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Home > Underwriting > Title News > Nineteen Volume Four

SERIES: Nineteen VOLUME: Four DATED: April, 2004


In a recently decided Appellate decision National Granite Title v. Cadlerock Properties (Appellate Division, Second Department, decided March 1, 2004) the Appellate Court reversed a lower court decision and permitted a title insurer to recover tax payments it advanced under the terms of its title policy. The Court determined that the real estate taxes in question were the sole obligation of the sellers and, therefore, the title insurer was subrogated to the rights of its insured and entitled to be reimbursed for its payment. The Court's decision is as follows:

"The plaintiff National Granite Title Insurance Agency, Inc. (hereinafter National), issued a title insurance policy to the nonparty-purchaser of the defendant sellers' property which mistakenly failed to indicate that a portion of the property was subject to tax liens. Paragraph 7(a) of the sales contract between the nonparty-purchaser and the defendant sellers provided that real estate taxes were to be adjusted prior to closing, and paragraph 7(c) provided, inter alia, that any errors or omissions in computing closing adjustments shall be corrected. Further, paragraph 7(c) provided that this provision would survive the closing. After the closing of title on the subject property, National learned that a portion of the property was subject to tax liens, and paid the amount of those liens on behalf of the nonparty-purchaser in accordance with the terms of its title insurance policy. National then commenced this action against the defendant sellers seeking to recover, as subrogee of the nonparty-purchaser, the money it paid to satisfy the tax liens.

Where the contract, as here, is unambiguous, 'its interpretation is a matter of law and effect must be given to the intent of the parties as reflected by the express language of the agreement' . . . In the case at bar, the subject real estate tax liens were the sole obligation of the defendant sellers. However, those tax liens were omitted in computing closing adjustments. The doctrine of subrogation is applicable where a party, such as the plaintiff herein, has a legal duty to pay the debts of another for the protection of some benefit . . . Accordingly, the Supreme Court erred in denying that branch of National's motion which was for summary judgment and in granting the cross motion of the defendant sellers' for summary judgment dismissing the complaint."

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