Burke v. Ramblewood Manor Homes Ass'n, 2008 WL 2220587 (Mich.App.) (unpublished). A title insurance policy for a condo unit did not assure title to a carport that had originally been assigned to the unit, but which was reassigned to another unit before the insured bought.
Harry Burke bought a unit in Ramblewood Manor Homes Condominium in suburban Detroit. In the master deed, a carport was depicted as being assigned to Burke's unit. However, a document was later recorded which reassigned the carport to another unit. The policy issued to Burke by Transnation Title simply described his unit and made reference to the documents which created the condominium.
When Burke figured out that he could not use the carport, he sued the condo association, the unit owner who got the carport, and Transnation. The trial court ruled that Burke did not own the carport, and that the reference in his deed to the master deed did not undo the later reassignment of the carport. The court also ruled that Transnation did not implicitly insure Burke as having title to the carport, and his policy excepted the rights of co-owners. Burke appealed, and the court affirmed.
The court's discussion was brief in the per curiam, unpublished decision:
The title insurance policy issued to plaintiffs by Transnation regarding Unit 48 states, at Schedule B, that the policy "does not insure against loss or damage and the Company will not pay costs, attorneys' fees or expenses which arise by reason of": 6. Rights of co-owners of RAMBLEWOOD MANOR HOMES in common elements as set forth in Master Deed
as amended
and all terms and conditions, regulations, restrictions, easements and other matters set forth in the above described Master Deed and statutes. 7. Covenants, conditions, restrictions, easements, and right-of-ways, if any affecting the common elements. This matter arose out of plaintiffs' (as co-owners) claim of ownership of a common element contrary to any other co-owner's right to that same common element. As the policy at issue specifically states that it will not insure against loss or damage arising by reason of a co-owner's rights in common elements, Transnation owes no coverage to plaintiffs on their complaint. Because there are so many claims in which an insured asserts that the insurer should defend the insured's interpretation of its rights and title interests created in a condominium regime, it is too bad that this decision will not be published. Although the exceptions in the Burke policy were found adequate to except this dispute, underwriting counsel should consider the adoption of a more comprehensive exception which would clearly state that the insurer will not pay for disputes about the interpretation of the documents creating the condo regime. This is a different issue from that of the rights, easements and restrictions created by the instrument. The editor suggests the following for consideration as a model exception:
The Title insured by this policy does not include any rights or interests other than those recited in Schedule A, and does not assure the Insured that it has Title to any other rights or interests which might have been granted in the documents which created the condominium regime, or any amendments thereto. This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of any dispute concerning the interpretation of, or the rights and responsibilities granted or created by, the documents which created the condominium regime, or any amendments thereto.
