Legal Question in Real Estate Law in California

Title and escrow practices differ between Northern and Southern California, and your question doesn't contain a Zip code or otherwise identify you location, which may affect the validity of my answer. I have a suggestion or two that may help you avoid suing the earlier title company, which may or may not have been at fault.

First, recognize that your current buyer is the party that's looking for good title, either on his own demand, or more likely because he needs title insurance and/or must satisfy a lender. The demand for the letter from your ex-spouse doesn't originate with the second title company. Next, this may be a problem that can be resolved through four-way discussions between the two title companies in their roles as escrow servicers, the first title company's title-insurance person (assuming you got title insurance, which seems likely if you refinanced), and the buyer (or whomever is pressing the buyer to get good title). It may be that your title insurer from two years ago can step in and provide the necessary assurances. In any event, such a multi-party conference should bring the fault issues into sharper focus.

Finally, if litigation is necessary, you should consider bringing a quiet-title action rather than a negligence suit against the first escrow service provider. This may be cheaper and quicker, especially since your ex-wife would be the key defendant, and upon being served with the suit might become very much more willing to give you a quitclaim that would satisfy the buyer.

I usually agree 110% with Mr. Whipple, but I have to say he is way off base on many levels on this one. I spent many years as a vice president and associate general counsel for the parent company of Chicago Title Ins. Co., Fidelity Natl. Title Ins. Co., and a number of other title insurance subsidiaries. Whipple is wrong that this issue is not being generated out of the title company. If you have a validly executed deed from your wife to you, you have clear title. The timing does not affect the validity in any way. In fact, without knowing the state of title before the refi transaction I can't say for sure, but it may have been necessary to do it in that order due to constraints of the refi transaction. The the real problem is that you have title that has a red flag in it for the title insurance and loan underwriters. Any conveyance of title that is outsided a cleanly escrowed transaction is a red flag, epecially in the context of a divorce. You wouldn't believe all the fraud, forgeries, and other shenanigans that go on with title documents between ex and soon to be ex spouses. So it is quite common for the underwriters to require that the off-title ex spouse confirm they are not claiming any right to set aside the deed or otherwise claim a remaining interest in the property.

Now as for your immediate problem, you should not lose your buyer over this, unless you are going to be unable to close escrow on the date agreed. They have no right to back out of this deal unless you cannot provide clear insurable title at COE. You have not said whether or not your ex will provide the letter or not. Getting the letter, or a quitclaim deed even better, is your best solution. If she won't sign or can't be found in time, then you have a number of options, including demanding that the title company wiave the letter, since you have clear title. If it's the buyer's lender, however, you won't have as much leverage. Whipple's idea of suing your ex is rediculous, since you certainly can't get any kind of lawsuit done in time to close your current escrow, but there are other legal remedies if you lose your transaction.

I could spend all day on "if this, then that" explainations, but that wouldn't be much help to you and would be a big waste of my time. If you'd like to get into more details of your transactions and get more specific advice, please feel free to contact my office.