Iowa Administrative Code
Agency 265 - Iowa Finance Authority
Chapter 9 - Title Guaranty Division
Rule 265-9.8 - Claims
Universal Citation: IA Admin Code 265-9.8
Current through Register Vol. 47, No. 13, December 25, 2024
(1) Claim procedures. In the event of a claim, the rights of the division and a party are as follows:
a. Upon receipt of
notice by a party of a claim, the party must notify the division in writing
within three business days of receipt of information about a claim by the party
and shall mail notification to the division by first-class mail at the
division's address as set forth in subrule 9.4(1). In addition, if the nature
of the claim is such that the guaranteed claimant or the division, or both, may
suffer loss or damage that might be reduced or avoided by notice given more
promptly than required by the preceding sentence, the party shall notify the
division by telephone, facsimile transmission, e-mail, overnight mail or other
overnight delivery service, or any combination of these methods.
b. When a party receives a request from the
division for information with respect to a claim, the party shall supply to the
division any documents, correspondence, surveys, abstracts of title, title
searches, other writings, or other information known by or available to the
party and relevant to the claim, even if not specifically requested by the
division.
c. A party shall
cooperate fully in the investigation and resolution of a claim and shall supply
any additional, new information that may come to the party's attention with
such promptness as the circumstances permit.
d. The division may, with or without prior
notice to the party or parties involved, investigate and resolve any claim in
any manner that, in the division's sole discretion, the division may deem
advisable.
(2) Claim loss recovery.
a. Any
claim losses paid are recoverable from a party by the division.
b. In the absence of knowledge by the party
about the title defect or other matter causing the claim loss, the division
shall not seek recovery from the party when a claim loss arises from one or
more of the following:
(1) Hidden defects,
including, but not limited to, forged deeds and mortgages, false affidavits,
and false statements of marital status;
(2) Errors by public officials in maintaining
and indexing the public records, including, but not limited to, errors by
county assessors, recorders, clerks, and treasurers;
(3) Errors in these rules, manuals, and any
other written instructions given by the division that the party relies upon in
issuing an abstract, title opinion, commitment or certificate;
(4) Errors in surveys provided by registered
Iowa land surveyors that the party relies upon in issuing a certificate that
provides survey coverage; or
(5)
Underwriting determinations or title risks approved by the division prior to
issuance of the abstract, title opinion, commitment, or certificate.
c. The party shall reimburse the
division for a claim loss when the division determines, in accordance with
paragraph 9.8(2) "d, " that the party is liable and when the
claim loss arises from one or more of the following:
(1) Errors by the party in the preparation of
an abstract or any other report of information in the public record;
(2) Reliance by the party upon sources of
title searches and other title information that had not been approved by the
division at the time of the reliance;
(3) Errors made by the party in examining the
title information provided in an abstract, survey, affidavit, or other source
of title information;
(4) Errors
made by the party in the preparation or review of an abstract, title opinion,
commitment or certificate;
(5)
Issuance of an abstract, title opinion, commitment or certificate by the party
with knowledge that title is defective; or
(6) Failure of the party to follow the Code
of Iowa, these rules, manuals, or any other written instructions given by the
division.
d. Unless
another rule, the Code of Iowa, manuals, or any other written instruction given
by the division provides for a different standard of liability or other rule
for determining whether the party shall be liable for a claim loss, the
division shall apply the following standards:
(1) In the event that a claim loss occurs for
which the division may seek recovery from the party under subparagraph
9.8(2)"c"(1), the division may demand reimbursement from the
party if the party was grossly negligent in preparing the abstract. Gross
negligence includes the failure to make a search or the use of inadequate
search procedures. Gross negligence under the preceding sentence includes but
is not limited to failure to search certain indices, failure to search all
names of parties with an interest in the real estate, or failure to search in
all public offices required by the division search procedures or procedures
used by prudent title searchers if the division has not established specific
search procedures. In making its determination whether to seek recovery, the
division may consider the complexity of the public record, the reliance of the
party upon division-approved search procedures, the training and experience of
the person who made the error, and the existence or nonexistence of previous
search errors by the party.
(2) In
the event that a claim loss occurs for which the division may seek recovery
from a party under subparagraph 9.8(2)"c "(2), the division
may demand reimbursement from that party if the party relied upon sources of
abstracts or other title information that had not been approved by the division
at the time of the reliance.
(3) In
the event that a claim loss occurs for which the division may seek recovery
from the party under subparagraph 9.8(2)"c "(3), the division
may demand reimbursement from the party if the party negligently examined the
title information used in making a title determination, failed to raise an
appropriate exception, waived an exception, or endorsed a commitment or
certificate.
1. The division may make full
review of local county abstracting standards and bar title rules as a guide to
determine whether the party has failed to meet the standard of skill and
competence of an abstractor who prepares an abstract or an attorney who
examines titles in the community where the claim arose.
2. The division may also consider whether the
party followed the Code of Iowa, these rules, manuals, or any other written
instructions given by the division in examining the title.
3. In addition, the division may seek input
from other parties in the community in which the claim arose as to the standard
of care of an abstractor who prepares an abstract or of an attorney who
examines titles in that community.
(4) In the event that a claim loss occurs for
which the division may seek recovery from the party under subparagraph
9.8(2)"c "(4), the division may demand reimbursement from the
party if the party negligently prepared or reviewed an abstract, title opinion,
commitment or certificate.
(5) In
the event that a claim loss occurs for which the division may seek recovery
from the party under subparagraph 9.8(2)"c "(5), the division
may demand reimbursement from the party if the issuance of the abstract, title
opinion, commitment or certificate constituted fraud, concealment or
dishonesty, or if the issuance of the abstract, title opinion, commitment or
certificate was based upon an underwriting decision on an unusual risk that was
made without contacting the division for approval.
(6) In the event that a claim loss occurs for
which the division may seek recovery from the party under subparagraph
9.8(2)"c "(6), the division may demand reimbursement from the
party if the party failed to follow the Code of Iowa, these rules, manuals, or
any other written instructions given by the division with respect to the matter
causing the claim loss.
(7) In the
event the division seeks reimbursement from a party, the division shall state
the basis of the reimbursement.
e. The division board may establish levels of
authority, including dollar amounts, for the division for the settlement of
claims made against the division.
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