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Contact real estate attorney James N. Graham
Madison, Wisconsin
608.663.6464

 Accession Law LLC

What Is Going On With Title Insurance Premiums In Wisconsin?

Atty James N. Graham
Accession Law LLC

Question:  What is going on with title insurance premiums in Wisconsin?

Answer:  Good question.  We have received rate sheets from several local title insurance companies that show a significant increase in policy rates.  For example, the owner's title insurance premium (usually a seller closing cost) on a $252,000 house has increased from $627.00 to $934.00 as of the fall of 2012.  

At least one company implied that the rate increases  had something to do with recent action by the Wisconsin Office of the Commissioner of Insurance.  The Wisconsin OCI did issue a bulletin in April of 2012 which can be found at 0412titleins.htm .  This bulletin does not reflect a change in either the law or the enforcement of the law.  Title insurers have been required to file rate schedules with OCI for many years.  This bulletin simply reminds title insurers of record-keeping requirements for rates and, in particular, for cases where the rates are lowered below the published rates.

So what is the reason for rate increases?  Note that the rate increase is not an isolated case where one company raised its published rates.  At least 3 of the major title insurers have increased their rates in exactly the same fashion.

If there is not a regulatory reason for the increase, there must be a business reason.  One of the companies explained the rate increase as follows:

"Wisconsin rates have lagged far behind the rates elsewhere in the country and in the neighboring region, making it a very difficult place for the title underwriters to do business, and forcing them to cut back on support services and other operating expenses that would benefit consumers.  The new rates, although still below much of the country, bring us more in line with surrounding states and will permit a greater focus on customer service and better products."

This does not explain why there is a need for a nearly 50% increase in one year.  It also does not explain why the major insurers moved in synchronized fashion.

In discussing this question with other real estate attorneys, I have heard several hypotheses as to the reason for this move.  One attorney suspects that the foreclosure epidemic has resulted in higher levels of claims.  While this may be true, the explanation strikes me as unlikely for several reasons. 

First, the title insurance premium is really only partially an insurance premium.  Most of what is being purchased is not "insurance" in the standard risk-sharing sense but rather a fee for the service of searching the title and analyzing the risks.  Second, this would be easy to establish if it were true and would undoubtedly be offered to explain rate increases to customers.

Another explanation I have heard is that the national insurers have long disapproved of a purportedly common practice in Wisconsin ie - deviation by title insurance agencies from the published rate sheets.  In my experience, the rates offered by local agencies have been extremely competitive to the point of being identical.  The agencies have increasingly generated revenue through increased closing fees and other sources of revenue (which are not passed through to the national underwriting insurers).  In order to limit this, so the theory goes, the national companies each concluded that they should raise their rates.    

To date, I am uncertain how to explain the curious substantial and identical increase in rates among different companies.  I am certain that it has nothing to do with a change in the law.

Attorney James N. Graham practices real estate and business law with Accession Law LLC

Choose Your Home Builder Wisely

"It may sound self-serving, Madison attorney James Graham acknowledged, but hiring a lawyer versed in real estate law can put a new home customer in a much better position.

“Most (new-home) transactions don’t involve an attorney, and to the extent a person is represented by anyone, they’re often using a real estate broker — who’s not trained in reviewing contracts, is not allowed to give legal advice, and is an interested party in the transaction,” said Graham, who works for Accession Law."

Read more: http://host.madison.com/wsj/business/article_5a8a363a-fb60-5b49-87c6-2ec3bff8eb9c.html#ixzz21SuBLzQ4

Seller disclosure question

QUESTION:
My elderly mother is selling her vacation home. After full disclosure, is she liable for any period of time for property defects that might arise after closing?

Answer

There is no way to absolutely limit a seller's liability after closing. There is a 6 year statute of limitations for legal claims arising from the purchase contract. Such claims might arise as the result of a warranty or because of representations made by the seller.  For example, there are numerous seller representations made in the real estate condition report which typically is incorporated by reference into the contract.  Remember that misrepresentations can occur both through what is stated and through what is not stated.

Further, Wisconsin has a false advertising statute which may apply to a seller who makes a false or misleading statement to induce a buyer to purchase a home. Under § 100.18(11)(a), if the buyer proves his case, the buyer can recover any monetary loss plus costs and attorney fees.


Even the use of an "as-is" clause does not relieve the seller's duty to fully disclose the condition of the property. For example, in Green Spring Farms v. Spring Green Farms, 172 Wis. 2d 28 (Wis. App. 1992), some calves on the property had been killed by salmonella bacteria. The seller apparently believed that the problem had been alleviated and did not disclose the condition.  Further, the seller sold the property "as-is." The buyer later experienced problems with the salmonella contamination and sued.  The Court held that the seller had a duty to fully disclose material adverse conditions even though the transaction was "as-is." The rationale is that the seller has this material information and the buyer is not able to discover the information.


A seller should discuss any known or suspected property conditions with an attorney to determine what to disclose when and how.


Attorney James N. Graham of Accession Law LLC is providing a general answer which does not establish an attorney/client relationship and which is not legal advice. Contact attorney James N. Graham in order to discuss the terms of retainer and the information needed in order to obtain a legal opinion, recommendation, or advice. The first inquiry for an attorney is to know only the parties involved in order to check for conflicts of interest with current or former clients.


James N. Graham
Accession Law LLC
6401 Odana Road
Madison, WI 53719

Real estate and business law in Madison, Wisconsin

The Real Estate Connection - Interview with James N. Graham

10 Years in the Making: Class of 2002 Alumni

Wisconsin joins $25 billion mortgage settlement

For information on the mortgage settlement agreement, please see the referenced article by Holly Pomraning, Assistant Attorney General, Wisconsin Department of Justice
Wisconsin Joins $25billion mortgage settlement

...
Under the agreement, settling banks have set up phone lines to provide information related to loans that they service. Borrowers may obtain information about the settlement and their rights by calling the following numbers:

• Ally (GMAC): 800-766-4622
• Bank of America: 877-488-7814
• Citi: 866-272-4749
• JPMorgan Chase: 866-372-6901
• Wells Fargo: 800-288-3212

Information is also available at the following websites:

• http://www.nationalmortgagesettlement.com/
• http://www.hud.gov/
• http://www.doj.gov/
• http://www.doj.state.wi.us/