Quick Answer
When a previous title company made an error, the next steps depend on the nature of the mistake, what documents were recorded, whether a prior title policy was issued, and whether the error caused a current title problem. Corrective documents, a claim under the prior policy, underwriting review, or legal action may be needed.
Possible Errors From a Previous Title Company
- Failing to discover an existing lien or judgment during the title search
- Recording documents with incorrect legal descriptions. Learn about incorrect recording.
- Overlooking a missing signature or defective execution
- Failing to obtain a necessary release of a prior mortgage
- Issuing a title policy that missed a title defect
- Incorrectly indexing recorded documents
Real-World Example
In a Rhode Island case, warranty deeds, mortgages, and title policies were issued with incorrect legal descriptions that did not match the properties actually being conveyed. The errors were not discovered until years later when foreclosure proceedings began. The case illustrates how a title company error can remain hidden for years and require corrective litigation. 1st Option Title, Scott Horne, and Horne & Associates did not handle this matter. It is referenced here for educational purposes.
What Should You Do?
If you discover that a previous title company made an error affecting your current transaction, the first step is to notify the current title company. They can investigate, determine what curative work is needed, and coordinate with the parties involved. If a prior title policy exists, the current owner may have coverage under that policy for the error. Learn what title insurance does when someone challenges ownership.
Could There Be a Title Insurance Claim?
If the previous title company's error resulted in a loss, there may be a claim under the title insurance policy that was issued at the time of the prior transaction. The policyholder should review their policy and contact the insurer about the claim process. Learn what an owner's policy covers.
FAQs
Is the previous title company responsible for fixing their error?
Responsibility depends on the nature of the error, whether a title policy was issued, and the terms of that policy. In some cases, the title insurer may be responsible for curing defects that its policy should have covered.
Can a previous title company error prevent a current closing?
It can if the error created a title problem that must be resolved before the new transaction can close. However, many errors can be corrected through curative documents or underwriting approval.