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Owner’s Title Insurance and its Role in the Purchase of Real Property

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The purchase of real property is one of the more expensive investments that our clients make.

At the time of closing, non-discretionary closing expenses such as transfer taxes, bank fees, mortgage title insurance and appraisal costs significantly add to the upfront costs to be paid by the purchaser at closing. One discretionary expense is the purchase of an owner’s title insurance policy. The owner’s title policy is a one-time charge that is not required as a condition of loan closing by any lender financing the transaction.

Often clients will ask if it is really necessary to purchase an owner’s title insurance policy given that a title search of the property will be conducted prior to the closing. Our experience has been that it is always wise to purchase an owner’s title policy to protect your investment as there are numerous times when even a properly conducted title search will not uncover a problem that will likely lead to a claim against the property. In most instances, these claims are covered by an owner’s title policy. Coverage from suit in these claims can protect you as the owner against the reduction in value of the property due to an undisclosed encumbrance or costly legal expense in the defense of your property or enforcement of your property rights.

It has been my experience that title claims against real estate are so varied that it is impossible to anticipate in advance of purchase if a property may later be subject to a title claim. Bergeron Paradis & Fitzpatrick represents a leading title insurance company in Vermont. Three recent examples of actual title insurance claims that we have defended demonstrate the varied nature of real estate title claims.

The first of these claims involved a judgment creditor who attempted to foreclose a judgment lien filed in the land records against the property owner claiming the lien had priority over a later recorded first mortgage. The owner’s name was “Bayley” but the court, in issuing the judgment lien, spelled the owner’s name as “Bailey”. The error was not noticed and the judgment lien was recorded under the name “Bailey” in the land records. In conducting a title search, the title searcher did not discover the lien due to the different spelling. Recently, the Vermont Supreme Court upheld a lower court decision striking down the priority of the judgment lien over the priority of the bank mortgage, holding that a title searcher “should not be expected to do the work of poets, phonetic linguists, or multilingual specialists” as such a requirement would be an unfair burden. Lively v. Northfield Savings Bank, et al, No. 2007-165, October 5, 2007.

The second of these claims involved the foreclosure of an undischarged mortgage on the property of the owner. In 2004 the owner had purchased property for use as his primary residence. Prior to closing, a title search revealed the presence of a substantial first mortgage on the property. At the closing, the bank holding the existing mortgage erroneously advised that the payoff was only a few thousand dollars as the bank reported a payoff on the wrong loan of the record owner. This amount was paid and the remainder disbursed to the Seller of the property who retained the proceeds instead of paying off the actual mortgage loan balance. Three years later, the new owner of the property was sued for foreclosure by the bank on their priority first mortgage.

The third example involved an easement to use a common lakeshore lot in a development as access for swimming and boating purposes. The property owner’s deed specifically provided that the lot had the benefit of the easement over the lakeshore lot for access. The lakeshore lot was sold to a third party who immediately commenced construction on the lot, denying the lot owners with deeded access to the lot enjoyment of their rights.

In all these instances, the owners, at the time of closing, purchased an owner’s title insurance policy. In each instance, the title insurance company immediately stepped in to defend the claims of the owners at considerable expense. What is significant about these actual claims is that they are not claims that could have been avoided by conducting a title search on the property. In the first claim, considerable expense was incurred in defending the owner’s priority first mortgage against the judgment lien, with the case ultimately being appealed to the Vermont Supreme Court. In the second claim, the title company was required to pay off the previous first mortgage in order to protect the owners from foreclosure. In the third claim, the title company was required to defend the right of the property owner to enjoy the benefits of the deeded lakeshore easement for which an owner’s title policy had been secured.

When comparing the cost of title insurance to the cost of defending any of these claims, it is readily apparent that the protection offered by an owner’s title policy is a good investment.

The Law of Corporal Punishment in Vermont

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Has the mom who slapped her 5-year-old son on the hand, to keep him from touching a hot stove, committed the crime of Domestic Assault? Has the dad who slapped his mouthy teenage daughter in the face after she just used the “f” word, guilty of Domestic Assault? Surprisingly, the answers to these fairly common family encounters are found in a very murky area of case law in Vermont.

