If a Grand Prairie resident buys a new home, 95% of the time he is also going to be required to purchase a title insurance policy. This would be the same for a resident of Arlington, Dallas, Fort Worth, or Weatherford.
The Texas Supreme Court decided a case in 1994 that is relavent to home buyers and purchasers of title insurance policies. The case is styled, Chicago Title Insurance Company v. Jerry E. McDaniel and Christina W. McDaniel.
This case involves a claim against Chicago Title Insurance Company for violations of the Texas Deceptive Trade Practices Act (DTPA). The McDaniels purchased a title insurance policy issued by Chicago Title. The policy guaranteed the McDaniels had good and indefeasible title to the estate or interest in land described in the policy, which was the home they had purchased. This was in 1983.
In December 1988, the McDaniels received notice from the bankruptcy trustee of Couch Mortgage that their property was subject to a preexisting lien that had been properly filed and recorded. There were later federal bankruptcy court actions.
The McDaniels brought the lawsuit seeking damages under the DTPA, based on Chicago Title’s representations. Chicago Title then secured the release of the preexisting lien.
Chicago Title asserted that it had discharged its obligations under the title insurance policy, and that it cannot be liable under the DTPA because it had made no representations regarding the status of the title to the McDaniels’ property.
The Supreme Courts’ ruling was that “A title insurance policy is a contract of indemnity. In other words, the only duty imposed by a title insurance policy is the duty to indemnify the insured against losses caused by defects in title.” Thus, Chicago Title’s issuance of a policy did not constitute a representation regarding the status of the property’s title; rather it constituted an agreement to indemnify the McDaniels against losses caused by any defects.
The Court further ruled that a title insurer may be liable under the DTPA for an affirmative representation that is the producing cause of damages to the insured. But, in the present case, there is no allegation of any such affirmative representation. Nor is there any allegation that Chicago Title breached its duty under the contract, or that it may be liable to the McDaniels in any other respect apart from the DTPA.
It appears in this case that the lawsuit was limited in the matters that were sued upon. An experienced Insurance Law Attorney may have been able to assert other causes of action or been more expansive in the DTPA claims. Title companies usually do a good job in making sure title to property is properly researched. Most of the time the property is somebody’s home. At the least, the property would be a big investment for somebody. On the occassions that a problem is encountered it is important to seek legal help to insure your rights are protected.
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