Title Insurance In Florida - Revision history

Joetschida: /* IV. DOES TITLE INSURANCE GUARANTEE OR WARRANT TITLE= */

2018-07-12T14:05:14Z

‎IV. DOES TITLE INSURANCE GUARANTEE OR WARRANT TITLE=

Joetschida: /* III. WHAT IS TITLE INSURANCE */

2018-07-12T14:04:15Z

‎III. WHAT IS TITLE INSURANCE

Joetschida: /* II. BASIC REAL PROPERTY – A REVIEW */

2018-07-12T14:03:14Z

‎II. BASIC REAL PROPERTY – A REVIEW

Joetschida: /* VIII. PROMULGATED FORMS AND RATES */

2018-07-12T14:02:28Z

‎VIII. PROMULGATED FORMS AND RATES

Joetschida: /* VII. AMOUNT OF COVERAGE */

2018-07-12T14:01:51Z

‎VII. AMOUNT OF COVERAGE

Joetschida: /* V. MEASURE OF LOSS UNDER A TITLE INSURNACE POLICY */

2018-07-12T14:00:13Z

‎V. MEASURE OF LOSS UNDER A TITLE INSURNACE POLICY

Joetschida: /* IV. DOES TITLE INSURANCE GUARANTEE OR WARRANT TITLE= */

2018-07-12T13:58:08Z

‎IV. DOES TITLE INSURANCE GUARANTEE OR WARRANT TITLE=

Joetschida: /* II. BASIC REAL PROPERTY – A REVIEW */

2018-07-12T13:56:33Z

‎II. BASIC REAL PROPERTY – A REVIEW

Joetschida: /* III. WHAT IS TITLE INSURANCE */

2018-07-12T13:55:50Z

‎III. WHAT IS TITLE INSURANCE

Joetschida: /* I. INTRODUCTION */

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‎I. INTRODUCTION

@@ Line 62: / Line 62: @@
 gap will remain between the effective date of that update and the date that the insured documents [deed and / or mortgage] are recorded.  That shorter title gap is required by F.S. 627.7841 to be Insured when a title agent closes and disburses even though that shorter title gap cannot be searched as of the date of the closing.  Insuring the Gap or the shorter gap could be considered casualty title insurance but title insurers are mandated by Florida law to insure the Gap.
-==IV.	DOES TITLE INSURANCE GUARANTEE OR WARRANT TITLE===
+==IV.	DOES TITLE INSURANCE GUARANTEE OR WARRANT TITLE==
-A.  Contract of Indemnity
+===A.  Contract of Indemnity===
 	Does a title insurance policy guarantee or warrant title to real property?   The answer is no.  In the Conditions of the both the Owner’s and Loan Policies at Section 8, the policies provide as follows:
@@ Line 90: / Line 90: @@
 Since the title policy is a Contract of Indemnity, the Insured will be indemnified i.e. compensated, for a loss due to a matter covered by the policy.  While the insurer is obligated to indemnify (compensate) the insured for a loss incurred due to a covered title defect, the insurer is not obligated to cure the title defect.
-B.  Breach of Title Policy
+===B.  Breach of Title Policy===
 	Is a title policy breached when a covered title defect is discovered?  While many of the title insurance cases use the phrase “breach of contract” when referring to a title defect that was not disclosed by the policy, the answer to the question is no because a title policy does not guarantee that the title has no title defects.  Instead, the title policy is an agreement to indemnify the insured when a covered title defect is discovered.  Therefore, a title policy cannot be breached by the mere discovery of a title defect.  Lawyers Title Insurance Co. v. Synergism One Corp., 572 So.2d 517 (4th DCA 1990).

