What related party transactions could adversely affect a titleholder?
Many people purchase property in their own name, individually, and later decide to develop it, bring in an investor, set up an LLC, or transfer it in another manner — perhaps to a family member. Conversely, an investor might dissolve or distribute the property from an LLC or a corporation. Often, owners do not consider that their original owner’s title insurance policy does not follow them to the new entity. It protects them while they own the property, but it does not protect the new entity or the new owner. There may be some basis for the new owner, including their own entity, to go back against them on a breach of a title warranty and thereby make a claim on their policy. However, the new owner has no direct protection from the title insurer. How does title insurance mitigate the effects of these related party transactions? The owner’s policy of title insurance provided by the seller at the time of sale ensures that the title is indeed vested in the owner, and it also ensures that i
