For our second episode of the new season, Title Nerds co-hosts Mike O’Donnell and Bethany Abele interviewed Steve Gottheim, General Counsel of the American Land Title Association (“ALTA”).  Steve discussed some of the primary issues of concern to ALTA and its members, including housing recession possibilities, public policy issues around increased access to affordable housing and, generating the most conversation, real estate and wire fraud.  Steve noted that ALTA is deeply involved in providing education and assistance to title insurance and real estate professionals to help avoid scams and to identify money laundering scenarios.  In addition, ALTA provides a host of educational materials about avoiding wire fraud for consumers and real estate agents.  Steve also touched on the proliferation of title monitoring services, and the need for home buyers to consider enhanced homeowners policies with title insurance fraud protection.

Bethany then interviewed Riker Danzig associate Jim Mazewski about the complex title insurance coverage matter Findlay v Chicago Title Ins. Co., 2022 IL App (1st) 210889 (2022).  Therein, the Illinois Appellate Court, First Division, adopted the reasoning of other outside jurisdictions and held that title insurance claims were exempt from Illinois’ “complete defense rule,” which requires that an insurer provide a defense on all claims raised against an insured even if only one of the claims is covered.

In this matter, landlocked homeowners were able for years to easily access the Lake Michigan beach via  a beach easement across a portion of a neighboring lot, Lot 5.  However, when Lot 5 was purchased by a new owner, the new owner objected to neighbors cutting across his property and filed a lawsuit to prevent them from doing so.  The landlocked homeowners sought a declaratory judgment, implying that an ingress-egress easement existed on Lot 5.  The new owner of Lot 5 won that suit, and then sued Chicago Title, which had received claims from both parties to the first lawsuit as they were both insured by Chicago Title.  The plaintiff’s suit against Chicago Title alleged conflict of interest, failing to provide coverage for all counts of the earlier litigation, and failing to approve of the plaintiff’s retention of a new attorney. Failing at trial on all claims, the plaintiff appealed.

In a decision in line with a growing body of caselaw, the appellate court found title insurance companies are not subject to the “complete defense rule.”  The Court also found that Chicago Title had the right to select counsel of its choosing, not the insured’s.   Tune in to the podcast for an in-depth discussion of the Appellate Court’s consideration of the plaintiff’s claims leading to the decision.