Title insurance is a critically important part of any real estate transaction; or at least it should be. The title company guaranties the "quality" of an owners interest in the property - that there aren't any (unknown) liens or defects. No buyer that I work for will purchase a property without it.
Title insurance is only as good as the insurer. We want to know that the insurance company, like the Rock of Gibraltar, will always be there. We want to sleep easy at night, knowing that the client is protected.
That said, it was a bit distressing to see that PLM Title Company shut its doors, without any forewarning last week. Worse still, this morning's news is that there is a criminal investigation underway - and that we do not yet know why. Old timers like me shudder with memories of the great Intercounty Title debacle five years ago. Here's to hoping that this one is nothing like that one.
Set aside the problems involved trying to make a claim against a defunct title company. What about the banks and buyers (and sellers) that had money being held in escrow by that title company? Or had deeds and mortgages waiting to be recorded with local county recorders offices? Or who had escrow closings scheduled there to consummate their transactions? Big mess
Any good news in this for my clients? I suppose the "good news" is that, (a) I have had only two buyers in the last five years purchase title insurance from PLM; (b) their insurance was underwritten by Guaranty Title & Trust Company, still a viable and presumably well capitalized company, and (c) three years ago, I instituted an office policy that we will only accept title insurance from a short list of the strongest title companies, in order to problems of the sort presented when "the Rock" crumbles.
UPDATED: Nov. 20, 2008: I erroneously identified PLM's underwriter as Guaranty National when this message as originally posted. The correct entity, Guaranty Title & Trust Company was liquidated on October 27, 2008 by Ohio state regulators. All insurance policies, commitments and certificates of insurance issued by GTT, are cancelled, effective November 26, 2008. Inquiries regarding the GTT liquidation and requests for Proofs of Claim forms should be directed to: The Office of the Ohio Insurance Liquidator, Attn: GTT, 50 W. Town Street, Third Floor, Suite 350, Columbus, OH 43215. The telephone for that office is (614) 487-9200.
PLM's other underwriter Pacific Northwest Title Insurance, remains a viable entity.