The purpose of this article is to provide a basic, stripped-down understanding of the Litigation Guarantee. While Litigation Guarantees are a complex Title Insurance and Policy mechanism, and extremely important in litigation involving Real Property and land use, we can dispel the concept to its most basic principles.
What Is a Litigation Guarantee?
A litigation guarantee is essentially an insurance policy that is issued in favor of the attorney and the client in an action affecting land. A litigation guarantee offers plaintiffs protection that they have named all proper parties as defendants in their case, thereby ensuring any judgment received related to the case is binding. Litigation guarantees are complex title insurance policies but they should be considered in actions involving ownership and liens on land.
Litigation Guarantees and Personal Jurisdiction
Some of the most commonly litigated disputes involve claims to real property. Whether the issue involves a foreclosure, an easement dispute, or an action to quiet title, the determination of a party’s rights and remedies with respect to real property and land use are consistently popping up on California’s Central Coast and through the state.
When you ask the Courts to determine what your rights are with respect to a piece of property, one of the most important preliminary requirements is personal jurisdiction. Generally, a Court can only bind the parties that are actually named in a lawsuit. By way of an example, if Persons A, B, and C own a neighboring parcel that is burdened by a recorded roadway easement in your favor, and they erect a fence preventing you from using your roadway, you may have to sue them to prevent them from quieting your interest in the easement. If you only name Person A and Person B in our lawsuit, even if you win, your victory is meaningless as to Person C, who was not a named party in the lawsuit. Therefore, it is of the utmost importance that early on in the litigation process, you determine the identity of all the possible parties who could claim an adverse interest in the real property in dispute.
There are two main ways to determine the proper parties to be named as defendants in a real property lawsuit. The first option is to head down to the county hall of records and research the entire chain of title of the real property at issue to find and track the interests through history. The other option is to have your attorney work with a local title company to purchase a Litigation Guarantee, which will show the vested interests in the real property at issue. The title company will typically require an explanation of the factual and legal basis of the particular dispute for which the litigation guarantee is to be issued so that an accurate and precise Litigation Guarantee can be generated, detailing all parties who may claim an interest in the property, as well as any defects or encumbrances.
In many ways, a Litigation Guarantee can be thought of as an insurance policy, ensuring that you, as Plaintiff, have named all the necessary and appropriate parties in your lawsuit, and all of the requisite information relating to the property is obtained upfront, ensuring (and insuring) that any judgment you receive is binding and effective.