Siegel

Appellant Fidelity National Title Insurance Company appeals from a judgment in favor of Edward M. and Howard B. Siegel. Liability was based on Fidelity’s failure to disclose a lien recorded against property purchased by the Siegels. The issue we are called on to resolve was settled by 1981 amendments to the Insurance Code and cases interpreting those amendments. It is apparent, however, that despite clear authority to the contrary, parties to real estate transactions continue to misunderstand the purpose of preliminary title reports and title insurance policies and mistakenly rely on the accuracy of the information contained in those documents. As we explain, a party who fails to obtain title insurance and instead relies on a preliminary report or title insurance policy showing no encumbrances does so at his own peril and cannot thereafter maintain an action against the insurer when an undisclosed lien comes to light.

Background

The Real Estate Transaction

Edward and Howard Siegel are brothers. Along with defendant and cross-respondent George Liebman, their half brother, the Siegels were the beneficiaries of a trust set up by their mother to hold title to a duplex.…