BajaNomad

Property Buyers Question Title Insurance

Anonymous - 3-21-2005 at 10:37 AM

http://www.mexidata.info/id428.html

By Nancy Conroy
March 21, 2005

Property buyers at the El Dorado Ranch development in San Felipe, Baja California, have criticized Stewart Title Guaranty Company, a U.S.-based firm offering title insurance in Mexico. Buyers say they were misled by the Stewart Title logo on marketing materials for the project. Signs, billboards, and advertisements for the development contain the Stewart Title logo, yet in reality buyers could not obtain individual bank trusts, nor was individual title insurance available.

The El Dorado Ranch is a huge development, sprawling over 35,000 acres, in the beachfront town of San Felipe on the Sea of Cortez. Single-handedly, this development is making San Felipe a tourist and residential destination in Baja California. Thousands of lots and homes have been sold, and the developer conducts an extensive marketing campaign in the U.S. Busloads of buyers arrive each weekend, with estimated sales of 40 lots per weekend.

Most buyers however were not familiar with the Mexican real estate purchasing process, so the only information available was what they were told by the developer. And both the developer and Stewart Title regularly said that El Dorado Ranch was ?insured,? ?covered? or ?enhanced? by Stewart Title insurance, even though individual title insurance policies for buyers were not available.

Stewart Title issued a master title insurance policy covering all of the land at El Dorado Ranch, the beneficiary being the developer. This means that if a title problem occurred the developer was ? and is ? insured, but not the buyers. The claim that the development ?had Stewart Title? was and is true because of the master insurance policy favoring the developer, but it is misleading.

Buyers did not understand the difference between a Stewart Title policy benefiting the developer and one benefiting the buyer. As such, when buyers saw the Stewart Title logo they assumed it meant that title was clear, permits and licenses for the development were in place, and individual bank trusts and title policies were available and secure at time of purchase.

Stewart Title Guaranty Company is the industry leader in providing U.S. style title insurance to those purchasing property in Mexico. As such, the company has a significant responsibility to the public to act in accordance with the strictest standards of quality and transparency.

But, the reality is that Mexico is a different market from the U.S., and the idea of ?bringing U.S. standards to Mexico? is an incredibly difficult, if not impossible, promise. In the El Dorado Ranch controversy, we are seeing how difficult it is to implement that idea in the real world. On the one hand, buyers are correct when they complain that Stewart Title misled them. On the other, buyers must realize that U.S. expectations do not apply and that the title insurance industry in Mexico is still evolving.

Stewart Title never specifically stated that individual title insurance policies were available. They allowed El Dorado Ranch to use their logo to show that they believed the development was legitimate, and they had confidence that titles at the development would eventually be insurable. Stewart never represented the deal as anything different than what it was, and they never claimed that buyers were obtaining individual insured bank trusts on the day they put down their money.

Stewart also made a significant effort to educate buyers about Mexican real estate in general, and aspects of the deal were difficult to understand. El Dorado Ranch is the largest development in Mexico, an unprecedented land privatization, and many of the things they were doing had never been done before.

The problem is that the public does not understand what standards Stewart Title is using in Mexico. Mitch Creekmore, Vice President of Stewart Title, said in an interview: ?When title can be conveyed, established and recorded, we can provide a policy. That is the U.S. standard.?

In contrast, this observer believes the U.S. standard for real estate transactions is that an identifiable ?closing? should occur, when buyers pay the money and receive their insured title at the time of purchase. Not three years later like at the El Dorado Ranch.

As well, the definition ?U.S. standard? should include clear advertising criteria, so that buyers who see the Stewart Title logo can make reasonable assumptions about what the deal will involve and guarantee. The logo Stewart Title Guaranty should be like a ?Good Housekeeping Seal of Approval,? meaning that they have checked and approved all aspects of the deal.

El Dorado Ranch

comitan - 3-21-2005 at 10:59 AM

I'm sure Stewart title hasn't done anything against the law but when a corp. Like El Dorado Ranch has a Master Fidocomiso and if they were to go defunct you are (The home owners become liable) for what ever liabilities that the developer had. I have seen this happen the home owners had to repurchase thier homes from the bank. The above is what I understand to be correct but I cannot guarantee that the total above is correct because I am not a Mexican Lawyer.

Bruce R Leech - 3-21-2005 at 12:24 PM

wow comitan that is scary . I did not no that thanks.