Statutory Analysis

When the police are called to a family domestic disturbance, the crimes of Domestic Assault as proscribed in 13 V.S.A. Subchapter 6 (Misdemeanors and Felonies) come into play. There is no statutory exception or defense for corporal punishment in Vermont for Domestic Assaults. Therefore, many police officers take the position that if there is no statutory defense of corporal punishment, that they will arrest a parent who engages in physical discipline of their child. Similarly, some prosecutors take the position that since our legislature has not seen fit to create a statutory defense of corporal punishment, that if there is a complaint brought to the attention of the authorities, the crime of Domestic Assault has been committed, without regard to a parent’s historical “right” to use corporal punishment on their child. Thus, the criminal defense lawyer in Vermont is often presented with an inconsistent pattern of enforcement of the domestic assault statutes, as applied to parents who may use corporal punishment on their children, depending upon the particular practices of the police agency or the State’s Attorney’s Office involved. This means that the practitioner must then look to case law to see how our District Courts, and more importantly, our Supreme Court have dealt with this nebulous area of law.

Case Law

Vermont Supreme Court Cases

There are two relatively recent Vermont Supreme Court cases which address a parent’s use of corporal punishment as a defense to a criminal charge of Domestic Assault. A review of these two cases reveals that our Supreme Court tends to side-step the outright endorsement or rejection of the defense of corporal punishment, instead preferring to decide the cases on other grounds. A discussion of these two Vermont Supreme Court cases, State v. Martin and State v. Barron appears below.

In State v. Martin, 170 Vt. 614, 751 A.2d 769 (2000), our Supreme Court opined that, “Because of the natural relation of parent and child, a parent, unquestionably, is answerable only for malice or wicked motives or an evil heart in punishing his child”. See Martin, supra, at p. 616. The Supreme Court then went on to hold that the trial court’s jury instruction on corporal punishment was an appropriate jury instruction. The District Court’s actual instruction on corporal punishment, which the Supreme Court ruled was not error, was as follows:

“The law recognizes that a parent does not commit an assault by inflicting corporal punishment on a child within the parent’s custody or parental control providing the parent remains within the following legal limits of exercise of that authority. Under the law, the parent has a right to inflict corporal punishment on a child subject to his disciplinary control provided the punishment is motivated by a corrective purpose and not by anger, that it is not inflicted upon frivolous pretenses, that is not excessive or otherwise unreasonably inflicted, or that it is not cruel or merciless”. See Martin, supra, at p. 615.

In State v. Barron, 176 Vt. 314, 848 A.2d 275 (2004), the Vermont Supreme Court held that in parent-on-child assaults, that “The State must prove bodily injury as defined in 13 V.S.A. § 1021(1), and need not apply a different and higher standard contained in 33 V.S.A. § 4912. See Barron, supra, at p. 319. The Supreme Court then ruled that the District Court erred in requiring the prosecution to prove the higher standard of injury in response to a V.R.Cr.P. 12(d) Motion to Dismiss. However, the Supreme Court went on to note that because, “The District Court did not rule on Defendant’s claim that he is entitled to a corporal punishment defense, we [Supreme Court] decline to address that issue in advance of the District Court”. See Barron, supra, at p. 319. Therefore, our Supreme Court neither endorsed nor rejected the availability of a corporal punishment defense to a charge of Domestic Assault in its decision in the Barron case.

The defense attorney should always cite the Martin case in a Motion to Dismiss Pursuant to V.R.Cr.P. 12(d), and make the argument that obviously if the Supreme Court did not believe that there was a defense of corporal punishment in Vermont, then it would have stated that in the Martin case, instead of ruling that the District Court’s instruction on corporal punishment, was “not error”. Often times the prosecutor will argue the Barron case for the proposition that there is no defense of corporal punishment in Vermont. However, a close reading of the Barron case, reveals that our Supreme Court did not reject the doctrine of corporal punishment, or overrule the Martin case, but instead rejected the trial court’s decision that the State had to prove the higher standard of injury contained in 33 V.S.A. § 4912 in parent-on-child assault cases. Defense attorneys should use the trial court’s jury instruction on corporal punishment from the Martin case, in Motions to Dismiss Pursuant to V.R.Cr. P. 12(d), as well as at any trials in District Court where the defense of corporal punishment should be invoked on behalf of a parent.

District Court Decisions

Our District Courts have dismissed cases involving parental use of corporal punishment. In State v. Jeffrey Reed, Docket Nos. 49-1-95 BnCr and 35-1-95 BnCr, the evidence showed that the Defendant slapped three of his girlfriend’s children in their faces when they would not be quiet. In spite of the fact that the Defendant was not a parent, the District Court opined on page 5 of its Decision that, “This conduct does not show a gross deviation in the standard of care exhibited by law abiding persons under similar circumstances. The general rule for corporal punishment is that “it may be used to discipline a child provided that the punishment is reasonable and not excessive”, [citing] State v. Lembesis, Docket No. 451-1-95 CnCr (Chittenden District Court, April 12, 1995)”. Indeed, in the Lembesis case the Honorable Amy Davenport, in a case where the Defendant was charged with Domestic Assault for spanking his 13 year old daughter four times on her buttocks, held as follows:

“There is no law in Vermont that prohibits a parent from using reasonable corporal punishment to discipline his child. See 33 V.S.A. § 3503; 16 V.S.A §1161(a). Indeed, the general rule is that a parent may use corporal punishment to discipline a child if that punishment is reasonable and not excessive. See In re W.G., 349 N.S.2d 487, 488 (Iowa1984); State v. Thorpe, 429 A.2d 785, 788 P.2d 208, 222 (Az. Ct. App. 1965); see also 59 Am Jun 2d Parent and Child, § 22 (collecting cases). Corporal punishment is excessive when a parent acts “immoderately, cruelly or mercilessly and with a malicious desire to inflict pain,” Hunt, 406 P.2d at 222; see also Thorpe, 429 A.2d at 788, or when it is designed to create a substantial risk of death, serous bodily injury, disfigurement, extreme pain or mental distress or degradation. N.B. v. Commonwealth Dep’t. of Public Welfare, 527 A.2d 623, 625 (Pa. 1987).

In State v. Suzanne Gilbert, Docket No. 927-7-01 WnCr, the Defendant struck her 14 year old daughter on her forehead “during an angry exchange between the mother and the daughter after the child made what the mother viewed as an inappropriate comment”. See State v. Gilbert, Supra, at p.1. The District Court dismissed the State’s case in a written decision arising from the Defendant’s Motion to Dismiss pursuant to V.R.Cr.P 12(d).

Conclusion

Perhaps the reason why the Vermont Supreme Court has neither directly endorsed nor rejected the long standing doctrine of corporal punishment, is because the Court is hoping that the legislature will deal with that issue within the statutory definitions found in 13 V.S.A. Chapter 19, Subchapter 6 (Domestic Assaults). On the other hand, it appears unlikely that our legislature will ever want to deal with the thorny issue of corporal punishment, since the entire concept of a parent’s use of corporal punishment involves such underlying social issues relating to socio-economic status, class, education, and even rural vs. suburban child-rearing practices. Many self-described enlightened parents, including the author of this article, would never use corporal punishment on their child, preferring instead to discipline their children with time-outs and loss of privileges. However, some conservative and traditional parents see nothing wrong with using corporal punishment as a method of parental discipline. Regardless of what one thinks about the use of corporal punishment as a disciplinary tool, police officers, prosecutors, defense attorneys, judges and more importantly, Vermont parents, need to know whether or not reasonable corporal punishment is an exception or defense to our Domestic Assault statutes, which should be plainly spelled out in Title 13, rather than having to resort to case law which has been somewhat unsettled in our State.

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