Source: https://www.wolfflaw.com/claims-under-a-title-insurance-policy-in-california-for-damages.html
Timestamp: 2019-04-24 00:03:01+00:00

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Ins Code § 104 & 12340.1.
expenses provided under this Policy, resulting form the covered Covered Risks set forth below . . .
2. Someone else has rights affecting Your Title . . .
6. Your Title is defective . . .
insurance policies, that is, liberally in favor of the insured, and against the insurer. . .
A title insurer is strictly liable in the case of any defects in title or differences between the policy and actual title to the property, including but not limited to any clouds on the title.
“[I]n the case of a title insurance policy, the insurer undertakes to indemnify the insured if the title turns out to be defective. That is the purpose of procuring the insurance and knowledge of defects in the title by the insured in no way lessens the liability of the insurer. The doctrine of skill or negligence has no application to a contract of title insurance."
J. H. Trisdale, Inc. v. Shasta County Title Co. (1956) 146 Cal. App. 2d 831, 837.
Overholtzer v. Northern Counties Title Ins. Co. , supra, 116 Cal. App. 2d at 128.
A cloud on title, even if it does not cause any present problem, but which could lead to a future problem with use of the property, is a covered loss under a title policy. Overholtzer v. Northern Counties Title Ins. Co. , supra, 116 Cal. App. 2d at 124.
65 Butterfield v. Chi. Title Ins. Co. (1999) 70 Cal. App. 4th 1047, 1060. (Emphasis added) Marketable title: "'. . . must be free from reasonable doubt, and such that a reasonably prudent person, with full knowledge of the facts and their legal bearings, willing and anxious to perform his contract, would, in the exercise of that prudence which business men ordinarily bring to bear upon such transactions, be willing to accept and ought to accept. It must be so far free from defects as to enable the holder, not only to retain the land, but possess it in peace, and, if he wishes to sell it, to be reasonably sure that no flaw or doubt will arise to disturb its market value. . . .'"
Native Sun Inv. Group v. Ticor Title Ins. Co. , supra,189 Cal. App. 3d at 1275.
“So far as pleading and proof are concerned, an allegation and proof of the existence of the easement and of diminution in the market value are all that is required."
J. H. Trisdale, Inc. v. Shasta County Title Co. , supra, 146 Cal. App. 2d 831, 836 (emphasis added).
The insured property owner under a Title Policy is entitled to be paid the difference between what he or she paid for the property, and the true market value with the defect or cloud on title created by the undisclosed easement etc.
Claims should be made in writing on a title policy to the Title Insurer immediately upon discovering the defect in title.
“[The] cases allow an insured to recover damages caused by a defect in title covered by the policy. (Cf. Kish v. Bay Counties Title Guaranty Co. (1967) 254 Cal.App.2d 725, 732 [62 Cal.Rptr. 494].) By measuring the value of real estate without a given defect and subtracting the value of the land with the defect, a diminution in value measure of damages, such as the one used in Overholtzer, isolates the damages caused by the defect.
It is a matter of law that damages must be computed taking into consideration the easements and other defects or use restrictions of record, as they represent a cloud on title and a covered loss under a title policy, even if they are not currently being enforced. Overholtzer v. Northern Counties Title Ins. Co. , supra, 116 Cal. App. 2d at 124; 65 Butterfield v. Chi. Title Ins. Co. , supra, 70 Cal. App. 4th at 1060.
N.B. The contents of this Article do not constitute legal advice or create an attorney-client relationship, and you may not rely on it without seeking legal advice regarding your particular situation and contract from a competent government contracts lawyer or public works contract attorney. Please also note that statutes and case law are frequently changing and these materials may become outdated. For further information on this topic and how the current law may apply to your particular project and issues, Contact Us via email, phone (415)788-1881 or visit our website at www.wolfflaw.com.

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