Waterloo
Hempstead, NY--Into this up scale Long Island neighborhood came
a homebuilder looking for developable property.
The builder selected this lot on a quiet street. The existing stucco
and frame house would be demolished, and a custom home built in
its place.
The builder ordered title insurance from a First American
agent. The agent's search turned up a "Water Agreement"
recorded in 1925, between then owners of lands being laid
out for the Town of Hempstead and the Queens County Water
Company.
The Water Agreement affected a large tract of land, and allowed
the Water Company to maintain water pipes "through and
under any streets or avenues" which might thereafter
open in the tract. |
As built, the new home had to be moved
forward almost to the street. |
Based on this language the agent's examiner decided to give the
builder coverage against any adverse effect of the Water Agreement
on the insured property. This the examiner did by showing the Water
Agreement in the policy, with the notation "affects streets
only."
| But when the builder went to get his demolition permits, he
was denied because water department maps showed an underground
pipeline through the middle of the property. Building over such
pipelines was allowed in the past, but not now. |
 |
The builder made a claim and First American investigated. It turned
out the water department maps were right. Perhaps the examiner should
have paid more attention to a sentence buried in the middle of the
1925 Water Agreement, saying that in 1911 the Water Company had
laid a 24-inch water main through the tract, and "(a) part
of said main is laid through land which has not been opened as a
street or avenue."
Dig We Must -- The solid line shows location
of the pipeline, broken lines show desired location for the new
home. Our first thought was that the pipeline could be moved.
This, of course, was the offending pipeline.
Our proposed solution was to move the pipeline at the Company's
expense. But county engineers explained this is the sole water main
providing service to five communities near JFK airport. Moving the
pipeline could interrupt service for days.
Only poker players like to hold a flush.
The Company paid the policy amount, $151,000, to the insured builder.
Then the builder changed his plans by re-configuring the house and
moving it forward on the lot, so it has a very narrow setback from
the street.
MORAL: This risk would be covered by a "standard
coverage" title policy, because it was (arguably) disclosed
by the recorded Water Agreement.
But for better protection, clients should request "extended
coverage" to include such risks as underground easements for
utilities, drainage, or storage, which are not shown at all by public
records or which may be physically located where they weren't originally
entitled to be.
|
