Bulletin: IN2010006

Dear Associates:

On June 29, 2010, the Indiana Supreme Court in US Bank, N.A. v. Integrity Land Title Corp ., No. 17S03-1002-CV-120, held for the first time that a title company issuing an incorrect title commitment may be sued in tort for negligent misrepresentation. In this case, the title company missed a prior foreclosure judgment and the title insurer/underwriter had gone out of business. In recognizing an action for negligence against the title company, the court found that the title company had a duty to communicate the state of title accurately when issuing its preliminary commitment and that the insured bank relied on the commitment in order to approve its loan to borrower.

As previously stated in Stewart Bulletin MU000034, it is recommended that you add the following disclaimer to your commitment (or preliminary report or binder). Some courts may enforce a disclaimer for negligence.

THIS COMMITMENT (substitute preliminary report or binder where appropriate) IS NOT AN ABSTRACT, EXAMINATION, REPORT, OR REPRESENTATION OF FACT OR TITLE AND DOES NOT CREATE AND SHALL NOT BE THE BASIS OF ANY CLAIM FOR NEGLIGENCE, NEGLIGENT MISREPRESENTATION OR OTHER TORT CLAIM OR ACTION. THE SOLE LIABILITY OF COMPANY AND ITS TITLE INSURANCE AGENT SHALL ARISE UNDER AND BE GOVERNED BY THE CONDITIONS OF THE COMMITMENT.

A copy of the above-referenced Supreme Court case may be found at the following link: http://www.in.gov/judiciary/opinions/pdf/06291003fsj.pdf.

If you have questions relating to this or other bulletins, please contact your local underwriting personnel or Stewart Legal Services.

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