Title insurer not liable for failing to alert buyer to demolition order
Kandasha Glenn bought a home in Pontiac and title insurance from First American. One week after the closing, the home was demolished pursuant to a two-year old order issued by the City of Pontiac. Glenn filed suit against the title company, alleging it was negligent in failing to uncover and give her notice of the order under its duty to search "public records." The Court of Appeals upheld the dismissal of Glenn's claim, deciding that the title insurance contract did not expressly cover a complaint of this nature. The Court held that the title insurer was only obligated to fulfill its contract, and it interpreted the contractual promise to apply only to matters of "title" to the property.
Glenn had argued that the duty to disclose matters of "public record" should include demolition orders, and not merely documents from the Register of Deeds. The title insurer and the Court of Appeals disagreed, finding that Glenn's damages were a result of the exercise of governmental "police powers" and therefore excluded from coverage. Since the demolition order did not affect Glenn's "title" to the property, the public record duty did not apply, and the police power exclusion did.