The Typo

Shafer, CA

Some folks find it hard to believe that a simple typographical error can lead to a total failure of title.

Believe it!

Here in this farming community in California’s central valley, a shoestring developer bought land on the edge of town which he then subdivided into three parcels. He built his first “spec” house on parcel 2, then got a construction loan to build his second model on parcel 1.

A construction deed of trust was insured on parcel 1 but, unfortunately, the typist hit the wrong key and the document was recorded showing “parcel 2” in the legal description. But not only did the insured deed of trust secure the wrong parcel, it appeared as a second deed of trust on parcel 2. When the construction loan became due, parcel 1 remained unsold so the developer decided to refinance.The new lender ordered title insurance from a different title insurance company. This other title insurance company issued a Commitment showing parcel 1 as free and clear.

To our developer friend, this must have seemed like winning the lottery without having to buy a ticket. He promptly closed the new loan, pocketing the proceeds of about $91,000.00, he departed the state.When payments ceased, the insured lender began to foreclose. The typo was discovered and the title insurance policy was obligated to buy the loan.

MORAL

A simple typo can result in a total failure of title, even in a nice, quite neighborhood of honest, hard-working people.