@@ Line 23: / Line 23: @@
 ==III.	WHAT IS TITLE INSURANCE==
- A.  Statutory Definition of Title Insurance
+===A.  Statutory Definition of Title Insurance===
-	Florida Statute, Section 624.608 defines title insurance as:
+Florida Statute, Section 624.608 defines title insurance as:
 	“(1) Insurance of owners of real property or others having an interest in real property or 	contractual interest derived therefrom, or liens or encumbrances on real property, against loss by 	encumbrance, or defective titles, or invalidity, or adverse claim to title;”
@@ Line 35: / Line 35: @@
 	“shall be construed to confine the scope of coverage of title insurance to real property 	and contractual interests derived therefrom.”
-	Based on F.S. 624.608 and Rule 69O-186.007, title insurance insures an owner’s title to real property or a lender’s mortgage lien on real property against loss caused by an encumbrance, defective title, adverse claims to title, or the invalidity of the mortgage lien.  While F.S. 624.608 and Rule 69O-186.007 set forth the general parameters of title insurance in Florida, the terms of the title insurance policy expressly provide what is insured by the policy and what is excluded and excepted from coverage.
+Based on F.S. 624.608 and Rule 69O-186.007, title insurance insures an owner’s title to real property or a lender’s mortgage lien on real property against loss caused by an encumbrance, defective title, adverse claims to title, or the invalidity of the mortgage lien.  While F.S. 624.608 and Rule 69O-186.007 set forth the general parameters of title insurance in Florida, the terms of the title insurance policy expressly provide what is insured by the policy and what is excluded and excepted from coverage.
-B.  Casualty Title Insurance
+===B.  Casualty Title Insurance===
 .  Casualty Title Insurance Prohibited
-	F.S. 627.784 expressly prohibits title insurance from being casualty insurance.  That Section states as follows:
+F.S. 627.784 expressly prohibits title insurance from being casualty insurance.  That Section states as follows:
 	“A title insurance policy or guarantee of title may not be issued without regard to the

@@ Line 7: / Line 7: @@
 ==II.	BASIC REAL PROPERTY – A REVIEW==
-A.  Conveyance by Deed
+===A.  Conveyance by Deed===
 	When transferring title, the seller could convey with a warranty deed, a special warranty deed, a quitclaim deed, or another form of deed but most contracts require the conveyance be by a warranty deed.  Many people, including attorneys, are confused as to who is the grantor, and who is the grantee in a deed.  The best explanation that I have heard to that conundrum was from my Real Estate School Instructor before I went to law school.  He said that the grantor is the “give-or”, and the grantee is the “give-ee”.  The “or” is always the “give-or” and the “ee” is always the “give-ee”.  Therefore, the grantor conveys title to the grantee, and the grantee receives title from the grantor.  So, in a deed, the grantor is the seller and the grantee is the buyer.
-B.  Mortgage as Security for Loan
+===B.  Mortgage as Security for Loan===
 	If the transaction involves financing, the lender will require a mortgage on the property as security for the loan.  The lender lends money to the Buyer to purchase the property, and the Buyer signs a promissory note agreeing to pay back the loan.  The Buyer also gives the lender a mortgage on the property as security for the promissory note i.e. the loan.  A mortgage is a lien on the real property and is not itself the loan from the lender.  Who is the mortgagor and who is the mortgagee in the mortgage?  Remember, the “or” is always the “give-or”, and the “ee” is always the “give-ee”.  Therefore, under the terms of the mortgage, the mortgagor is the “give-or” – the Buyer, who gives the mortgage to the lender as security for the loan; and the lender is the
 the “give-ee” – the  “Mortgagee” , who receives the mortgage on the property from the mortgagor as security for the loan.
-C.  Mortgage is a Lien
+===C.  Mortgage is a Lien===
 	Under F.S. 697.01, a mortgage does not convey conditional title to the lender as security for the lender’s loan but instead grants a lien against the real property as security for the loan.

@@ Line 217: / Line 217: @@
 ==VIII.	PROMULGATED FORMS AND RATES==
-	===A.  Promulgated Forms===
+===A.  Promulgated Forms===
-	Under F.S. 627.777, all forms of title insurance such as commitments, policies and endorsements must be approved by the Florida Office of Insurance Regulation (“OIR”) before they may be issued.  F.S. 627.777(1) provides as follows:
+Under F.S. 627.777, all forms of title insurance such as commitments, policies and endorsements must be approved by the Florida Office of Insurance Regulation (“OIR”) before they may be issued.  F.S. 627.777(1) provides as follows:
 	“(1) A title insurer may not issue or agree to issue any form of title insurance 	commitment, title insurance policy, other contract of title insurance, or related form 	until it is filed 	with and approved by the office. The office may not disapprove a title 	guarantee or policy form on the ground that it has on it a blank form for an attorney's 	opinion on the title.”
-	===B.  Promulgated Rates===
+===B.  Promulgated Rates===
 	Under F.S. 627.780(1), title insurance premium is promulgated by OIR so only the premium rates adopted by OIR may be charged.  F.S. 627.780(1) provides as follows:
 	“(1) A person may not knowingly quote, charge, accept, collect, or receive a premium for 	title insurance other than the premium adopted by the commission, except as provided in 	s. 626.9541(1)(h)3.b.”

