Secured Lenders and Sloppy Title Insurers: Hovannisian v First Am. Title Ins. Co.
Real Property Law Reporter (Vol.40, p. 132 - 135, Nov. 2017)
9 Pages Posted: 8 Mar 2018
Date Written: November 2017
Hovannisian v First Am. Title Ins. Co. (2017) 14 CA5th 420, reported at 40 CEB RPLR 122 (Sept. 2017), concerned the liability of a title company under a lender’s title insurance policy that had failed to mention an existing mortgage on the property securing the loan — an omission apparently not discovered until after the property had been sold to third parties (the Hovannisians, whom I sometimes refer to as the Buyers) at the lender’s trustee sale. The Buyers had been forced to pay off that lien, apparently not having acquired title insurance themselves; had previously sued Wells Fargo Bank (WFB), the foreclosing successor to the original lender, claiming fraud and breach of warranty; and had settled that litigation by taking an assignment of any claims that WFB might have against First American under that policy. (Their claims looked doubtful, at best, because WFB apparently had not known of the mortgage, and its foreclosure notices and its trustee’s deed upon sale to them disclaimed any warranties of title.) Thereafter, the Buyers brought this action against First American as WFB’s assignee.
Keywords: Hovannisian, Title Insurance
Suggested Citation: Suggested Citation