. Any obligation to perform maintenance or repair on the Land; or
> 2. Environmental protection of any kind, including hazardous or
> toxic conditions or substances.
>
> unless there is a notice recorded in the Public records,
> describing any part of the Land, claiming a violation exists. Our
> liability for this Covered Risk is limited to the extent of the
> violation stated in that notice.
>
> We’re not aware of any publicly recorded notice of that the 3^rd
> story is a violation. Does this seem like adequate protection for
> the buyer or a recipe for disaster?
>
> Marc Holmes
>
> Holmes Law Group PLLC
>
> 2303 W. Commodore Way, # 306
>
> Seattle WA 98199
>
> HolmesLawGroup.com <http://holmeslawgroup.com/>
>
> marc at holmeslawgroup.com <mailto:marc at holmeslawgroup.com>
>
> Ofc: 206-357-4224
>
> Cell: 206-849-0853
>
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