Why do Detroit homebuyers need title insurance? Just ask Nicole Curtis

Nicole Curtis probably should have known better. 

The host of HGTV’s “Rehab Addict” thought she had purchased a house in Detroit’s Islandview neighborhood for $17,000 in 2017. She told the Detroit News that she subsequently put $60,000 into securing the home, getting property insurance and paying off back taxes.

But in 2018, more than a year after she bought the property, the Detroit Land Bank Authority informed her that she wasn’t the title holder for the home at 451 E. Grand Blvd. — the Land Bank was, and had been since before she bought it.

On Aug. 21, 2017, the Wayne County Register of Deeds records previous owners Jerome and Joyce Cauley granting 451 E. Grand Blvd. to Detroit Renovations LLC, Curtis’ company, by quitclaim deed. But at that point, the property was in the Land Bank’s possession. 

In other words, it appears the Cauleys no longer owned the home when they sold it to Curtis. Or as Mayor Mike Duggan described the incident, “it appears she was scammed.” 

Several years and a couple of court cases later, the Land Bank secured legal rights to the home in August. Though Nicole Curtis has since sued the Land Bank, saying it took advantage of her, the agency recently put it up for sale for $40,000. 

The suit is ongoing, with a judge set to rule next month on whether Curtis’ case can proceed and attention focused on the battle between Curtis and the DLBA. But our most pressing question has gone unanswered: How did this happen to someone as experienced at renovating distressed Detroit homes as Curtis? 

One thing we do know: There’s a step built into the homebuying process designed to prevent this kind of murky ownership battle. It’s not glamorous, there’s no glory and if your sale goes smoothly it won’t do anything for you. But if not… that’s where title insurance comes in handy. 

What is title insurance?

In order to guarantee clear ownership of a home, a buyer purchases title insurance. A title company will search the public records, like the county’s register of deeds or court records, to verify a property’s ownership status. 

“As the owner, you’re being insured against prior claims for the title — defects in the chain of title that show up after you own the property,” Debbie Kudla, branch manager at Title One, Inc. based in Livonia, told Detour.  

Issues that might crop up that would impact a new buyer include an unpaid mortgage (which means a bank can put a lien on the home), an illegal deed, a missing heir or unpaid taxes leading to foreclosure. 

But if the title company believes the title is clear, it will write an insurance policy as part of the purchase agreement. If somebody later makes a claim for ownership of the home, the title underwriter would be responsible for resolving it.

How do you clear a title?

Clearing a “cloudy” title depends on the nature of the problem.

If there’s a lien on the house, the owner will need to contact the lienholder and resolve the issue. If, for example, the previous owner failed to pay taxes, those will need to be repaid. 

If there are multiple claims to the property, then the would-be owner should hire an attorney and initiate a “quiet title” suit to establish the actual owner and extinguish the prior interests.

What is a quitclaim deed? (Hint: not proof of ownership)

Quitclaim deeds are a way of conferring rights to a property, and are often used in sales outside of the traditional real estate market — like someone transferring ownership of a home to a family member. They’re relatively easy to file, and are typically used to avoid paying for the services of a title company. 

However, quitclaim deeds offer no guarantee that the seller actually has ownership of the property.

“I could actually give you a quitclaim deed on the Renaissance Center and it wouldn’t be fraudulent,” Kudla said. “I’m giving you any interest I may, or may not, have in that building.”

The most secure, and traditional, way to transfer property is through a warranty deed, which includes assurances that the title is clear. 

Why is title insurance worth it?

Curtis’ team has laid blame over the ownership confusion with the Detroit Land Bank Authority, in part for failing to file the title in a timely fashion. 

“We all want the DLBA to succeed and hopefully, sooner than later, the Board realizes that we are all on the same team, just well overdue to getting on the same page with this,” Curtis said in a statement shared with Detour. “The DLBA is overwhelmed and things are falling through the cracks.”

In a post about the dispute on the Historical Detroit Area Architecture Facebook group, she wrote that she did use a title company but that “there were mistakes in paperwork made.” She told WXYZ that the title company did not find other ownership claims: “We did a title search and there were liens for back taxes and water, all the normal things,” she said.

Curtis’ team declined to answer Detour’s questions about whether she purchased a title insurance policy or share more details about the paperwork mistakes. 

Any decent title company would almost certainly have spotted the inconsistencies at the Register of Deeds and done a thorough investigation into the home’s history; a policy would cover losses due to title problems or mistakes. Title insurance is a basic and important part of homebuying. If Curtis didn’t get a policy, it would seem to be a major oversight. We do know she isn’t alone — others have been victims of similar selling scams. 

In the end, the case is a good demonstration for the value of good title insurance. “I really do recommend getting title insurance, and not just because I’m in the title business,” Kupla said. “I’ve seen too many people decline the service because they wanted to save some money and now their whole investment is in jeopardy.”