There is little risk in presuming that the majority of homeowners rate their property as their most important asset. Paradoxically, homeowners likely know more about their car insurance than the insurance purchased for the purpose of protecting legal title to their property. Just like no one would want to purchase a car subject to someone else’s car loan, neither do people want to purchase property subject to the former owner’s mortgage or other liens. A homeowner may avoid such problems by obtaining a title insurance policy.
Familiarity with title insurance is usually nothing more than a nuisance charge on a closing statement. Yet, the essential function of a title insurance policy is to provide coverage ensuring the homeowner has good title to the property. If a covered title defect is found, the policy pays the homeowner for actual loss under the terms of the policy, and no more.
As with any insurance policy, it is paramount to understand what is covered. Basically, title insurance is a two-step transaction: the title commitment and title policy. The commitment consists of three parts: Schedule A, Schedule B, and the Conditions.1 Schedule A lists the name(s) of insured(s), the amount of coverage, a description of the insured property, and the effective date. Schedule B-I provides preliminary requirements to a policy being issued. Schedule B-II lists exceptions to coverage. The commitment also has Conditions found on the commitment cover. Following closing, the policy is issued based upon the commitment if the requirements have been met.
A typical title insurance policy contains certain exceptions concerning title risks that cannot be discovered or evaluated relying solely on public real estate records. The survey exception removes coverage for boundary line disputes. The purpose of the survey exception is to make it clear that the policy does not protect against matters outside a review of real estate records. In other words, matters that would be discovered by a surveyor are not covered by a title insurance policy unless a survey is obtained prior to closing.2 Typical language for this exclusion, found on Schedule B of the policy, states:
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys’ fees or expenses) which arise by reason of: Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey or inspection of the premises.
Essentially, the title company puts the risk of not surveying the property on the insured. The property owner can limit this risk by either obtaining a survey or arranging for the removal of the survey exception.
Removing the survey exception – which can be accomplished by performing a survey per the policy conditions or paying an additional premium – exponentially expands the protection provided by a title insurance policy. For example, when the survey exception is removed, coverage is expanded to include3:
1. A survey’s failure to show an encroachment of a policyholder’s fence on a neighbor’s property.
2. The incorrect placement of lot line which causes a policyholder’s cellar door to open on a neighbor’s property.
3. The incorrect placement of a power line easement 50 feet from the house as opposed to the true of measurement of 5 feet from the house.
4. An incorrect statement of the amount of acreage.
5. The encroachment of an insurance holder’s barn onto the neighbor’s property.
Whether you are working with a realtor or purchasing a for sale by owner property, it is important to understand your title insurance policy and the exceptions to coverage. Review your title insurance terms and exceptions to ensure your property is protected. If you have questions about your title insurance policy and what it covers, make sure you call your attorney.
1. This form is available at the ALTA website: http://www.alta.org/forms/ (last visited June 5, 2017).
2. Joyce Palomar, Title Insurance Law, § 7.02.
3. Title and Escrow Claims Guide, 2nd Ed., § 12.3.16 (2013).
On April 15, 2011, Apple Inc., maker of the iPhone, iPod, and iPad devices, sued Samsung, maker of a variety of smartphones, in United States District Court for the North District of California. Apple’s primary claims were that a number of Samsung’s products infringed on Apple’s patents and trademarks. As a quick primer on patent and trademarks: (1) A patent is the “exclusive right to make, use, or sell an invention for a specified period (usu. 20 years), granted by the federal government to the inventor if the device or process is novel, useful, and nonobvious.” 35 U.S.C. §§ 101-103; (2) A trademark is “a word, phrase, logo, or other graphic symbol used by a manufacturer or seller to distinguish its product or products from those of others.” Black’s Law Dictionary (7th ed.). To receive federal trademark protection, a trademark must be: (1) distinctive rather than merely descriptive, (2) affixed to a product that is actually sold in the marketplace, and (3) registered with the U. S. Patent and Trademark Office.
If you, your children, or anyone using your IP address downloads copyrighted content online, you may find yourself in the dragnet of civil litigation. Copyright holders of movies such as Hurt Locker and Expendables have taken the shotgun approach to litigation, suing BitTorrent (described more fully below) users who downloaded their films. For example, in the Hurt Locker litigation, nearly 50,000 people who downloaded the movie using BitTorrent’s peer-to-peer (“P2P”) downloading software have been sued. On one side, the copyright holders are accused of being copyright trolls, a derogatory term used to describe aggressive litigation to enforce its copyrights. In their defense, the copyright holders argue that their property has been stolen and they are using legal channels that provide compensation.
To prevent being sued for copyright infringement, some background on BitTorrents is necessary. BitTorrent is a P2P file sharing protocol. With BitTorrent, every downloader is a source for other users who want that file. Torrents differ from traditional P2P networks like Napster, Kazaa, and Limewire, in that each new file downloader is receiving a different piece of the data from each user who has already downloaded the file that together comprises the whole. Thus, a downloader of Torrent is also an illegal uploader. In legal terms, this means that every BitTorrent user downloading Hurt Locker is infringing copyrighted material by simultaneously acting as a source for others to download the copyrighted material.
BitTorrent users are not anonymous. Therefore, it was possible to obtain the IP addresses of all current and possibly previous downloaders of the movie Hurt Locker. Hurt Locker served a subpoena on the downloader’s ISP requesting that they disclose the personal information for the IP addresses that downloaded the film, and a federal judge ordered the ISP to release the identities of the defendants. In general terms, this is the story of how 50,000 people, based on their IP address, have been sued for copyright infringement for downloading Hurt Locker.
The defendants, if found to have violated the Hurt Locker copyrights, could be liable for damages up to $150,000, not including attorney’s fees.
The foregoing illustrates the dangers of illegal downloading. To protect yourself, you must know who is using your IP address. To do this, password protect your IP address and monitor whom you give the password to. You should contact your internet service provider with any questions regarding this procedure. In sum, to prevent exposure to costly, time consuming, and potentially embarrassing (depending on what was downloaded) litigation, understand the dangers of using torrent technology, limit access to your IP address, and monitor your children’s use of the internet.