Bulletin: MU000034

Dear Associates:

There have been recent lawsuits claiming that a title insurer or title insurance agent may be liable in tort to a third party (such as a seller) or for additional damages, because of a separate duty to: (1) examine title; (2) disclose all matters affecting title, even those that may otherwise be insured against; and, (3) not misrepresent the status of title.

Some states allow these suits and some do not. Courts sometimes focus on whether the title company advertised that it examines title for the customer. Some courts suggest that this type of advertisement may create a new duty to parties to do a correct, complete examination. While we do not believe that this position is correct, it must be considered. As a title insurance agent, you perform or secure an examination for our benefit to determine insurability and do not examine title for the benefit of proposed insureds or other parties.

Company Policy: You should not advertise that you are examining title for the customer's benefit in producing a commitment, title policy or other title insurance form.
Add a disclaimer to its commitment (or preliminary report or binder). Some courts will enforce a disclaimer for negligence.

Company Policy: We recommend that you included the following disclaimer in your title commitment (preliminary report or binder).

THIS COMMITMENT (substitute preliminary report or binder where appropriate) IS NOT AN ABSTRACT, EXAMINATION, REPORT, OR REPRESENTATION OF FACT OR TITLE AND DOES NOT CREATE AND SHALL NOT BE THE BASIS OF ANY CLAIM FOR NEGLIGENCE, NEGLIGENT MISREPRESENTATION OR OTHER TORT CLAIM OR ACTION. THE SOLE LIABILITY OF COMPANY AND ITS TITLE INSURANCE AGENT SHALL ARISE UNDER AND BE GOVERNED BY THE CONDITIONS OF THE COMMITMENT. (Examples are available through the references section at the end of this bulletin.)

If you should have any questions, please call Stewart Title Guaranty Company underwriting personnel.