With home prices at five-year lows in some places and the economy starting to level off, more and more people are entering the real estate market and beginning to purchase houses. This process usually includes obtaining a title insurance policy. A title insurance policy protects the purchaser if the title to the home, lot, or both is not in the condition stated on the face of the policy. The policy generally will contain certain exceptions and exclusions for known defects, such as easements. Thus, if the homeowner suffers a loss (e.g., restricted use of his backyard due to an easement), the homeowner may recover under the policy unless the loss is due to an exception or an exclusion. But what if the exception or exclusion is not entirely clear?
This is the exact situation Mr. Michael Crossman and his wife faced. In this case, The Crossmans contracted to purchase a home from Mr. and Mrs. Peter Yacubovich, the Crossmans chose the home because of its large backyard. “They envisioned extending the deck, adding a pool, planting a garden, building a batting cage for their children, and fencing the yard for their dogs.
The Crossmans obtained a commitment and title insurance policy from Lawyers Title. This policy excepted from coverage “easements according to the plat.”
Unfortunately for the Crossmans, upon moving in, they discovered that a petroleum pipeline ran across their backyard via a recorded easement that restricted the Crossmans’ use. The Crossmans tried to recover under the title insurance policy, but Lawyers Title received summary judgment based on the title policy exception for easements according to the plat. The Crossmans appealed, and the appellant court held that while a title insurer can list exceptions and exclusions, these exceptions and exclusions must be clear, precise, unambiguous. The title insurer bears the burden of proving that the exceptions and exclusions are clear, precise, and unambiguous. Because the petroleum pipeline easements in this case pre-dated the plat and were not shown in an “unambiguous” way on the plat, the appellant court held that Lawyers Title was not entitled to summary judgment. In order to recover, Lawyers Title will now have to show at the trial level that the easements were clear, precise, and unambiguous; but they cannot solely rely upon the exception in the title insurance policy.
An experienced Kansas or Missouri real estate attorney can help you interpret title insurance policy exceptions and exclusions.
– The State Line Lawyer
Related posts: