Wednesday, August 29, 2007

Title Insurance: the importance of an access endorsement.

Kroger is building a new grocery store down here in Bourbonnais and it was scheduled to open on September 13. Unfortunately, in a situation that almost reminds me of a bar exam question, the opening has been postponed indefinitely because there is no "curb cut" permit, or a permit to access the property via the adjoining street. (Kroger operates in a nearby building that it rents; I know one of the owners of that location and I’m sure that person is happy.)

I do not purport to know all the facts here, nor am I assigning blame or even suggesting that anyone is in fact to blame. But, had I been involved, is there anything I could have have done to try to prevent this problem? Maybe, maybe not. At the least, I would have tried to obtain title insurance over this issue when buying the land. A basic title policy only insures ownership of the property in question. In a commercial deal of this size, if representing the buyer I would have insisted upon obtaining an access endorsement insuring that the property has access to a public street. (Practice hint: Read the endorsement and consider asking that the form language be modified to suit your needs.) At least there might be proceeds to call upon had this problem happeed anyway. And if I could not obtain this insurance, I would have flagged the issue for my client's consideration.

Maybe this is just one of those no-fault snafus. And there is no guarantee that anything I might have considered would have helped. But there is a lesson here: If you are a dirt lawyer, you can’t ever assume. Every deal of this nature is Development 101 for me, and I constantly have to question myself in each and every step of the process so as to add value to the transaction.