I have written previously about title commitments and policies and surveys and the importance of the review process. Perhaps I haven’t discussed the importance of knowing who you are working with and what their abilities are.  Taking that back to the fist step, as the buyer of real estate, how do you assure that you can work with top notch title professionals.  The basic rule is that the person paying for title insurance chooses the agent and underwriter.  Because this is a cost item, and in Florida, a significant one, sometimes buyers and brokers want to negotiate the cost over to the seller.  This is a bad idea as it gives the seller control of the title process.  The seller selects the agent and the underwriter and the buyer is stuck with whatever is presented and is at a disadvantage when it comes to resolving issues.

I can tell countless horror stories about having to work with the other guy’s title company, on large deals and on small deals, going back many years. Needless to say, when my client controls title, the process and result goes much smoother (note, in Florida, attorneys may act as title agent, meaning we issue the policy for the underwriter).  I select the underwriter I feel is appropriate for the deal.  I have long relationships with examiners and underwriters and I know that the commitment I receive will be thorough and if there is a problem, we will jointly work to solve it.  It won’t be thrown back at me without a solution.

More often than not, when the other guy is in control, the opposite occurs. We find problems that the title company missed.  We run down the solutions when the title company should.  We argue with underwriters.  Product and documents are not timely delivered. Because it is not my transaction, I can’t go around the agent even if I have a relationship with the examiner.  Deals stall or even die.

Recently, my buyer client signed a contract prior to contacting where he agreed to pay for title but use the seller’s title company. This was a double no no.  The title commitment appeared clean.  The seller provided an unsigned, unsealed survey dated just 10 months prior.  However, the seller never received the final survey.  Naturally, the title company was unwilling to delete the survey exception based on this survey.  We tried to contact the surveyor to get a signed copy and update the survey, but the surveyor had gone out of business.  We therefore obtained a new survey.  The new survey showed us that there was no access to the property from a public road.  Therefore, the title was not marketable.

Presumably, the title company had based its commitment on seller’s prior policy, issued less than 1 year ago. I asked numerous times for a copy of the prior policy and for an explanation as to what the title company would require in order to insure access.  I got neither.  The agent would not allow me to speak to the underwriter.  After 3 weeks, I was finally able to speak with the underwriter from the prior title company who explained to me that the prior policy had made exception for the access issue specifically.  Therefore, the title company either never received the prior policy or ignored it.  Either way, they kept silent.

We eventually received documentation from the county enabling the title company to insure access and allowing us to close. But, the point is that the other guy’s title company did a horrible job.  It missed the access problem initially, refused to explain the problem until I figured it out from the prior title company and then wouldn’t tell us how to resolve it for another week.  They delayed the closing by a month and a half.  All this happened because I did not have control of title because the contract gave it to the other guy.

In another on-going case, the other guy’s title company has taken over 6 months to issue the final title policy.  After months of pleading and finally, threats, we received the policy.  It was wrong.  It did not even match the marked up commitment issued at closing.  The delay in issuing the final policy has delayed our client in re-financing its property.  Our new title search for the new loan policy has uncovered potential title problems that should have been resolved when we bought the property and were never shown on the title commitment.  But other guy’s title company never raised these potential issues.  If/when we get the final policy, we might have to file a claim if the new underwriter is not satisfied that the potential issues have been resolved.  I really wish the client had not negotiated away the control of the title in this case.

Whenever possible, do not negotiate the right to control title away. The cost of title insurance is a cost well spent to insure that your deal will close the way you want it to close.

This year, hurricanes, with record rain, storm surges and winds, have resulted in severe damage to both commercial and residential buildings, mold contamination, and significant interruption to businesses in the impacted areas. Several Caribbean islands have been wiped away, Key West is unrecognizable, and Houston may have lost more than 150,000 homes. For most of us, luckily, the damage was less severe. My wife and I have leaks in our roof and elsewhere and lost a window (but gained an indoor tree). We lost power for about four and a half days. Friends in South Miami are still without power as of the writing of this post.

The legal implications of the hurricane aftermath extend well beyond mere rebuilding. Mold contamination and water intrusion must be addressed and properly remediated. Design and construction defects may be alleged to have exacerbated the extent of the damage from the hurricane. Employers may face workers’ compensation claims from employees and also may have vacation and lost wages concerns. Insurance coverage may be at issue. Construction costs may have escalated causing losses to builders or developers. Building permits and development approvals may expire due to delays caused by the hurricane. Condominium associations may not have sufficient reserves to act on emergency repairs. Construction licensing regulations may affect the ability to commence repairs and provide penalties for failure to engage properly certified contractors.

So what to do?

  • Make sure you and your family, employees and customers will be safe in your home or building.
    • Are there electrical system damage and risks?
    • Is the water safe to drink?
    • Is there a risk to the structural integrity of improvements?
    • Other Physical Hazards (don’t panic, but snakes and scorpions like piles of debris).
    • Contamination? Such as leaking petroleum tanks, chemical spills and the like.
  • Address potential health risks, whether mold or risky property conditions.
  • Secure your property and protect it from potential or further loss of property value.
  • Deal with Insurance.
  • Deal with Government Agencies such as FEMA
  • Deal with FP&L’s reimbursement programs.
  • Check with your mortgage lender. The lender may have the right to collect insurance proceeds and disburse the funds as repair and rebuilding proceed.
  • Only then commence to restore your property. Use only licensed and insured contractors. Where required by law, obtain all necessary permits and approvals. If you are part of a condominium or property owners’ association, make sure all Board approvals are obtained.
  • Get on with your life

Our lawyers have assisted clients in resolving insurance disputes, negotiating agreements in connection with assessment and remediation services, resolving design and construction defect claims,  implementing programs for addressing employee benefits, preparing hurricane and disaster response plans, and in finding their way through myriad environmental regulations.   In one recent example,  we resolved an insurer’s denial of coverage for water damage based on a theory that the building envelope was defectively designed or constructed and that the damage was not caused by a windstorm (as provided in the policy). By engaging the proper experts, a successful argument was made that the building envelope was properly designed and constructed and that it was indeed the hurricane-force winds that caused the water intrusion.

In another example, we assisted a client in requesting an extension of the expiration date for various development approvals that could not be met due to the direct delays of the hurricane, the difficulty in obtaining materials and the need to redesign to address increases in construction costs.

In addition to helping guide our clients in making proper recovery efforts, we are also focusing our clients’ attention on preventative measures to avoid future repeat damage and liability. We have found that many building and business owners have been hesitant to expend significant sums in prevention, in part to the belief that the recent hurricane landfalls in Florida were merely a fluke.  Whether global warming or a regular climatological cycle, it appears that the Atlantic hurricane season has been on an upswing that may continue for a decade or more. Proper preparation can lessen the business impacts and speed up recovery efforts.

 

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