Threats to title that arise from an inheritance are dealt with as any other challenge to title, however there are a few features of this subject that may be of useful regard.

Despite the irrefutable truth of the beneficial properties of title insurance, an alternative or tentative query on title may be sought from an attorney in regard to title.

Known as a ‘title opinion’, the attorney will investigate the title with diligence and report on the issue of clear title.

The attorney then remains in proxy for the insurer and is able to be sued should the contrary position present itself in regard to the title’s status. The attorney will no doubt have professional indemnity insurance to cover such a contingency however; there will most likely be a statutory period of limitation in regard to the bringing of proceedings for malpractice. This usually will be 3 years.

While the essence of title insurance is to protect against challenges to the integrity of title, a potentially disastrous risk is able to take the form of persons claiming a property under the rules of succession.

When a person passes away, a statutory period running from the date of the grant of probate (approximately 6 months) allows a window of opportunity for eligible persons to claim a moral right to challenge a will or to request the court to allocate assets of the testator in their favor, in the event of no will coming into existence.

Deceased Estate Property

Within that period of time, the executor of the will may have disposed of a property belonging to the deceased’s estate, and so while a clear title may be found by diligent searching on the part of the purchaser or his agent, the subsequent application of an eligible person upon the assets of the deceased estate may see a valid claim for an interest in regard to the alienated land or property.

In this case the purchaser without insurance will suffer unimaginable loss as he will be required to forfeit his interest to that of the beneficiary of the deceased estate.

Alternatively, a prudent purchaser who has invoked the services of a title insurer, will be found to suffer no detriment, as the insurer, while unable to defy a court order may be able to reach an agreement with the beneficiary or alternatively, will forfeit the title and compensate the policy holder.

This type of cover, will most likely be absent from a standard title insurance policy and will require the specific endorsement at the instance of the policy holder. Naturally, such additional coverage is offered at no cost, but may well be worth the investment as the increase in premium cost will be negligible.

The laws of succession have expanded to entertain more than merely a legal entitlement. Contemporary intestacy rules allow for eligible persons to prove a moral right which will be determined by the court.

The list of eligible person is exhaustive but is not limited to immediate family. It extends to de facto relationships, children and grandchildren, all of whom are required to prove a moral duty existed on the part of the deceased to provide for their welfare by way of the estate.

The breadth of the legislation represents unprecedented risks as to the potential for challenge to the titles of deceased estate property that has been disposed of prior to the expiry of the statutory period after probate is granted, and further justifies the logic of title insurance.

Resources:

http://titleinsurancetalk.blogspot.com/2007/05/query-state-inheritance-lien-divest.html

http://philfaqs.com/them-thats-living-there/i-heard-a-foreigner-can-inherit-land-in-the-philippines/

http://www.la-legal.com/modules/article/view.article.php?c1/28