Commercial Title Searches Have Many Caveats

In preparing a zoning report for a proposed ethanol plant, Chicago Title apparently missed the names of several nearby homeowners, who were therefore not served with legal notice of the planned construction. As the construction became more imminent, neighbors found out and quashed the transaction, causing Chicago Title a $48.4 million loss. See more details at Ethanol Producers magazine.

 

CLAYTON, Mo. (CN) – A St. Louis County jury awarded $48.4 million to an ethanol company against a title company that failed to notify property owners near a site where the ethanol company wanted to build a plant near Wichita. The award, after a 2-week trial, is the largest ever in St. Louis County Court.
Abengoa Bioenergy wanted to build a plant in Colwich, Kan. Chicago Title was supposed to notify nearby property owners in order to obtain zoning to build it, but seven property owners were left off the notification list.
After zoning was granted, the property owners found out and sued in 2008. Abengoa was forced to build a more expensive, less profitable plant in Granite City, which was finished 15 months after the first plant was supposed to be completed.
The award includes the higher cost of building the plant in Granite City, the cost of the 15-month delay and the lower revenue from the plant.

John L. Davidson, Esq.

13975 Manchester, Suite 19

Saint Louis, Missouri 63011

One Response to Commercial Title Searches Have Many Caveats

  • Mike says:

    Oh man, this is a bizarre description of facts, but as is always the case with matters involving title insurance, the media doesn’t provide the background details. Since this is characterized as a “slap on the wrist,” I’m guessing CTIC has done something bad, and is being punished. Or, is it merely paying under a policy? Why would CTIC be the party responsible for notifying adjacent owners? Last time I checked, CTIC didn’t own or build any Ethanol plants, and the zoning work should have been done by an attorney. Was CTIC hired to identify the appropriate owners? Did they miss something in the public records? Did CTIC issue a zoning endorsement? I suspect something of the latter’

    [Pat sez: I assumed that this was a special service performed by the company – identitifying nearby property ownerst who had tobe notified befoe a certain land use application could be approved.]

    The best advice I ever got as a title attorney was, “keep your mouth shut, if title insurance is in the paper, it’s never good, even when it’s good.” DIRT conversations aside, I have found those words to ring true time after time. Many years ago, when I was at CTIC, another underwriter issued some policies for a residential subdivision in which the local municipality allowed a letter of credit guaranteeing developer’s installation of public improvements to lapse. When the developer went under (for other nefarious reasons), leaving the roads and other amenities unfinished and 60%+ of the lots unsold, the municipality hit the few homeowners with massive assessments (30K+ each) to finish the public improvements. All this despite, as the local paper put it, “the title company issuing a deed telling the homeowners that the property was “free from encumbrances”.” My neighbor at the time, whose sister-in-law had purchased such a home, asked me how “my” company could have screwed over so many innocent people. I kept my mouth shut.

    I’m sure this one will make for a nice appeal. I can’t wait to hear the underlying story (which most claims people will tell you is always entertaining).

    Cheers,

    –Mike

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