Legal Question in Real Estate Law in California

If you purchased a title policy, and it had an erroneous vesting statement of title, you need to make a claim with the title company. If you relied on someone else's policy, you don't have a case. I urge you to speak to a competent real estate attorney who has handled cases against a title company.

The correct answer to your actual question is "no." The title company was not negligent. As a strict matter of law, title reports are NOT representations as to the status of title. They are offers of insurance based on title being as stated in the title report, nothing more. There is no duty to get the report right beyond the consequences of issuing a policy that a claim will be made on. There can be no negligence in that situation as a matter of law. As Mr. Roach notes, however, if you were issued a title policy as part of the transaction and the deed from the sellers to you is invalid for the reasons you outline, most likely have a solid claim on your title insurance policy. That obligates the title insurance company to either take action to clear your title, or pay you your loss. It is also fairly likely that there was some ESCROW negligence involved in the problem. If so, you should not only be covered from the actual defect in title, but you probably can recover consequential losses if you have any, such as if you lost an opportunity to refinance on favorable terms.

I have 25 years of real estate law experience, including the better part of a decade as an associate general counsel to the parent company of Fidelity Natl. Title Ins. Co. and Chicago Title Ins. Co. So this type of case is right up my alley. If you need any further assistance, I have conference facilities in Palo Alto, Cupertino and San Jose, and would be happy to schedule a consultation at your convenience.

I'd say the title company may have been negligent, but not in a way that would give you a right to recover against them based on their error in the title report.