@@ Line 191: / Line 191: @@
 ==VII.	AMOUNT OF COVERAGE==
-	===A.  Policy Must State Amount of Coverage===
+===A.  Policy Must State Amount of Coverage===
 	Florida Statute 627.778(1)(a) requires that the title policy state a specific amount of coverage for insurer solvency purposes.  F.S. 627.778(1)(a) provides as follows:
@@ Line 197: / Line 197: @@
 	“(1)(a) A title insurer may not issue any contract of title insurance, either as a primary 	insurer or as a coinsurer or reinsurer, upon an estate, lien, or interest in property located 	in this state unless:
 . The contract shows on its face the dollar amount of the risk assumed; and
-. The dollar amount of the risk assumed does not exceed its surplus as to 				policyholders, 	unless the excess is simultaneously reinsured in one or more 			authorized insurers or one or more reinsurers that meet the requirements of s. 			624.610.”
+. The dollar amount of the risk assumed does not exceed its surplus as to policyholders, unless the excess is simultaneously reinsured in one or more 			authorized insurers or one or more reinsurers that meet the requirements of s. 624.610.”
-	====B.  Owner’s Policy Coverage====
+===B.  Owner’s Policy Coverage===
-	Regarding the amount of an owner’s policy, Florida Administrative Code Rule 69O-186.003(1)(a)2 provides that:
+Regarding the amount of an owner’s policy, Florida Administrative Code Rule 69O-186.003(1)(a)2 provides that:
 	“In all cases the owner’s policy shall be issued for the full insurable value of the 	premises.”
 The title insurance industry interprets “full insurable value” to be the full fair market value of the property.  The public policy behind this requirement is to protect the owner’s full equity in the property.
-	===C.  Lender’s Policy Coverage===
+===C.  Lender’s Policy Coverage===
-	Regarding the amount of a loan policy, Florida Administrative Code Rule 69O-186.003(1)(b)2 provides that:
+Regarding the amount of a loan policy, Florida Administrative Code Rule 69O-186.003(1)(b)2 provides that:
 	“2. A mortgage title insurance policy shall not be issued for an amount less than the full 	principal debt. A policy may, however, be issued for an amount up to 25 percent in 	excess of the principal debt to cover interest and foreclosure costs.”
-The public policy behind this requirement is to protect the lender’s loan amount and to allow the
+The public policy behind this requirement is to protect the lender’s loan amount and to allow the lender to obtain 25% more in coverage to cover foreclosure costs and interest.
 ==VIII.	PROMULGATED FORMS AND RATES==

