When purchasing a real estate property, you will have a decision to obtain title insurance. While it may not seem like a big deal at the time, title insurance is something that you should consider. One of the reasons that title insurance may come in handy is for adverse possession claims.
Understanding Title Insurance’s Function
Many real estate transactions come with risks. Title insurance is a way to protect yourself from financial loss and possible legal expenses should there be a defect in title to your real estate property that is covered by the policy. Title insurance allows for a secure transfer of ownership for both buyers and sellers. Title insurance is different from other insurance instruments in that it focuses on risk prevention, rather than risk assumption. It is also different because title insurance comes with no monthly payment – just a one-time premium paid at closing.
When you choose to obtain title insurance, title examiners review the history of your property and look to eliminate title issues before the purchase occurs. This coverage can give property owners peace of mind, knowing that they will be excused from legal disputes tied to the property prior to their ownership.
Identifying Adverse Possession Cases
One of the things that some types of title insurance can protect property owners from is adverse possession claims. In certain situations, other individuals who have not purchased the property can still make a claim to live there and potentially gain title and ownership of that land after a certain period of time. Usually, this happens when a squatter has lived at the location long enough without being evicted that they may legally claim rights to the property
For a court to allow the claim, the claimant must prove, by clear and convincing evidence, that for the statutory period, their use of the land was continuous, open and notorious, exclusive, and hostile to the true owner.
While there are still some disputes over wild and untended parcels of land, the most common adverse possession cases deal with disputed boundary areas between neighbors. For example, let’s say a property owner reviews a survey map of their parcel and finds that their property line actually extends 15 feet into their neighbor’s yard, which now has fruit trees growing on it. Depending on a number of factors, including how long the trees have been there and other activities conducted on the strip of land, the property owner may or may not have lost the title to that portion of their land to their neighbor.
Role of Title Insurance in Litigation
Title insurance protects the owner of the property and the mortgage lender against future claims for any unknown defects to the property at the time of the sale. The insured will be defended in a lawsuit attacking their title, and the title insurance company will either correct the title problem or pay the insured for actual losses up to the face amount of the policy. If litigation is required to cure title, lawsuits may take years to resolve depending on the nature of the action, the resistance put up by the defendants, as well as the court’s caseload and schedule.
A title company and its agents are held to a certain standard regarding the accuracy of their work. If you feel that the title insurance company or agent did not exercise reasonable care in performing their duties, you may be able to hold the title company liable for losses incurred due to their negligence, and you may have to resort to a lawsuit against them.
Florida’s Unique Legal Consideration
In Florida, there are five conditions that a trespasser must meet in order to claim title under the adverse possession law. These requirements for succeeding with an adverse possession claim are rather difficult for a claimant to meet.
Hostile: The trespasser must be acting without permission. This prevents your tenants from making a title claim, along with other landscape maintenance personnel, pool cleaners, etc.
Actual: The trespasser must have actual control over the property. For instance, if the trespasser would add a new building to the land it would show actual control.
Open & Notorious: The trespasser cannot hide their use of the property in hopes of going unnoticed. Note: Just because you don’t notice the trespasser doesn’t necessarily mean this doesn’t apply unless there was action taken by the trespasser to hide their use of the property.
Continuous: Florida law requires the trespasser to meet the other four conditions without a break for seven years. In other words, they have to exercise control over the property for those seven years. If they, for instance, removed the shed they built on your property before the seven-year mark, it could void their claim.
Exclusive: Only one individual may make a claim under adverse possession. Therefore, two people cannot combine their time spent on the property in order to meet the time condition.
Additionally, the claimant must have paid any outstanding special improvement liens or taxes on the land within a year of assuming possession.
Securing Your Property Rights
Buying or selling a real estate property can be a complicated, confusing, and cumbersome process. Real estate is a major investment and there can be dangerous risks associated with these transactions without the right protection.
In many cases, the parties in a real estate transaction are indifferent about the selection of the title insurance firm. However, choosing the right title insurance ensures that neither party will experience a surprise regarding the title after closing. Before you enter into a real estate transaction, make sure you speak with an experienced attorney to ensure that your real estate assets are fully protected and that your property and title are properly secured.
I’m Rob Robinson. I’m a 5th generation Floridian and I’ve been practicing law in this great state for over 30 years. I have a deep understanding of the title insurance laws in Florida and I can help defend clients engaged in title disputes as well as offer strategies to help avert potential legal conflicts. Even minor title defects can cause major headaches for buyers, sellers, and owners of commercial properties. Allow me to bring my many years of commercial real estate experience to your next real estate transaction.
Please contact my office so we can discuss your questions and legal challenges.