Holy Cow!

This sure is a good reason to check municipal liens for any title search you do. Check out this case in Missouri, Sachtleben & Hruza v Alliant National Title Insurance. The Court, in its decision, actually calls the property "the little barn on the prairie" . 

SANFORD SACHTLEBEN and LUCIANN HRUZA, Appellants, vs ALLIANT NATIONAL TITLE INSURANCE CO., Respondent.

Appeal from the Circuit Court of St. Louis County 21SL-CC02156 Honorable Joseph S. Dueker Filed: July 25 2023

Summary:

This is a case in the Missouri Court of Appeals, Eastern District. Sanford Sachtleben and Luciann Hruza purchased a 20-acre piece of farmland with a barn on it in New Melle, Missouri, in 2016. They bought a title insurance policy from Alliant National Title Insurance Co. Later, they discovered that the barn violated zoning ordinances, and they were joined as defendants in a lawsuit by the city of New Melle seeking to enjoin the use of the barn.

Appellants expected Alliant National to defend them against the lawsuit, but the insurance company refused, and Appellants sued for breach of contract. Alliant National argued that they were not entitled to coverage because the lawsuit was not properly recorded with the St. Charles County Recorder of Deeds, as required by the policy's terms.

Appellants appealed, arguing that the policy's definition of "Public Records" was ambiguous, the ordinance violations affected the title's marketability, the Sullivans committed fraud by not disclosing the lawsuit, and Alliant National had actual notice of the lawsuit.

The Court found that Alliant National indeed had actual notice of the lawsuit before issuing the policy, which triggered the company's coverage obligations. As a result, the Court reversed the trial court's summary judgment in favor of Alliant National and remanded the case for further proceedings.

"At oral argument, Alliant National’s counsel stated that the insurer’s “actual knowledge does not matter” and that “actual knowledge is secondary” to the records filed... To conclude otherwise, we would be allowing Alliant National to avoid its obligations when it was aware of the imminent storm forming as the New Melle lawsuit and the looming threat to Appellants’ purity of title, certain to imperil the little barn on the prairie."