@@ Line 139: / Line 139: @@
 ==V.	MEASURE OF LOSS UNDER A TITLE INSURNACE POLICY==
-	===A.  Determination and Extent of Liability===
+===A.  Determination and Extent of Liability===
-	Condition 8 of the policy entitled “Determination And Extent of Liability” provides as
+	Condition 8 of the policy entitled “Determination And Extent of Liability” provides as follows:
 . DETERMINATION AND EXTENT OF LIABILITY
@@ Line 158: / Line 153: @@
 Under Condition 8, the maximum liability of the insurer under the policy for a covered title defect is the lesser of the policy amount or difference between the value of the property as insured i.e. without the title defect, and the value of the property with the title defect.  This second measure of damages is usually referred to as the “diminution in value”.
-	====B.  Measure of Loss – Owner’s Policy====
+===B.  Measure of Loss – Owner’s Policy===
 	While Condition 8 of the policy sets forth the maximum loss under the policy to the lesser of the policy amount or the diminution in value of the property due to the title defect, what constitutes loss under an Owner’s Policy is different than what constitutes loss under a Loan Policy.  In CMEI, Inc. v. American Title Insurance Company, 447 So.2d 427, the 5th DCA stated that:
@@ Line 166: / Line 161: @@
 Therefore, an owner suffers an immediate loss if a covered title defect reduces the market value of the insured property.  For example, if a $10,000 judgment against a former owner of the property was missed in the title search, the insured owner would have an immediate loss under the title policy as long as the policy does not have an exception for the judgment and the judgment was a valid lien against the property.
-	===C.  Measure of Loss – Loan Policy===
+===C.  Measure of Loss – Loan Policy===
 Regarding the measure of loss under a Loan Policy, the above quote in CMEI, Inc. v. American Title, 447 So.2d 427, continued:
@@ Line 172: / Line 167: @@
 	“A mortgagee’s loss is measured by the extent to which the insured debt is not repaid 	because the value of [the] security property is diminished or impaired by outstanding lien 	encumbrances or title defects covered by the title insurance.  Therefore, superior liens or 	title defects … may … reduce the market value of the … property … yet result in no loss 	or damage to the insured mortgagee because the effect of the title problems does not 	reduce the value of the security property below the amount of an indebtedness secured or 	because the indebtedness is otherwise secured or paid.”
-Therefore, if the market value of the insured property with the covered title defect is greater than the debt secured by the mortgage, the lender will not have suffered a loss under its policy
+Therefore, if the market value of the insured property with the covered title defect is greater than the debt secured by the mortgage, the lender will not have suffered a loss under its policy because the market value of the property, even with the title defect, is sufficient to make the lender whole if the lender has to foreclose and take title to the property.  In CMEI, Inc. v. American Title, the Loan Policy was in the amount of $1,475,000.  After the lender foreclosed and obtained title to the subject property, two recorded easements were discovered that were not listed as exceptions in the Loan Policy.  However, the market value of the property when the lender foreclosed and obtained title, even with the two easements, was in excess of $1,475,000.  Therefore, the lender did not suffer a loss under the Loan Policy because the market value of the property with the defects was sufficient to fully pay the debt owed the lender.
-	===D.  Exclusions from Coverage===
+===D.  Exclusions from Coverage===
 	The title polices contain Exclusions from coverage and the introduction to those Exclusions from coverage states as follows:
-	“The following matters are expressly excluded from the coverage of this policy, and the 	Company will not pay loss or damage, costs, attorneys’ fees, or expenses that arise by 	reason of:”
+	“The following matters are expressly excluded from the coverage of this policy, and the 	Company will not pay loss or damage, costs, attorneys’ fees, or expenses that arise by reason of:”
 And, Exclusion 3(c) states as follows:
@@ Line 187: / Line 181: @@
 	“(c) resulting in no loss or damage to the Insured Claimant;”
-There can be a claim for a covered title defect, but if the insured has not suffered a loss, the title defect will be excluded from coverage under Exclusion 3(c).  In the CMEI, Inc. v. American Title case, even though there were two missed easements that encumbered the property, the lender did
+There can be a claim for a covered title defect, but if the insured has not suffered a loss, the title defect will be excluded from coverage under Exclusion 3(c).  In the CMEI, Inc. v. American Title case, even though there were two missed easements that encumbered the property, the lender did not suffer a loss under the policy because the value of the property with the two easements on the property was in excess of the amount owed to the insured lender under the loan secured by the property.  Therefore, under Exclusion 3(c), those two missed easements were excluded from coverage under the Loan Policy but would have been covered under an owner’s policy.
 ==VI.	DATE OF TITLE INSURNACE POLICY==

