Third District Denies Title Insurance Claim

Village Carver Phase I, LLC v. Fidelity Nat’l Title Ins. Co, 3D12-166 (Fla. 3d DCA 2013):

Village Carver sought recovery under an owner’s policy of title insurance for losses associated with the demolition and redesign of a portion of an affordable housing project on which was unearthed an abandoned cemetery and human remains during the course of construction. Village Carver argued the title policy afforded it coverage for the losses because Fidelity failed to except from coverage under the policy the statutory easement for ingress and egress provided to relatives and descendants of any person buried in a cemetery for the purpose of visiting the cemetery under §704.08. The Third District disagreed.

The cemetery in question was created by a deed recorded in the public records in 1908. The title insurance policy was issued in 2008. The Florida Marketable Record Title to Real Property Act (MRTA) relieved Fidelity of any legal obligation to search the chain of title back to that time. Additionally, Fidelity did not have actual knowledge of the existence of the cemetery at the time it issued the title insurance policy. The headstones and other cemetery markings had been removed by the time buildings were constructed on the property in 1948.

Village Carver asserted that coverage and liability existed under the insurance policy because Fidelity had implied notice of the existence of a cemetery and human remains in the ground or alternatively that the mere possibility of the existence of an easement in favor of relatives renders the title unmarketable. §627.7845(1) only requires a title insurer to perform a reasonable title search before issuing a title insurance commitment, endorsement, or policy. The implied notice on which Village Carver relies depends upon the existence of the 1908 deed. The delivery and recording of that deed is indisputably an act, title transaction, event, or omission that occurred before the effective date of the root title within the meaning of the MRTA.

Alternatively, no one had sought to exercise a legal right or assert any interest pursuant to §704.08. There had been no act, title transaction, event or omission giving rise to a claim under the title insurance policy. The Third District explained that title insurance policies are indemnity contracts against actual monetary loss resulting from specified causes, such as defects, liens and encumbrances existing on the date the insurance policy was issued. Title insurance policies do not insure against future occurrences.