May a property owner holding a title insurance policy transfer title to the insured property to themselves as trustee for their intervivos trust using a quitclaim deed and retain the coverage?

Facts: A property owner held a title insurance policy extending coverage so long as the property owner retains an interest in the property. The policy also covers a successor when the owner transfers the property other than by a sale. For estate planning purposes the property owner sets up an intervivos “living” trust and transfers title to the property to themself as trustee using a quitclaim deed, not a grant deed. The property owner’s easement included in the coverage is subject to litigation. The owner as trustee makes a claim on the title insurer to cover a loss, which the insurer denies.

Claim: The title insurance company claims the policy coverage ended when the property was transferred, since the quitclaim deed terminated all of the owner’s interest in the property as the deed contains no implied warranties of title.

Counterclaim: The owner claims the policy is still in effect since the coverage extends to all transfers that do not include a sale and granting the property to themselves as trustee did not interrupt their continuous ownership.

Holding: A California court holds the title insurance policy ended when title to the property was transferred to the trust vesting by use of a quitclaim deed since a quitclaim deed does not provide for an implied warranty of title as a grant deed does and thus ended any continuing interest in the property. [Santos et al v. Fidelity National Title Insurance Company (2025) ____ th Cir.___]

Santos et al. v. Fidelity National Title Insurance Co.

Editor’s note — A grant deed conveys real estate with covenants relating to the interest conveyed. On the other hand, a quitclaim deed terminates any interest in the real estate described in the deed which may be held by the grantor signing and delivering the quitclaim deed. Unlike a grant deed, a quitclaim deed operates to release to the grantee all interest the grantor may hold in the property. [Platner v. Vincent (1924) 194 C 436; See RPI Forms 404 and 405]

Related RCDs

May an owner of developable property encumbered by an undisclosed easement recover under a policy of title insurance the diminution in value based on the property’s highest and best use?

Related Reading

Real Estate Legal Aspects Chapter 22: Title Insurance

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Contents of a Title Insurance Policy