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ILLINOIS
LEGAL UPDATE
SPRING 2010 ISSUE
Title Insurance Basics
Title
insurance is something that virtually all property owners pay for, yet many
people have little understanding of the value of what they are receiving. When
title insurance is purchased by a property owner, the insurer guarantees that
the owner has clear title to the property, free of other claims or encumbrances
that could prevent the owner from selling the property or getting the best price
for it when it is sold. Title insurance evolved as a way to protect land
purchasers from unscrupulous sellers and to encourage the efficient transfer of
property ownership.
Title
insurance protects property buyers from sellers who try to sell land to more
than one purchaser, thus leaving the purchasers to fight over who is the bona
fide owner of the land. Title insurance also ensures that the property has no
encumbrances or impediments to ownership interests, such as a neighbor’s walkway
or fence that encroaches on the property, and it ensures that there are no liens
on the property, such as a mechanic’s lien for work performed on the property
but not paid for by the seller. Any of the above instances could reduce the
value of the property or force the owner to spend money in order to “cure” the
defects.
How It Works:
When
someone purchases real property, the title insurance company carefully reviews
the records of title to the property by doing what is called a “title search.”
If the title search reveals any defects to the title, such as those mentioned
previously, the seller will be required to cure those defects as a condition of
closing the sale. Once any defects are cured, the purchaser will receive clear
title to the property.
The
title insurance company will also review the current land survey, which must be
provided by the seller, and will ensure that no encumbrances are revealed by the
survey, such as a fence or wall encroachment that reduces the size of your
property.
If an
encumbrance does exist, the seller may be forced to reduce the price of the
property due to the land’s reduced value. On the other hand, if an encumbrance
existed at the time that the seller originally purchased the property and the
title insurer did not include it as an exception to its policy, then the
seller’s title insurance would cover any costs expended by the seller to cure
the defect.
There
are certain encroachments or easements on the land that are necessary for the
use of the land. For instance, there are public utility easements that involve
the use of the land for such items as gas lines, electrical lines, telephone
lines, cable lines, sewers, or any other items that are necessary for the common
good of all landowners. These types of easements do not reduce the value of the
land, and title insurance companies will readily insure over such encroachments.
In fact, these items may add value to the land by providing valuable services.
In the
final analysis, title insurance gives you and, in the case of mortgaged
property, your mortgage company or bank the assurance that you own your property
free and clear and that its value is not reduced by some unknown right or
interest of a third party.
Nursing Home Assaults
Many of
us are aware that seniors can face dangers in nursing homes. Residents can
receive substandard medical care, be given the wrong medications, or simply be
neglected. However, recent data show a rise in new and unexpected
problems—assaults, rape, and even murder.
In 2000,
there were 5,000 cases of patient‑on‑patient assaults in nursing homes; by 2003
(the most recent year for which statistics are available), this number had risen
to 5,515. During the same period, the number of rapes increased by 51%.
There
are a number of reasons for this increase in attacks on the elderly. As the
population ages, nursing homes have become more crowded. More people suffer from
dementia or mental illness, which sometimes can cause them to lash out
violently. Some nursing homes house younger, mentally ill patients with older,
defenseless elderly residents. Finally, some nursing home residents are
criminals, elderly sex offenders, or murderers.
Usually,
the person responsible for a criminal act is the criminal. However, in many
cases, these assaults lead to civil suits against the nursing homes, based on
the claim that the nursing home was negligent for not keeping a dangerous
resident away from the victim or for not taking the time to determine which
residents are potentially dangerous. The suits argue that a nursing home should
be aware of these things and that it should take steps to protect residents from
assaults once it knows that a particular person presents some kind of danger to
others.
Nursing
homes often point to health‑care privacy laws and claim that these laws prevent
them from issuing warnings about other residents. They also sometimes cite
inconsistent state laws or claim that the costs of background checks and the
like are too high for them to bear.
Advocates for the elderly are more likely to cite understaffing, incompetence,
and an unwillingness to admit that there is a problem. Whatever the cause,
individuals whose loved ones reside in nursing homes should be aware of the
potential for violent assaults and should keep their eyes open and not be afraid
to ask hard questions of the management and staff.
Prevent Burglary
Approximately every 15 seconds, a house is robbed somewhere in America. A few simple precautions
can make your home a less‑inviting target and can convince burglars to try their
luck elsewhere.
• Install deadbolt locks on all outside doors, and make sure
that all windows (not just those on the ground floor) have good, strong locks;
•Keep trees and shrubbery cut back from windows so thieves
do not have a place to hide;
•If you are leaving town for several days, suspend mail and
newspaper delivery, and ask a trusted neighbor to keep an eye on your home;
•If you are not at home, keep a light on so the house looks
occupied;
•Consider an alarm system monitored by a reputable security
company;
•Keep a car parked in your driveway. Like lights, it makes
the house look occupied and stops burglars from backing up a van and cleaning
you out.
