Suing for non-disclosure

[Ruth Hall]

What are the chances of winning suing the seller for non-disclosure? 

I bought a flip, renovated and in the market to sell. I was provided a clean owner's FIDELITY NATIONAL TITLE INSURANCE COMPANY policy by the agency. I closed the house through a local title agency. I'm hearing news there might be some title issues since they missed some paperwork and have not completed yet. I don't know yet what that paperwork and details are since it was just brought to my notice today. Both the seller and the title agency was aware of the missing paper work but did not disclose it to me until today.

[Peter Walther]

It's interesting you're considering suing before you've submitted a claim and given the insurer an opportunity to investigate the matter and if there is indeed a covered defect and coverage, to cure it or pay your loss.

A title policy is a contract between the insured and the insurer with rights and obligations on both parties.  One of the insured's obligations is to notify the insurer of any allegations of a title defect which the insured believes may be covered under the policy, as soon as possible.  Failure to do so may adversely affect the coverage under the policy.  In addition, despite popular misimpressions, a title policy is not an opinion of title and is not a representation of the status of title.  It is merely an agreement of the terms and conditions under which an insurer will pay a covered loss. 

In my experience, many courts have found that when a policy issuing agent has conducted a title search and exam for the issuance of a title commitment and policy, it's done for the benefit of the insurer and not the insured, and therefore the insured has not been damage (in a recoverable way) by the agent's failure to disclose a known defect.  The agent may have liability to the insurer for its loss but not to the insured.  If one received an abstract of title or an attorney's opinion of title they might have a cause of action for negligence, in my opinion.

I suggest you submit your claim and let the process unfold and see if you do have a loss that is not recoverable under the policy before you get to concerned, though you might still want to get an attorney's opinion about your legal rights.