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The Institute of Continuing Legal Education
What Every Real Estate Practitioner Needs to Know
About Title Insurance
Douglas G. Smith
LandAmerica Financial Group
Livonia
Michael A. Luberto
Chirco Title Company
St Clair Shores
I.
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
II. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4
III.
Policies – Owners & Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-9
IV. Endorsments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-13
V. Settlement and Other Escrow Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-19
Exhibit
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-23
I.
Introduction
A. Development of the Title Insurance Industry
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“Old” process
a. Abstractor reviews documents of record
b. Attorney issues opinion regarding status of title
c. Cases established liability only for negligence, and usually limited to the
amount paid for the abstract and opinion
d. Virtually no protection against fraud
e. Abstractors began to issue guarantees, and set aside money in cash reserves
to pay claims, but did not guaranty against risks not disclosed in the public
records
2. Early stages of title insurance industry
a. Title insurance established to provide reliability in determining the status of
title and to allow for indemnification for errors in determining the status of
title.
b. Title insurance is the only type of insurance to have been “invented” in the
United States.
The Institute of Continuing Legal Education
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Homeward Bound Series
c. The first title insurance company is believed to have been established in
Pennsylvania in 1871.
d.
It provided for indemnification not only for matters of record, but also off-
record matters such as f