Attorney-at-Law

Ask the TITLEMAN™

Q & A

John T. Lotardo

Attorney-at-Law

Q. I received a telephone call from a former buyer who bought 4 homes in Arizona a few years ago. They were told by the City that one of their rental properties is delinquent for water service and they must pay their tenant's bill. Furthermore, the City stated to them that they are legally responsible for said bill and that their owner's title policy enforces the owner as the responsible party. Is that the case that the owner's policy includes such provisions? The owner wants to know if they can fight it and with whom.

A. Sorry to hear about them having to cover the bills for their tenants. Unfortunately, a water bill is not something that is included in the coverage in the owner’s policy. It is a matter between the City and the owner. Sounds like he either misunderstood what they told him or the City was mistaken about what title insurance is all about. If the City refuses to settle with the owner I would think his lease agreement with the tenant would permit him to sue the tenant for the expenses- assuming that the tenant was indeed responsible to pay for the water bill that is.

Q. I have a dispute going on between Brokers in regards to the definition of an "arms-length transaction." Could you provide one for me please?

A. The basic idea is concerning a transaction in which the buyers and sellers act relatively independently. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party.

Q. I met you at a recent seminar you presented on Title Law in Arizona. I’m looking for a limited title reports (status of title reports) for use in preparation of Mechanic’s and Materialman’s Lien, and the foreclosure of a Mechanic’s Lien.

A. Although limited report assists in seeing the status of the title, I would think you would need a litigation guarantee for a lien foreclosure action. A status of title only gives you just that, a status of what’s on the property. A litigation guarantee would show more in the way of who are the parties you should be naming, etc.

John T. Lotardo aka the TITLEMAN™ is Senior Vice-President/General Counsel for Stewart Title & Trust of Phoenix, Inc, State Counsel for Stewart Title Guaranty Company and is a regularly featured columnist. In addition, he is a frequent speaker and presenter on real estate-related topics. Have any questions for him? Send it to him at titleman@askthetitleman.com.

The information supplied is of a general nature and should not be relied upon as legal advice. You should consult with your own legal counsel. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Copyright © 2010 John T. Lotardo, All rights reserved.