Selecting a title company for a transaction is influenced by a number of factors, including the level of customer service, responsiveness and sophistication (particularly when dealing with complex commercial transactions). Knowledgeable and responsive escrow officers and underwriters can facilitate closings tremendously. However, underwriting guidelines may adversely affect an underwriter’s ability to deliver an acceptable title insurance policy. 

Recently, title underwriters have changed underwriting guidelines regarding matters shown on an updated ALTA survey. Traditionally, title companies agreed to limit survey related exceptions to “as shown on the survey” based on an ALTA survey. Now, despite providing an updated ALTA survey for the insured property, a title company in a recent deal involving Indiana real estate was unwilling to limit survey related matters to “as shown on the survey” when the client requested the survey deletion endorsement to its title policy. The title company attempted to limit its coverage relative to survey issues by inserting “as approximately shown on the survey” based on the recent ruling in Lawyers Title Insurance Corporation v. Doubletree Partners, L.P., (5th Circuit, January 14, 2014). In the Doubletree Partners case, which involved Texas property and a Texas title policy, the insured obtained the survey deletion coverage and the title insurance company was liable for damages suffered as a result of a flowage easement affecting the property that was not accurately reflected on the survey. As a result of the Doubletree Partners case, the title company changed its national underwriting guidelines which are now out of step with other insurers.

Oil, gas and mineral leases offer another example of a title company changing its underwriting guidelines in a manner inconsistent with longstanding practice and the title insurance market as a whole. Typically, oil and gas leases affecting real property where the primary term has expired, are removed as exceptions to title by the title company upon producing an affidavit of non-production. However, many title underwriters refuse to remove expired oil and gas leases based on an affidavit of non-production and, in many cases, will not remove expired oil and gas leases absent a release of the lease, contrary to generally accepted practice within the industry.

The insured is not without options. Before selecting a title company, careful research into different title companies’ practices is recommended.