Does title insurance cover condemnation?


#1

I bought a duplex two weeks back and come to find out it is condemned. The city is ready to tear it down. I got a GC to look at it and he is saying I need to pay $60,000 to remove the floors and walls so the city can inspect the joists. We looked at it prior to purchase and there was nothing really wrong. It needs some paint and TLC, not a wrecking ball!

I did purchase title insurance and I was told that there were no code violations, and one city lien, which I saw was satisfied in the public records. Do I have recourse? I really don’t want to have to go to court for a $30,000 property.


#2

get a new GC

Go to the City and get a permit to repair the duplex. Tell them what is going on and to make sure the house is not to be torn down. With a permit, repair the issues and move on. Title insurance is not of use in this instance.

Contact the City Code office. Get time by getting a rebuild permit. $60,000 to remove the floors and walls is ridiculas.

Joists can be inpected from under the house. I assume a raised floor house.

I could be mistaken but I worry about the fact that you seem to believe the GC about needing $60,000 to remove walls and floors. That is crazy, and you dont seem to think it is crazy. If that is the case, you better learn how a house is built and how to reasonably repair a house.

I am sure you probably know better but I have known several new to the flip, rental, investing world that have no clue how to get a house rehabbed and end up getting taken advantage of by GC and other remodler boneheads. Get good advice from trusted people.


#3

Marc,
I know this may vary from state/county to state/county.

In Fulton County, GA I bought many vacant lots that had previously had houses on them that were torn down.

First they filed notices for pending demo and then demolition liens. Both of those would have shown up in a title search, subsequently, I would think the title insurance has some responsibility, if there was something filed.

I would go to the courthouse and search the title and see if there’s something filed that your title person should have found.

Maybe also contact your closing attorney, who approved the title search and who signed off on the insurance. They don’t want anything negative come up against them and will likely give you good legal advice as to your options.


#4

Marc,

Check and see if the property you purchased is actually the one the city wants to demolish.

They do make mistakes and bulldoze the wrong place from time to time.


#5

I’m getting more estimates. They are all saying that the city requires removal of walls and ceilings to inspect for termite damage. The city guy says that the foundation needs to be repaired, but this is pier-and-beam construction, so I’m not sure what he means by “foundation.” The contractor said that the first floor ceiling and all walls must be opened and all termite damage repaired. Once that is done, they require everything to be brought up to current code, which means new wiring, new plumbing, new roof, etc, etc. Sounds more expensive to me than a new house.

I’m thinking it would be best to let it be torn down and file suit. Checking with my legal team now.

I have an engineer and another GC coming to look tomorrow.

I did check, and yes, there is a demo notice on the city’s website dated weeks before closing.

I know they make mistakes. I once got a knock on the door from a crew with a dozer. I was like “What! You are NOT tearing down my house today!” Turns out they had the wrong address. My wife says I should have let them tear it down and sue the city.


#6

Title report acquired by you?

Reading between the lines a little bit here I’d guess you did NOT get physical title ins document showing all liens as this would undoubtedly show any/all recorded liens including demo notice…and in my years of experience the times when I saw a TC actually miss any lien were very few.

But I do rec a visit with your lawyer as if the S didn’t divulge all this to you he/she committed a little fraudulent concealment that just might make him/her liable for any losses you incur.

*“legal team” is a term lawyers don’t use much, as opposed to RE Agents who seem to think that makes a great ad…and whenever I see such an ad I think “Oh great another idiot hotdog I wouldn’t hire on a bet”.


#7

LOL, it really is a team. Husband and wife.

This was a remote closing, and I didn’t see the title commitment. I asked for it today and it does not show any demo. We went down to the city to see the history they said nobody inquired, so the perfect storm screw up down at the title co.

This was a simultaneous closing (or maybe seller had it for a few days) and it was his title company. I think someone owes me, but I’m not quite sure who. Maybe sue them all and see what falls out.