This month’s edition of Dirt Tales continues our examination of the Covered Risks provisions in the ALTA title policies. The facts in each series are true occurrences, except for the names of the parties involved which have been changed.
Steve Subdivider had found a large mountain tract of property that he wanted to subdivide and develop. When he was shown the property by his real estate agent, he was taken along a scenic road that ran at times with a stream with waterfalls, a beautiful pasture and wildflowers. The scenic route sealed the deal for him and he could count the sales in his mind the beautiful drive to the property was going to bring.
After closing he got right to work developing the tract. A couple of weeks after starting he received a letter from the U. S. Forest Service advising him to cease and desist utilizing the scenic road. He took the letter to his closing attorney who pulled out Steve’s survey and the tax map of his property. Sure enough, the scenic road Steve loved was a U. S. Forest Service road over which Steve did not have the right to use. The access to his property was through a winding narrow back road that was not capable of being widened and wasn’t suitable for two-way traffic to and from his development. There was not going to be any way he was going to be able to sell the lots now. In his mind, the tract was now worthless. Since he had gotten title insurance that did not make any exception for access and since he didn’t have good access Steve filed a claim with the title company.
The title company denied his claim citing he did in fact have access to his property over the easement that had been granted in his chain of title over the narrow and windy road. The question for us to consider is what kind of access a title insurance policy insures. We’ll begin by taking a look at what the title policy says about access.
The 2006 ALTA Owner’s Policy, on the face page, under “Covered Risks” the policy provides:
COVERED RISKS SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND THE CONDITIONS, BLANK TITLE INSURANCE COMPANY, a Blank corporation (the “Company”) insures as of Date of Policy and, to the extent stated in Covered Risks 11, 13, and 14, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of:
1. Title being vested other than as stated in Schedule A, and
4. No right of access to and from the Land.
The 1992 policy contains similar language. Although the basic Owner’s and Loan policies insure access under the Covered Risks provision they do not insure the quality of access. Title insurance insures legal access, not actual or practical access. This doctrine of insuring legal access as opposed to the quality of access was set out in Marriott Financial Services v. Capitol Funds, Inc.288 NC 122 (1975). In Marriott, the Supreme Court of North Carolina reversed an order dismissing an access claim because the insured had ‘pedestrian' access only to a major Road rather than vehicular access, citing that pedestrian access was legal access. The Marriott rule has been cited in other state court decisions regarding what constitutes insurable access.
As interpreted in the Marriott case, and other similar cases, title insurance will only insure access in terms of the legality of the granting easement and not the quality of the access.