{"id":903443,"date":"2024-10-16T15:33:20","date_gmt":"2024-10-16T21:33:20","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=903443"},"modified":"2024-10-16T15:33:22","modified_gmt":"2024-10-16T21:33:22","slug":"actual-loss-under-title-insurance-policy","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/actual-loss-under-title-insurance-policy\/","title":{"rendered":"Actual Loss Under A Title Insurance Policy Is Calculated Based On The \u201cHighest And Best\u00a0Use\u201d Of The Insured Real Property"},"content":{"rendered":"\n<p>John L. Hosack and Jason E. Goldstein | <a href=\"https:\/\/www.buchalter.com\/publication\/actual-loss-under-a-title-insurance-policy-is-calculated-based-on-the-highest-and-best-use-of-the-insured-real-property\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Buchalter<\/a><\/p>\n\n\n\n<p>In a victory for all insureds who have title insurance policies, and possibly a victory for insureds under other real property related insurance policies, the California Court of Appeal in\u00a0<em>Tait v. Commonwealth Land Title Insurance Company<\/em>\u00a0(2024) 103\u00a0Cal.App.5<sup>th<\/sup>\u00a0271, 277 (rev. denied, 10\/2\/24), held that an insured\u2019s <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/replacement-cost-value-actual-cost-value-difference\/\">actual loss<\/a> under a title insurance policy must be calculated based upon the highest and best use of the insured real property (\u201cwe agree with the Taits that the policy entitles them to reimbursement for the diminution in value of their property based on its highest and best use\u201d).<\/p>\n\n\n\n<p>The Taits, in reliance upon the title insurance policy which they had paid for, purchased certain real property with the intent to develop it by first subdividing it into two (2) lots.&nbsp; However, as the Taits moved through the process of subdivision, the Taits discovered an undisclosed recorded maintenance agreement which materially adversely impacted the marketability and value of the insured real property and interfered with its potential development.<\/p>\n\n\n\n<p>The Taits tendered a claim to their title insurer which was accepted.&nbsp; The title insurer then engaged an appraiser who purported to determine that the diminution in value of the insured real property was $43,500.00. &nbsp;The title insurer then cut a check to the Taits in that amount.&nbsp; In stark contrast, the Taits engaged an appraiser who determined that based on the \u201chighest and best use\u201d of the insured real property, the diminution in value was actually $700,000.00.<\/p>\n\n\n\n<p>Based on these authors\u2019 experiences, a \u201cbattle of the appraisers\u201d frequently occurs in title insurance cases and \u201clowball\u201d appraisals are a common bad faith tactic used by title insurers to unreasonably withhold policy benefits from insureds. See, e.g.,&nbsp;<em>First American Title Insurance Company v. David Ordin, et al.<\/em>&nbsp;(2011) 2011 Cal.App.Unpub.Lexis 6946 (insurer\u2019s appraisal $5,000; insured\u2019s appraisal $220,000; bad faith award against title insurer affirmed).<\/p>\n\n\n\n<p>The California Court of Appeal, in reaching its opinion in&nbsp;<em>Tait<\/em>, distinguished the earlier opinion of&nbsp;<em>Overholtzer v. Northern Counties Title Ins. Co.<\/em>&nbsp;(1953) 116 Cal.App.2d 113, by holding that, \u201cThe loss of the potential to achieve a property\u2019s highest and best use presents a smaller magnitude of loss than a completed building or other improvement, like in&nbsp;<em>Overholtzer,<\/em>&nbsp;but the nature of the insured\u2019s expectations and reliance interests is similar.\u201d&nbsp;&nbsp;<em>Tait<\/em>, 103&nbsp;Cal.App.5<sup>th<\/sup>&nbsp;at 286.<\/p>\n\n\n\n<p>The California Court of Appeal also tethered its \u201chighest and best use\u201d determination to established valuation procedures utilized in eminent domain actions by holding that, \u201cIn short, if the highest and best use is sufficiently definite to make it just for a government entity to compensate a property owner for its loss, it is sufficiently definite to constitute a basis for determining the \u2018actual loss\u2019 under a title insurance policy.\u201d<\/p>\n\n\n\n<p>The term \u201cactual loss\u201d in the Taits\u2019 title insurance policy was not defined and the California Court of Appeal found it ambiguous in conformity with standard insurance law and construed the term \u201cactual loss\u201d in favor of the insured and against the insurer.<\/p>\n\n\n\n<p>Based on these authors\u2019 experiences, undefined and ambiguous terms in title insurance policies are frequently misrepresented by title insurers to be \u201cclear and explicit\u201d in order to unreasonably withhold policy benefits from their insureds.<\/p>\n\n\n\n<p>While title insurance policies have many provisions which are improperly interpreted by insurers to unreasonably withhold policy benefits, in whole or in part, the\u00a0<em>Tait<\/em>\u00a0opinion\u2019s approval of the highest and best use standard in connection with determining an insured\u2019s actual loss under a title insurance policy has now removed one such improper interpretation from the title insurer\u2019s arsenal.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>John L. Hosack and Jason E. Goldstein | Buchalter In a victory for all insureds who have title insurance policies, and possibly a victory for insureds under other real property related insurance policies, the California Court of Appeal in\u00a0Tait v. Commonwealth Land Title Insurance Company\u00a0(2024) 103\u00a0Cal.App.5th\u00a0271, 277 (rev. denied, 10\/2\/24), held that an insured\u2019s actual&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/actual-loss-under-title-insurance-policy\/\">Continue reading <span class=\"screen-reader-text\">Actual Loss Under A Title Insurance Policy Is Calculated Based On The \u201cHighest And Best\u00a0Use\u201d Of The Insured Real Property<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10721],"tags":[12093,9895,22],"class_list":["post-903443","post","type-post","status-publish","format-standard","hentry","category-insurance","tag-actual-loss","tag-advise-consult","tag-insurance","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Actual Loss Under A Title Insurance Policy Is Calculated Based On The \u201cHighest And Best\u00a0Use\u201d Of The Insured Real Property - Advise &amp; 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