@@ Line 64: / Line 64: @@
 ==IV.	DOES TITLE INSURANCE GUARANTEE OR WARRANT TITLE===
-	===A.  Contract of Indemnity===
+A.  Contract of Indemnity
 	Does a title insurance policy guarantee or warrant title to real property?   The answer is no.  In the Conditions of the both the Owner’s and Loan Policies at Section 8, the policies provide as follows:
@@ Line 79: / Line 79: @@
 In CMEI, Inc. v. American Title Insurance Company, 447 So.2d 427 (Fla. 5 DCA 1984), Judge Cowart stated that title policies are:
 	“[C]ontracts of indemnity, under which the insurer agrees to indemnify the insured up to
@@ Line 92: / Line 90: @@
 Since the title policy is a Contract of Indemnity, the Insured will be indemnified i.e. compensated, for a loss due to a matter covered by the policy.  While the insurer is obligated to indemnify (compensate) the insured for a loss incurred due to a covered title defect, the insurer is not obligated to cure the title defect.
-	===B.  Breach of Title Policy===
+B.  Breach of Title Policy
 	Is a title policy breached when a covered title defect is discovered?  While many of the title insurance cases use the phrase “breach of contract” when referring to a title defect that was not disclosed by the policy, the answer to the question is no because a title policy does not guarantee that the title has no title defects.  Instead, the title policy is an agreement to indemnify the insured when a covered title defect is discovered.  Therefore, a title policy cannot be breached by the mere discovery of a title defect.  Lawyers Title Insurance Co. v. Synergism One Corp., 572 So.2d 517 (4th DCA 1990).
@@ Line 101: / Line 99: @@
 	When a title claim is submitted to the title insurer, the title insurer has the option under Condition 7(b)(ii) to pay or settle the claim with the insured, or under 7(b)(i) to pay or settle the title claim with the third party alleging some interest in the property.  Condition 7 provides as follows:
 . OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF LIABILITY
 In case of a claim under this policy, the Company shall have the following additional options:
 (a)	To Pay or Tender Payment of the Amount of Insurance.
 To pay or tender payment of the Amount of Insurance under this policy together with any costs, attorneys’ fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment or tender of payment and that the Company is obligated to pay.
 Upon the exercise by the Company of this option, all liability and obligations of the Company to the Insured under this policy, other than to make the payment required in this subsection, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation.
 (b)	To Pay or Otherwise Settle With Parties Other Than the Insured or With the Insured Claimant.
 (i)	To pay or otherwise settle with other parties for or in the name of an Insured Claimant any claim insured against under this policy.  In addition, the Company will pay any costs, attorneys’ fees, and expenses incurred by the Insured Claimant that were authorized by the Company up to the time of payment and that the Company is obligated to pay; or
@@ Line 123: / Line 120: @@
 	Title, all as insured, in a reasonably diligent manner by any method, including litigation and the 	completion of any appeals, it shall have fully performed its obligations with respect to that 	matter and shall not be liable for any loss or damage caused to the Insured.”
-Under Condition 9(a) of the policy, if the title Insurer cures the title defect in a reasonably diligently manner after a title claim is submitted for a covered title defect, the title insurer’s
+Under Condition 9(a) of the policy, if the title Insurer cures the title defect in a reasonably diligently manner after a title claim is submitted for a covered title defect, the title insurer’s obligations under the policy are fulfilled.  Therefore, the policy is not breached by the mere discovery of a title defect and the insurer is not liable for any loss or damage to the Insured beyond curing the title defect.  See Lawyers Title Insurance Co. v. Synergism One Corp., 572 So.2d 517 (4th DCA 1990);  and Cocoa Properties, Inc. v. Commonwealth Land Title Ins. Co., Id., citing Conditions 7(a) and 7(b) of the policy at issue in the case, which are now Conditions 9(a) and 9(b) in the current version of the policy.
 	Under Condition 9(b), if the title insurer decides to cure the title defect by litigation, the title insurer will have no liability to the insured for loss or damage caused by a covered title defect as long as the court, including all appeals, rules in favor of the insured.  See Lawyers Title Insurance Co. v. Synergism One Corp., 572 So.2d 517 (4th DCA 1990), and Cocoa Properties, Inc. v. Commonwealth Land Title Ins. Co., 590 So.2d 989 (Fla. 2 DCA 1991).
@@ Line 142: / Line 135: @@
 	speaks, and not before, and not if the court’s judgment is favorable.’”
 	When a title claim is submitted to the title insurer, the title insurer can either compensate the insured for the title defect or cure the title defect.  Typically, the insurer will select the option that will cost the insurer the least amount of money.  If it is less expense to cure the title defect than to indemnify the insured for the title defect, the insurer will cure the title.  If it is less expense to indemnify the insured than to cure the title defect, the insurer will indemnify the insured.  The insurer has the option under the policy to cure the defect or compensate the insured.
 ==V.	MEASURE OF LOSS UNDER A TITLE INSURNACE POLICY==

@@ Line 3: / Line 3: @@
 ==I.	INTRODUCTION==
-	In a typical real estate sale transaction, the seller conveys the real property to the buyer with a deed and the buyer gives a mortgage to the lender if financing is involved.  The buyer would be insured with an Owner’s Policy of title insurance and the lender would be insured with a Loan Policy of title insurance.  The purpose of this course is to explain what title insurance is, what a title insurance policy covers, and the various Florida Statutes and Insurance Rules that govern title insurance.
+	In a typical real estate sale transaction, the seller conveys the real property to the buyer with a deed and the buyer gives a mortgage to the lender if financing is involved.  The buyer would be insured with an Owner’s Policy of title insurance and the lender would be insured with a Loan Policy of title insurance.  The purpose of this Section is to explain what title insurance is, what a title insurance policy covers, and the various Florida Statutes and Insurance Rules that govern title insurance.
 ==II.	BASIC REAL PROPERTY – A REVIEW==