[WSBARP] Dirters and Title Policy Wonks

[Paul Neumiller]

So, bear with me.  Client recently buys waterfront property.  Commitment and Title Policy (ALTA Owner's Policy (06/17/2006) lists an exception for "Terms and Conditions of "Boundary Line Adjustment" from 2004 and gives the recording information for a Boundary Line Correction ("Correction") and the accompanying survey.  The Correction purports to lop off 20 feet of waterfront and gives it to the property to the north of the subject property and then lops off another 18 feet of waterfront and gives it to the property to the south.  Client buys the property knowing about the Correction.  The legal description insured by the title company is the post-Correction description.

BUT BUT BUT, I discover that the parties never recorded the title transfer documents to consummate the Correction.  And, because the parties never recorded the transfer deeds to re-configure the parcels, the County never changed its maps and its legal descriptions for the client's property.  So, the client has been paying for taxes, and continues to pay, for the full sized parcel even though the client has use of only the reduced size parcel (OUCH because client is paying for an extra 38 feet of low bank water front property which is about a third of its original width).   Assume the other parties are now unwilling to sign and record the transfer deeds (why not (?), because they have full use of property for which they are not paying taxes.)

Now it seems to me (and it is industry practice) that the title company should have caught this recording oversight and have the parties sign and record the transfer title deeds to complete the Boundary Line Correction back when the client bought the property.  But it didn't.  Now the client is paying far more taxes than it should be paying AND the title policy is for a non-legal parcel.  That is, the title policy insures the post-Correction description but because the Correction was never completed, the correct parcel is the full parcel, not the reduced parcel.  BTW, the client's lenders deed of trust also uses the post-Correction legal description. 

Does the client have grounds to submit this claim to the title company to figure out a fix?  Is a title company allowed to insure a non-legal parcel?  Any other thoughts?

  

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