Finally,
remember that even the best precautions don’t work if you don’t use them! So
give your home a security checkup, keep those doors and windows locked, and beat
burglars at their own game.
“Obvious” May be in the Eye of the Beholder
A recent
decision involving an injury caused by a treadmill highlights the fact that what
is “obvious” to one person may not be obvious to another.
The case
involved a 10‑year‑old girl who was staying overnight with a friend. She fell
off of a treadmill belonging to her friend’s parents and suffered a severe hand
injury when her hand got caught in the machine.
The
girl’s parents sued, claiming that the presence of the treadmill was a dangerous
condition, and that the friend’s parents should have made sure that the children
could not use it. The owners of the treadmill responded that the danger of a
motorized treadmill is so obvious that a 10‑year‑old child should have known to
stay away from it. The trial court agreed and dismissed the suit. On appeal,
this decision was reversed.
In its
opinion, the Illinois
appellate court reaffirmed the general rule that a person is not liable for
injuries caused by an “obvious danger,” which is defined as a danger that is
apparent to, and which would be recognized by, a reasonable person using
ordinary perception. Examples of dangers that are obvious even to children
include dangers presented by water, heights, fire, and even trampolines.
However,
the court found that the danger posed by a treadmill could not be determined as
a matter of law. It noted that a treadmill may be dangerous because of the speed
at which it operates, its machinery, both of these things, or something else
entirely. It also noted that treadmills differ, and that the safety features on
one machine may not be present on another.
These
different dangers and features make it impossible to articulate exactly what
danger should be obvious to an average 10‑year‑old child confronted with a
particular treadmill. This lack of an identifiable generalized danger means that
it was not proper to conclude that the danger was so obvious to a child that the
case could be decided by a court, not by a jury.
Insurance Coverage Can be Limited
Every
homeowner should have homeowner’s insurance in order to protect against property
damage, suits for personal injury, and the like. However, just having
homeowner’s insurance does not guarantee that it covers all claims.
A recent
lawsuit arose out of the sale of a house. After the sale, the buyers sued the
sellers, claiming that the sellers had falsely stated on a disclosure form that
the home had no water problems, flood damage, or mold. The sellers made a claim
on their homeowner’s insurance policy, but the insurer refused to defend them.
The sellers then sued the insurer, seeking a court declaration that the insurer
had to defend them and pay any judgment taken against them.
The
sellers’ theory was that the buyers’ lawsuit made allegations about the
existence of “property damage” and that property damage was covered under their
homeowner’s policy. The insurer responded that property damage is covered only
if it is the result of an “occurrence,” and making misrepresentations during the
sale of a house was not an occurrence under the policy.
The Illinois court agreed
with the insurer. It found that the word “occurrence” was used in insurance
policies to eliminate the need to determine the exact cause of a loss and that
it often broadened coverage. However, in order to be an occurrence, the event
causing the property damage still had to be unexpected, unforeseen, or
accidental. Because the false statements did not cause the property damage, they
were not an occurrence and therefore were not covered.
Credit Card Act
Recently, the Credit Card Accountability Responsibility and Disclosure Act of
2009 (the Credit CARD Act) went into effect. Congress saw a pressing need to
protect consumers from abusive fees, penalties, interest rate increases, and
other unjustified changes in the terms of credit card accounts. A new hike in
the penalties for violators of the Act will provide extra incentive for
compliance. A few of the highlights of the Act are:
•
The Act prohibits rate increases on existing
balances due to “any time, any reason” or “universal default” and severely
restricts retroactive rate increases due to late payments.
•Contract terms must be clearly spelled out and
must remain in place for all of the first year. Companies may continue to offer
promotional rates with new accounts or during the life of an account, but these
rates must be clearly disclosed and must last at least six months.
•Institutions are required to give credit card
holders a reasonable time to pay the monthly bill—at least 21 calendar days (up
from 14) from the time of mailing.
•Credit card companies are required to apply
excess payments first to the highest interest balance (usually for new
purchases), as most consumers would expect them to do but which some companies
have not done because it is not as profitable.
•The Act ends the confusing practice by which issuers use
the balance in a previous month, even if all or a part of it was paid off, to
calculate interest charges on the current month. Many consumers likely were not
even aware of this particular practice, called “double‑cycle” billing.
Credit
card holders will find it easier to avoid over‑limit fees because institutions
now have to obtain a consumer’s permission to process transactions that would
place the account over the limit. So that consumers can better avoid unnecessary
costs and manage their finances, creditors must give them clear disclosures of
account terms before they open accounts and clear statements of the activity on
their accounts afterwards.
The Act
contains new protections for college students and young adults, formerly a
favorite target for blanket marketing of credit cards. Among other things, there
is a new requirement that no card be issued to anyone under 21 unless he or she
submits a written application, with either the signature of a co‑signor over 21
or information showing independent means for repaying the credit card debt.
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